now we will learn how to record deposits to our bank account from customers credit card swipes a
customer could pay a sale receipt by credit card or a customer could pay a past invoice which we
record in the payments window if a customer pays by credit card then you will indicate
this at the moment you record the transaction by choosing the payment method credit card everything
else is the same as we learned in the previous customers and receivable section if a customer
does pay by credit card and you do choose payment method credit the money for that transaction will
be recorded into undeposited funds payments and sales receipts from customers get recorded into
undeposited funds when we swipe a credit card the same way that those payments and sales receipts
would be recorded into undeposited funds if they gave us a check or cash think about this for a
moment when a customer gives you a check you own and legally possess the money but you cannot use
it until it clears the bank that is the exact same condition as swiping a customer's credit card at
the moment you swipe the customer's credit card you own the money you have legal title to it but
you cannot use it until it clears the bank that's the reason why swiping a customer's credit card as
they pay is exactly the same thing as receiving cash or a check that transaction that payment
or receipt gets recorded into undeposited funds credit card swipes usually go into undeposited
funds on the day of the sale and then it could take two or three business days till the money
finally gets deposited into your bank account after you log in to your bank account and observe
that the credit card swipe has cleared you record the deposit before we can record our first example
we have to set up the file to receive credit card swipes by adding an expense account in the chart
of accounts called credit card processing fees that's because the merchant that gives us the
credit card charges a fee every time a customer swipes a credit card and we collect that money
and it gets deposited into our bank account from the main menu click list chart of accounts in the
bottom left click account new the type is expense when you click continue expense is still chosen as
the type make sure your cap locks is on and type credit card processing fees and this account in
the chart of accounts will hold all the excel of the processing fees every time you swipe a
customer's credit card after our first example we will be charged a fee and this account will show
up on the trial balance now let's imagine on March 24th holdin to nine video hours for candy she paid
by swiping her MasterCard with this number and this expiration date the white piece of paper
that came out of the credit card machine gave this number as the unique number that identifies the
transaction because she did pay immediately we will make a sale receipt the customer was candy
the date was March 24th the item was video and the quantity that she did was nine okay so for
the most part this was a normal sales receipt like we learned before we click in the check number
field to put the number from the slip that came from the credit card machine the unique number
that identifies this transaction from the credit card slip was eight seven six five four three two
now the last thing you have to do is record the payment method if the customer paid by credit
card you would click this button here notice the enter credit card information window opens up I'm
going to move the witness a receipt window over a little again click the payment method for credit
card it just so happens candy was paying with a MasterCard when you click card number field be
very careful to type it in carefully because once you type it in you will not be able to go back to
that field to see the numbers that you typed in when we click away from the field QuickBooks X's
out the first 12 out of 16 numbers and you can never see them again put in the expiration date
to 18 click done and now we've done everything we need to record this sale receipt click Save and
close now let's imagine on March 25th we logged in and observed that Candy's 2700 has cleared
however the money amount that was deposited in our bank account was not 2,700 the money amount
deposited was really two thousand six hundred seventy three dollars because the merchant that
processed the credit card took off twenty seven dollars as a processing fee let's take a look
at how to record this from the main menu click banking make deposit and of course the two windows
that we learned about before open up in order to find the deposit from Candy's credit card swipe it
would be easier to change the sort by to sort by date this way we can scroll all the way down and
see the most recent payments that we have received here it is when we click on it we're selecting it
and we okay now we get to the deposits window make sure we put the date that it was physically placed
in our bank account however when we log in to our bank account online and look at the money amount
that we got from candy it's not the two thousand seven hundred the merchant put minus twenty seven
dollars as a fee so we click one row under the deposit and put minus twenty seven and push
tab that lowers the amount of the deposit to the actual amount that we saw when we logged into our
bank account online in the from account column we click directly under undeposited funds click the
pull down arrow and we choose the expense account that we set up earlier in this video and now we
confirm that two thousand seven hundred dollars is coming out of undeposited funds twenty seven
dollars is going into the expense credit card processing fee and the difference of two thousand
six hundred seventy three dollars is actually what was physically deposited into the cash and
bank when we click Save and close we can open our trial balance and we can see now that credit card
processing fee expense shows up for the first time as twenty seven dollars if we double click cash
and bank and scroll to the bottom we can see that the actual amount that we record in our QuickBooks
for cash and Bank 2706 hundred seventy three matches what was in the computer when we logged
into our account online and of course if we double click on deposited funds and scroll to the bottom
we can see that twenty seven hundred went in when into and deposited funds when we swipe the card
and the full twenty seven hundred came out when we deposited the money into the bank QuickBooks
allows you to save the credit card information in the permanent records of the customer we know
the permanent records of the customer is in the customer center for example let's imagine
that this MasterCard with this number and this expiration date is Alan Arby's credit card and
he wants us to keep it on file permanently so we can use it for future transactions from the main
menu click customer customer center double click on the customer that we want and the Edit customer
window opens up remember there are several tabs of information in the customers permanent records
click the payment settings tab and in the bottom left here is the credit card information here we
go let's type it in credit card number one two three four five six seven eight nine zero one
two three four expiration date is February of 2018 name on the card Allen RB and then
of course we would normally put Allen's address and zip code and then we would click OK now be
warned about one very important point once the information is saved in the permanent customer
records only the QuickBooks administrator can see this number only the person who's logged
in as the administrator can reopen the customer center reopen the customers records and see the
credit card number that is permanently put on file you will learn in a later video what
it means to be the QuickBooks administrator when you watch the security tools video about
usernames and passwords the reason why I can reopen the customer center double click Allen
and click on his payment settings is because I'm logged in right now as the administrator you will
automatically be logged in as the administrator if you did not set up usernames and passwords
let us imagine on March 26th Allen paid in full the balance of his invoice number 21 he
paid this with the MasterCard that he has on file and the slip that came out of the
credit-card machine had a unique transaction number that identified this credit card swipe
as one 1 two 2 three 3 four 4 five 5 a nice easy number to remember currently
the balance of Allen's invoice number 21 is 4,000 so the actual amount of the charge is
going to be $4,000 we open the payments window and of course we choose customer Allen RB and
collapse the ribbon so we can see all of his open invoices we make the date March 26th when
we choose payment method credit card QuickBooks remembers that Allen RB had a MasterCard ending
in 1 2 3 4 and this information came up because it was saved with Allen's permanent records if
Allen agrees he's paying with the credit card on file just click done now put $4,000 in the payment
amount because that's the amount of the charge when you push tab you remember that QuickBooks
finds the exact match of any invoice that has the balance due of the same amount of the payment now
all we have to do is put the reference number from the slip that came out of the credit card
machine 1 1 2 2 3 3 4 4 5 now we're finished recording Allen's credit card charge to pay a
previous invoice with the credit card that we put in his permanent file click Save and close
March 27 we logged into our bank account online and observed that Allen's charge cleared the bank
well how do we know which one is Allen's charge well the original charge was 4,000 but the fee
was $40 because remember the fee is 1% and that's what the credit card merchant processor takes as
a service fee for processing allen's credit card therefore the net amount that was deposited into
our bank account on March 27 was three thousand nine hundred and sixty dollars from the main menu
we click banking make deposit notice the payment window comes up to see the most recent payments
and credit card swipes sort this window by date and scroll all the way to the bottom
here's Allen's charge on his MasterCard and here's the transaction number that went with it when we
click on it to choose it we can click OK and then we return to the make a deposit window we confirm
which bank account the money's going into and of course in the date box we put the date that it was
actually physically placed into our bank account we're almost finished except we have to deduct the
fee we know that the fee was $40.00 we click one row below the four thousand type in minus forty
then when we push tab we notice the total of the deposit decreases to the actual amount that
was physically placed in our bank account click directly under the word undeposited funds then
click on the pull down arrow to choose the account that will hold the fee the account that records
credit card processing fees is down here we put it on the list earlier credit card processing fees
expense so undeposited funds will decrease by four thousand credit card processing fees expense will
increase by $40.00 and cash and bank has already increased by three thousand nine hundred sixty
dollars and now we are recording it when we click Save and close we can open the trial balance and
see credit card processing fees is up to sixty seven dollars from a moment ago if we double
click we can see both transactions where we charge the customers credit card and we can see the fee
for each individual one of those transactions adding up to the total that we pay for credit
card processing if you double-click cash and bank you notice that the very last transaction
matches what's in your account online March 27th the credit card merchant deposited three
thousand nine hundred sixty dollars into your bank account if you double click on deposited
funds and scroll all the way to the bottom you see that Allen's charge went into undeposited
funds for the full amount and therefore came out of undeposited funds for the full amount