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Setup advanced deposits from customers in QuickBooks Desktop

Advanced deposits are money a customer has given to the business in advance for a service that has yet to be billed, completed or services rendered. This is a liability to the company and act as a promise from the company to the customer to perform the services the deposit is made on.

This article details the steps in correctly setting up advanced deposits from customers as a current liability in QuickBooks to ensure accurate bookkeeping.

Detailed instructions

Very Important: Do NOT make credit memos for advanced deposits.

Step 1: Set up an Other Current Liability Account.

  1. From the List menu, select Chart of Accounts.
  2. Click the Account button and select New.
  3. Select Other Account Types at the bottom, click on the drop down and select Other Current Liability.
  4. Click Continue.
  5. In the Account Name field, enter a name for the account (Example: Advanced Deposits).
  6. Click Save & Close.

Step 2: Set up the In and Out item for Advanced Deposit.

  1. From the List menu, select Item list.
  2. Click the Item button and select New.
  3. In the Type field drop down select Other Charge.
  4. Enter a name for the item (Example: Advanced Deposit in).
  5. In the Account field, click the drop down and select the Other Current Liability Account setup in Step 1.
  6. Click Next.
  7. In the Type field drop down, select Discount.
  8. Enter a name for the item (Example Advanced Deposit Out).
  9. In the Account field, click the drop down and select the Other Current Liability Account setup in Step 1.
  10. Click OK.

Step 3: Record the Deposit.

  1. From the Customers menu, select Enter Sales Receipts.
  2. In the Customer: Job field, click the drop down and select the Customer name.
  3. In the Item field of the Sales Receipt, select Advance Deposit In.
  4. Enter an amount in the Rate column.
  5. Click Save & Close.

Note: It is important to utilize the Enter Sales Receipt function when dealing with advanced deposits.

Step 4: Create the Invoice and apply the deposit.

  1. From the Customers menu, select Create Invoice.
  2. In the Customer: Job field, click on the drop down and select the Customer:Job.
  3. In the Item field on the Invoice, click the drop down and select an item to invoice the Customer:Job.
  4. In the next line on the Invoice, click on the drop down and select the item (advanced deposit out)  you setup in Step 2.
  5. Enter an amount in the Rate column as a negative.
  6. Click Save & Close.
KB ID# HOW13288
12/10/2016 12:46:03 AM
PPRDQSSWS404 9138 Pro 2017 b8b34c