QB Payments from 2019-2020 not matched to Deposits - Merchant Statements no longer available What do I do?

I understand how important it is to keep your client’s financial records accurate, @Dancz, and we're here to help you with clearing the undeposited funds account and reconciling transactions.

First, you can start by reviewing your client’s bank statements from 2019-2020 via their online bank portal to identify deposits that correspond to payments in the undeposited funds account. Most Banks keep their online bank statements data up to 5 to 7 years before permanently deleting it. Also, using payment IDs displayed in QuickBooks memos can also help match payments to specific deposits. 

Once you’ve matched the payments to deposits, you can use the Bank Deposit feature to transfer them from undeposited funds to the correct bank account. Here's how:

        1. Go to Create and select Bank Deposit.

        2. Select the payments that correspond to the deposits.

        3. Then click Save and close.

For payments that can’t be matched to any deposits, applying a Journal Entry will allow you to reflect them accurately in the accounts. This helps clear the balance in undeposited funds for payments that don’t align directly with bank deposits. Here's how:

1. Go to Create, then select Journal Entry.
2. Set the date for the journal entry based on when the funds were originally deposited into the bank account.
3. On the first line, select Undeposited Funds from the account dropdown. Enter the payment amount in the Debit column to reduce its balance.
4. On the second line, select the Bank Account into which the money was deposited. Enter the same payment amount in the Credit column to reflect the deposit.
5. Use the Description field to add details for reference, such as the payment ID or description of the adjustment.
6. Click Save and Close to finalize the journal entry.

It's also worth noting to ensure the amounts in Debit and Credit are equal to keep the books balanced.

Once these adjustments are made, you can begin reconciling the account, ensuring all cleared deposits align with the bank register. Address any discrepancies during reconciliation and review the balance sheet to confirm that the undeposited funds account now reflects only current undeposited transactions.

If additional guidance and clarification is needed, please don't hesitate to reach out. The Community space is available 24/7.

Thank you for your response. Would adding the journal entry from undeposited funds to the bank that the 'received payments' went into create an increase on the QB bank balance? If the 'received payment' is not matched to the banks downloaded deposit I was under the impression that it would create a double entry of income. The received payments I cannot match came from Quickbooks payments. The QB payment ID's are in the received payment so I have assumed that meant the money was truly deposited. I can verify that I received the batch deposit from Intuit however I cannot verify the specific invoices the batch payment deposit included due to not having it saved and Intuit saying they only keep 2 years of data. I want to make sure my QB balance continues to match the bank balance.

Thanks for getting back to us with more details, Dancz. Yes, adding a journal entry from Undeposited Funds to the bank account will increase QuickBooks Online's (QBO) bank balance. 

If the actual deposit is already recorded in QBO, adding a journal entry creates a duplicate deposit, inflating the bank balance unnecessarily. This happens because the journal entry would account for the same funds already recorded.

You're also correct that the Received Payments in QBO are already recognized as income in QBO when applied to invoices. If these payments are later tied to a deposit or journal entry that incorrectly  adds income again, it will result in a double entry of income.

Since the Received Payments you’re working with came from QuickBooks Payments, the best method is to use the Bank Deposit feature to move them from Undeposited Funds to the correct bank account. To do so, here’s how:

1. Open your QuickBooks account.
2. Go to the plus (+) icon, then select Bank Deposit.
3. Select the Account where the funds were deposited from the dropdown, then make sure to set the Deposit Date to match the date of the deposit in your bank statement.
4. Select the payments that relate to the batch deposit in the Received from column. You can use the QB Payment IDs, dates, and amounts as references to select the correct payments.
5. At the bottom of the screen, check that the total deposit matches the bank statement.
6. Once done, Save and Close.

Alternatively, if you can't match payments to batch deposits due to missing invoice details, you can use a clearing account as a temporary placeholder to move payments to the bank account via journal entries. To complete this process, follow the steps below:

1. Set up a clearing account.
2. Next, click on the plus (+) icon and choose Journal Entry from the menu.
3. Select the appropriate date range.
4. Select the clearing account as your debit and select undeposited funds as credit.
5. Add the other necessary information.
6. You can also add a memo to identify this transaction.
7. Once you've made sure everything is accurate, click Save and Close.

Afterward, you can reconcile your account to ensure all deposits align with the bank register. Moreover, I still recommend collaborating with your accountant, as they can provide expert guidance on the most effective approach to address and resolve this matter.

If you have other questions feel free to comment them below.

What do you mean by clearing account? I am not sure what the account that would need to be in order to do the journal entries you recommended as an alternative. 

Ignore my question on clearing account. I did not see the hyper link to the explanation for it in my first read through of your response. Thank you

I do not see how using a clearing account clears the issue up. Since bank accounts are on the balance sheet this still makes the business seem like there is more income that what was actually received does it not? In that regard it would almost be pointless to do a journal entry out of undeposited funds. Would the clearing account  bank be inactivated after the journal entries are done so it doesn't show on the balance sheet? My goal was to make sure the 'receive payments' do not make it seem like the company is still expecting money to be put in the bank itself since the money was deposited a long time ago. 

You're correct, @Dancz. You don't need to create a clearing account to clear the undeposited funds (UF). You only need to deposit the funds into the correct bank account. I'll explain how QuickBooks Payments work below.
 

To answer your question, clearing an account won't affect or add more income since it only transfers the funds from Undeposited funds to the clearing account.
 

To begin with, if you're using QuickBooks Payments, you don't need to do anything. QuickBooks Payments will automatically receive the payments and place them in Undeposited Funds. It will also automatically create a Bank Deposit to clear the funds from Undeposited Funds.
 

If you see payments in the UF, they are likely manually created invoices or payments added by your client. Ask your client to verify the payments from Undeposited Funds. If these are manually created entries or valid payments or if you're not not sure which correct bank account to deposit to, request their bank statement as your basis to match those payments to the right bank.
 

Let me know in the comments below if you have any other questions about QuickBooks. 

Your suggestion does not work. The issue starts in 2019 and QB payments no longer has the statements nor are the receive payments matched to their deposits. I have no way of verifying the matches. If something gets matched and it matches to a deposit in the wrong month it messes up the reconcile. I don't know how to balance undeposited funds without creating an increase in the bank account or a different account. The client did not save the QB statements from back then. I only have the bank statements which is only good for verifying the deposit itself. Also it is important to note that in the deposit tab under sales, it looks like it was never used as it has the 'Get Started' button. I watched a video that said that this screen should show the deposits and what receive payments were included in those deposits. I have ran through so many option trying to find a solution that doesn't cause other issues.