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  #1  
Old 01-02-2018, 12:39 PM
Juro Juro is offline
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question from client about recording deposits from tenants.

Hope you had a happy new year and Christmas
I need some advice on the QuickBooks chart of accounts. We collect $1,000 from our clients as an opening deposit when we set up a new bank account for them. Historically we showed this in QB as a liability account (Client Funds). The idea being that when we are holding it itís a liability as itís not our money, when we deposit it into their account, it then comes out of the liability account and balances out.

However in practice, that doesnít happen and QB seems to enter 2 credits, the invoice and the client payment, but only 1 debit, consequently the account doesnít balance.

If we have an income account and a separate COG account in theory they should both grow the same and balance. But if we do it that way are we increasing our business income and COG, when in reality itís not part of our business income.

What is the best way to handle these transactions.???????
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Old 01-02-2018, 05:09 PM
Juro Juro is offline
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Thanks for the reply, but I'm not sure I explained myself well enough.

We issue an invoice (otherwise the client won't send the money) see attached. typically we'll collect the invoiced amount from the client by ACH in to our Chase checking account. we'll then move the $1,000 to our Escrow account, once the clients bank account is open we'll then transfer their $1,000 by ACH. That bit is easy. the bit we're struggling with is how we recor it in QB.

We have 2 products as you can see from the invoice. The 'Opening Deposit' was stup as arriving into the 'Client Funds account' which is setup as a 'Liability account'. The product was marked as 'We purchase it' and the cost account was setup as the same as the income account. My reasoning being that the funds be added and removed leaving the account balancing at zero.

That didn't seem to work, now we're stuck.

We also have lots of strange accounts in our Char of accounts and I'd really like to go through them with you and sort them out properly.
Attached Files
File Type: pdf Test Invoice.pdf (12.1 KB, 2 views)
File Type: pdf client funds acct (chart of Accounts) 1.pdf (24.6 KB, 1 views)
File Type: pdf opening Dep (prods & Servs).pdf (27.7 KB, 1 views)

Last edited by Juro; 01-03-2018 at 12:25 AM.
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  #3  
Old 01-03-2018, 05:43 AM
Rustler Rustler is offline
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the first issue is the opening bank dep service item
that is the initial 1K, and the income account should be the client funds liability account, and not income

then you would deposit the 1K to some escrow type bank account to hold it, later you move it to the actual client bank account you create

The item for the new bank account fee should post to income, you do not show the item screen for it. And of course you deposit it in your operating funds account.

What ever you pay to open a new account is an expense, you do not net income and expense in one account, income is reduced by expense on the P&L
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Old 01-03-2018, 11:03 AM
Juro Juro is offline
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Smile

Thanks, Rustler. Sometimes it is hard to understand what the client is talking about. The hardest part is how to word a response that they can understand, too.
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  #5  
Old 01-18-2018, 11:23 AM
Juro Juro is offline
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Quote:
Originally Posted by Juro View Post

However in practice, that doesnít happen and QB seems to enter 2 credits, the invoice and the client payment, but only 1 debit, consequently the account doesnít balance.

If we have an income account and a separate COG account in theory they should both grow the same and balance. But if we do it that way are we increasing our business income and COG, when in reality itís not part of our business income.

A customer invoice will always record a debit to Accounts Receivable.
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