Client Reimbursement from Client Escrow Account

RBlazer · ‎April 08, 2021

Let me give some background here. I am an artist manager, and I have a separate business checking account (from my day-to-day business checking account) dedicated to any monies due to my client as an escrow account. I do not move any money from that account unless directed by my client. I have two (2) "other current liability" accounts in my charts of accounts. One is for engagement deposits that get distributed after a show has played and my client has "earned" the money as income that I then pay out less my management commissions. The other account is for his royalties management from the streaming services, i.e. Spotify, Amazon, Apple Music, etc. This is where I am confused. I have invoiced my client for the amount of $211.99 as a reimbursement for administering the royalties based on the invoices from the record label. I setup a transfer in the amount of $211.99 from the escrow account to my day-to-day business account (I get that moves the money physically from one account to another) with my financial insitution. Now, I need to account for this money move and deduct the $211.99 from the royalties account (other current liability) to the bank account. I tried to enter a general journal entry as a debit on the liability (royalties) and a credit to the bank account, but it makes it a credit on the liability (royalties) and day-to-day bank account. I feel like I am missing a step in how to account for this. Also, I should add that my client is setup as both a customer (billing for website maintenance and other recoupments) and a vendor (for paying out commissions).

I need to show money moved from Escrow Banking Register to Business Check Register. (assume this is done via the transfer funds feature?)

How do I move the funds of $211.99 from the Royalties (other current liability) and create a credit on the customer invoice for the recoupment of said $211.99?

This is for Quickbooks Desktop for MAC.

MichelleBh · ‎April 08, 2021

Hi there, @RBlazer.

I appreciate for providing detailed concerns and all the steps you've done before posting here in the Community. I'm here to help you move the funds of $211.99 from the Royalties in QuickBooks Desktop (QBDT).

You're on the right track in transferring the money. Ensure to choose the correct Transfer Funds From and To. This way, the amount will show to the exact liability account.

See the sample screenshot below for your reference:

Once done, you can now create an item that represents the Royalties and make sure it affects the other current liability.

Here's how:

Go to Lists, then select Items.
Choose the plus + icon, then pick New Item.
Select the type of item you want to create.
Fill out the item fields and tap Save.

For more information about the fields, check out this article: Add, edit, and delete items.

After that, let's create an invoice as a negative amount. Let me guide you how.

Open the invoice page.
In the first line, enter the original item with the positive amount
In the second column, add the royalties item that you've previously created with the same negative amount to offset the amount.
Complete the other fields, then tap Save and close.

You can always review the chart of accounts or customer's report to check the money you've previously added. Then customize it to show specific information. You may refer to this link: Customize reports in QuickBooks Desktop for Mac.

Additionally, I'd encourage you to visit this article about QBDT's How Do I questions: User's Guide.

Don't hesitate to let me know if you have further questions. I'm glad to help you.

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