Undeposited fund account credit balance, how to fix it?

Hi All,

My client's book has a large amount of undeposited fund credit blance. And i found that there may be duplicated deposits. She had one sale invoice but two deposits to the bank. Does any one know how to fix the credit balance? BTW, what reasons may cause the undeposited fund credit balance? I really need your helps here, and very appreciated!!

  • 0

    Hi Shelly,

    Normally the undeposited funds account would have a zero balance if all deposits are made.

    Two ways I know of that this could happen is if your client:

    - Recorded a Deposits that transferred out of that account to the main deposit account, but later reversed one of the receipts or adjusted it to direct it to the 'main' bank account.  them, or if the client

    - started using Deposits with the account in a credit balance.

    If you run the G/L report with, and without corrections shown, the error should show up at the point where the balance stops cycling to zero when deposits are recorded.

    One practice that really makes the undeposited funds account messy, is if the deposited cheque face date is used, instead of the received date.   I've seen one charactor that the postmark was always a full month after the cheque date.  You can't spend money that you don't have, so the received date should be used.  

    I recommend:

    - Use the received date

    - put the cheque date and number in the comments.   (i.e. Chq 12345 dated May 24)

    - Print and save, but Don't post the deposit until you get back from the bank.

    To fix it:

    Find the double-recorded receipt in both accounts.   If it was included in a deposit from 'undeposited funds' to the main deposit account, and the receipt has not been reversed, remove the receipt that was recorded as deposited directly to the main account.   (you can't reverse the deposit).

    If the receipt was reversed after the deposit was recorded, enter a G/L transaction on that day with the same reference to debit Undeposited Funds, and credit the 'main' bank account.

    All Bank Deposits do, other than print the deposit slip, is to debit the deposit account, and credit the Undeposited Funds account.

    The Deposit Log report may also help sort it out.

    I hope that helps, please post back or mark any answers that helped you.

    Randy

  • 0 in reply to RandyW

    Hi Randy,

    Thank you for the reply.

    I found that my client created an sale invoice and received payment by a chq. Then she went to "made deposit" to deposit the chq to the bank. After, she went back and make some changes on the original sale invoice. When she went to "make deposit" again and saw the same chq listed in "add chq to deposit slip" window, so she did the "make deposit" action again. In this situation, she had double-recorded deposits.

    I guess the way to fix it is like you said to remove the second deposit, but if I do so, the bank will be off a large amount (but my bank is the correct amount and the bank recon is correct, that's why I cannot make any change related to the bank account). I really don't know how to fix the credit balance of the undeposited fund without affecting the bank balance...

    If my client makes changes to sale invoices after "make deposit" has been done, what can she do about the SAME deposit listed in "add chq to deposit slip" (she already deposited it BEFORE)? Can she remove it?

    Shelly

  • 0 in reply to Shelly M

    Pull up the actual journal entry for the original deposit and then the second deposit as well. Verify that both debit the same bank account. If so, AND the bank balance truly is correct, then somewhere along the line, an adjustment to the bank must have been made. Find that adjustment - it will credit the bank and debit something, and then you'll know where to post the large credit to. Common accounts for the adjustment to be made to are 1. bank charges and interest, 2. cash over/short, 3. sales and taxes.

    tip: if you look at the account transaction and check "show corrections" you'll see where the original invoices paid by cash/cheque were each entered, then reversed and re-recorded with the revised amount.

    How can she go and change an invoice that is already paid and funds deposited? She received $x, she can't change that fact, especially since she apparently already put that same money in the bank! Me thinks her methodology needs some work.

  • 0 in reply to AmyGurl

    Hi Shelly,

    I tried what you think happened, and yes, the deposit can be entered twice as you say.

    I'm guessing that she's entering invoices as 'paid by cheque' so there is a new transaction created each time she adjusts an invoice, perhaps to add a note, fix the shipping address or change a date, who knows?.   Sage 50 (rather stupidly, actually) creates a new cheque entry that can be placed in a deposit

    (there is no error message to indicate that something is wrong, just a credit balance in the undeposited funds account).

    The fix is normally to just debit undeposited funds, credit the bank account, but that only works if someone didn't try to fix it first.  If you print of the G/L listings of the Undeposited Funds, and Bank accounts, and cross everything off that looks right, you should have the (hopefully few) doubled entries.  

    It should be easy to see at which G/L entry the deposit was double-recorded, by running a G/L report of the Undeposited Funds account in transaction order.  The balance after each deposit should be zero, so you should see when it stops going to zero.  (if the error is in a prior fiscal year, it will go back to the amount of the last year's error each time).

                    Balance

    invoice       xxxxxx

    invoice      xxxxxxx

    deposit           0.00