Unapplied cash payment income and undeposited funds on profit& loss

stephburgos · ‎March 12, 2021

I need help!

I work for a company that had quick growth and had no bookkeeper for years and a cpa that was not very informative to them in regards to the book keeping. They had no idea what reconciling even was.

I had to start with 2019 for the books the book so they can file 2019 taxes, I fixed the linked bank accounts and started off 2019 with a fresh account due to no reconciling for year that were already filed.

Now I find myself stuck and don't know what to do to fix a possible error.

I think I may know what ive done wrong but don't know how to fix it or if its even possible to fix.

when I look at the p&l for 2019 I see a few things in the income categories that shouldn't be there.

when I select total sales, under the split category, I see most transactions categorized as accounts receivable, but a few say chase 2019 and others as undeposited funds.

then beneath total sales I see 2 other categories listed as uncategorized income and unapplies payment income.

I know I need to fix the uncategorized business income categories however for the unapplied cash payment income I don't know what or why those are there.

what I think I did wrong is this...

when a deposit from stripe for 10 different payment gets deposited into the account, I enter the 10 payments (full payment including the fee that stripe takes) and put them in undeposited funds then I enter the deposit (prior to the fees charged) and then I link the deposit I entered to the bank transaction, since there is a difference in the amounts I check off the resolve option and enter the stripe fees as a negative amount. I think im doing that right?

anyways for a few of the payment I got lazy and instead of entering the deposit I was just matching the bank transaction deposit directly to the payments entered. could this be what's causing this issue? if so how can I fix it the year is all reconciled?

any advice or suggestions help. ive been stressing on this for a few days now so I decided to come on here and seek help

john-pero · ‎March 13, 2021

You are handling the stripe payments correctly although if you know the fees being deducted before your bank syncs you can add the negative fee to the deposit.

If unsure, and have entered your sales, ignore the match or add option that is not reflective of particular sales. A single daily journal or sales receipt works fine for most retail where customer names do not need tracking.

If your payments entered are attached to sales receipts the matching to the deposit without first creating the deposit is not the problem.

Unapplied cash income can arise from prepayments where money is recorded as received prior to invoice date and no matter how much you try to change dates to match up sometimes it just never clears. Toggle your report between cash and accrual. If the unapplied amounts disappear when you view accrual this might be the issue.

In any event a received payment must be applied to something or simply considered as miscellaneous income. If it went in the bank it is either income, loan proceeds, or owner equity. There are no other options.

Also look for any unapplied customer credit memos. Look for any open invoices. An invoice on 11/1 of $50 with a separate payment of $50 on 10/31 would be an example. Customer balance is zero but this would be a case where your issue might arise. One solution is change the date on the invoice to before the payment if you can.

stephburgos · ‎March 15, 2021

so youre right, when i looked at the p&l on accrual the unapplied cash payment do not appear. how can i fix that so my p&l can be correct? is. that something i should be concerned about to fix?

stephburgos · ‎March 15, 2021

also what should i do with partially payed invoices? how to i get them to 0

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Unapplied cash payment income and undeposited funds on profit& loss