now we will learn how to record spending the customers or the tenants cash this means we
pay expenses from cash that we physically receive before depositing that cash to the bank there are
two general rules when you collect cash from customers or tenants if you expect to deposit
all the cash use the receive payment window like we learn in previous videos and then that money
should be recorded into undeposited funds however if you expect to spend the collected cash before
you deposit it and then you actually spend the cash and deposit the remainder you will instead
use the make deposit window and record the money into cash on hand for example let's imagine on
August 4th 2018 holding the owner collected $1000 cash from Johnny the tenant for rent that Johnny
paid in advance but then later that same day he paid from that cash $100 to Rex repair for an
emergency repair let's also imagine even later on the same day we paid from the petty cash collected
$50 to FedEx for a delivery that was related to business but not related to any specific property
then before the business day closed we deposited the remaining cash on the same day so if this is
something that you do this would be the way to record it very simple from the main menu click
banking make deposit now we said it was going to be August 24th of 2018 so let's just jump over to
that or sorry August 4th of 2018 and of course we deposited the money to were actually depositing
the money to Chase Bank ok now first we have to record that we received from Johnny the tenant and
we have to put on that same the actual amount that we received and the money we received from Johnny
the tenant is really unearned rent unearned rental income of a thousand dollars because almost every
time you receive rent physically it's unearned because the tenant always pays in advance before
staying in the place so we have to acknowledge the total that Johnny gave us to properly increase
Johnny's balance and to properly record the amount that we actually had as unearned rent but you see
on the same day we collected a hundred we paid a hundred for wrecks repair so earlier in the day
we paid wrecks repair and we paid wrecks repair for repair expense okay which is right here and
the amount of the cash that we handed wrecks for the repair was a hundred dollars so on the same
row as wrecks repair and repair expense we put a hundred dollars now on that same day we also paid
fifty dollars to FedEx for a delivery from that same $1000 cash so we have to choose FedEx as
our vendor delivery expense as our expense and the amount that we actually paid for delivery
goes on the same row as the delivery expense now here's the problem the computers telling us we're
depositing more than we actually received in cash because it is very very important that you put a
minus sign next to each of the individual expenses that you actually paid so what is happening here
well the unearned rent increases by a thousand because that's the amount of unearned rent that
Johnny paid and of course Johnny's balance will go up by a thousand repair expense will increase
by a hundred because we paid a hundred of this thousand to repair and delivery expense will
increase by 50 even though we put a minus the minus is decreasing it from the deposit but the
$50 itself is increasing the amount that you paid for delivery so this is how you would record the
deposit at the end of the day this is the total cash I got from the customer or tenant put a minus
next to each expense that you paid from and that means the amount that you're actually physically
depositing in the bank account on August 4th is $850 and that's how you do it after we click Save
and close you can look at the trial balance and if you open up your cash and bank and scroll to the
bottom you see that on August 4th the proper amount that actually went into the bank $850
is the amount that increased the bank account not $1,000 because even though we received a thousand
all the 850 went into the bank now what about this what about the repair expense well repair
expense went up to 800 as you can see the hundred dollars here that came from the deposit on August
4th increased the amount we spent on repairs and that's the same thing for delivery and that's how
you record a situation when you're depositing the net amount of cash most importantly you have to
look at the tenant balance detail because if you look at Johnny you have to make sure that you give
him a full thousand dollars credit towards his balance even though you paid some of his cash
for your own expenses so that's the proper way to record it and I thank you for your attention