Learn to use the undeposited funds account to make your accounting run smoothly.
Navigate to Chart of Accounts
From the home screen, click on the Transactions tab in the side menu.
Select Chart of Accounts from the drop-down options beneath the Transactions tab.
Edit Undeposited Funds Account
On the Chart of Accounts screen, locate the account named “Undeposited Funds”. In the far right of the account row, beneath the column labeled ACTION, click the View Register carrot.
Select Edit from the drop-down options available.
Enter Account Details
In the account detail screen, you’ll see a text box labeled “Name” in the top right corner. Type the name “Blue Bank Bag” into the text box, then click Save in the bottom right to save and exit out to the Chart of Accounts page.
Set Your Receive Payment Account
This is where the real work begins. Let’s say today you got a check for $300 from one customer and a cash payment for $108 from another customer. When you receive these payments, you’ll need to record that in your QuickBooks.
To do this, from the home screen click on the + menu and beneath the column labeled “Customers” select Receive Payment.
On the Receive Payments screen, beneath the section labeled “Deposit to” click on the account box, then select the account named “Undeposited Funds” from the options available in the drop-down menu.
Note: If you renamed your Undeposited Funds account with another name (e.g. “Blue Bank Bag”) then you need to select the renamed option from the drop-down menu for this step. Whichever option you choose here should be the account name that corresponds to the account originally named Undeposited Funds. If you ever forget the name of your Undeposited Funds account, you can always look it up in Chart of Accounts.
Once you’ve selected your “Deposit to” account for the payments you’re receiving, click on the carrot at the bottom right and select Save and close to the Receive Payment screen.
Deposit Your Undeposited Funds
Back on the Home Screen, click on the + menu and beneath the column labeled “Other” select Bank Deposit.
On the Bank Deposits screen, check the boxes next to all the payments you’ve received into your Undeposited Funds account. For the purposes of our example, we’ll choose the $108 cash payment and the $300 check payment.
Click Save and Close at the bottom of the screen to exit.
Examine Transaction Details
Back on the Home Screen, click on your Checking account in the Bank accounts menu on the right-hand side of the screen.
Now, on the Bank and Credit Cards screen, take a look at your Checking account summary. Notice that your deposit now appears with the rest of the transactions in your Checking account.
When your bank transactions download, QuickBooks matches each payment to the customer so you don’t have to. Take a closer look at your “Blue Bank Bag” deposit by clicking on the transaction to open the drop-down transaction detail.
You can inspect the transaction further by clicking on Deposit in the drop-down transaction detail.
Here you can see the line-item details of your “Blue Bank Bag” deposit.
Now it’s your turn. If you’ve got a “Blue Bank Bag” deposit to make, use Undeposited Funds now so you have less work to do later.