in this changing accounting systems video we're going to learn all about setting up undeposited
funds undeposited funds set up is the last part of setting up your accounts receivable undeposited
funds is another peripheral or subsidiary area of data that must match the balance of an account in
the trial balance chart of accounts and we know the name of the account that everything has to
equal to is called undeposited funds the details inside the account include checks cash and credit
card swipes from payments of customer invoices and it also includes checks cash and credit
card swipes from sales receipts that we previously recorded undeposited funds has to be set up after
account receivable and accounts payable have been set up but before the main set up journal entry it
comes after those two things because it's really part of the accounts receivable setup because
no matter what we might have some payments for invoices that have not yet been deposited as of
the transfer date there are only three possible things that can be in undeposited funds at the
moment we switch over from the old system to the new it could include invoice payments to invoices
that are currently open as of the transfer date it could include money we collected from sales
receipts that we recorded in the previous system or it could include invoice payments to closed
invoices customers gave us money and we have already applied the money to past invoices
the check or the credit card swipe would still be sitting in undeposited funds now for invoice
payments to open invoices in other words anything sitting in undeposited funds that has already been
applied to invoices that are still currently open we have already recorded them into undeposited
funds as part of the accounts receivable setup all we have to do is make sure that they are received
into the into the undeposited funds account and not the cash and bank account as we're recording
those payments in our new system if you record a payment to the wrong deposit account you must
change them one by one until the details match the old system in other words if you were setting up
the new system and you put in a customer payment that you put in as deposited cash in bank but
it's really supposed to be in undeposited funds or vice-versa you have to go and fix it so it matches
the old system so for both QuickBooks desktop and QuickBooks Online let's take a look at what's in
the old system and compare it to what we have in the new system after the accounts receivable and
accounts payable setup first we'll compare the old system with the new system using QuickBooks
desktop then we'll do it again for good measure with QuickBooks Online so for QuickBooks desktop
the primary window is the new system and the secondary window behind it is the old system
so if we take a look at the trial balance in the old system it has the old numbers just like we
finished with at the end of the quickbooks online course but if we look at undeposited funds in the
old system and we can see it's only $4,200 with QuickBooks desktop you can double click
and you can actually see in the account which ones have already been deposited the desktop
version includes this column called cleared and anything that's checked inside the undeposited
funds account has already been deposited into the bank so right now when we look at the old
system or the remaining numbers at the end of the old system the only item that does belong
in undeposited funds is this sale receipt from March 14th it's the only one because we received
a check for this sale receipt and not cash so the instructions told us not to deposit it it
only told us to deposit the cash so this sale receipt with the check that we received from
candy for this sale receipt should be sitting in undeposited funds because that's what we finished
with with the old system now when we look at the new system we can take a look at the trial
balance and see that after we set up only accounts receivables and payables undeposited funds was
instead 1680 not the 4200 and when we double-click and see why is it 1680 what we actually see are
three payments that don't belong there these three payments were the mistake that I was referring to
in the previous video in the previous video when we set up accounts payable we were supposed to
record these payments as deposited into the bank already but I purposely had you make the mistake
by having it go into undeposited funds so that you can experience fixing this mistake so all we
have to do is remove in the new system we have to remove from undeposited funds what does not
belong there so all we have to do is double click the payment change the deposit account to cash and
bank and save yes and then notice it disappears from undeposited funds change it to cash in
bank because it is in cash and as of the transfer date do it to the last mistake and now all of the
payments that have been applied to open invoices have been properly deposited in the bank and now
you can see the negative balance of cash has gone lower negative because we increase the balance by
depositing those items from undeposited funds and now you can see undeposited funds now has zero
as we continue to correct it the next thing that was in undeposited funds in the old system that's
missing from the new system is this sale receipt right here if we go to the old system remember
we said that the balance of undeposited funds in the old system as of the transfer date was
$4,200 and that's because we received a check for the March 14th sale receipt from candy and that's
the only thing that's supposed to be there well fixing that is very easy you see when it comes to
sale receipts that were in undeposited funds as of the transfer date it's the same idea as setting up
accounts receivable or setting up accounts payable you just enter them as you see them and make sure
that they get recorded into the undeposited funds account that's it now if you remember as
you record them other numbers besides undeposited funds will change usually income accounts but you
don't have to worry about that because we will adjust for those changes as we make the main
setup journal entry to correct the balances the same way we did in the original video when there
were results left over and we made our debit and credit for the difference between what was left
over and what were the balances in the old system so there's only one example of a sale receipt in
this case that we need to enter so let's go ahead and enter it and make the balance of undeposited
fun's finally correct now if we look at what's in the old system we can see that when we open
undeposited funds that sale receipt that we were talking about was March 14 2017 for candy
14 video hours so that's what we will put in the new system we will make a sale receipt for March
14th of 2017 and we will choose candy Charles just like we know video and 14 make sure that
the deposit account is on deposited funds because it was a check I don't remember which check number
it was it doesn't matter but now in the new system when we open the trial balance ladies
and gentlemen undeposited funds now has the same balance in the new system that it did in the old
system and what you're looking at right here are the numbers in the new system after setting up
receivables payables and undeposited funds and it is these money amounts that we would subtract
from the money amounts in the old system it is the money amounts right here in the old system
minus the money amounts oops gives me minus the money amounts leftover in the new system from
after receivables payables and undeposited funds and in our case these are the numbers we would use
to subtract to find the money amounts of the main setup journal entry and exactly what we did to
prepare undeposited funds and the desktop version I am now going to show you exactly what we would
do to fix it in quickbooks online now let's make those exact same Corrections in your quickbooks
online system let's go to the new system here and let's imagine we finished setting up receivables
and payables so the best thing to do is open reports and open your trial balance which is
the results of all transactions regardless of date now here's undeposited funds notice when we open
up the deposited funds accounts in QuickBooks Online notice that there are no checkmarks in
other words there is no way to find out in the quickbooks online system which ones have already
been deposited and which ones have not been deposited just by looking at the checkmarks
the only way that you can know is well you open the undeposited funds and you know it's there but
you can't tell what has been deposited there are other ways of doing that in quickbooks online I'm
gonna make this a tiny bit wider okay I hope you can see everything but basically we do the same
things in quickbooks online to prepare undeposited funds that we just did with the desktop version
double-click the payment choose cash and bank because that's where this payment was at the
moment we switched over okay no thank you good got to do it you know one by one click the payment
change it to cash in bank because that's where it was at the moment that we switched over okay and
then one last one and now undeposited funds will be zero after we switch over this last payment
but we know that undeposited funds is not zero because if we go back to the trial balance we
know that we're supposed to put a sales receipt for March 14th from candy 414 video hours so
let's go ahead and record that sales receipt sales okay actually you have to click the plus sign and
come over to sales receipt like we learned in the quickbooks online course and the date was March
17th of 2017 that's the year we're working in the customer was candy Charles and it was video
and it was quantity 14 and that's what made the $4,200 and make sure that this goes into
on deposited funds because this sale receipt was undeposited at the moment that we changed
accounting systems so now that we save it and now that we go back to the trial balance you
can see the trial balance here and the quickbooks online account is the same as the trial balance
in the new system with the QuickBooks desktop it has the exact same numbers in undeposited funds
cash and bank and everything else and now these are the numbers we will subtract from the ending
balances of the old system to be able to find out the amounts of the main setup journal entry you