Deposits From Cash Register

@Tiffster81  If they are depositing money from the cash register into the bank account, then the amounts should already exist in QB in one of two forms; either as Undeposited Funds or in a Current Asset or similar used to track the cash register balance.

If the sales from the cash that they are depositing are already accounted for and were already treated as a deposit, then there are already errors in your records.

Yes, the deposits are in the books, but I don't know what ledger account to classify them into. Like I would not class them to sales bc its not a sale its a deposit from the cash register. I am asking what ledger account would I put the deposits into. Thank you for your help.

Also, the asset account the deposit is debited into is cash, which account do I credit with this transaction?

@Tiffster81  What I mean to say is, it depends on how the sales were handled to begin with.

When you recognize income in QB, whether by sale receipt or invoice or what have you, it either is deposited into a Bank type account, a Current Asset type account, or into the Undeposited Funds account.

Since they're taking it from the cash register, I would normally assume that the money from the sales was put into Undeposited Income in QB.

That being the case, you'd use Undeposited Income as the source account on the deposit, effectively moving a value from one Asset account to another Asset account, no additional income recognition required.

"Also, the asset account the deposit is debited into is cash, which account do I credit with this transaction?"

If you mean that the money from the original sale was already put into a Cash Current Asset account, then that same Cash Current Asset account would be your source account in the new deposit. This would also be moving an amount from one Asset (Cash Current Asset) to another Asset (Bank). This action would debit the Bank, raising its balance, and credit the Cash, lowering its balance.

Here are how sales are recorded. The client uses a POS system that deposits cash into the bank account. There is an asset account that the deposits are credited into and debited into bank account.

At the end of the month, I make a journal entry to record sales that debits the asset account and credits sales to accurately track sales for sales tax purposes and because the merchant of the POS systems does not deposit all cash from sales into the bank account due to fees and a percentage of the sale that is held in the merchant account from each sale.

So the deposits from sales are covered.  All sales are accounted for in my journal entry at the end of the month. Here's my question:

Periodically, money from the cash register is deposited into the bank account. These funds should not be classified as sales because sales are accounted for from my monthly journal entry. If I classify these transactions as sales the sales will be overstated. If I set up another asset account to offset the debit to the bank account, that account would have a running balance that would just accumulate forever.

Do you think I should reduce my journal entry for sales each by the amount of cash register deposits, and classify the cash register deposits as sales to simplify the process.

@Tiffster81 

"Periodically, money from the cash register is deposited into the bank account. These funds should not be classified as sales because sales are accounted for from my monthly journal entry."

Sorry to jump in here @FishingForAnswers .  The retailer in me just couldn't help it. 

Where are you getting the numbers for the journal entry - from your client's POS or their merchant account?  Where is the register cash recorded in the chart of accounts?  If your journal entry includes the cash sales left in the register, then you should have an asset account that contains that cash as @FishingForAnswers mentioned.  Do you have that?  If the cash in the register is not in an asset account called 'Petty Cash', 'Register 1', or isn't sitting in Undeposited Funds, then it was never recorded as sales.  If it was recorded as sales but never deposited then it must be sitting in an asset account somewhere and you would just make a bank deposit and assign that asset account to the deposit.    

Hi, thank you for jumping in.

The journal entry from sales in coming from the sales report from the POS system. The cash deposits from the cash register are entering the bank account from employees taking the funds to the bank and depositing the funds into the bank account.

Yes, the deposits are in the bank account, on the bank statement, and in the books, but as we know accounting is associated with two entries.  A debit and credit. If I create a new account and credit the cash deposits from the cash register to this new account and the debit is cash (the bank account) what should I do about the balance that will be accumulating in the new account that is receiving the credit?

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I think the solution is to adjust the monthly sales journal entry according to the bank deposits from the cash register. What do you think?

@Tiffster81 

So the issue must be that your client is depositing more than the daily cash sales on some days.  Are they also depositing less than the daily cash sales on other days?

I was a retail corporate controller for many years and we always had the stores deposit the exact cash sales each day and, therefore, each register always started and ended each day with the same amount of cash in the drawer.  Some retailers will deposit just their large bills for example and therefore the deposit doesn't match the daily sales (a mess from an accounting standpoint).  Is that what's happening?  If so, the issue is that you must not have the opening/closing register cash (petty cash) set up as an asset account.  That's the account that should be credited if the deposit exceeds the daily sales and debited if the deposit is less than the daily sales.  There should be no need for any adjustment account.  If you don't have the petty cash on the books as an asset account, get with your client and set it up.  You can offset petty cash to Opening Balance Equity initially.