Quickbooks Desktop - apply deposit to invoice

jack1289 · ‎November 11, 2020

I am using QuickBooks desktop.

I have a tenant who didn't pay the rent, and it has been agreed to take the owing payments from the Rent deposit held.

The rent deposit is held in a separate bank account, which i have setup in QuickBooks, and the money deposited when it was received under the account "Tenant Security Deposits Held", which is under "Other current liability" account type.

We used to send the tenant an invoice when the rent was due, so under their customer it shows the owing invoices, and the correct balance.

How do i record the deposit being transferred to the rental bank account, and also apply the amount to the open invoices, so that the balance owing is reduced.

JessT · ‎November 11, 2020

Good day, Jack!

I'd like to clarify that the movements of funds between bank accounts and categories are recorded separately.

Yes, you can record a transfer from one bank to another if that happened in reality. However, this is just a plain transfer to show the movement of funds between bank accounts and cannot be used to pay the invoice.

What we want to achieve here is to also move the funds from the Other Current Liability account to the Accounts Receivable (Debtors) account so that we can apply it as payment to the invoice. I will guide you through the steps, but I highly suggest letting an accountant review the transactions.

Create a journal entry to move the funds from Other Current Liability to A/R (Debtors):

From the Company menu, choose Make General Journal Entries.
On the first line, select the other current liability account, enter the amount on the DEBIT side, and enter a memo.
On the second line, choose the A/R or Debtors account, enter the amount on the CREDIT side, enter a memo, and tag the customer's name.
Click Save & Close.

Pay the invoice using the created credits from the journal entry:

Open the invoice and click the Receive Payments button.
Click Apply Credits to open the Discounts and Credits window.
Put a check on the credits to select it and click Done.
Click Save & Close on the Receive Payments window.

When you check your Tenant Security Deposits Held account, you should see the decrease from the journal entry we created.

With regards to the bank transactions, create a transfer to move the funds from the bank account that holds the funds to your bank account for rental deposits.

From the Banking menu, choose Transfer Funds.
Select the From and To accounts. Disclaimer: The accounts I used in the screenshot are based on the scenarios relevant to your case and for example purposes only.
Enter the amount.
Enter a memo.
Click Save & Close.

To sum this up, your liability is decreased, your customer's invoice is paid, and the movement of funds in the actual bank accounts is also recorded in QuickBooks.

If you have other questions in mind, please don't hesitate to go back to this thread.

View solution in original post

Ashleigh1 · ‎December 02, 2020

Hello Jack1289,

So the AP or AR just needs to be at the top line, if you follow the instructions on that box you will be fine.

So the first line in a journal entry is the source of the transactions, all the subsequent lines are targets of the transaction. Accounts Receiveable needs to be at the top and can only be in there once, you would need to create multiple journals if you need more than one AR account on it.

View solution in original post

RenjolynC · ‎November 11, 2020

I'll show you some steps on how to apply the payment to an invoice, jack1289.

Before doing so, I recommend consulting with your accountant for advice to make sure your reports are accurate. To start, you'll want to write a check from the bank account where the tenant security deposits held is deposited. This is to take out the amount, so we can deposit it to the correct bank.

Here's how:

Go to Banking > Write Checks.
From the Bank Account drop-down, select the bank where the tenant security deposit held is added.
Click the Expenses tab, and choose the Other Current Liability account for the tenant deposit.
In the Amount field, enter the owing payments.
Hit Save and Close.

I've got a sample screenshot for reference:

Next, let's create a bank deposit to the correct bank account by following these steps:

Click Banking > Make Deposits.
Select Cancel when you get the Payments to Deposit window.
From the Deposit To drop-down, choose the rental bank account.
Add the tenant from the Received From drop-down and click OK when you get a pop-up that says "This customer has an outstanding invoice"
Choose the Accounts Receivable account from the From Account drop-down list.
Enter the amount and hit Save & Close.

Please see this sample screenshot:

Finally, we can apply the deposit to the invoice.

Here's are the steps:

Go to Customers > Customer Center.
Select the customer's name and open the invoice.
Click the Receive Payment icon from the Main menu.
In the Receive Payments window, select the invoice.
Under the Unused Credits section, you will see an open credit. Click the Apply Credits link.
Put a check mark on the credit you want to apply and hit Done.
Click Save & Close.

Feel free to read this article for more information: Get started with customer transaction workflows in QuickBooks Desktop.

I'm always around if you need more help with the steps above or other concerns with QuickBooks Desktop. Take care and stay safe.

jack1289 · ‎November 11, 2020

@RenjolynC Thanks for your reply.

in regards to the first step is there a reason why you have said to write a cheque. As i have both the bank accounts, the one where the deposit is held and the account where the rent is sent to, can you just do a bank transfer via the banking menu, or will this not work.

IamjuViel · ‎November 11, 2020

Hello there, @jack1289.

With QuickBooks Desktop, you can simplify the recording of your transactions faster and easier. With that being said, allow me to share some information on how to record transactions in QuickBooks.

When you make a funds transfer in QuickBooks, you move money from one bank account to another in the company file. Using this option is easier if you move the money via an online electronic transfer. Also, the funds are recorded directly to the account.

While if you write a check, you can create a credit memo for it and use it in paying your tenant's open invoice.

Get back to us here if you have other questions about managing your tenant's payments. I'm always here to help you manage and record your transactions.

jack1289 · ‎November 11, 2020

Hi,

If i do it as a funds transfer rather than write a cheque, am i still able to pay towards the open invoice or not?

JessT · ‎November 11, 2020

Good day, Jack!

I'd like to clarify that the movements of funds between bank accounts and categories are recorded separately.

Yes, you can record a transfer from one bank to another if that happened in reality. However, this is just a plain transfer to show the movement of funds between bank accounts and cannot be used to pay the invoice.

What we want to achieve here is to also move the funds from the Other Current Liability account to the Accounts Receivable (Debtors) account so that we can apply it as payment to the invoice. I will guide you through the steps, but I highly suggest letting an accountant review the transactions.

Create a journal entry to move the funds from Other Current Liability to A/R (Debtors):

From the Company menu, choose Make General Journal Entries.
On the first line, select the other current liability account, enter the amount on the DEBIT side, and enter a memo.
On the second line, choose the A/R or Debtors account, enter the amount on the CREDIT side, enter a memo, and tag the customer's name.
Click Save & Close.

Pay the invoice using the created credits from the journal entry:

Open the invoice and click the Receive Payments button.
Click Apply Credits to open the Discounts and Credits window.
Put a check on the credits to select it and click Done.
Click Save & Close on the Receive Payments window.

When you check your Tenant Security Deposits Held account, you should see the decrease from the journal entry we created.

With regards to the bank transactions, create a transfer to move the funds from the bank account that holds the funds to your bank account for rental deposits.

From the Banking menu, choose Transfer Funds.
Select the From and To accounts. Disclaimer: The accounts I used in the screenshot are based on the scenarios relevant to your case and for example purposes only.
Enter the amount.
Enter a memo.
Click Save & Close.

To sum this up, your liability is decreased, your customer's invoice is paid, and the movement of funds in the actual bank accounts is also recorded in QuickBooks.

If you have other questions in mind, please don't hesitate to go back to this thread.

jack1289 · ‎December 02, 2020

Hi @JessT ,

As you can see in the screenshot below, i am getting an error when trying to make the journal entry.

The error pops up when trying to select the Accounts Receivable on the second line.

How do i fix this?

Thanks

Ashleigh1 · ‎December 02, 2020

Hello Jack1289,

So the AP or AR just needs to be at the top line, if you follow the instructions on that box you will be fine.

So the first line in a journal entry is the source of the transactions, all the subsequent lines are targets of the transaction. Accounts Receiveable needs to be at the top and can only be in there once, you would need to create multiple journals if you need more than one AR account on it.

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Quickbooks Desktop - apply deposit to invoice