Use Sales Receipt for Customer Deposits

I would recommend Not putting a negative on the invoice.

Put the Prepayment item on a Credit Memo and apply it to the invoice. That way, the Invoice in the customer transactions listing and reporting will still show the Amount that was this sale. Putting the negative on the invoice results in the the invoice showing a reduced about as "this total sale" when really, what you want to see is the prepayment as part of Credits Applied from that credit memo and from any other Payment they make against any remaining balance owed.

And make sure your business tax entity type is allowed to hold this as Liability. A Cash Basis entity that is not allowed to hold it as liability should link that prepayment item to Income. For Cash Basis, that is income when you get it, and reverses income when you Apply it, the same as a Discount for the amount prepaid (already reported as income).

Hello all. 

Good day, Scott5702.

I can provide you with little insights about using sales receipt for customer deposits in QuickBooks for Mac.

If you want to apply the deposit to the invoice, you'll need to use the Accounts Receivable for the deposit and apply it to the customer. This way it will reduce the invoice amount due.

If the report shows an open balance, that column will always be zero. Since the Sales receipt is tagged as a paid sale.

You may find these articles helpful:

• https://quickbooks.intuit.com/community/Income-and-expenses/Create-sales-receipts/td-p/201986.
• https://quickbooks.intuit.com/community/Reports-and-accounting/Accounts-Receivable-workflows-in-Quic....

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@Rose-A

Please Learn from the input here. You have given Bad Guidance. The use of AR for the Deposit is not right for what is being reviewed.

The Sales Receipt entry for managing Funds prepaid means you use the same prepayment item and amount on the Credit Memo. This clears your liability account, if that is what you are allowed to hold prepayments as. Or, it offsets that this was already treated as income when you got it, for a cash basis tax reporting entity.

Nothing here is also AR, manually. And using AR in "deposit entries" is Wrong for both cash and accrual basis tax entities.

@Scott5702

Yes, you Apply the credit memo to the invoices. For this:

"When I google how to apply a credit memo to an invoice it says to apply it as a payment. But then the customer does not see the deposit they paid on the invoice to reduce the amount due. I do not understand why this is a good idea."

You likely need to Customize your Invoice template; Intuit tends not to make them meet our needs. You need the Footer to show the following:

Total <== this sale

Payments/Credits Applied <== the CM prepaid value will show here

Balance Due<== eventually goes to Zero.

And you can use Statements. That would show, for instance:

Invoice $5,000

Credit Memo -$2,500

Which explains why the Footer on the invoice also shows they still owe $2,500 for that partially prepaid sale.

@Rose-A

Intuit's Own Support Article is right here:

https://community.intuit.com/articles/1774522

Does this mean that there is a credit memo going against the receipt in addition to the recorded sales receipt or in place or the sales receipt? 

Would adding the prepayment item to a credit memo that is then applied to the invoice replacing the sales receipt or in addition to the sales receipt? I am encountering this issue where I need to record the sales receipt for one year to reflect the deposit for an event that won't happen until the next year. 

Hi lindyjean,
 
From what I’m getting, you’re concerned that you’re declaring sales (sales receipt) this year before the actual sales (event) which will happen the next year.
 
In this setup, the sales will not be declared in your Profit and Loss report yet since we’re using a liability account on the sales receipt. Then, adding a credit memo, which uses the upfront deposit item, will not declare as sales as well. What it does is it turns the funds as credits to the customer’s profile to be used in their future invoices.
 
On the other hand, when you run sales reports on Accrual basis, you’ll see that the credit memo will offset the sales receipt.
 

I highly suggest consulting your accountant so they can advise the best option for your company.

If you have other questions, please let me know.

When I tried to do this same transaction, the income showed up when I created the Sales Receipt. I verified to make sure the item I created in the Products & Services was tied to my Current Liab (Def Income). What am I doing wrong?

Thanks for checking in with us, pcftampa.

The sales will not be declared in your Profit and Loss report yet since we’re using a liability account on the sales receipt. 

There could be several reasons that might trigger errors in Profit and loss report data. Among these are the following: 

• You are selecting a different date range for both of the reports
• Profit and loss reports are generated on a different basis
• You have selected an incorrect sales account to pull up the sales items
• There are transactions included in the profit and loss report that do not use items
• The company file has damage in the transaction or list data

Let's check if the correct account is selected for the Items. Here's how: 

1. Open the Lists section in QuickBooks and click Item List.
2. Right-click any list item and choose Customize Columns.
3. Ensure that the Cost Account and Account columns are selected.
4. Now verify that each sales item is pointing towards the correct account.
5. Make changes to the items that are linked to the wrong account.
6. Verify if the reports are accurate now.

If the same thing happens, there may be a damaged data on the company file you've been working with. This causes unusual behavior when running a report in QuickBooks. We can run the Rebuild Data tool is built-in to fix any company file data issues. Just follow the steps and detail in the Fix data damage on your QuickBooks Desktop company file article. We can also repair your QuickBooks Desktop to fix any damaged components in the software.

Visit our QuickBooks Help Articles page for more insight s about managing your business in your software.

Feel free to update us after performing the solutions, as I want to ensure this is resolved for you. Please reply to this post and I'll get back to you. You have a good one. 

I have QB enterprise.  QB item set up is blocking the use of a liability account with the error message that no accounts receivable or payable can be used only revenue.  Please advise.  The company's business is primarily a customer deposit before item is built so having customer deposits item is crucial.

Hi there, @bb100.

To make sure that you're able to set up an item to the liability account, you'll want to check if you've selected Service if you want to collect upfront deposits for services, or Other Charge if you collect upfront deposits for products.

To do this, here's what you'll need to do:

1.  Go to the Lists menu at the top.
2. Choose Item List.
3. In the Item List window, right-click and select New from the pop-up menu.
4. From the Type drop-down menu, select the purpose of the deposits you collect.
5. You can select Service if you collect upfront deposits for services, or Other Charge if you collect upfront deposits for products.
6. Enter a name for the item (for example Upfront Deposit) in the Item Name/Number field.
7. Select the Upfront Deposit liability account you created from the Account drop-down list.
8. Click Ok.

To know more about this process, see this article: Manage Upfront Deposits or Retainers.

If there's anything else I can do for you, let me know by commenting below. I'd be happy to help. Have a great day. 

Thank you but I selected every single option from service to other charges and no matter what I choose, I am not allowed to link to a liability account.  Either something is wrong with Quickbooks program or in my set up at some other area in quickbooks.  How do I fix this problem?

I can provide additional steps on how to fix the issue about being unable to link the liability account to the item, bb100.

The item could be damaged and you'll want to run the verify and rebuild utility to fix this. Let me show you how:

1. Select File, then select Utilities.
2. Select Verify Data, then select OK to close all windows. If you see “Your data has failed the integrity check” you need to rebuild your file.
3. If there are no problems with your data, you’re done.

Once you’ve verified your data, you can rebuild your company file to fix any errors or data damage that's found.

1. Select File, then select Utilities.
2. Select Rebuild Data, then select OK to close all windows.
3. QuickBooks will ask to make a backup before rebuilding your company file, select OK. If you don’t want to do a backup, select Cancel to continue rebuilding your company file
4. If you haven’t set up any backup preferences, QuickBooks will ask you to update them. Select Backup Preferences and edit as needed, then select OK.
5. When the backup's finished, select Show in Finder to locate the backup or select OK if you’re done.
6. Once the rebuild finishes, click OK.

To make sure your file is free of errors or data damage, verify your company file again. If you still have errors or damage, rebuild the file again.

Once done, go back and edit the item. If the same issue persists, I recommend contacting our QuickBooks Desktop Live Team. They can further investigate the issue.

I'm also adding this link to learn the different ways you can track customer transactions: Get started with customer transaction workflows in QuickBooks Desktop

Stay in touch with me on how the contact goes by commenting below. I'll be around if you need more help with this, bb100.

for future reference to help others the fix this problem the solution was simple.  The customer deposit account was created as an Accounts Payable account instead of "Other accounts payable".  When I changed the account to "other a/p" I was then able to create the item and link it to a liability account.  None of the other suggestions were relevant.

None of those answers were correct.  The customer deposit account was entered as an Accounts Payable account and quickbooks only allows it to be "other accounts payable" account.  Once that was changed, then I was able tp create an item and link it to the liability account,.

Actually the fix was simple though it took 6 hours with QB support to get the answer.  The customer deposit account was set up as an Accounts Payable account which blocks " items" linked to AP.  I changed the account to an "other accounts payable" account and then QB let me create the item and link it to customer deposits as a liability.