Basic Example of How Funds Flow between the Order Manager and QuickBooks Accounts
When an item is “sold”, the AR account is debited with the price of the item sold and the Sales account is credited with the price of the item sold.
Example:
A $100.00 widget is sold.
AR = $100.00
Sales = -$100.00
When the payment is recorded for the widget,the Deposit account is debited and the AR account is credited.
Example:
Payment is received for the $100.00 widget
Sales = -$100.00
AR = $0.00
Deposit = $100.00
The changes described above take place as two separate transactions in QuickBooks – one as a General Journal entry (Sale) and one as a Deposit entry (Payment).
When a return occurs, the reverse is applied and the AR account is credited, and the Sales account is debited.
Sales = $0.00
AR = -$100.00
Deposit = $100.00
The line below indicates this is occurring – For the return on order 81845, -$152.95 is being debited (to offset earlier credit) to the sales account “OM Refund”.
And the offset (credit) is applied to the “OM SALES ACCT REC” (AR – rolled into the daily journal entry)
Once the credit is issued to the customer (they are given a refund) the AR account is debited, and the Deposit account is credited.
Sales = $0.00
AR = $0.00
Deposit = $0.00
Notice that the refund issued to order 81845 shows the deposit account (OM PayPal) as being credited and the sales account (OM SALES ACCT REC) being debited for the amount of the return.
Additional Information
Keep in mind that at any given time the AR could show a balance/credit situation for one or more of the following reasons:
- An order has been approved but not paid (shows Balance Due) – AR would show positive.
- An order has been paid for but not approved (order shows paid in full but no sales data has been recorded – AR would show negative).
- A Return has been processed but the credit has not been issued (order shows credit due) – AR would show negative.
- An error condition could have caused incorrect data to be written or could have omitted data from the sales history system leaving an imbalance.
A review of the current state of the order versus sales history system versus deposit history can usually identify these problems.