Once again, I've screwed up and I need help. (Windows XP Home, QuickBooks
I have a very secondary line of work which I was (ggratified and) horrified
to see has taken off over the past year.
Unfortunately, I didn't take it seriously at the time and didn't create
invoices for what were initially minor jobs. My accountant now says I should
have raised invoices.
I was hoping to create an annual total invoice and show cheques deposited to
the business account as partial payments. The cheques were deposited using
the "Make Deposits" window, showing the income account for the secondary
line of work.
If I create an invoice and use payment items to pay down the total over the
year, I finish up with twice the actual income.
It's been a long day, and I can't make sense of the "Help" screens on this.
Does anyone have any advice, please?
There are several painstaking ways to accomplish your task but I'd question
your accountant asking you to go back and do all this work. Be certain
he/she wants you to do this for 2005 rather than just backtrack for 2006.
Neither of the following two methods will affect your bank reconciliations.
1. Edit all deposits and change the income account to the accounts
receivable account, making sure to properly assign the customer/job name.
You'll end up with all your payments showing as negatives on your Accounts
Receivable reports. The invoice plus the payment credit will either wash
out at zero or show a customer balance.
Using this method requires you to then go to Customers>Receive Payments and
manually receive all those credits against the invoices in order to get them
off your A/R reports.
2. Re-enter your received payments via the Customers>Receive Payments
window, temporarily doubling your income. Edit each deposit, select the
Payments button, select the customer payment that matches the one on the
deposit, after it appears in the Make Deposits window under the original
entry you can delete the line of the original entry. This way the
reconciled deposit stays the same, you just substituted the payment you
created in Receive Payments for the one you originally entered as an income
This is the point where I get confused about the "Receive payments" - since
I set up invoices at the end of the year (not realising I'd need them
earlier), I thought that "Payments items" would be the answer, as the
payments were received before the invoice date. Can I do this anyway, even
if I have a global invoice with a later date?
Same question as above - can I use "Receive Payments" for an invoice dated
after all the payments have been received?
[Sorry if these are really stupid questions, I've been staring at the
accounts and the "Help" screens and manual for several hours now.]
You can apply payments to any invoice you wish as long as they're from the
same customer, regardless of date.
If I understand you correctly you created one invoice per customer covering
a year's worth of billing but have many small payments given at the time
services were originally rendered.
If that's right then method 1 would probably be fastest for you. You still
have to edit each of those original, cleared, deposits as there's no way
Once all those payments show up under each customer with only the one bulk
invoice you'll be ready to clear-out the zero balance customers. That's
where you'd go back to Customers>Receive Payments because you have to tell
QB that the payment/credit amount showing in A/R should be applied to the
invoice of the same amount also showing in A/R.
For the customers with remaining balances you can leave things as they are
for now or apply the payment to the invoice and A/R reports will just show
the balance due on the invoice.
Almost. You can't apply a payment to a future dated invoice, because the
invoice hasn't hit the A/R yet. However once the day the invoice is dated has
passed then you can apply any payment to it. Happens all the time when a
customer overpays and says just put it on my next order.
Thank you - this all worked nicely. However, for anybody tempted to do this,
a remaining drawback is that if you deposited more than one cheque, QB won't
allow "more than one A/R or A/P" per deposit, so you have to create an
artificial deposit, which confuses the bank statement ...
Its been a long morning so my mind is numb at the moment. I don't
understand what you mean by multiple deposits and only one A/R or A/P
account. You shouldn't need to create anything with the method I described
and neither method should affect your reconciliations.
My hunch is that you made deposits containing multiple payments/checks.
When using Customers>Receive Payments to apply payments you should be
recording them to Undeposited Funds. That's where they're stored for your
use when you edit the original deposit and replace the manual line item
going to the income account with the line item, or items, from Receive
Your hunch is correct - I made (for example) a deposit containing three
cheques, two for one customer and the third for another. However, the
problem arose before I got to the Customers>Receive Payments stage, when I
was editing the (multiple) deposits entries. This is where QB told me I
can't enter more than one A/R or A/P per deposit, when I tried to change the
account for the second cheque to A/R.
Okay, I see what you're saying. You chose to just edit deposits to point
all payments to the A/R account. I didn't foresee the problem you mention
when telling you about that method. The other method, where you (first)
re-record all payments received using Receive Payments and placing them in
Undeposited Funds, temporarily doubling your income. Then you'd edit each
deposit and replace lines in the deposit that go to income with the matching
payments sitting in Undeposited Funds.
I apologize for not foreseeing that glitch before. Obviously, when I said
this would be a painstaking task, I wasn't exaggerating.
When you make the payments against the invoice, apply them to Undeposited
Funds rather than the Bank account. Open the original deposit, select the
replacement payment(s) which correspond to the income originally recorded
from the Undeposited Funds list (you may have to click on the Payments
button at the top of the Make Deposits window). This should insert the
replacement payment (coded to Undeposited Funds account) on the last line(s)
of the deposit. Delete the original line (click on the line & use
ctrl-delete) to remove it. This should leave you with the invoice payment
assigned to the correct deposit & leave the deposit TOTAL unchanged.
If you did not 'bill' the customers, then why do you need to create invoices
after the fact?
Are you selling inventory items? Are your services subject to sales tax? If
not, why invoice?
I'm not sure of the tax requirements in the country/area you are from. If
your company is required to use accrual-based accounting, end-of-year
invoices will certainly muck up your previous quarters. All income will show
as having been posted end-of-year.
Again, why is this a problem?
That's because when you create the invoice, you are entering income
transactions. Invoices also increase the value of accounts/recievable (the
money that is owed to you).
If you want to use 'post dated' invoices to 'correct' your books, you must
change the income account on each deposited check in question to 'accounts
receivable', making sure that the customer name is associated with the
check. This will create a credit to each customer account. These credits
would be applied to any open invoices using the 'Receive Payments' window
for EACH customer. NOTE that your accounts recievable balance history WILL
BE SKEWED due to the fact that you will be subtracting money owed BEFORE you
have created invoices to reflect the balance due.
Note also that in order to change the accounts on the deposited checks, you
will most likely have to delete the old deposit and re-enter. This means
re-reconcilling your bank statements in turn.
If your accountant is insistant (for whatever reasons) that individual sales
be recorded, may I suggest you look into using sales receipts? This will not
necessarily reduce the work you have ahead of you; you will still need to
enter the sales, and the sales will be entered individually, as opposed to
one end-of-year record per customer - and the issues involving editing the
bank deposits will still exist - BUT the income activity and accounts
receivable history will be unaffected. You will also have eliminated the
need to 'Recieve Payments' for each customer after entering your changes.
We're an S corporation, and the accountant said that services (not subject
to sales tax) supplied through the corporation should have invoices
attached. To be specific, I sing, and last year this took off, resulting in
a bunch of 1099s.
Because they were deposited before I created the end-of-year global invoices
for each client.
It's only 5% or so of total sales, and I typically get a cheque before or
directly after every job, so A/R wasn't a serious problem (and this year I'm
handling it differently).
You're absolutely right. Fortunately, I got away with it this past year, as
I didn't reconcile the business account until now. (Something else I'm
I'm raising invoices for the services as the clients cut the cheques, so
there's no further problem.
Thank you for the help!
It shouldn't mean either. I often go back and change accounts on reconciled
deposits without a problem. The deposit isn't changing, only the account
its associated with, therefore the change has nothing to do wtih the
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