Banking and Undeposited Funds

by Bek
(Australia)

Hi Jennifer,

I am having trouble with banking and undeposited funds.

I am baby stepping my way around QB's trying to recover an account that has not been reconciled since Oct 2004 - very bad.

Banking has not been done in the correct manner for a long time eg, instead of doing it on QB first and getting amounts to equal undeposited funds, the cash box was just cleaned up by taking random amounts and banking them rather than a total of sales.

Now the problem is trying to enter the deposits into the system to match bank statements as selecting from undeposited funds is never going to equal the amount banked because of the adhoc nature of what was banked.

Could you please suggest possible courses of action.

Thank you,
Bek

Jennifer replies:

Hi Bek,

In this situation there are only two things I've been able to do:

1. Locate a deposit book or other record of the actual detail of the bank deposits. This will enable you to record them correctly.

2. Look at the bank statement. Locate the total of the deposits for that month. Go to the "Payments to Deposit" screen and "grab" this same total of deposits, or at least as close as you can get. Make a small adjusting entry in the actual deposit screen so that this total matches exactly the total of the deposits on the bank statement. Save the transaction.

Assuming the checks and withdrawals have been entered correctly, you can now reconcile this account.

I hope this helps with banking and undeposited funds. Let me know by posting a comment below. Thanks for writing.

Comments for Banking and Undeposited Funds

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Jun 27, 2008
Thank you
by: Bek

Thanks for the advice, with a bit of trial and error I got the books to balance EVENTUALLY using less 'creative accounting' than I thought.

Thanks for the help and the service you are providing, Im sure as I continue on I will need your help again

Cheers, Bek

Jul 28, 2010
undeposited funds
by: Anonymous

Hi Jennifer,

I just took over the books from the previous bookkeeper for a hair salon business. I am very very confused over the use of the undeposited funds. Ex: For the month of Nov. 09 the ex bookkeeper recorded in the General Journal:

DR CR
Services 11992.50
GST Payable 599.63
Tips 1178.10

TD bank 15,045.98
Undeposited Funds 1,275.75

I had checked the November sales over and over again with the Bank Statement and everything has been deposited. There shouldn't be any undeposited funds. Do you mind sheding some light on this for me? I would really really appreciate your insights as I am extremely frustrated by this. Thank you in advance.

Jennifer replies:

I have no idea why the previous bookkeeper used Undeposited Funds in this transaction. Undeposited Funds basically means "Cash in Transit," which means "cash received from a customer but not yet taken to the bank."

If the previous bookkeeper understood the concept correctly, then it means that as of the date of the journal entry, there was $1275.75 in customer payments that had not yet been taken to the bank. If the previous bookkeeper did NOT understand the concept correctly... well like I said already: I really do not know. Is there any way you can contact this person to ask?

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