Now my Undeposited Funds on my Balance Sheet is always -50. I’ve read all of the questions and answers but nothing I do will clear this up because in order to clear Undeposited Funds, I have to use the Record Deposits and it duplicates the problem. I’ve removed the original “fixes” and now I’m back to a $50 item showing up in “Record Deposits” that I need to remove. I have done what has ben suggested here to clean up my undeposited funds and when I check to see that it was done correctly it still showing in undeposited funds.

Offset the negative value

Do you have a growing balance in Undeposited Funds? Do you have lots of payments in Undeposited Funds? Have you tried to fix it with a Journal Entry and discovered the payments are still showing up to be deposited? (you can’t fix Undeposited Funds properly with a Journal Entry in QuickBooks).

This is most common when you batch your deposits — only going to the bank once or twice a week — or when you accept a credit card payment and it takes a day or two for the funds to clear your bank account. The undeposited funds account is meant to be a temporary account. It’s where do contra assets go on a balance sheet unique to QuickBooks Online and its main purpose is to make bank reconciliations easier. Typically, when you make multiple bank deposits on one trip, the bank combines all individual checks into one transaction. In other words, what you see on your bank statement does not match what you see on your itemized bank deposit slip. You’ll need to create first a new journal entry from the clearing account to transfer the amount to Undeposited Funds.

1. Once you have determined all deposits have been recorded properly, open the Bank Deposit screen again and review what is in the Undeposited Funds account.
2. However, it would be best to consult your accountant for the category or account to use.
3. Afterward, you can deposit the payments into the appropriate accounts to zero out the balance in your UF account.
4. Accurately record the date a payment was received.

If I do a Bank Deposit, even with the journal entries to offset the negative, the Undeposited net sales defined Funds register will just go back into the negatives. The only way to keep Undeposited Funds balanced is to leave the journal entries in the Bank Deposit screen and this doesn’t seem like a solution. Then, I have updated the answer above to follow through on using a clearing account to remove the pending in your undeposited funds. The QuickBooks balance is the total balance of all bank transactions that you’ve added or matched to QuickBooks. While the bank balance is your bank’s actual balance from the last bank feed update. If the Bank balance is lesser than your QuickBooks balance, there might be bank transactions that are causing the difference.

How to use QuickBooks Online’s Undeposited Funds account

Then, recreate it by selecting the pending payment. The best option here is the suggested steps provided by our Super Explorer Lynda, to create a giant deposit and drop-down a line with a negative amount of the total deposit to clear the funds. Use the following steps to help you create a Journal entry and offset the value of a negative deposit in Undeposited Funds. I can see the importance of clearing out the journal entries in the Bank Deposit page in QuickBooks Online (QBO), @SG91. That’s why I’m here to guide you on the steps you need to take care of this. Otherwise, you run the risk of either understating or overstating your income, both of which will have tax implications.

Reasons to use the Undeposited Funds account

Also, you added a bank deposit to your bank account as an income. To verify this further, you may need to run reports (Profit and Loss) and make the necessary customization. To follow through to the suggested by someone you mentioned, you’ll need to deposit those journal entries to a clearing account.

QuickBooks Tip: Clean up and Fix Undeposited Funds

I’m sure deleting the payments all together would create the same problem. Please don’t hesitate to contact me if you need help adjusting the UF account balance or any other QuickBooks-related matters. One of our primary goal is to maintain high accuracy level, keep an eye on our transactions and manage in case of any financial discrepancies. It’s not uncommon to follow an improper workflow in QuickBooks, resulting in a balance. If when to prepare multiyear financial statements it’s still the same, I’d suggest contacting QuickBooks Care team.