How do you handles Customer deposits or retainers in QuickBooks?
There are several ways to handle customer deposits. A few are detailed below.
* Create an other current liability account
* Name it Customer-Deposits.
* Create a service item called Deposits
* In the account, point it to the Customer-Deposits account
When you accept the deposit, use the deposit item on an invoice. What happens is that the money received (the deposit) is sent to the other current liability account. It is a liability because you owe the customer something, either a refund or a product.
When the product or job is done, invoice the customer for the full amount, then as the last entry on the invoice enter the deposit item and enter the amount of the deposit as a negative number.
This records the sale, takes the deposit out of the liability account and applies it to the amount owed, and the invoice will show the amount still due to you.
Another way to do it is:
* Create the invoice
* Then use receive payments against the invoice
* Add the deposit amount as being received.
Then after that use the statement function to bill rather than a new invoice, the statement will show the deposit and subsequent payments made and the balance due. Receive payments against the original invoice.
To handle customer retainers (deposits) you create an Other Current Liability account, call it Customer-Deposit. Then create an Other Charge item, which points to the Customer-Deposit account, call it Use-Customer-Deposit.
To record the deposit:
* Open the bank register
* Enter the customers name
* Enter the amount in the deposit column
* Select the Customer-Deposit account.
That puts the money in the bank, and creates a current liability in that amount.
To bill and use the deposit:
* Create your sales receipt or invoice billing
* Enter the other charge item Use-Customer-Deposit
* Enter a negative 1 (-1) in the quantity
* Enter the amount in the rate.
The invoice will reflect the lower amount due, or zero. The amount of the retainer used will come out of the current liability account Customer-Deposit.