Question

Undistributed Tips

Forum|Forum|3 years ago
July 19, 2022
2 replies
83 views

I'm having an issue with my undistributed tips. Here is my process.

I create sales receipts for cash/credit/check sales, and when a tip is added I add the tip into the tip line of the sales receipt. The tip is automatically put into the undistributed account. Even though it eventually is deposited into my bank account.

I run payroll, which is paid from my bank account, and the I enter the tips earned from that period of time. The tip is paid from my bank account but the amount never leaves the undistributed account. I attempted to create an expense for the employee to move the money, but when I do that it shows it as an additional expense on my checking account.

I don't know how to get the undistributed amount to show $0.

L

LeizylM

QuickBooks Team

Thanks for reaching out here in the Community, adam73647.

I'd be glad to provide some info regarding undistributed tips in QuickBooks Online.

To start, let's create a Gratuity/Tips account for the tip and select Other current liabilities. Here's how:

Go to the Gear icon. Choose Chart of Accounts and then select New.
Choose the Detail Type that best matches the transactions you wish to track by selecting Other Current Liabilities in the Account Type field.
In the Name field, type Gratuity/Tip.
Once done, click Save and close.

Next, let's create a journal entry to transfer the credit to the Gratuity account

Select the +New button and choose Journal Entry.
Set the date as the same date as the payment you received.
Select Accounts Receivable in the first line, and then enter the tip amount in the Debit column.
Select the customer's name from the Name column
Next, choose the Gratuity account on the second row and enter the appropriate amount in the Credit column.
When you're done, click Save and close.

Let's then use the Receive Payment option to remove the customer's credit. I'll show you how:

Select +New icon and choose Receive Payment.
Make sure the date matches the journal entry you've created.
Select the journal entry from the Outstanding Transactions section.
Next, check the box beside Unapplied Payment under the Credits field. This is the amount we're trying to move.
Once done, select Save and close.

Then, go to the Banking menu and see if you can find a matched deposit there. As soon as everything checks out, you can start reconciling your account.

I'm always ready to lend you a hand in case you have any other concerns about undistributed tips. Just leave a reply below and I'll circle back to help you out. Have a good day.

A

adam73647Author

I have some questions...

I already have an account for Other current Liabilities that was auto created and when the TIPs are entered through the sales receipt that is where they automatically go.

So I have the account and tips are sitting in there already. My problem is there isn't anything to actually deposit, as the deposit has already hit the account with the original sale. The sale amount and tip are included in the sales receipt and also included in the deposit.

That's where I have the issue of this undistributed tip. The tip is distributed with payroll, but payroll doesn't grab from the undistributed account. It's like quickbooks is creating "extra."

A

adam73647Author

I've re read your response several times and I just don't see how this will fix my issues moving forward. Since the deposit is already matched properly.

I don't know if I'm explaining this correct or not.

I can walk you through an example of a deposited check.

Had a client come in for a service. Service was $199. They left a tip of $31. The total of the check was $230.

Attached is the screen shot of the sale.

I did a mobile deposit for the check of $230. Second screen shot shows the categorized matched deposit of $230.

Yet, I ALSO, get $31 added to the Undistributed account. Screenshot 3. Even though when I did payroll, I added the $31 into the total tips owed. I don't have a screen shot of this, as it wasn't exactly $31, it was more because of other tips. But the money was paid out, and the debit hits my bank account, but for the entire check, it doesn't show tips.

So that leaves me now with this imaginary undistributed amount that's already been deposited and then distributed through payroll.

Just realized I can only do one screen shot. I'll try to get them all in one. Okay, they are all in one image.

H

HOB1

Hello,

Did you ever get this issue resolved after 1 year? I reached out to QB for the same problem. I mentioned that this problem was all over the internet without a resolution. What she told me to do was go into Chart of Accounts tip (current Liability account) and open register. Above the first entry line at the top, click on journal entry on the left, put nothing in the payee account leaving this blank, create a new Payroll expense account as "Tips Paid Out", then debit the amount paid out in tips in the debit column.

H

HOB1

Tried it but doesn't work!!! Been on the phone with QB for 3 hours with payroll specialist and no resolution to this problem. The journal entry does debit the undistributed tips account however the credit to the "Tips paid out expense" account creates a Negative in my P&L report. This is really frustrating that there is no resolve by QB "experts"

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