Entering Cash Deposits in Quick Books 2006 and make GJE entery to distribute it into Net Sales, Sales Tax and Cash Over/Short.

Posted on 2007-10-02
Last Modified: 2012-08-14
Hi I am running Windos XP pro and have question about Quick Books 2006.
I have a retail fast food business. I like to know how I can enter a deposit in  Quick Books, in a way that I can go back and see the individual deposits in reconciliation page. Also my deposit consist of 3 entities.
That is Deposit=Net sales + Sales Tax + Cash overage/shortage. I would know the Net Sales figure from my cash register, and I calculate the sales tax. I would enter net sales and sales tax once a month. I will enter cas deposit on daily basis. I would then make general entry once a month to breakdown the cash deposit into 3 items (Net Sales, Sales Tax and Cash Over/Short). I would call the account where I store my deposits as "Exchange Account". (I am setting it up to be under " Other current assets", Net sales under "income" and Sales tax under"other current liabilities") All said and done but I don't know exactly how to enter this figures in Quick Books 2006. I just bought this software and I am trying to understand its functionality. After I finish entering I want to see how the P & L report and Balance sheet change, so that I know what I am doing is right. It has became a very long question, I thank you in advance for understanding my problem. Please help.
Question by:hpjethwa
    1 Comment
    LVL 15

    Accepted Solution


    This isn't going to sound nice, but what you need first is a simple course in accounting; there should be an "Accounting For Dummies" book that will give you what you need to know. Don't be embarrassed; everyone has to start somewhere.

    Your problem isn't one that has to do with Quickbooks, really, and I don't have it installed on this computer, so it's going to be a bit of a crapshoot for me to tell you the exact steps you want to take... but I'll give this a shot, and see if I can get it installed tomorrow.

    Your deposits are simply additions to your checking account; they have nothing to do (as far as Quickbooks is concerned) with how you got the money (either from Sales or from Sales Taxes or from Over/Short). The money itself is either an asset (Sales) or a liability (Taxes). For your daily deposits, you can just include all the money there, though.

    However, the SOURCE of the deposit -- the part that shows up on your P&L -- is where you take care of keeping your sales and your sales taxes separate. The easiest way to look at everything is by doing a T (one is your Profit and Loss -- Income minus Expenses -- and the other is your Balance Sheet -- Liabilities plus Equity equals Assets).

    Assets                          |            Liabilities
    Chk Acct       100.00     |    Sales Taxes      7.00
                                        |     Tot Liab            7.00
                                        |    Equity              93.00
    Total Asset  100.00      |   Liab + Equity   100.00

            Income                |    Expense
    Sales             92.00     |  Tax Set Aside     7.00
    Ov/Sh              1.00     |  Food                   0.00

    Income           93.00    |   Expense             7.00

    So... what you're calling the Exchange Account is actually your checking account. I have shown Tax under income because it is also a liability until you actually pay it. Once you've done that, then your Total Liabilities will be zero, but your checking balance will also be $93 instead of $100. You'll also note that I've shown a "Tax Set Aside" account under expenses; it doesn't really count as an expense, because all your doing is collecting it for the government -- but you also don't want it to be considered actual Income either. You could show it as a negative number under your Sales as well -- it's the same thing.

    Now, how to enter. Quickbooks allows you to enter deposits and write checks by just entering them the same way you would fill out a deposit slip. Once a month, you do General Ledger transfers... you add something to one account and subtract it from another.

    Let's use the example above. On the day you pay the taxes, you would write a check... the money would come out of your Checking acct, and the account it would balance against would be the Tax Liability account. It would decrease your assets by $7, but it would decrease your liabilities by $7 as well. The effect on your overall balance sheet would be zero.

    That's why it's called "double entry" bookkeeping. Every transaction -- a deposit, a check -- is balanced against something else. Let's say you write a check for some food (shown as 0.00 above) -- for $30.00. Your assets decrease by $30, and your expenses increase by $30. Now your total assets are $70, your liabilities haven't changed, and your expenses have increased to $37. Since (Liabilities plus Equity) = Assets, and your Liabilities haven't changed, it now means your Equity is worth only $63, because your Assets will drop to $70.

    Meanwhile, your P&L will show the same sales figures, but your expenses have gone up, so your profit -- Income minus Expenses -- will be smaller.

    Hope this all makes sense.

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