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How to Correct Undeposited Funds Without Deleting the Incorrect Deposits in QuickBooks

Just finished a remote QuickBooks session a few minutes ago with Brandon, he was a big help. While he & I were on the phone, we came across a situation and he fixed it, but I didn’t take notes and now I can’t remember all the steps. Let me back up a bit.  Initially I was receiving payments and had them going to Undeposited Funds and then depositing those funds into my reg checking account. At the end of August/1st part of Sept., I stopped doing that and just had everything going directly into my checking account. The problem I found is that the Balance Sheet doesn’t recognize any transactions deposited into Undeposited Funds so I have to go back through about 6 months worth of transactions and change all that to reflect them going into the checking account. How do I do that and will I then have to re-reconcile my bank account?
The balance sheet recognizes the payments, they’re just in the Undeposited Funds account instead of the checking account.  QuickBooks uses undeposited funds as a temporary holding place until you actually deposit the checks at the bank.  At that point, you should go to Banking > Make Deposits and select all the checks you are actually depositing from the list. 

If you have payments sitting in undeposited funds that you deposited manually, you need to clear them out.  You can delete the deposits you made without using undeposited funds and then deposit them correctly, but this will affect your previous reconciliations.  The beginning balance of your current reconciliation will change and the newly entered deposits will show up.  They offset each other, so all you have to do is check them off to finish your reconciliation.  However, this means you'll have a reconciliation report that doesn't match your bank statement.

So you might want to do the $0 deposit trick instead.  Go to Banking > Make Deposits, select all the undeposited funds that have already been deposited, then add an additional line on the deposit with a negative amount (bringing the deposit total down to $0) using whatever account that was used on the manual deposits (most likely a revenue account).  No effect on your checking account, but it’ll not only clear up undeposited funds but also the duplicate revenue you most likely created when you entered your deposits manually.

If you use deposit the $0 check to your regular checking account, you will see a $0 deposit that you should clear on the next reconcile.  For this reason, I prefer creating a "clearing" bank account that I used for all my $0 transaction tricks.


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This article is provided for informational purposes and is not intended to be construed as legal, accounting, or other professional advice. For further information, please consult appropriate professional advice from your attorney and certified public accountant.

Ruth Perryman - QuickBooks Specialist Written by +Ruth Perryman

Ruth is the an Intuit Premier Reseller that offers great deals on QuickBooks POS and QuickBooks Enterprise. She has provided expert QuickBooks help to thousands of businesses all over the world since 1996.

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3 Responses to How to Correct Undeposited Funds Without Deleting the Incorrect Deposits in QuickBooks

  • Lynn says:

    Hi Ruth,

    I have two the duplicate revenue at Service Income, I do not know how to correct it. I’ll try your $0 trick on Monday.

    Thanks

    Lynn

  • Vickie Daman says:

    Thank you so much for the “$0 deposit trick”. I have been looking for a way to clear my undeposited funds without effecting everything else. I tend to enter most of my deposits manually because I like for my check register to show who the money came from; however, this led me to having a ridiculously large amount in my undeposited funds that I had no idea how to clear until I came across your suggestion. Thank you!

    • Glad to help, Vickie!

      You might want to take a look at the Deposit Detail report (Reports > Banking) instead. It has much better info than the register.

      Ruth