CASH RECEIPTS

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Once statements have been sent, we should start receiving payments from our customers. We need to deposit these payments in the bank and credit customer’s accounts. The first step in this process is to create a deposit in the system to document the actual deposit going into the bank. This is done using the Open Bank Deposits form (Figure 108) found under Accounting Accounts Receivable Post Payments.

At the lower left of the Open Bank Deposits form is a button with the caption New Deposit. Clicking on this button opens the Add New Deposit form (Figure 109). The Add New Deposit form allows you to identify the Deposit Number, Deposit Date, and Depository Account for the new deposit. Saving this information creates a new deposit on the Open Bank Deposits form. This new deposit becomes a bucket to which you can add payments from customers. You add payments to the deposit and post those payments to customer accounts using the Post Payments form (Figure 110) accessed from the Open Bank Deposits form by selecting the deposit you want to use and clicking the Use Deposit button.

When you bring up the Post Payments form, you first enter a customer Account Number to bring up the relevant customer, then enter the customer’s Check Number (or “Cash”) and the Payment Amount. The grid below will display all invoices for that customer which have an outstanding balance. In the example shown in Figure 110, a check for $1,008.44 has been received from the customer which is intended to pay the first two (oldest) invoices listed in the grid. You can see the amount for the first invoice, $331.83, has already been entered in the Pmt Applied column (there are actually three ways you can enter an amount in the Pmt Applied column: you can key the amount in; or you can double-click in the Pmt Applied field or simply press the Enter key while in the field to populate the field with the total amount of the invoice). Entering payments for the first two invoices will bring the total of the Invoices/Credits field near the top right of the form to $1,008.44 and bring the Balance field to zero. At that point you can click the Post Payment button and the deposit will be updated (and the new total deposit amount updated in the grid on the Open Bank Deposits form) and the payment will be posted to the customer’s account and the two invoices will be closed.

Let us say that Café Buenos Aires has sent you an additional check in the amount of $1,000.00 to be applied against the remaining balance on their account. None of the remaining outstanding invoices has a Balance Due of $1,000.00, nor do any combination of invoices together total $1,000.00, so this payment will have to be handled a little differently. There are three ways this payment could be applied to the customer’s account. The first would be to pay one of the invoices completely and then apply the remaining balance to the second invoice as a partial payment. Note that, as you enter amounts in the Pmt Applied column, the Balance field at the upper right of the form gives you a running total of how much remains unapplied from the customer’s check (Figure 111). This tells you, in our example here, that the residual amount of $990.18 can be applied as a partial payment to invoice number 42656. Entering that amount in the Pmt Applied column and clicking the Post Payment button would update the deposit amount by adding the $1,000.00 to the $1,008.44 we posted above (bringing the total amount of Deposit Number 030404C to $2,008.44), close invoice number 42649, and update the balance outstanding on invoice number 42656 by reducing it from $3,072.00 to $2,081.82

The second method for handling the customer's $1,000.00 payment would be to post it on account. After bringing up the Post Payments form and entering the Account Number, Check Number, and Payment Amount exactly as you did above, you can then click the On Account button and the payment will be posted to the customer’s account with no reference to a specific invoice or invoices. The next time you bring up Café Buenos Aires in the Post Payments form, you will see the payment as a separate line item (Figure 112).

The payment on account could later be applied to specific invoices (and other types of adjustments made) by using the Apply Adjustments form (Figure 113) accessed by clicking on the Adjustments button. The Apply Adjustments form allows you to select a Ledger Code for the adjustment (the F3 key is available in this column), and then enter a positive or negative Amount to be posted against the customer’s account. In our example, we are posting an adjustment to offset the on-account payment we just posted. After making this adjustment, we can then go in and apply the payment to specific invoices in a manner similar to how we did above when closing one invoice and applying a partial payment to the other. The net result of these adjusting entries is zero, so it would have no effect on bank deposits or the accounts receivable balance.

The third way to apply the $1,000.00 is kind of a hybrid of the first two methods. First you would apply the payment to one of the outstanding invoices, but then, rather than applying the remaining amount to the second invoice, you can post the remaining amount on account. Using our example here, you could apply $9.82 to invoice 42649 so that the Post Payments form looks as it did in Figure 111, and then you can click the On Account button to post the remaining $990.18 on account. Later you would be able to apply the $990.18 to an invoice using the Apply Adjustments form as described above.

You will need to complete the Post Payments form for each check or cash payment you have received that is to be included with the current deposit. Each time you click the Post Payment button, the form clears and is ready for the next payment to be input. You can also Cancel any payment before posting it. Once you have posted all payments to the customers’ accounts, you can return to the Open Bank Deposits form and reconcile and post the deposit by using the Reconcile Deposit form (Figure 114) accessed by clicking the Reconcile button. This form will display the total dollar amount of the deposit and show you the payments included with this deposit. At this point you will want to compare the total in the system with the actual deposit and enter your Cash and Checks totals to verify that they match what you have entered. The Application will not post the deposit unless the Balance field equals zero.

In the upper right-hand corner of the form are two checkboxes which allow you to choose whether you want to print and/or post the deposit. These two checkboxes are selected by default. When these two options are selected and you click the Reconcile button, the system verifies that the deposit is in balance, and then the deposit is posted and the Deposit Reconciliation report is printed (Figure 115). Once the deposit is posted, it will disappear from the list of open deposits on the Open Bank Deposits form and your bank account will be updated to show the deposit.

Having now processed payments from your customers and posted deposits, you can run the Cash Receipts Journal (Figure 116) found under Reports A/R Reports Cash Receipts Journal.

If the Include G/L Dist checkbox is selected when printing the Cash Receipts Journal, the Cash Receipts G/L Distribution report (Figure 117) is also printed.

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Accounts Receivable

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