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qbteachmt
qbteachmtAnswer
Dec 11, 2018 4:47 AM UTC

You don't use JE for this at all.

If this is your money, then on the Expenses tab, post to an Other Asset account.

If this is money someone paid to you, then you set up an Other Charge Type Item linked to Liability and use it on a Sales Receipt for this name. That way, you know Whose Liability you are holding. You apply that or return it, later, using that same item.

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25 replies

qbteachmt
qbteachmtAnswer
Dec 11, 2018 4:47 AM UTC

You don't use JE for this at all.

If this is your money, then on the Expenses tab, post to an Other Asset account.

If this is money someone paid to you, then you set up an Other Charge Type Item linked to Liability and use it on a Sales Receipt for this name. That way, you know Whose Liability you are holding. You apply that or return it, later, using that same item.

    mhcholdingsllc
    Jan 4, 2019 10:45 PM UTC

    What is the correct procedure for when earnest money is returned (in the event of a cancelled sale, for example)? Is there a way to tie the check to the deposit so it zeroes out? 

    PreciousB
    PreciousB
    Jan 5, 2019 12:51 AM UTC

    Greetings mhcholdingsllc,

     

    I'll join on the conversation to help you record the returned earnest money.

     

    You can write a check for this with the same liability account that was used for the sales receipt. This will zero out the earnest money.

     

    Here's how:

    1. Select Banking on the left pane, then choose Write Checks.
    2. Choose the liability account.
    3. Enter the needed details.
    4. Click Save & Close.

    Please reach out to me if you have additional question. I'd be happy to help. Have a lovely day!

      jeannecmiller
      Nov 23, 2020 8:46 PM UTC

      How do you records Earnest Money received that is not going to be refunded?  Does it just go to Other Income as Option Money?

      Charies_M
      Nov 23, 2020 11:28 PM UTC

      Thanks for joining us today, jeannecmiller.

       

      You can create an advance payment/prepayment using the Receive Payment feature to record the Earnest Money received from your customer. 

       

      For the account, it depends on where you want the amount to be deposited. You have two options for entering the prepayments or deposits, either by using Accounts Payable or an Asset account. I suggest consulting your accounting professional to know which option is best for you.

       

      The followings are some easy steps to follow:

       

      First, make sure you have the customer listed on Quickbooks. If you have already listed the customer on Quickbooks Online, then you can skip this step and continue to step

       

      1. If not, go to Customers, then Customer Center.
      2. Click New Customer & Job.
      3. Create a new customer by filling out all the information.
      4. Hit OK.

      Once done, create a Receive Payment:

      1. Go to Customers, then Receive Payments.
      2. Find the customer from the Received from drop-down and enter the payment amount.
      3. Click Save and Close.

      There are no invoices being linked to at this time. The customer is making a prepayment that will be applied to future invoices to generate income.

       

      To review the existing prepayments, you can run the Customer Balance Detail report.

      1. Go to the Reports menu, then select Customers & Receivables.
      2. Then, Vendor Balance Detail.
      3. Select Customize Report, then go to the Filters tab.
      4. Go to the Filters tab, then select Transaction Type from the list.
      5. From the Account drop-down, select Payment.
      6. Click OK.

       

      Let me know if you have any follow-ups or other questions. I'm always here to help. Wishing you a good one.

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