The Undeposited Account is useful because:
- It helps to keep paid or closed invoices separate from open or unpaid invoices when cash has been received.
- Using it will delay cash book updating until the funds are in the bank making bank reconciliations easier.
- It will separate cash from cheque deposits where they have been made on the same day.
Example: Cash and Cheques received and banked on the same day.
Mr DJ Jones receives $5,000 in cash and $5,000 in cheques on Friday the 12th of June. He goes to the bank and deposits the money received.
His bank statement from the 12th of June will likely show the cash deposit of $5,000 and the cheques may only show up on the actual statement a few business days later, say on the 16th of June.
Let’s look at how we would record this in QuickBooks Online.
CASH RECEIPT
- Go to the invoice that is being paid and click Receive Payment
The window below will open:
Select payment method: Cash
In the Deposit to: select the Undeposited Fund Account.
Enter the amount received by cash:
For Mr DJ Jones, that would be $5,000.
Then click Save.
Reconciling the Undeposited Fund Deposits:
At the end of the day when you reconcile the statement, you notice that there is a cash deposit of $5,000.
1.From the + sign on the top right of the QuickBooks screen, click Bank Deposit
2.Open window
The payments made to the Undeposited Fund will now appear.
3.Select the bank on Account: Once Upon Cheque Account
4.Date: Select date of deposit
5.Select the payment or payments in the deposit. N.B You will only see the payments that you have made to the Undeposited Fund Account here.
6.Save
7.Go to the Banking tab
8.Match the bank feed with the deposit.
CHEQUE DEPOSIT
- Go to the invoice that is being paid and click Receive Payment
Follow screen shots above:
Select payment method: Cheques
In the Deposit to: select the Undeposited Fund Account.
Enter the amount received by cheques:
For Mr DJ Jones, that would be $5,000.
Then click Save.
Reconciling the Undeposited Fund Deposits:
After about 3 days on the 16/10/2018, Mr DJ Jones should notice that there is a cheque deposit of $5,000
1.From the + sign on the top right of the QuickBooks screen, click Bank Deposit
2.Open window
The cheque payment made to the Undeposited Fund will now appear.
3.Select the bank on Account: Choose Once Upon Cheque Account
4.Date: Select date of deposit: 16/10/2018
5.Select the payment or payments in the deposit. N.B You will only see the payments that you have made to the Undeposited Fund Account here.
6.Save
7.Go to the Banking tab
8.Match the bank feed with the deposit.
And there you have it!
