 QuickBooks Online 2024 deposits to checking account from payments to deposit account which used to be called the undeposited funds account. Get ready and clear your mind because we don't overanalyze, we intuit within to its QuickBooks Online 2024. Here we are in our Get Great Guitars 2024 QuickBooks Online sample company file we set up in a prior presentation opening up the major financial statement reports like we do every time the reports on the left hand side in the favorites right clicking on the balance sheet to open link in new tab right clicking the profit loss otherwise known as the income statement to open the link in a new tab same with the trial balance right click open link in a new tab if you don't have that trial balance in the favorites you can find it over here searching for trial balance let's go to the tab to the middle close up the hamburger and change that range we're gonna first a word from our sponsor yeah actually we're sponsoring ourselves on this one because apparently the merchandisers they don't want to be seen with us but but that's okay whatever because our merchandise is is better than their stupid stuff anyways like our trust me i'm an accountant product line yeah it's paramount that you let people know that you're an accountant because apparently we're among the only ones equipped with the number crunching skills to answer society's current deep complex and nuanced questions if you would like a commercial free experience consider subscribing to our website at accounting instruction.com or accounting instruction.thinkific.com go from 010124 tab 013124 first month of january running so we can refresh ourselves and then we'll tab to the right close up the hamburger and do it again you gotta do the repeat session 010124 tab 013124 and another another running rep so that we can refresh again tabbing to the right these are quick sprints we're gonna close up the hamburger and then we'll do it again 010124 tab 013124 tab run it to refresh now we've refreshed up we're warmed up i like to say we cool you don't warm up you gotta cool up and then you warm down that's how professionals do things you don't warm up you cool up and then warm down anyways let's go to the balance sheet and prior presentations we set up our new company file we entered the first transactions that are the foundation typically found in the cog such as the account settings manage users lists like the chart of accounts like the products and services we set up our customers vendors employees we put in place our beginning balances we funded the company then by getting cash by taking out a loan and putting in our money ourselves we took that money we then purchased fixed assets to have a beautiful store that we have with furniture in it and whatnot and then we bought inventory so that we can sell our guitars that's what we sell and then finally we started selling stuff we showed some examples of sales happening with the two major sales forms that being the invoice form and the sales receipt form now what we want to do is we've received the payments on the invoice invoice and then receive payment and on the sales receipt we get paid at the point in time but we have the money now in the undeposited funds or funds to be deposited which we need to put in the bank with the bank deposit at this point in time now we've looked at a bank deposit form before but we did so when we're just assigning an account to it so if i was so note as a general rule for myself if i'm using a deposit form to increase the checking account and i'm just assigning an account such as we did before when we got a loan from the bank or when we got a loan from the bank or when we when we put the money in ourselves i would simply go to the register typically to do that which is the quicker way to kind of do a deposit or possibly use the bank feeds to do that type of deposit because it will most likely be an electronic transfer and once again the bank feeds which we'll talk about in a future course or section in more detail will be a kind of a shortened register type of format which will still create a full deposit form the when i would definitely use a deposit form is when i have to take the information in and out of a clearing account such as might be the case with the invoice and the sales receipt and that's because if i look at this deposit form now we have the whole top bit here is helping us to group these payments the payments that we have received after we receive payment on an invoice and the sales receipt which we're imagining will go into the bank account in a lump sum different than or combining the the payments that we got from the individual so let's give a quick look at the flow chart just to recap this this is a quick book's desktop flow chart but we're just looking at the flow of the forms remember when we're looking at the customer cycle there it depends on what industry we are in as to how easy the cycle will be the easiest cycle would be you just get paid by like youtube or you get paid by some of their platform and therefore you can just wait till it clears the bank and you can just record it as a revenue with basically a deposit form most likely through the bank feeds at that point in time however most of the time it's a little bit more difficult than that if you're running a full service accounting system because you might be in an industry where you have to do the work first such as a law firm a bookkeeping firm a landscaping company and that case you have to do the work and then invoice the client send the bill out to the client and then you have to collect on the bill so that's when you have to deal with the accounts receivable when you receive the payment we have the receive payment form we saw this in a prior presentation the receive payment form could go directly into the checking account at this point in time in which case it's kind of acting as both a receive payment form which is a form that we think of as decrease in accounts receivable and a deposit form because it's putting the money into the checking account but we can't do that unless we get the payments that we expect to go into our checking account without being you know hit with fees or combined with other things so that means if it was an electronic transfer that might work or if it was an actual check that's going to hit our account in the same format that might work but if we're getting cash or if we're getting credit card payment format then we're most likely going to have to put it into a clearing account undeposited funds so that I can then group those undeposited funds in the proper format so that when I put it into the bank with the deposit form it will have the same format that will show up on the bank side which will be reflected in our books and the form of bank feeds that I can basically tie out to the same is true if you're at a cash register if you're at a cash register kind of situation or you're collecting payments at the same point in time you do the work then you can't just usually wait till it clears the bank because you want the internal control of recording the transaction at the point in time you do it rather than waiting for it to basically clear the bank usually that would be the way that you would want to do it you might be in a system where you could say well once I verify your payment pay me now with this electronic transfer once I verify it I'll do the work maybe then you can be in a system where you can wait till it hits the bank account but even then it's likely that you don't want to do that because you would like to track the sub forms you would like to track your actual customers breaking out your sales by customer and by service item with subsidiary reports which QuickBooks has designed to do with the the sales receipt form not necessarily the deposit form so typically same thing happens you're going to say I'm doing work say add a register I'm going to record the sales as they happen but instead of depositing them directly into the checking account I'm going to put them into undeposited funds because if you're at a register it's quite likely that you might have different forms of payment options such as cash such as a credit card electronic transfers possibly and so on cash and credit cards in particular are going to cause a problem if you deposit them directly into the checking account when you receive the payments because the cash is going to be deposited possibly nightly and will include all cash payments that you received not each one being deposited individually and the credit cards might incur fees as well as be combined with other credit card charges which the company will then put into your bank account in a lump sum so those are the issues you have to think about and you have to correlate with the credit card companies or whatever financial institution you have so that you can come up with a system that you put the money into the clearing account and then deposit into the bank account in the same format if you don't do that you won't be able to reconcile and if you turned on your bank bank reconciliations or your bank feeds what will happen is you'll have one big deposit on the bank side and you'll try to figure out how all of your deposits line up to it and you might be able to figure that out you can add them up but if there's other things involved like fees and stuff then it's still you still might not be able to reconcile it so if you find yourself doing that then you probably don't have the most efficient system you want to use the clearing account so let's go back on over here let's close this out just to recap we entered before the invoices and then the received payment on the invoices and then we entered the sales receipts those got deposited into the payments to deposit which used to be called undeposited funds but QuickBooks changes the names of everything because the online people are paying that's how they justify their salary on updating the software from time to time the web designers I would I guess and so we go in here and so these are the payments that we have received that we have not yet put into the bank account now we're imagining that these were all cash payments we assigned them as cash payments but that might not be the case we might have a system we're all the all payments that we receive we're just going to put in here and then transfer them out of here in whatever format that might be so whatever's in here at the end of the night I'm going to make deposits into the checking account when I do that I'll take the lump sum deposits of all the cash I have and put it into the checking account take the money out of here in accordance to those transactions which were for the payment type of cash the credit card stuff same thing I'm going to wait till the credit card company groups all those payments together and pays them out and then I'm going to go in here I would go into the ones that were with the credit cards and group them together and then make a lump sum deposit out of here into the checking account which might also have to include the accounting for a fee or something as they as they give us the money from there as well and and so that's the general idea so what's that going to look like so I'm going to go back on over here and we're going to say okay let's go to the first tab and I'm going to go into the plus button and all we have to do is go into the deposit form and QuickBooks has kind of managed this for us by giving us these payments that we have received here's the payment type we're imagining they're all cash in our case even though they're big dollar amounts and we probably wouldn't done that cash all of them but checking account that's we're going to deposit into let's make it I think we're staying as of the 19th let's keep it as of the 19th and then I'm just going to pick first of all Sam the guitar man and string music the two that were on the 19th so if I select those two you can see the total is going to come out here to 757085 so I'm imagining at the end of the night on the 19th we make one lump sum deposit that's going to be 757085 into the bank what's this going to do for our journal entry well it's going to go into the checking account as one lump sum which is what we want because that's what we expect to come through the bank feeds allowing us to match it to the bank feeds and the bank reconciliation it's going to go out of the check it out of the undeposited funds account the other side but it's going to come out one at a time notice that this total 287085 is what's in undeposited funds so this amount right here is reflecting what's in undeposited funds now let's just pretend there was a credit card issue because this often comes up if there was a credit card they might charge you a fee so what if the credit card combined these two together and they charged you a fee as part of their payout well then you might go down here and and record into a directly into an account that would be bank fees or credit card fees or something like that where you'd have the a negative amount in here right so that would be so if it charged you like a hundred dollars in a fee right that would bring you down to 747085 so that you can still come up with an amount that's going to hit your bank account in the same format on our side as will actually physically hit the bank account that's the purpose of the form all right I think that's everything let's save it and close it save and close obviously we can clear we can we can cancel we can print it we can make it reoccurring this is not a form typically that you would provide of course to external users purely an internal form here so the format of it customizing it isn't like an issue as it might be certainly with an invoice possibly with a sales receipt all right let's close that out and let's go then to the tab to the right and run it so we can refresh it we only work with fresh stuff here we're going to go into here just like a a vegan that raw vegan deals only with fresh not that I am one but you know what I mean like they only deal with fresh food we only deal with fresh reports that's the correlation I'm trying anyways here's the deposit so it's in there as one lump sum so there it is that's what we want to see closing that back out going back to our report and then on the other side of things we see the payments to deposit if I go into that you can see it is going out here as two payments now so now these two you and that's great because you can see it ticking tying it out so really nicely formatted I like the new red stuff too so you can see like the increases and decreases it's easier to tick and tie off than if it's all one color by the way I used to think as an accountant that having multiple colors is kind of not necessary it's all just numbers right but but as I started using excel the colors color coding things helps it really helps all right so now we're left with a 20,005 in there so let's just do it again so obviously if this was cash we would do this like on a nightly basis right but now there's 20,005 in here so I'm gonna do it again back to the first tab drop down deposit I'll make a different deposit it's going in the checking account let's just make it the 21st for our purposes here and now we're going to deposit all these at the same time this would be like normally if you had a cash payments that you have that you receive and that's the only form of payment that you receive you're just like you give me cash I still think cash is king I don't care what they say I don't care if the government's trying to kick me off a cash I know I just want cash payments then okay then that's then at the end of the day we're just going to make all of those all of those lump sum payment go into the bank account so we're just going to select the whole thing and there it is so now we've got the 20,500 cash all right and then so probably don't have that much cash in it but that's too much cash in either but but we're going to say that's that there it is so that's going to go into the increase the checking account by one lump sum 20,500 it's going to go out of the undeposited funds or the funds to be deposited the clearing account one at a time so we can tick and tie them out let's go ahead and save and close it and check that out back to the balance sheet running it to refreshing it going into the checking because we're checking it out and then we're going we see that this went into the checking account with a deposit of where don't I need to change the dates what happened I thought I changed the date let's exit this up here okay 01 to 01 31 24 something happened with my date you probably saw that when I started this thing I messed it up somehow but there it is there's the 20,500 so there it is notice I did that on purpose by the way just to show you that it's usually a date issue right it's always a date issue usually when something's messed up especially with the practice problems when you're not working in real time but if I go into there there it is it's one lump sum instead of the three broken out that's what we expect to see in the checking account that's what will be able to match on the bank feeds and it'll be an easy process and then on the other side the payments to deposit is now at zero note that that number did not go away even though it's zero that's what you want for internal reporting purposes because I want to be able to drill down on it and still be able to see the number which is now being taken out one at a time so I can take and tie them off increases and decreases which is great now if this was for external reporting purposes then you might say that you you don't want to see that stuff and so you might say that if you go up top here you're gonna say instead of having active you're gonna say non-zero amounts so boom and so then you wouldn't see that so that would be for external reporting but for internal reporting you're gonna say I want to see everything that is active that had activity in it and that will show you show you that one so that's one of the differences between the settings that you might do for internal reporting versus the external reports that you might provide to a client say at the end of the month the end of the quarter or the end of the year so that looks good let's go back to the balance sheet and we can just run it again this is where we stand at this point in time so we've got more money in the checking account the clearing account has been cleared out that's what a clearing account is by the way there's a difference between a clearing account and a temporary account that you might hear that terminology a temporary account is all the income statements are temporary accounts meaning they clear out at the end of the year so if I was to change the year up 010125 to 123125 we reset the odometer for the new trip it's back down to zero let's go back to 010124 to 013124 run it if I go back to the first tab this one clears out on some other schedule typically a very short schedule when you're done with like cycle possibly nightly in this case if we were to make cash sales for example and then deposit the money into the bank at the end of the at the end of the night in which case we would close it out like on a nightly basis so there's what we have thus far here's the net income no impact on the income statement from this transaction we just moved from one balance sheet account to the other 07225 that's what the bottom line of the income statement is so it's the same as it was last time go into the trustee trial balance we're going to run that one as well and if your numbers tie out to these numbers great if they do not then try increase in the date see if it's a date issue drill down get to the source document change the date if it's a date issue which is something that's great to do in a practice problem but something you want to be careful of doing of course in practice so we have the balance sheet on top of the income statement asset accounts checking account asset the accounts receivable account asset inventories and asset investments and asset payments to deposit now zero asset account accumulated depreciation contra asset account decreases the asset furniture and equipment asset account then the liabilities are on the credit assets what the company has on one side and then on the credit side in essence basically is who has claimed to them third party liabilities the vendors that we buy our guitars from the financial institution credit card company the government trying to take money for protection money but they're not giving us any protection that's worth anyways then the loan payable for the current portion the bank wants their piece of the money because they gave us money that we we needed it you know to buy the guitars and stuff so i'm not really complaining about that or anything i'm just saying and then we have the owner's investment that's going to be our portion the equity these are the equity accounts and then the income and expense which of course can be squished down to one number which is basically a credit as long as the income is greater than the expenses which is part of equity 10107 plus the 5180 minus the expense 8062 that's the 7225 on the income statement 7225 and we know that if we were to move this up to the next period this would close out into equity that's 77 that's well i would be the 10107 plus the 5180 minus 8062 net income plus this 77896 85121 if we move it up to the next year 010125 123125 running it you can see balance sheets gone it's all part of equity the income statement is part of the equity it's telling the story it's just telling the story of how we got there just a year back not the entire life story of the business just like movie size length right just one year you don't like tell us a movie about someone's whole life usually unless it's kind of weird you know you just tell like a little bit of one piece of time which actually was somewhat interesting and with the financial statements the last year that's usually the most interesting bit so you kind of tell the story about the last year