Correcting Customer Payments and Deposits
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QuickBooks – how to correct a customer payment when the deposit has already been recorded.
What if you find that you made a mistake on a customer payment? Simple right? Find the payment and correct it in QuickBooks. But what if QuickBooks tells you that you cannot make that change because the payment is already included in a deposit? Ok sure, then just go to the deposit and delete it so you can fix the payment. But wait! There are othe r payments included in this deposit, and those payments are ok! Moreover the deposit may be reconciled so I definitely do not want to delete it! What can I do then? This web cast will answer that question for you.
This can actually be handled in a few simple steps.
- Delete the line item from the deposit containing the payment that was recorded incorrectly.
- Replace it with a temporary line item containing the same amount.
- Fix the payment
- Bring the payment back into the deposit
- Delete the “place holder” created in step ‘2’
So let’s say we just realized we received payments are recorded a deposit but we accidentally recorded a payment from “David Hughes” that was really from another customer, Erika Pretell. We don’t want to delete the deposit because there are other payments recorded there.
We also never want to delete a deposit that has already been reconciled. How could it be wrong if it is already reconciled? Easy – let’s say you’re a bookkeeper and you’ve been hired to clean up the books of Larry’s Landscaping and supply. You find that Larry really doesn’t know bookkeeping too well. What he has been doing is posting invoices and applying payments, but not recording the deposit, leaving the applied payments in “undeposited funds”. Then when he gets his bank statements he sees that none of his deposits are on the books, so he records the lump sum deposits and books them all to an income account. Well besides having a ton of money sitting in undeposited funds that needs to be cleared out, Larry has now duplicated his income. This is going to make Larry unhappy when he has to pay his taxes on twice the income, but doesn’t have twice the amount of money in his account. Also when Larry presents his Profit and Loss Statement to the bank for a Line of Credit and the bank finds out that his income is doubled there, they will not be too happy and will likely not extend credit to Larry. So it is really important to fix this stuff and it is equally important to know how to fix it without creating an even larger mess. You cannot delete a deposit that has been reconciled – it will through your reconciled balance off, so even if your payment is the only one in the deposit, on a reconciled deposit you cannot delete it, you have to use the method described above and demonstrated in the video.
In this video tutorial we will show you how to correct both scenarios.
Review this video several times until you really understand the material. Then open a sample company file and practice doing this. Do this 3 or 4 times and you will get it for sure!
Now that you know how to do this you can first be aware of and look for situations like these where income is duplicated, and/or a payment was mis-posted on the books and you will now have mastered the knowledge required to correct these issues. You will know how to do this blind.