Banking & Credit Cards

How Do I Make a Bank Deposit?

Chief Mechanic · July 25, 2010 ·

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

QuickBooks Enterprise Solutions 10 Payments To Deposit

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.

QuickBooks Enterprise Solutions Make Deposits

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.

QuickBooks Enterprise Solutions 10 Deposit Summary

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.

QuickBooks Enterprise Solutions 10 Deposit Warning

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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How Do I Record a Gain or Loss On Funds I Transferred To a Foreign Bank Account?

Chief Mechanic · April 4, 2010 ·

Recording a gain or loss on funds transferred to a foreign bank account is accomplished by the Company->Manage Currency->Home Currency Adjustment menu selection.

First, enter the Date for the currency adjustment and choose the Currency whose value you want to update. Click the Calculate Adjustment button to locate those balances potentially impacted by the changed exchange rate. Enter the updated exchange rate.

QuickBooks Premier 2009 Multicurrency Home Currency Adjustment

In this example, we started with an exchange rate of 1 British pound (GBP) = 1.705 US Dollars (USD). We’ll record a new exchange rate of 1 GBP = 1.905 USD. Click the Calculate Adjustment button a second time to calculate the exchange-related gain or loss based on the updated exchange rate. Select the balances to adjust based on the new exchange rate by placing a check mark to the left of each balance. If you need to better describe the adjustment, enter a Memo. Click the Save & Close or Save & New button to record the adjustment.

QuickBooks Premier 2009 Multicurrency Home Currency Adjustment Updated

QuickBooks will post a General Journal entry to the Exchange Gain or Loss account in the amount of the adjustment.

QuickBooks Premier 2009 Multicurrency Home Currency Adjustment Report

See our related article for more information on transferring funds to a foreign bank account.

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How Can I Transfer Funds Between 2 Bank Accounts Maintained In Different Currencies?

Chief Mechanic · April 4, 2010 ·

QuickBooks 2009 and Enterprise Solutions 9.0 (and later) support transactions in multiple currencies. Each account, customer, and vendor has an associated currency. Multi-currency support in QB does not extend to employees.

Therefore, when you set up a bank account, you’ll specify the Currency used for that account, as shown below.

QuickBooks Premier 2009 Multicurrency British Bank Aaccount

In a company file (.qbw) that has already been set up to use multiple currencies, set up each bank account with the single currency in which the account is maintained.

QuickBooks Premier 2009 Multicurrency Chart of Accounts

To transfer funds from 1 bank account in 1 currency to another bank account in another currency, there are 3 basic methods:

Create a vendor for the foreign bank and write a check to that vendor where the account is the foreign bank itself
Use the Transfer Funds function
Use a General Journal Entry

See our related article for more information on recording gains and losses on funds transferred to a foreign bank account.

Method 1 – Create a Vendor for the Foreign Bank and Write a Check

Create a Vendor for the bank account that will receive funds, and be sure to include the currency in which the account is maintained.

QuickBooks Premier 2009 Multicurrency Edit Vendor

Next, simply write a check from the account denominated in 1 currency (the Bank Account in USD below) to the Vendor whose records are maintained in the currency of the account receiving the funds (British Bank below). On the Expenses tab, set the Account to the bank account receiving the funds.

QuickBooks Premier 2009 Multicurrency Write Check Bank Transfer

Method 2 – Use the Transfer Funds Function

First, make sure you have already created both bank accounts – the bank account that is the source of funds and the bank account that will be the recipient of funds.

Open your General Ledger Chart of Accounts by clicking on the menu selection Lists->Chart of Accounts or using the keyboard shortcut Ctrl + A. Click once on the bank account that will be the source of funds. Be sure to click just once to select the source account, because double clicking will open a register for that account. If you don’t select the correct account, you’ll have a chance to review and correct the account selection before making the transfer.

With the source account selected, right click on the source account to invoke the context menu. Chose Transfer Funds from the context menu.

QuickBooks Premier 2009 Multicurrency Bank Transfer

The Transfer Funds Between Accounts window will allow you to transfer funds between 2 bank accounts. Verify that the source bank account – the one providing the funds – is selected in the Transfer Funds From pulldown and that the recipient bank account – the one receiving the funds – is selected in the Transfer Funds To pulldown. Until you select a recipient account in a currency other than your home currency, the Transfer Currency will be set to your home currency, and you won’t be able to change it. Once you select a recipient account in a foreign currency, you can record an amount to transfer either in that foreign currency or your home currency – QuickBooks will automatically do the conversion for you. Unfortunately, you can’t transfer funds between 2 accounts, both of which are maintained in foreign currencies.

QuickBooks Premier 2009 Multicurrency Transfer Funds

Enter a Memo for the transfer and click either Save & Close or Save & New. According to Intuit as discussed in this Intuit knowledge base article, because of a product limitation in QuickBooks the Memo for the recipient account is not set to the value entered on the Transfer Funds Between Accounts window when viewed on reports such as the Custom Transaction Detail Report. However, our own tests on QuickBooks 2009 don’t confirm this behavior. QuickBooks correctly sets the Memo field on both the source and recipient (target) accounts, and the Memo correctly displays on the Custom Transaction Detail Report.

Once the transfer is recorded, it will appear in the registers for both bank accounts as a TRANSFR transaction type. Here’s the register from the foreign bank account after recording the transaction:

QuickBooks Premier 2009 Multicurrency Foreign Bank Register

It’s always important to remember that QuickBooks will use exchange rates on file in QuickBooks before you record the transfer. If there’s no exchange rate recorded in QuickBooks at all for the 2 currencies involved, the exchange rate will be set to 1:1 unless you manually enter a new Exchange Rate in the Transfer Funds Between Accounts window before recording the transfer. If there is an exchange rate for the 2 currencies involved as of an earlier date, QuickBooks will use that exchange rate unless you manually enter a new one.

The Transfer Funds function is not unique to company files with multi-currency enabled or to transfers exclusively between bank accounts. With or without multi-currency enabled, you can use the Transfer Funds function to transfer funds between any 2 accounts.

One small advantage this second method offers is that it doesn’t require adding a Vendor to transfer funds between accounts, although in many cases you may have other reasons to create a vendor for a bank account, such as recording bank charges.

For those using or planning to use third-party addons for QuickBooks, the Transfer Funds function has an important limitation. Many third-party addons use the Intuit Software Developers Kit (SDK) to access QuickBooks data, and versions of the SDK up to 8.0 do not provide access to transfer transactions. For example, a custom report built from QuickBooks data gathered using the QODBC driver would not have access to transfer transactions, since the QODBC driver itself can’t access those transactions in QuickBooks. If transactions were recorded with this method, a custom report that relied on this information would be incomplete and inaccurate. Of course, if you don’t plan to use any addons or extract data from QuickBooks, this limitation is irrelevant, because the QuickBooks program itself can display and report on transfers.

Method 3 – Use a General Journal Entry

Another direct method is to use a general journal entry to accomplish the transfer. The account receiving funds is debited, and the account providing funds is credited.

QuickBooks Enterprise Solutions 10 General Journal Bank Transfer

When using this method, it’s important to understand an important limitation: the Currency of the general journal entry must be the Currency of the foreign bank account. Likewise, since most exchange rates in QuickBooks are expressed as a conversion from a home currency to a foreign currency, the exchange rate for a general journal entry is the reciprocal (i.e., 1 divided by the normal exchange rate) of the normal exchange rate.

Through QuickBooks 2010 release 5, general journal entries recorded in the home currency would incorrectly record home currency units in the foreign bank account – instead of converted home currency units.

Because of these limitations, this method is only recommended for advanced users exercising care when recording the transfer.

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Banking & Credit Cards

Accounting

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Intuit