Correcting errors in the Undeposited Funds account (Q)

Errors  made when receiving payments from customers often involve the Undeposited Funds account.  You have the option to use the Undeposited Funds account as the default account (see Receive Payments  under Edit/Preferences/Payments/Company Preferences).  Unchecking this function allows you to choose which account you want deposits to go into when you receive payments.  Checking this function automatically sends received payments into the Undeposited Funds account.

One common error is overlooking the Undeposited Funds account and then making a duplicate deposit in the Make Deposits window.  If there is a substantial balance in the Undeposited Funds account, this mistake may have made been continually over an extended period of time.   There are two ways to correct this.

1)      Correct each deposit individually

1. Find the original duplicate deposit
2. Delete the duplicate deposit
3. Use the Record Deposits window to add the correct deposits from Undeposited Funds.

2)      Make one large correction (when correcting each deposit individually is impractical)

1. In the Record Deposits window, add a line to the deposit
2. In the From Account column, enter the name of the income account that is overstated
3. Enter a negative number equal to the amount overstated in the income account

(Note: if Undeposited Funds reach back into previous years, use the Retained Earnings account in lieu of the income account)