We have several refunds and deposits that were grouped together by our merchant account processor and deposited in our bank as a negative deposit amount.

You are right! They do not offer any designated way to record as a negative deposit amount. They missed to recognize it happens in business.

Here is my work-around approach for now. You will need to create a new bank account type account. Let’s name the account as “Deposits Clearing” account.

For the refunds part, you will need to create “Refund Receipt” and select “Refund From” as “Deposits Clearing” account.

For the deposits part, you will also need to select Deposit to and send it to “Deposits Clearing” account. This could be either from “Receive Payment” form if it was for paid invoice or directly from “Sales Receipt” form.

After these two steps, you should see negative balance shown on “Deposits Clearing” account. In order to make that account zero, we will use bank transfer tab.

Go to “Transfer” (Create + sign > Other > Transfer form

Transfer funds from = real bank account

Transfer funds to = “Deposits Clearing” account

Transfer amount = deposit amount

Once you transfer funds from real bank account that, entry will create as negative deposit transaction.

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