Fixing old undeposited funds

Let me help fix your old undeposited funds, @debselpwyo.

Depositing your old undeposited funds affects your balance sheet and other reports in QuickBooks. You'll want to create a journal entry for this to correct the balance. However, I highly recommend seeking help from your accountant to offer you some advice on correct accounts to use when recording it.

Here's how to create a journal entry in QuickBooks Desktop for Mac:

1. Go to the Company menu, then select Make General Journal Entries.
2. Fill out the fields to create your journal entry. Make sure your debits equal your credits when you’re done.
3. Select Save or Save & Close.

I'm adding this article for more guidance: Create a journal entry in QuickBooks Desktop for Windows or Mac.

You might also want to check out this QuickBooks Desktop for Mac 2019 User's Guide to learn how to manage your transactions.

I'm still open to your replies. If you have other concerns (reports or transactions), don't hesitate to post a comment below. Have a great day ahead!

Thank you for your response. We understand the concept of journal entries, but are at a loss at to what account to use for the offsetting entry. Since this 10-year period of undeposited funds was generated during a time when QuickBooks was used only for creating Invoices and receiving Payments, there is really no appropriate account to debit to offset a credit to undeposited funds. We have tried various approaches, and regardless of what we attempt, when we "deposit" the undeposited funds, we either end up with an artificially high bank balance or an artificially negative income account. We just want these old undeposited funds to go away. Any monies accounted for in the undeposited funds account have long ago been dealt with in other accounting software outside QuickBooks. All we are looking to do at this point is zero out the old undeposited funds, while maintaining the historical invoicing data for that period (2005-2014). So my follow-up question(s): (1) what account type specifically should be used to zero out a deposit of the undeposited funds, without creating a large negative sales number, and if that cannot be accomplished with a journal entry, then (2) is there a way (and if so, how) to simply delete the old undeposited funds, without losing the historical invoicing data? We are most concerned with being able to access who was billed what & when, and less so with the payment status of the invoice.

I am having the same issue.  There are old  amounts in the undeposited funds that have already been accounted for.  How can we get rid of the old undeposited funds?

Thanks for joining the thread, queenee444.

Allow me to share some information about undeposited funds.

QuickBooks Desktop (QBDT) uses the Undeposited Funds account to hold customer payments. That's why your payments are labeled as undeposited and go directly to this account when receiving payments.

To get rid of the UF you can make a deposit, please have your deposit slip handy as your reference so you can choose the correct account. Let me show you how:

1. Go to Banking from the top menu. 
2. Select Make Deposits. 
3. Clickthe checks you want to combine in the Payments to Deposit window and click OK.
4. Choose the appropriate account from the Deposit To drop-down.
5. Enter the deposit date. 
6. Add a memo as needed.
7. Check the Deposit Total to ensure the account and selected payments match the deposit slip from your bank. 
8. Hit Save & Close.

I've added these articles that you can use for matching and reconciling transactions in QuickBooks:

• Add and match Bank Feed transactions in QuickBooks Desktop
• Reconcile an account in QuickBooks Desktop

Keep me posted if you still have other concerns with undeposited funds. I'm always around to help you. Have a good one!

Mark_R and AbegailS seem to both be missing the point of the problem that debselpwyo and queenee444 are having with deleting the old undeposited funds. We can't deposit the (old, long ago deposited, spent & accounted for/reconciled) undeposited funds to a current account, or we will artificially inflate that bank balance. Debselpwyo tried making a journal entry, but that process ended up either artifically increasing the bank balance &/or artificially decreasing an income account. We basically want to delete all those undeposited funds without affecting our current bank balances or income accounts.

Perhaps we should create a new bank account named "Bogus Bank Account" (for the sole purpose of clearing old undeposited funds) and use that to make a bogus deposit of the old (previously deposited) undeposited funds - hopefully we could then exclude that particular account from all reporting, or even delete it altogether. I even thought about going back through all the (old, long ago deposited, spent & accounted for/reconciled) received payments, and changing "Group with other undeposited funds" to "Deposit to Bank"... but that just artificially inflated the bank balance too.

The important issue to consider with our problem is that these old undeposited funds are from a long time ago and no longer really "exist" for current accounting purposes. They have already been deposited, accounted for, & accounts reconciled. In debselpwyo's case, they arose over a 10-year period (2004-2014) which is now more than 7 years in the past, at a time when only the invoicing/payments were done in QuickBooks and all other accounting was performed using other software.

The question remains: How can we make these old (no longer relevant) undeposited funds go away???

Jen_D thanks so much for your suggestion. I will give this a try at the end of the day & let you know if it solves our long-standing problem with old undeposited funds.

Thanks again Jen_D! This was essentially my "Bogus Bank account" solution, but your instructions to make the clearing account inactive made all the difference. My Mac version did not have a "Cash on Hand" option for setting up a new account, so I set up a new Bank account, transferred all the the old undeposited funds to the newly created Clearing bank account, then made that account inactive. That does seem to have done the trick since those old annoying U/F are gone, but none of my other account balances have changed. Yippee!! Thanks so much for your help.

I have the same problem and I've done the same but the "dummy" account appears on my balance sheet as (inactive). I don't want it to show up on the balance sheet at all. Did you have this same issue?

This method does not zero out account on PC. You need to zero out this account.

Late to the party…..yes it removes it (MAC) but on a PC it does appear inactive. Any suggestions? 

Hi there, Allocator.

I have another method for getting the correct data into the report.

An inactive account will show in the report as it should be in QuickBooks Desktop for Windows. Alternatively, you can export your report to Excel. From there, you can update the data and remove unnecessary information, such as inactive accounts.

Here's how:

1. Go to the Reports menu.
2. Select the specific report you'll want to run.
3. Ensure it has the correct reporting period.
4. Click the Excel dropdown, choose Create New Worksheet.
5. You can select Advanced to format the report.
6. Once done, hit OK, then Export to open the report in Excel.

For more details about exporting the report to Excel, check out this article: Export reports as Excel workbooks in QuickBooks Desktop.

I've also included this link to learn more about customizing the data display in your report: Customize reports in QuickBooks Desktop.

You're always welcome to add any details below if you need further assistance with managing your accounts or reports. I'm here to help you out.

Hi Giovann G,

  Thank you for the suggestion.  That definitely is an option for me.  Not to get too far off topic, but what is the actual process of actually clearing them if one were inclined to try and not alter the bank rec (the UF's are from a reconciled period)?  It was suggested I do the following: create a second deposit of the same UF amount  alongside the original deposit, post it, and then deposit it.  Afterwards, you need to go back and delete one of the two transactions from the original deposit screen.  Has anyone tried this?  I plan to try tomorrow.   

I have the same issue, but an additional problem. The dummy account with Cash on Hand would not work with QB online. I went to support and was told to create a dummy account and reconcile, which they walked me through but they had me go too far and it went into 6/30/2022 of this year. We used glance via chat so he could see exactly what we were doing and what dates were being used and the amounts. I told him we were not previously QB for bookkeeping but we wanted to for 2022 so whatever we did could not affect this year. 

Just like everyone else, all the funds have been accounted for we just used it for invoicing and receiving payments, just to track income and not expenses. We used another system for that. 

I knew I should not have allowed the reconciliation to go past 2021, but of course he used the most current statement that was available and assured me it would not be a problem. I've been using QB Desktop with Windows since 2004 but we just migrated to QB online in May and it's not as functional in my opinion even in Accountant view.

I can unreconcile all my 2022 entries but, it won't let me back out the forced balance amount or the last date of reconciliation the support person had me use which is 6/30/22.

My last call to QB support said they don't offer that and there's no way a chat support person helped me do that. (LOL), whatever, I don't care, I just need help.  I have no idea what to do to fix this and I can't reconcile my bank accounts moving forward because now it wants me to put in the massive undeposited funds balance I was trying to get rid of in the first place. 

Any suggestions?

I’ve got a solution for you, @JustPeachy.

I can see how this situation impacts your task, especially in processing reconciliation. No worries, we'll sort this out!

You can create a large deposit and drop one line down. Then enter the income account with a negative amount of the total deposit to clear the funds. Doing this makes your net deposit become zero.

Here’s how:

1. Open QuickBooks.
2. Select the + New button.
3. Click Bank deposit.
4. Fill in the correct information on the Deposit page.
5. You can check your register to verify the category if it's a sales or income account. Once done, use that account when creating the deposit under the Account column on the Add funds to this deposit section.
6. Enter the whole amount as negative, then save.

It would be best to contact your accountant to assist you further with this process.

I've attached an article that helps ensure books are balanced and accurate: Learn the reconcile workflow in QuickBooks. It has everything you need to start a new reconciliation, fix balance issues, and make changes.

Please know that I appreciate all your effort in trying to resolve these old undeposited funds issue and for reaching out to our support for help. You can leave a message on this thread if you have any other questions or concerns about managing your company file. The Community is always here to help. Keep safe always!

Why would I add a deposit? The undeposited funds were all accounted for and like I mentioned, the problem was that QB was only being used for invoicing previously. The bank deposits when put in the bank were not being matched up in QuickBooks to the invoice this is 100% of the problem, back to 2017.

We wanted to start using the bookkeeping aspect of QB for 2022, but now this has made the issue worse.

When I made the migration to QuickBooks online from QB desktop in May of 2022 I had not reconciled any bank statements yet for 2022.  I was hoping to resolve my original issue first. This reconciliation has caused another problem. There are no reconciliation errors or anything to help find what he did when he help set up the dummy account before the reconciliation or back track his steps. I now have a $200k beginning balance for 6/30/2022 which is wrong. and QB online won't let me change it because it thinks its right. Support says the only way is to manually unreconcile the entire every entry back to 2017. I started doing that and now I'm getting errors but its trying to fix the errors and I don't believe it will let me change the balance or the date even if I do because it thinks its user error. 

I appreciate you getting back, @JustPeachy.

Let me add some information about deposits in QuickBooks Online (QBO).

The best option here is the suggested steps provided by my colleague, MadelynC. You’ll have to add a giant deposit in the Negative amount of the total deposits to clear the funds.

Nonetheless, I’d still recommend you get in touch with your accountant to assist you with the process and ensure that all steps taken are correct.

Furthermore, I included this article for more information on how you can record your deposit in QBO: Record and make bank deposits in QuickBooks Online

In addition, you can refer to this article when categorizing your transactions and reconciling your account.

If you have any concerns about deposits, you can always comment back and post them here. Stay safe!

I tried doing this to correct the same problem; however, Quickbooks Online created a cheque and transferred the non-existant undeposited funds to the Opening Balance Equity. Is there a way to delete this amount to bring the books in line with reality?

Hello, AdequatelyHydrated.

Thank you for following the steps provided above by my colleagues to rectify the issue. It's great to see that you're willing to take the steps needed to resolve the problem. Yes, there is a way to correct this issue in QuickBooks Online. To bring the books in line with reality, you can follow these steps:

1. Go to the Accounting tab in QuickBooks Online.
2. Select Chart of Accounts from the drop-down menu.
3. Locate the Opening Balance Equity account and click on it.
4. Find the transaction that transferred the non-existent undeposited funds in the account register.
5. Click on the transaction to open it.
6. Select the Delete option to remove the transaction from the account register.
7. QuickBooks Online will prompt you to confirm the deletion. Click "Yes" to proceed.
8. After deleting the transaction, the Opening Balance Equity account will be adjusted accordingly.

It's important to note that deleting a transaction may impact your financial statements. I recommend consulting an accountant or bookkeeper for specific guidance if you're unsure about the implications.

You might want to learn how the Undeposited Funds account works in QuickBooks. This article will provide detailed information: What's the Undeposited Funds account?

Additionally, I'll add this article that tackles reconciling in QBO to ensure your accounts are balanced and accurate: Reconcile your transactions in QuickBooks Online (QBO).

Reach out to me again through this thread if you still have questions or concerns with deposits. I'll be around for you. Take care and have a nice day ahead.

I followed your directions, but I was not able to reduce the balance in the Opening Balance Equity. I got an error message when I selected Delete on the transaction which read "This transaction will cause a deleted ACCOUNTS named Cash on hand (deleted-1) to have non-zero balance." 

I was unable to complete the deletion.

Is there a setting that can be adjusted to allow this?

Thanks for getting back on this thread, @AdequatelyHydrated. I'll help you get around the issue you've encountered while trying to follow the steps provided by my colleague above.

The error message "This transaction will cause a deleted account named (name of account) (deleted) to have non-zero balance" means that the transaction you're trying to delete is linked to an inactive account. To resolve this, I'll provide some troubleshooting actions to help you fix it.

First, activate the deleted account. Here's how:

1. Go to the Gear icon and choose Chart of Accounts.
2. Select the Settings and click Include inactive checkbox.
3. Find the account to restore in the list and choose Make Active from the Action column.

Once done, delete the transaction and restore the inactive account. The instructions for doing so are laid out in this article: Error: This transaction will cause a deleted account named (name of account) (deleted) to have a non....

Once settled, you can also check out this resource if you're ready to reconcile your account flawlessly: Reconcile an account in QuickBooks Online.

If you need more help with your transactions, this thread is open for replies. The Community always has your back. Take care always.

If I have past undeposited funds in my qb and I change them to deposited does that record as income today?  Or is that income recorded when I originally marked them paid?

Good to connect with you here in the community, Tyler-1121. I'd be glad to answer your questions about income and deposits.

The payments will count as income when they are received, not when deposited into your bank account.

The Undeposited Funds account in QuickBooks Online functions as a holding account for payments like invoices and sales receipts until you're ready to deposit them.

Here's an article with additional details on how the Undeposited Funds account works: What’s The Undeposited Funds Account?

Additionally, here are a couple of helpful articles with more information on undeposited funds:

• How To Create A Report Of Your Total Undeposited Funds
• Deposit Payments Into The Undeposited Funds Account In QuickBooks Online

The Community is always available if you have other questions for us, Tyler-1121. We're always here to provide more guidance on undeposited funds, recording income, creating reports, or anything else related to QuickBooks Online.