 QuickBooks Desktop 2023 Deposits from Undeposited Funds Let's do it within 2-Hits QuickBooks Desktop 2023 Support Accounting Instruction by clicking the link below, giving you a free month membership to all of the content on our website, broken out by category, further broken out by course. Each course then organized in a logical, reasonable fashion, making it much more easy to find what you need than can be done on a YouTube page. We also include added resources such as Excel practice problems, PDF files, and more like QuickBooks backup files when applicable. So once again, click the link below for a free month membership to our website and all the content on it. Here we are in QuickBooks Desktop. Get great guitars, practice files. We started up in a prior presentation. Going through the setup process we do every time, maximizing the home page to the gray area in the view dropdown. Noting we got the hide icon bar, open windows list checked off, open windows open on the left-hand side. Reports drop down, company and financial. Let's look at the P&L profit and loss. Change the range from 010123 to 123123. Going to up the font size, customizing the reports and the fonts and the numbers, bringing the font on up to 14. Okay, yes please and okay. Let's open up the other major report in the reports drop down, company and financial. That being the balance sheet standard and then we'll customize it. Ranging changing 010123 to 123123 and fonts and numbers to increase the font to 12, no 14. Okay, yes and okay. That's the setup process we do every time. Let's go back to the home page. We are going to be making deposits here. And we note this little number five represents the items that are in undeposited funds. Those having been created from the receive payment form as well as the create sales receipt form. The undeposited funds is on the balance sheet account. It's in the other current assets, undeposited funds. So those five items represent the $28,070.85 in undeposited funds. Let's go back to the home page and just give a quick recap of the flow of the revenue cycle or customer cycle accounts receivable cycle. We might have an accrual system which will be dependent on the type of industry we are in. In which case we would have to do the work or provide the inventory first, bill the client or invoice the client to receive a payment in the future. We did some transactions like that to demonstrate the invoice and then the receive payment. When we entered the receive payment, we could have put it directly into the cash. In other words, the amount of payment that we got, we might have put it directly into the checking account. But the default is to put it into that undeposited funds account which we saw on the balance sheet. The reason for that is that we might have multiple kinds of deposits that are then going to be grouped together and actually go into the bank account in a different grouping than simply one at a time, one receive payment at a time. Most common that will happen if you have credit cards, payments receipts and if you have then receipts of cash, for example. Because then when we deposit them into the bank, we're going to have them grouped together in some way. Our goal to deposit them in our system, the checking account in our system in the same grouping as will appear on the bank statement allowing us to tie out to the bank statement in the bank reconciliation, which is a huge internal control. So the other item is on a cash-based system where we're going to imagine we had a register, they bring the goods or services to the register and we make the sale at that point in time. We then have no accounts receivable. We're getting the money at that point in time once again. We could put it directly into the checking account at that point. But oftentimes we put it into undeposited funds because if we get cash sales, for example, or credit card sales, for example, then when they actually hit the bank account, they could be grouped together so we don't want them in our system as one item at a time because it'll make it more difficult to do the bank reconciliation. Also just want to note that it's nice when you're sorting your data, for example, if you go to the home page over here and I drill down on the checking account, if I'm trying to look at the items that are increasing the checking account, it's kind of nice if they're just the deposits that increase and possibly transfers. If I also have sales receipts in there and the received payment forms, then it gets a little bit kind of more confusing to sort the increases if I'm trying to filter this by, say, the increases to the checking account. So that's another reason why you might want to say I would like to go through to the deposit form being the main form that increases, in essence, the checking account. Okay, so what we're going to do now is go to the deposit form and group these deposits together and this will then increase the checking account and decrease the undeposited funds. Now, this is going to be a form that's going to be a cash type form, checking account form. If it wasn't linked to the received payments and the create sales receipts, as we saw in a prior presentation when we made deposits for us, from us the owner to the business and from the loan, we went right to the register. So if it was not connected in some way to some other form in the cycle, I might just enter it directly into the register because I think that's the easiest way to do it. However, if it is connected, as we can see with the little five right here, I really want to use the deposit form because it's going to give us the pop-up as we can see here. Here's the little pop-up that's going to allow us to check off the payments and receive payment forms that we can group together. So whatever grouping we have, we're going to go to the bank. Now, we're imagining that we got all these in cash, even though they're fairly large dollar amounts and are unlikely that we would receive them in cash. But whether it be cash, credit card, or some other format of payment, I'm just going to think about cash here because that's a common way where we might have to group them together. We would collect the cash payments throughout the day, hopefully at the end of the day we go to the bank, hopefully not waiting until we have all this money on hand and we would deposit it at one point in time. Now, I'm going to make a couple different groupings of deposits because we went through all the sales transactions first and now we're going through the depositing, which works well for our practice problem. But obviously from a day-by-day routine, you would want to collect your deposits and then deposit them into the bank every day, for example. So I'm going to start off with these two down here. I'm going to check this one off and this one off. So those two items add up to the $7,570.85. That's the amount that's actually going to go into the checking account and will be reflected or seen on the bank statement. So I'm going to say, okay. And then if I go through this, it's going to be the checking account. That's our main checking account. That's the default. So it's going to increase the checking account because it's a deposit form. It's going to be 01222, we'll say, for our practice problem. It's going to be a deposit for the memo. The other side is going to be received from string music. So we've got the individuals, the customers in this case. And then the account is undeposited funds pulling in from the prior forms of sales receipts and the received payment forms. And then the amounts are going to be these amounts, which are going to show up, I believe, separately in undeposited funds account, but grouped together when they hit the checking account because that allows us to tie out to the bank statement, reconciling. So let's go ahead and save it and close it. And then I'm going to go to the balance sheet and check it out. So if I go into the checking account, zooming in, double clicking on to zoom in, we then see that we've got the 7000, we should have the 7500. Hold on, I entered it in 2022, didn't I? I messed up. Sorry about that. Let me go into 2022. I'm going to fix that. I did it on purpose so I could show you how to fix it. So the 750085, let's double click on that and go back to the source, back to the source and make this 23. We're working in 2023 in the future. Okay. So now let's save it and close it and say yes. So there it's in there now in the right date. There it is. Okay. So this is the split. It's a deposit form. If I drill down on it goes to the deposit form. The other side and undeposited funds. So if I go into undeposited funds, then we've got the two amounts, which is the 2390 and the 5180 separate line items here. So we can see them going up and then kind of back down in and out of the undeposited funds. But if I drill back down on it, then it's adding up to that one lump sum that's going in the checking account. The reason it's nice to have those two line item here is because you can take and tie the increase and the decrease into the clearing account, noting the undeposited funds is kind of is what I would call a clearing account, not just a temporary account, a temporary account being mainly the profit loss accounts, which zero out at the end of the month or year in the closing process. A clearing account will clear out back down to zero whenever the job that is there to perform is done. In other words, we're holding on to it in the clearing account until we make the deposit in the proper grouping. It will then go down to zero again. Closing this back out. Let's do it again. Going to the home page and now we've got three left that haven't been deposited because we had two of the five last time clicking on it. I'm going to deposit the rest of these at one time. Selecting those that adds up to 20,500. We're imagining that's how much we're going to put into the bank. And so we're going to say, okay, we're going to group them together. So what this is going to be checking account. Let's make this 2023 so I can do it right this time. And the other side is going to be undeposited funds. So it's going to decrease the checking account and it's going to clear out the undeposited. I'm sorry. It's going to increase the checking account and it's going to decrease the undeposited funds account and the amount total will be 20,500. That's the amount we expect to see as well on the bank statement. So let's say save it and close it and check it out. Save it and close it and then we'll check it out by going to the balance sheet and double click on the checking account. See if I got it right this time. Could you do it right for us? That would be helpful. Okay. I did it right. Okay. 120. And then if I double click on it, there's the deposit in the lump sum. The other side goes to a split account because it's on those multiple line items, even though the other side, all three of them are going to undeposited funds because if I close this out and undeposited funds down here and notice undeposited funds is now gone because it has gone down to zero. So if you want to see the activity, we can go into the customized reports up top and we can go into the advanced area and then it says display rows that are nonzero. I'm going to switch that to active rows, meaning if there was something that actually was done in it, even if zero I want you to show it so I can use the zoom feature to drill back down on it. This is one of the things you might want to turn on for your internal reports and for external reports, you might not want to have it there because if that's a zero, you don't need to report it when you're giving it to your end user. But you might want it in place so that in your internal reports, even if it's zero, I know there was activity so I can now zoom back in on it and I can see the items have been listed out in the three different line items here. And if I double click on that, it's going to take me to that deposit. So I'm going to close that back out, close that back out. Now the other way you might want to deal with that oftentimes is I just, I use a different report for it which is the trial balance. So more and more if I'm working internally and I'm trying to just check the accounts that are being impacted, I will go to the reports drop down accounting taxes and the trial balance report changing the range from 010123 to 123123, customize the report to make it a little bit larger, fonts and numbers, fonts, let's bring it up to 16 for this one. Okay. Yes. And okay. And I think by default without even changing it, the trial balance gives you any accounts that have activity so we don't have to change that default here and it's a little bit easier with one area to kind of find all of your accounts because we don't have all the subtotals if we're trying to drill down on them. As we have discussed in prior presentations, now the significance of having the deposits in there in these groupings will become apparent when you try to do the bank reconciliation. If I did not use the undeposited funds and I entered each of the deposits as each individual transaction happened instead of as when I grouped them to deposit them into the checking account, then when I do the bank reconciliation, that's when the problem would come to light. Often comes to light when people do credit card groupings because that can be a little bit more complex and the credit cards might group your deposits in some way, shape or form. You have to get a system down with them so you can get the same grouping as you make the deposits to make the bank reconciliation process, you know, as easy as possible. And you really want to do bank reconciliation and make them as easy as possible. We will have a whole section on the bank reconciliation. So now you want to kind of check your numbers here. And if you're following along with the practice problem, if something does not tie out, you could do the date change thing. I made that mistake on the data input totally on purpose to demonstrate the kind of mistake that could happen. And then you can drill down on it. You could change the date in the practice problem, something you want to be careful of in practice if you're running it live, but you have the option to do it.