Receiving Payments and Making Deposits
Receiving Payments and Making Deposits
Receiving Payments and Making Deposits
LESSON 7 Receiving
payments and
making deposits
7
Lesson objectives, 188
Supporting materials, 188
Instructor preparation, 188
To start this lesson, 188
Recording customer payments, 189
Recording a payment in full for a single job, 189
Entering a partial payment, 191
Applying one payment to multiple jobs, 192
Entering overpayments, 194
Handling down payments or prepayments, 196
Making deposits, 200
Selecting payments to deposit, 201
How QuickBooks handles the deposit, 203
Getting cash back from a deposit, 204
Processing credit card payments, 207
How merchant services work, 207
Setting up your company file, 208
Using a QuickBooks Merchant Service account, 208
Reconciling your account, 211
Other ways to process payments with QuickBooks Merchant Service, 213
Using a non-QuickBooks merchant account, 214
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Receiving payments and making deposits
Lesson objectives
To learn how to record customer payments in QuickBooks
To learn how to handle customer discounts, partial payments, overpayments, or
down payments
To see how to record a deposit in QuickBooks, and learn how QuickBooks treats the
deposit behind the scenes
To learn how to enter cash back from a deposit in QuickBooks
To learn how to process credit card payments
Supporting materials
PowerPoint file: Lesson 7
Video tutorial: Enter and deposit customer payments
Video tutorial: Track upfront deposits and retainers
Online demo: QuickBooks Merchant Service for PCs
Instructor preparation
Review this lesson, including the examples, to make sure you’re familiar with the
material.
Ensure that all students have a copy of qblesson.qbb on their computer’s hard disk.
The following steps restore the exercise file to its original state so that the data in the file
matches what you see on the screen as you proceed through each lesson.
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The Receive Payments window lets you match up payments you receive with invoices
you’ve written. You’ll be working with the Receive Payments window in this lesson.
The first step is to enter the name of the customer from whom you’ve received
a payment.
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Receiving payments and making deposits
When you record the transaction, QuickBooks creates a journal entry. The following
table shows the journal entry for the payment.
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To choose which invoice a payment applies to, rather than having QuickBooks
apply it to the oldest one, you can un-apply the payments and apply them as you
wish. If you always want to select the invoice yourself, turn off the Sales &
Customers preference “Automatically apply payments.”
3 Click Un-Apply Payment.
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Receiving payments and making deposits
4 In the Payment column, type 1000 as the amount you want to apply to the second
invoice, and then press Tab.
When you record the transaction, QuickBooks creates a journal entry. The following
table shows the journal entry for the partial payment.
In this exercise, you’ll apply this single payment to invoices for multiple jobs.
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Receiving payments and making deposits
Entering overpayments
If a customer sends you an overpayment, you simply enter the amount in the Receive
Payments window, and QuickBooks keeps track of the additional payment. When the
customer has future invoices, you can apply the overpayment to those amounts—you
can even apply the credit directly to the invoice.
Suppose that Rock Castle Construction has received a payment of $12,500.00 from
Pretell Real Estate for the 75 Sunset Rd. job. The outstanding invoice for that job is
$12,412.18.
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Receiving payments and making deposits
QuickBooks holds the unapplied amount with the customer’s name. The next time you
enter that customer in the Receive Payments window, QuickBooks displays the credit
amount in the Unused Credits area. The customer’s balance also reflects the credit
amount.
To apply a discount for early payment for any customer whose payment terms include a
QuickStart Tip
discount for payment before the due date, use the Set Discount button in the Receive
Payments window.
Even if the customer has already sent you a payment for the full amount of the invoice,
you can apply a discount. QuickBooks holds any credit amount in accounts receivable
until you apply it to an invoice or issue a refund check.
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Later, Rock Castle Construction is ready to prepare its invoices and needs to invoice
Kristy for the labor the workers have already completed on the job.
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7 Click Apply Credits to apply the down payment amount made earlier towards this
invoice.
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9 This is the credit that you want to apply to the invoice, so click Done.
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Receiving payments and making deposits
QuickBooks updates the invoice and displays the remaining balance due ($400) on
the invoice.
To see all the transactions related to customers, grouped by customer and job, create a
QuickStart Tip
customer balance detail report. (From the Reports menu, choose Customers &
Receivables, then choose Customer Balance Detail.)
Making deposits
When you use the Enter Sales Receipt window (for a sales receipt where you receive
payment on the spot), the Receive Payments window (for payments on invoices), or a
payment item on an invoice, QuickBooks keeps track of the money you’ve received
until you deposit it in the bank. When you receive payments from customers, you can
either deposit each payment directly into a QuickBooks bank account or you can group
payments together to be moved to that account at a later time. QuickBooks allows you
to choose the method you prefer for depositing payments.
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If you set the Sales & Customers preference to always use the Undeposited Funds
account as the default deposit to account (this is the setting in the exercise file), you do
not see the “Deposit to” option in the Receive Payments or Enter Sales Receipts
windows.
It’s easier to reconcile your QuickBooks accounts with your bank statements when the
accounts display deposits the same way that your statements do. Use the following to
help you decided how to set the preference in your own business.
If your bank statement shows a lump sum for a deposit, group payments with other
funds for later deposit using the Undeposited Funds account.
If your bank statement shows each individual payment that was deposited, deposit
directly to an account.
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3 Click OK.
QuickBooks displays the Make Deposits window, which shows the payments you
just selected.
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QuickBooks displays your deposits and reduces the balance in the account by the
amount of the deposits.
3 Close the account register window.
Now you can look at the deposit transaction in the checking account.
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Receiving payments and making deposits
You can create a report that shows you a list of all deposits and the payments included in
QuickStart Tip
each deposit. From the Reports menu, choose Banking, and then choose Deposit Detail.
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3 Click OK.
4 In the Make Deposits window, type Petty Cash in the “Cash back goes to” field and
press Tab.
5 When QuickBooks displays a message telling you that Petty Cash is not on the
account list, click Set Up.
QuickBooks displays the Add New Account window with the account name preset
to Petty Cash.
6 Make sure Bank is selected in the Type drop-down list, and then click Save & Close
to return to the Make Deposits window.
7 In the “Cash back amount” field, type 200 and press Tab.
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QuickBooks displays the deposit subtotal amount ($2000.00) and the total less the
cash back amount ($1800.00).
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At some point during this lesson, you may want to show the online demo of how
processing credit cards works with QuickBooks Merchant Service. Because accessing the
feature requires a merchant services account, students won’t be able to follow the
procedures in this lesson using the sample data file.
Some merchant accounts complete the transaction at the time of approval and others
require “batching out” at the end of the day. As each transaction is authorized, the
money is transferred into a holding account with the merchant account processor. The
money from the holding account is transferred to your designated bank account on a
regular basis, usually two to three business days after processing (depending on the
network and banks used).
The sales transactions that you have processed on a given business day are accumulated
and deposited into your bank account as totals (typically one amount for Visa and
MasterCard transactions and another total each for American Express and Discover). In
many cases, the card processing fees come out at the same time, either as a separate line
item or already subtracted from the total. Some processors wait and take the fees out at
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the end of the month. In addition to your monthly bank account statement, you'll
receive a statement from the merchant account processor that shows the total amount
of each day's transactions during that statement cycle and the fees that were charged.
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3 Make sure the “Process credit card when saving” checkbox is checked.
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5 Verify that the information in the window is correct, especially the credit card
number and the zip code, and then click Submit.
QuickBooks Merchant Service verifies the card, processes the transaction over the
Internet, and approves or rejects the payment. Note that the address has been
verified by Address Verification Service (AVS).
6 QuickBooks transacts and records the payment at the same time. You don’t need to
re-enter the transaction into QuickBooks separately like you might with a
non-integrated service.
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2 To see which payments have been funded to your bank, click Get Funding Status at
the bottom of the window.
Those payments that have been funded to your bank will show “funding status:
funded to bank” with the date of funding.
3 In the Checkbox column, select the funded payments you want to deposit and click
OK.
QuickBooks displays the Make Deposits window.
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4 In the Make Deposits window, make sure you have the right bank account selected.
Also, make sure the “After saving, go online to account for credit card fees and
adjustments” checkbox at the bottom of the form. Click Save & Close.
QuickBooks takes you to the Fees & Adjustment page to download the fees. You can
decide which bank register you want to move the transactions to.
You can show the online demos here on how QuickBooks Merchant Service works for PCs
and how to match credit card deposits to a bank statement. View the demos from the
QuickBooks Merchant Services Demo page:
http://www.quickbooksmerchantservice.com/services/demos.php.
Additionally, there are a couple handouts that you might want to distribute at this time.
An educational CD on general credit card processing information called “Everything
you wanted to know about Accepting Credit Cards at your small business.”
A flyer that notes the special merchant account pricing that QuickBooks Merchant
Service is providing for SBDC small businesses. The offer code is “SBDC” and it is a
two month trial.
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