How to Fix Undeposited Funds in QuickBooks
You’ve got two choices to fix it:
1. Delete the sales receipt or the invoice payment (along with the invoice) that created the undeposited funds.
2. Delete the deposit you created, edit the item used on the sales receipt or invoice to use an item mapped to an expense account, and then deposit the payment through undeposited funds again.
It’s helpful to understand what’s happening behind the scenes. You can do this by selecting the Journal button in Premier or Enterprise, or using Ctrl Y to bring up the underlying transaction journal.
• A sales receipt debits undeposited funds and credits whatever account the item(s) is mapped to.
• An invoice debits A/R and credits whatever account the item(s) is mapped to.
• An invoice payment debits undeposited funds and credits A/R.
• A deposit debits a bank account and credits undeposits funds.
When you deleted the deposit and replaced it with a deposit that didn’t credit undeposited funds, you caused the undeposited funds balance to increase. By leaving the sales receipt or invoice the same, you also have over-reported whatever account the item was mapped to.
Journal entries aren’t usually a good idea in QuickBooks because most of the reports are based on transactions. But in this case, it would’ve been easier to use a journal entry for this type of reclass (debit revenue, credit expense).
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.