Reconciling Undeposited Funds

Thanks for posting this concern in the QuickBooks Community, @Yogi,

Allow me to join the thread and share some steps to help you further with the Undeposited Funds corrections. The process of doing the adjusting entries is correct. However, in order to avoid affecting your account balances or post the deposit twice, you can use a clearing account for the journal entry.

To create a clearing or wash account, use these steps:

1. Go to the Lists menu, then select Chart of Accounts.
2. From the Account ▼dropdown, select New.
3. Pick an account type, then select Continue.
4. Complete the account details.
5. Select Save & Close.

After creating the journal entry, you can make the clearing account inactive, so the system will zero out its balance. Here's how:

1. Go to the Lists menu, then select Chart of Accounts.
2. Right-click on the account you want to make inactive, then select Edit Account.
3. Select the Account is inactive checkbox.
4. Press Save & Close.

Learn how to manage your chart of accounts, using this link: Add, edit, or delete accounts in QuickBooks Desktop

If you have further questions or concerns about correcting the Undeposited Funds balances, please let me know in the comment below. I'll be right here to guide you further with the corrections. All the best!

I understand that I can use a clearing account instead of the actual checking account, but that does not stop the reduction of the Undeposited Funds account when I make a deposit in order to remove this item from the Make Deposit screen. And inactivating the newly created account merely moves the amount into Opening Balance Equity. There has to be more to it. If I don't make a deposit, the amount is forever on that screen yet if I do then that amount moves back as a reduction of Undeposited Funds no matter what account I try to use to offset it. This error has been running through the last several years with many thwarted attempt to correct it.

I'm here to help you clear out your Undeposited Funds balance, Yogi.

QuickBooks uses the Undeposited Funds to holds the funds when receiving payments. If you already create Journal Entry(JE), you'll need to delete them. Then, process a zero amount deposit to clear its balance. Before doing some changes, I'd suggest backing up your company file since the process can't be reversed.

To delete the journal entries:

1. Go to the Lists menu.
2. Click Chart of Accounts.
3. Double-click Undeposited Funds.
4. Locate and open the JE.
5. Press Ctrl + D on the keyboard to delete.

Here's how to create a bank deposit:

1. Go to the Banking menu and then select Make Deposits.
2. Choose the payment in the Payments to Deposit window.
3. Add a second line and enter a positive amount to make the deposit amount to zero. You can reach out to your accountant to check what account to use in the From Account column.
4. Click Save and close. 

Feel free to read these resources here for more details:

• Record and Make Bank Deposits in QuickBooks Desktop.
• Deposit Payments Into the Undeposited Funds Account in QuickBooks Desktop.

You can always count on us and add a reply to this thread if you have other questions. We're always here to guide you.

I went through all years of Undeposited funds and deleted every general journal entry and the deposits (or lines of the deposits) related to the JEs.

I am right back where I started with the same negative balance in Undeposited funds. When I go to Make Deposits, there is no item available to select, QB will not allow me to indicate Undeposited Funds as an account in any deposit detail including cash back.

Next I make a JE to bring the account balance to zero, and now this amount shows up as available to deposit. To get it off this screen, I make a deposit to the "clearing account" and QBooks deducts that amount from my Undeposited Funds account balance.  Results can be seen in the attached report.

Get me out of this please!

Thanks for attaching a screenshot, Yogi.

I can share some tips on how you can get rid of that negative balance.

After creating an offsetting journal entry, you must group it together with the payments to create a $0 deposit and remove the negative payments from the Undeposited Funds account. I'll show you how:

1. Select Banking from the top menu bar.
2. Choose Make Deposits.
3. Select the payments and the journal entry you created. The total should be zero.
4. Select Save & Close.

However, if you're still unable to zero out the balance, I recommend contacting technical supports. This way, we'll be able to look into your account and further investigate this issue. Here's how to connect with us:

1. Go to the Help menu.
2. Choose QuickBooks Desktop Help.
3. Click Contact Us.
4. Enter "Unable to clear the negative balance in my Undeposited Funds account." in the description box.
5. Hit Let's talk and then choose a way to connect.

Additionally, here are some articles that you can read to learn more about how the Undeposited Funds account works in QuickBooks:

• What’s the Undeposited Funds account?
• Deposit payments into the Undeposited Funds account

Just add a reply to this thread or start a new conversation if you have any other questions. We're always here to back you up.