the first transaction that attorneys need to know how to record is how
to record receiving client retainer payments also called client deposits
what happens in your books and records when we receive a retainer deposit from a client well
the cash in your bank account obviously goes up because you just got paid and the recorded
amount in your unearned retainer fee account goes up because you got paid in advance and
did not yet earn the money what happens when we receive retainer deposits regarding the clients
balance well the balance of the client goes up because at the moment they pay you owe the money
to that particular client please note we will not use the undeposited funds feature in QuickBooks
we will assume all clients payments are directly deposited into the bank account and that cheques
received are immediately deposited into the bank account please watch the QuickBooks banking videos
to understand how this is done it's very simple it's a simple preference that you can change in
the Preferences window but it will explain more if you actually watch our banking videos if you
know QuickBooks you can use the undeposited funds feature in your own company when you actually do
your own books and records if it's something you feel comfortable with for example let's imagine
on January 1 we receive six thousand dollars from client Allen RB for six months retainer in
advance and he paid us with check number eighty four which was immediately deposited into the
bank account let's take a look at how to record this transaction from the icon bar click payment
now the date of the payment was January 1 let's assume that's January 1 of 2017
the client was Allen RB he gave us cheque number 84 so check number 84 now the money was not
deposited into undeposited funds it was instead deposited into the chase bank account to get this
pulldown menu you have to change the options in the Preferences window the payment amount was
$6,000 push tab on the left of your keyboard now this is all the information that you need there
is a memo field way down here at the bottom of the screen that you the bottom of the window that you
can't see and you might want to use the memo field very often to describe what this money is for and
how long it's for but aside from the text that you type in for yourself you should click Save
and close and now at the moment you click Save and close you have to print a retainer receipt
or some kind of documented proof that you can give the client so we click print credit memo and now
we click preview because in a real situation you would print it but because I'm showing you
this on video I click preview notice it says retain a receipt and it has only the column
headings and the columns and the information that you customized for your clients when you
made the retainer receipt in the previous video now let's click cancel and now let's check what
the results are in your books and records the trial balance shows now there is $6,000 in the
chase bank account and now there's $6,000 on earned by Ross that he owes to his clients and
future services now this is his general accounting information but let's take a look at the specific
client records in the client balance detail which is really the customer balance detail
you can see that Ross owes Alan our be $6,000 of future services that went into unearned rent
on January 1 when he received the payment now obviously $6,000 a month $6,000 for six months
in advance means that Ross basically earns $1,000 per month from Alan just being on retainer that
will be an important point in the following video but in this video let's do another example let's
imagine on January 1 we received seven thousand two hundred dollars from Betty Boop the client
for six months retainer in advance and she gave us check number seven one seven which was immediately
deposited into the account obviously that means Ross earns one thousand two hundred dollars from
Betty each month just being on retainer for her regardless of what services he provides
so how would we record Betty's information well again we click the payment icon and we put the
date is still January 1 the client in this case is Betty Boop and of course she gave us check
number 7 1 7 now the money amount she gave us was seven thousand two hundred dollars look to
the left of your keyboard and pushed the tab key because that will save the field without closing
the window this is all the information we need again in a real situation you would come to the
bottom of the window and type in the memo field all the details about your arrangement with Betty
regarding this particular payment we click Save and close and QuickBooks asks us to print the
credit memo which we will click and in this case it's her payment receipt in a real situation you
would print it but because this is a video I will preview it for you and you can see this
is the retainer receipt let me scroll up this is the retainer receipt for customer Betty Boop for
the one 7,200 and you can customize and adjust this receipt to suit your needs on your own time
let's cancel this because we're not going to print now let's again look at the trial balance
now the total cash and the bank is up to thirteen thousand two hundred but you can see we have not
earned any of that all of that 13,200 is unearned retainer fees for now now our third client candy
has a slightly different arrangement January 5th receive $2,400 from candy Charles for to future
court appearances and this is the check number that she gave us and we immediately deposited
it into the bank that means that it's going to be $1,200 per court appearance sometime in the future
that means that this is unearned retainer fees so again click payment this time we choose candy
Charles she gave us two thousand four hundred dollars actually she paid us on January fifth
so you have to be careful about the date and she gave us check number two two two of course
down at the bottom in the memo field you want to describe things as best you can click Save and
close print credit memo which is really Candy's rent receipt and now after you click cancel and
the transaction is saved when you look at the trial balance you see that the total unearned
is fifteen thousand six hundred dollars if you want an explanation why you owe 15 thousand
six hundred to the clients you can see that the customer balance detail which you could also call
the client balance detail shows at this moment you owe Allen six thousand dollars of future service
you owe Getty $7,200 of future service and you owe kandi two thousand four hundred dollars of
future service and that's why the total of the customer balance detail is 15,600 which is the
same as the unearned retainer fees and the trial balance fifteen thousand six hundred dollars