How to record payments received on 12/31 but in process until 1/2?

blacklabatx · ‎March 08, 2020

Hello,

My question is, the sales are on 2019 sales reports because the sale occurred on 12/31 and the customers paid on 12/31 with credit cards. So I did receive payment on 12/31, but it was in process at the bank and the deposit from the merchant account only showed on my bank account on 1/2, next business day.

I am on cash basis ( modified cash), would these sales transactions be recorded for tax purposes for 2019, or 2020? I also had some checks I deposited but they of course were only available to me the next business day. Would those be 2019 sales since I received the payments on 12/31?

How would I record it at the end of the year, undeposited funds? They were deposited but they do not show on my bank account on 12/31 yet....

Thank you for helping me

BL

john-pero · ‎March 09, 2020

I disagree with the previous answer. It has been proven and upheld that the USPS acts as your agent in that checks postmarked 12/31 are considered to be yours as of that date and not when they arrive when you deposit them.

Same goes for a credit card transaction. You ran the card on 12/31 and recorded the received payment as such - or should have. It is 2019 business. Card, check, cash it is all the same on cash basis. You could be sitting on a boatload of checks written 12/31 -not yet deposited but that doesnot matter.

If you are going to claim 12/31 checks that arrive in the mail as 2020 you might need to keep the envelope they came in as long as it was postmarked in 2020.

And you cannot delay the posting of a credit card payment to when it is actually funded any more than you can record checks you write asof date they clear yourbankrather than date you created them.

If you properly record the Receive Payment for a credit card when entered-swiped-dipped QB will properly report your cash basis income to include that payment.

A final illustration. You don't delay posting a customer check payment until after enough time has passed that it does not get returned nsf

View solution in original post

AlexV · ‎March 08, 2020

I'm here to share more details about the accounting methods, blacklabatx.

When using the Cash basis, you'll have to record the payment with the actual date you received it. Unlike in Accrual which is based on when you perform the service or the day you sent the invoice.

We'll have to use the January 2, 2020 date since you mentioned that you are using cash basis. Though, if you want to include it into your 2019, then you can record the payment using the 2019 date. Please refer to this article about cash and accrual accounting methods.

I also suggest seeking some help from your accountant. They are the best if you need further guidance on how to record such payments.

Keep on posting if you have more questions. Have a great day!

john-pero · ‎March 09, 2020

I disagree with the previous answer. It has been proven and upheld that the USPS acts as your agent in that checks postmarked 12/31 are considered to be yours as of that date and not when they arrive when you deposit them.

Same goes for a credit card transaction. You ran the card on 12/31 and recorded the received payment as such - or should have. It is 2019 business. Card, check, cash it is all the same on cash basis. You could be sitting on a boatload of checks written 12/31 -not yet deposited but that doesnot matter.

If you are going to claim 12/31 checks that arrive in the mail as 2020 you might need to keep the envelope they came in as long as it was postmarked in 2020.

And you cannot delay the posting of a credit card payment to when it is actually funded any more than you can record checks you write asof date they clear yourbankrather than date you created them.

If you properly record the Receive Payment for a credit card when entered-swiped-dipped QB will properly report your cash basis income to include that payment.

A final illustration. You don't delay posting a customer check payment until after enough time has passed that it does not get returned nsf

blacklabatx · ‎March 09, 2020

Thank you for your response.

I received the payments on 12/31 via credit cards, it was just being processed by the merchant service. As for the checks, i received and immediately deposited the checks on 12/31. They were in process at the bank, clearing on 1/2/2020.

I m clear that I received the payments in 2019, I am not sure what is considered constructive receipt, when it is actually available to me, or when I received it. The merchant accounts take 1 day to clear so it was not available to me until 1/2.

I am uncertain on how to report it in my books also: it is NOT part of my bank account balance on 12/31) , so in 2020 it will show as deposit but it is not 2020 sales. But, if i show it as undeposited funds that also seems a bit off because I did deposit it but it has not cleared so it is not part of the year end cash on hand.

Thank you so much!

BL

blacklabatx · ‎March 09, 2020

Thank you for your help. I did deposit it on 12/31 and the credit cards were run on 12/31. Would this be undepostied funds at year end i Quickbooks? The funds were not part of the my bank account /cash as of 12/31, but it was not really undeposited either. Is there such a thing as deposits in process or something like that? Thank you for taking the time to respond.

BL

Kendra H · ‎March 09, 2020

Hi there, @blacklabatx.

Thanks for following up on this thread.

Workflows vary from business to business, so I recommend asking your accountant to make sure this would work for you.

Also, if you have any further questions, you can contact our Customer Support Team as well. They'll be able to pull up your account in a secure environment and also be able to get on a screen share.

Here's how to reach them:

Click on the Help option on the top menu.
Hit Contact Us.
Enter your concern in the search field.
Select Let's talk.
Choose Get a callback to connect with us.

I'm always available here to lend a helping hand if you need anything else in QB Desktop. Have a safe and productive week!

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How to record payments received on 12/31 but in process until 1/2?