Always keep in mind that your goal when recording a bank deposit in QuickBooks is to match what you record to what you actually deposit. That means matching the transaction date, the amount, and the bank account to which you make the deposit.
The steps to make a bank deposit in QuickBooks depend on your setting of the Undeposited Funds preference.
For most QuickBooks users, the Undeposited Funds preference is enabled, so we’ll cover that scenario first.
Enabling the Undeposited Funds preference means that your default “deposit to” account is your Undeposited Funds account. Customer payments and sales receipts are temporarily accumulated in the Undeposited Funds account until you combine them into one or more bank deposits. Funds reach the Undeposited Funds account in one of 3 ways:
- recording a customer payment on the Customers->Receive Payments menu selection
- recording a Sales Receipt
- recording a General Journal entry
Funds in the Undeposited Funds account are combined into a bank deposit on the Banking->Make Deposits menu selection. If you select this menu choice and your Undeposited Funds account contains transactions, QuickBooks will automatically open the Payments to Deposit window, as shown nearby.
This window will contain all items available to deposit. In this window, choose the item(s) that actually make up the bank deposit being recorded. In our example, we chose 1 item. Buttons are available to Select All items and Select None, which performs an “undo” function. When you’ve selected the item(s) to deposit, click Ok to return to the Make Deposits window. If you want to change the items selected from among the available items to deposit, simply hit the Payments button at the top of the Make Deposits window. If your deposit will only contain items from the Undeposited Funds account, it’s a good idea to verify that the Payments Subtotal matches the amount of the deposit.
In addition to items gathered from Undeposited Funds, you can include other deposit items, as well as deductions for fees, such as incoming wire fees. You always want to have the amount of the deposit match the amount recorded by the bank. If your bank combines a fee with a gross deposit and records a net deposit amount, you’ll want to include the fee on the Make Deposits window. If your bank records a gross deposit and a fee as 2 separate transactions, you don’t want to include the fee on this window. In our example, even though we’re depositing 1 check, we’ve added a $10 bank service charge expense to demonstrate how a deposit deduction is recorded.
You can also receive cash back from a deposit, which will be deducted from the deposit. You should only use this feature if your bank reports the net amount of the deposit as 1 transaction. If you use these fields, you’d normally enter a petty cash account (effectively a transfer), an expense account (such as a travel advance), or an equity account (a return of equity). While recording cash back from a deposit on the Make Deposits window can save a step, we generally discourage using this method. It’s preferable to record the gross deposit and cash withdrawal separately because you’ll preserve more transaction details of the cash withdrawal by doing so.
Before saving the deposit, confirm the Deposit To account, the transaction Date, and the Deposit Total match your actual bank activity. Optionally, you can record a Memo for the deposit.
Once you’ve verified the deposit details, click the Save icon, the Save & Close, or Save & New button.
You can also print a Deposit Slip and a Deposit Summary from the Print icon. If you opt to print information associated with the deposit, QuickBooks will first save it. A Deposit Summary is simply a summary report of the items and cash back (if any) on the deposit.
A Deposit Slip is designed to work with pre-printed QuickBooks deposit slips to automate the step of filling out a deposit slip form before you take the deposit to the bank. However, using a pre-printed deposit slip imposes some restrictions on the deposit function: all deposit items must have a Cash or Check payment method, and every deposit item must have a positive amount. The screen shots below illustrate these restrictions.
Recording a deposit if you don’t use the Undeposited Funds account follows most of the procedures described above. If you previously had the Undeposited Funds preference enabled and disable it while you have items in the Undeposited Funds account, QuickBooks will automatically open the Payments To Deposit window. If there are no transactions in the Undeposited Funds account, QuickBooks will present the Make Deposits window and allow you to manually enter the items for a deposit.
For each deposit item, you’ll specify who provided the funds (Received From), the general ledger account (From Account), any applicable Memo, the Chk No., the payment method (Pmt Meth.), and Amount. If class tracking is enabled, you’ll be able to specify the Class for each deposit item as well.
Once you’ve verified the deposit details, click the Save icon, the Save & Close, or Save & New button.
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We have a small business. In August we sold four items for $45 each totalling $180. In October we bought one of those items back with a check for $45. That check was sent to the bank and deposited as a credit for $45 at the bank. How do we enter that into quickbooks so that it will reflect a $45 credit to the deposit account and show that item returned back to our inventory.
I did send this comment to your site yesterday and it disappeared!
Thanks for your help.
Dean
Dean – First, comments are moderated due to the large amount of spam we receive. That means until you have your first comment approved, it takes a little longer, especially on weekends, because it requires human intervention. After that, things get quicker.
As to your question, let’s summarize what took place. If our understanding isn’t accurate, let us know. You sold merchandise for $180 (the merchandise sale). You accepted a return from your customer for $45 (the return). You gave your customer a check for $45 for the value of the return (the refund).
For the merchandise sale, you use an invoice or sales receipt. That takes stock out of inventory and creates either an A/R balance (the invoice) or reflects the customer paid for the merchandise in full (the sales receipt). For the return, you use a credit memo by clicking Create Credit Memo/Refund on the Customers menu. You record the item returned, and that puts it back in stock. If you have any restocking or other charges, you enter those as other charge items on the credit memo. When you save the credit memo, QB will ask whether you want to leave the credit as an available credit, give the customer a refund, or apply to another invoice. In your case, you refunded the money, so you’d choose Give a refund. If you want to change your selection at a later date, just open the credit memo, and click the Use Credit To button at the top of the form. When you choose to give a refund, QB will automatically open a window confirming the details of the check. By default, the refund check is marked To be printed, because QB assumes you’ll print these refund checks later, when you print other checks. If you’ve already given the customer the refund check, you can clear this check mark, record your check #, and the check will appear in the register for the bank account you selected.
You only know that your customer deposited your refund check because it cleared the bank (unless you are both the vendor and the customer), so when you reconcile your bank account the refund check will be there, along with all of the other deductions and additions.
Hope that helps.
As owner of my LLC I initially I funded capital on several occasions to cover start up costs. How do I record these deposits so they show up in the register so I can balance my bank statement? I tried the Make Deposits under Banking but that deposit won’t show in the register. I made a “client” called Owner to show these deposits and subsequent draws, but I’m sure that’s not the right way to do it. I still can’t get the deposits to show up in the register. It should be classed as owner equity I think.
The Make Deposits function is the right choice. Double check that the Deposit To account that is selected is the bank account you want to use; if not, you can change this by editing your preferences. Deposits you make there will show in the bank account register if you made them to the right bank account. When you make the deposit, choose an Equity account for the capital you funded. It’s not a good idea to make a customer/client for these deposits. However, for draws, you can create a Vendor for yourself as owner. You’ll need to check with your accountant to determine if the draws are returns of the capital you contributed, a salary, or a combination of both. Using that vendor account, you can write a check to yourself, with an offset account based on your accountant’s advice.
I’m using QB Enterprise. When positing payments, we have a customer that pays several invoices on one check and then issues a debit against that check for an item that is in the process of being returned. If we had already received the return I would have issued a credit memo then apply that debit against it and post the payments, no problem. Since I haven’t received the return yet I can’t issue the credit memo so the check is short the amount of the debit. How can I credit each invoice as listed on the remittance and make it match the bank deposit?
You always have 2 options. First, you can record the exact amount of the payment but don’t apply it to any open invoices. QB might attempt to apply the customer payment, but just uncheck the invoices it selects. If you opt for this choice, use the memo field on the payment to note the invoices the customer marked to pay, since you aren’t applying the payment now and you might not have the remittance advice handy when you do make the application. The second option is to apply the payment to the invoices on the customer’s remittance advice so that as many as possible are paid in full, and 1 or 2 invoices (depending on the size of the customer’s deduction) are left unpaid or partially paid. In either case, when you receive the returned goods, you create a credit memo, and complete the payment application. The second approach completes more of this work initially; the first approach leaves more of it for when you create the credit memo. For cases of infrequent returns, some prefer the first approach because the full unapplied payment on A/R reports is a good reminder that the return requires resolution. Where returns are frequent and get resolved, the second approach is probably better. Whether you apply a customer payment to invoices or not, as long as you always enter the payment for the amount received, your payments will always match your bank deposits.
About a month ago we started to use QB pro 2011.I need to record the bank deposits from the past months and last year, . Those deposits are paying for invoices that are not registered in QB. How can I do this deposits to update the bank account?.
Claudia – Normally, you wouldn’t do that. You choose a start date in QB, and you record starting balances as of that date and all transactions after that date. You can’t selectively record transactions after the start date, because your accounts won’t balance. For example, if you started to use QB on 7/1, you should record all of your starting balances of 7/1 (such as bank balances and A/R balances), and all transactions (bank deposits and customer payments) on or after that date.
Is there any way to modify the fields that show up in the Payments to Deposit window? With the process my church uses, seeing the Memo field for payments/donations is critical to make this process work well. I cannot find out how to add another field to the default view.
Unfortunately, there isn’t a way to modify the fields in the Payments To Deposit window. One common technique is to “hijack” the functionality of another field to serve your purpose, but there doesn’t seem to be a good candidate to do that. All of that leads me to the question: why do you need to see the Memo field? I’ll take a guess that the Memo field drives your decision about which bank account should receive the deposited funds. If my guess is correct, the workaround is to design a report showing the payments in your undeposited funds account that are waiting to be deposited. QuickBooks uses the Cleared status to mark records in the undeposited funds account that have been deposited. So you can create a Custom Transaction Detail Report with filters that: cover all date ranges, only show the undeposited funds account, and only show uncleared transactions. You can then control which columns that show up on the report, and one of those columns can be the Memo field. If you memorize the report and run it just before making deposits, you’ll have the information from the Memo field handy, even though it is not in the Payments To Deposit window.
Hope that helps.