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debselpwyo
Level 2

Fixing old undeposited funds

We are using QuickBooks 2019 Desktop for Mac, Version 18.0.9 R10, with 2-user licenses. I am now working for a small company who began using QuickBooks in 2005, but only for invoicing - they would create invoices & receive payments, but no other accounting was done in QuickBooks. The company began using QuickBooks for all accounting functions in 2015, but there are still 10 years of undeposited funds left over from the time when QuickBooks was only used for invoicing. We are left with 1.4 million in undeposited funds that has just been hanging around & messing up the Balance sheet, account summaries, etc.  Is there a way to quickly & easily "deposit" these funds to clear the undeposited funds account of these old payments without adversely affecting the other accounts? Some type of journal entry perhaps? Any help would be greatly appreciated.

Solved
Best answer May 26, 2021

Best Answers
Jen_D
Moderator

Fixing old undeposited funds

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

 

Allow me to join the thread and share some steps to help you further with the U/F corrections. To avoid affecting your account balances, you can use a clearing account to transfer the amounts.

 

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

 

  1. Go to the Lists menu, then select Chart of Accounts.
  2. Select Create +.
  3. From the Type ▼dropdown, select Cash on hand.
  4. Complete the account details.
  5. Select OK.

 

Once done, you can move the amount from the Undeposited Funds account to the clearing account using a bank transfer or a journal entry. 

 

After that, 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. Select the account you want to make inactive.
  3. Select Settings ⚙️, then select Make Account(s) Inactive.

 

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 this, please let me know in the comment below. I'll be right here to guide you further with the corrections. All the best!

View solution in original post

8 Comments
Mark_R
QuickBooks Team

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!

debselpwyo
Level 2

Fixing old undeposited funds

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.

queenee444
Level 1

Fixing old undeposited funds

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?

AbegailS_
QuickBooks Team

Fixing 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:

 

 

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

 

debselpwyo
Level 2

Fixing old undeposited funds

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
Moderator

Fixing old undeposited funds

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

 

Allow me to join the thread and share some steps to help you further with the U/F corrections. To avoid affecting your account balances, you can use a clearing account to transfer the amounts.

 

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

 

  1. Go to the Lists menu, then select Chart of Accounts.
  2. Select Create +.
  3. From the Type ▼dropdown, select Cash on hand.
  4. Complete the account details.
  5. Select OK.

 

Once done, you can move the amount from the Undeposited Funds account to the clearing account using a bank transfer or a journal entry. 

 

After that, 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. Select the account you want to make inactive.
  3. Select Settings ⚙️, then select Make Account(s) Inactive.

 

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 this, please let me know in the comment below. I'll be right here to guide you further with the corrections. All the best!

View solution in original post

debselpwyo
Level 2

Fixing old undeposited funds

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.

debselpwyo
Level 2

Fixing 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.

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