Question

separate account for large job deposits

Forum|Forum|4 years ago
June 15, 2022
7 replies
56 views

As a company that installs all the appliances in a commercial kitchen, we occasionally have some pretty big jobs. We request the company make a 50% deposit before we order all the equipment. Sometimes this puts a lot of money in our account that is really in reserve to pay for the equipment.

Our CPA told us we could create a new Current Liability Account to track these funds, so they don't come out looking like profit.

He guided me through making an entry to deposit the funds in this account instead of our usual bank account, and then also moving from the deferred account to the regular account when the job was done and we needed to apply the payment to the customer's invoice.

But - it's not coming out of my Accounts Receivable. That is still showing that they owe this money - even though the invoice shows it as paid.

I hope there's someone out there who can understand what I'm trying to explain - I barely understand it myself!

QuickBooks Enterprise Suite

M

Maybelle_S

QuickBooks Team

I'm here to ensure this is taken care of, @joannelj.

We'll have to use Accounts Receivable as an affected account when we make a bank deposit. So we can use it to pay the invoices in this way.

Here's how:

Go to Banking.
Select Make Deposits.
Under RECEIVED FROM, choose one from the name of your customers.
On the FROM ACCOUNT column, select your Accounts Receivable account.
Below the MEMO Column, type a short description. Say Prepaid Deposit.
Enter the amount of the deposit.
Click Save & Close.

Now when you're ready, create the invoice accordingly making sure to use the service item and the Receive Payments window will show up with a credit for the prepaid deposit. Take a look at the screenshot below.

I'm adding this article with the topics you can use while recording the common customer transactions: The Customer Transaction Workflows in QuickBooks Desktop.

It'll always be my pleasure to help if you've got additional questions about QuickBooks invoicing and payments. Use the Reply option below and surely I'll be here ready to assist you. Take care and stay safe!

J

joanneljAuthor

I'm trying to enter this deposit, but when I get to the FROM account, I have an Accounts Receivable account, but I also have an 'undeposited funds" account (other current asset), which is where all my regular payments go.

Am I putting these deposits in the regular AR account?

Adrian_A

Level 8

Thanks for getting back to us, joannelj.

I'm here to help record the funds.

Instead of creating another deposit, you can create a Journal Entry to move the payments. This way, your current liability account will move to Accounts Receivables.

From there, apply the credit to the invoice. Here's how:

On the credit memo page, make sure you select Customer: Job to open the Apply Credit to Invoice window. Then, select Done.

Also, you can run the Job Profitability Summary report to view jobs that are complete.

Then, you can modify the font and style of the report. Check out this link to learn more about this: Customize reports in QuickBooks Desktop.

I'll be right here to help manage your Job Profitability report or if you have other concerns.

Rainflurry

Level 11

@joannelj

Your situation is one of QB's unfortunate limitations. As @Maybelle_S mentioned, you need to receive the payment or make the deposit (either way works) as a credit to A/R which, as an accountant, drives me crazy because customer deposits are a liability not a reduction in A/R (both are credits in accounting terms).

So, your accountant is technically correct but if you want to have QB have the deposit available to be applied as a credit to a future invoice, you need to apply the deposit to A/R.

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