To work around the problem of not being able to attach a deposit to a sales order, we've been using the non-inventory deposit on sales order line item method which posts a negative number to at Liability account at the time of invoice. We then create a receipt for the payment from the customer which hits the undeposited funds account and this liability account to balance things out.
We now have a large Liability account that contains all of our customer deposits, yet the customer's accounts show zero.
This method has caused problems, one of which we're facing now.
The company has been sold to one of the employees and there is a completely new Quickbooks company file for that new entity. The liability account is being transferred to that new file. The owner of the company already wrote a check that matches the sum of the customer deposits account and entered the corresponding transactions in each company file. Now the new company shows the liability, but there is zero connection to any customers...so the new entity has no idea who the money belongs to EXCEPT for the open sales orders which have a deposit line item on them.
Since this method has too many problems, we're switching to using the Credit Memo feature of Quickbooks to issue gift cards and records of customer deposits so they hit the Accounts Payable as a negative value and immediately post to the customer's account as a credit.
The only problem we have with this method is that we have to manually note on the CM which sales order the deposit is intended for when that SO goes to invoice, and we have to note on the SO the number of the CM so the customer can see that they have a deposit intended for that sales order (or a gift certificate to use.)
QUESTION:
How can we convert the Customer Deposit liability account into Credit Memos such that the value in the Liability account is reduced while the deposits are properly allocated to the customer's accounts and post to A/R correctly?
Normally money would come in and hit the undeposited funds account and the A/R account if we were using "Receive Payments." Is there a way to "Receive Payments" from a customer and then use the funds that are now sitting in Undeposited Funds to offset the Customer Deposits liability account?
