Lessons

Lesson Info

Deposits and Payments

We've looked at entering income and expenses and that's fairly straightforward, but we're going to start looking now at payments and deposits this is now where we're looking at those etc specific materials and I'm going to bring them up on the spreadsheet I'm going to show you those downloadable spreadsheets that I mentioned earlier the csb files there's the one for your bill if you'll remember and then there's the one for your orders and we'll look at how you look at each of those individually and where you enter this stuff in so the balance sheet is the part of your ledger where you're actually going to record any deposits and payments this includes the payments that you make as well as the payments that you receive, so this is all gonna happen in there. Um and I should mention just to clarify about those two different ledgers that I was talking about. So I've been using that fancy ledger that j k o reference just because it's faster we don't have the time for me to be adding things ...

up by hand on screen, but it is the simple ledger that's part of the bonus materials it is still a computer file, so you can either use it as a spreadsheet in which you type equations into it the way that I have or you can print it out and you can write everything out by hand so it's still a spreadsheet, but it doesn't include equations already built into it, but it will still function like a spreadsheet and that you can type, you know equals this times this, and it will spit out a number for you. So just some clarification around that s o deposits they rendered is positive numbers in your balance sheet payments are entered as negative numbers so similar to that income detail that we looked at, where your sales and your consulting has entered as a positive number. But those allowances, those discounts, sales coupons were entered as a negative number. We're also going to look at deposits between accounts, because every monday your shot payment account will deposit to your your business bank account, right? Because everybody is now going to set up a separate business bank account from their personal accounts that we can keep everything in its place. Um, and the totals should match between all of your statements. So one of your accounts that will look at in the balance sheet is your petty cash. What cashes in your wallet? Um, presumably hopefully your business wallet, right against separate cash from your personal cash. S o if you take forty dollars out of your business checking account that's, actually a transfer or a deposit from your checking to your petty cash so we're going to look and make sure that all of those amounts match and at the end of the month or the end of the week or however often you do your bookkeeping um the amount of cash that's left in your wallet should match the amount of cash that it says that you have on your ledger if not, you spend something weird you either didn't record a receipt or you used it for something personal when you shouldn't have but this is a way to double check that everything that you've entered is correct that you have gotten paid everything that you've sold that you have deposited everything that you've been paid and that those deposits were actually credited to you on ended up in the right place um so let's go to the ledger and let's take a look at uh, entering in some payments let's switch to the balance sheet which is close to the end here and this is organized by account so you'll see down here we have petty cash set up as an account and appear we have checking and um I also then want to pull up some of these spreadsheets that we have from etsy specifically so this is your statement we've looked at this already as a screen shot on the uh power point and remember, these are the things that are listed a little weirdly because you're etc statement is what actually was where you will actually see the names of the products but then it is this orders sold orders sheet where you will actually see that merchant service fee let's make this bigger as well where you will actually see that card processing fee this is that direct checkout fee where they take a percentage of processing the credit card for you all the way over and column q and it's his card processing fee it doesn't say direct check out anywhere doesn't say merchant services anywhere so you kind of have to know where everything is um luckily for me in this particular shop this is for the lauren belle chef um I I tend to know what everything uh sells for they all have different prices so I know that if it's a forty dollars item um it's the mariana the anglerfish uh thirty five dollars it's probably the octopus seventy five dollars is probably one of each right but then I have um this other thing on here let's bring the bill back up let's see did I sell so then I have uh mitchell and monster that's also thirty five dollars so I only see the amount in my orders sheet which is so annoying so then you have to go back and see in your statement what was it that you actually sold right? You have to match it up because for whatever reason in your sold orders it's only showing you the quantity it's not showing you over here number of items one one one two it's not showing you which item it wass why on earth that's that's a subject for another rant um so let's look at how we actually enter these things in here um I would start with your sold orders so we looked at um one of the orders that well I made up in order for a small hand but let's look let's let's look at an actual order um we've already tackled the san francisco sacramental people where I didn't charge the sales tax that I should have so let's go back and take a look at this. All right? I've entered in to my income detail here is my small ham order in row eight I've taken out the sales tax for my own purposes I've gotten twenty five dollars how my entering that in to the balance sheet so let's put in and will assume that this happened in february instead of december on let's tio let's do one of the direct paint the direct check out one so here we go on the sixth I've sold I know what it is it's a mariano the angler fish because it's a forty dollars sale its out of state so I don't have to worry about the sales tax I paid fourteen dollars charged fourteen dollars for the shipping the order total was fifty four dollars and here is the merchant service fee so here's where I can go back now and enter the merchant service fee so let's put in this transaction I sold a mariana anglerfish. I sold it for forty dollars. I sold one of them there's no, this is out of states, right? It's not taxable, so I need to write down why this is out of state. So there's no sales tax on there. Um, this is the rate this is the tax amount. Shipping was fourteen dollars, so the total here was fifty four. This was paid via etc direct check out. Just going to say ceo for check out and it goes into product sales. So now I've recorded my income for this, but now I need to start taking pieces out of it. Okay, so now we're gonna go back to the expense sheet that we showed earlier groups not the summary. I want the details. Here we go. What did I say? It was february third. On february third, I paid direct checkout fee and let's remember what that was because I have already for gotten a dollar eighty seven. I paid one fee, so dollar eighty seven uh there's no pre paid sales tax here. Of course it was direct check out, um I paid it this is that this will actually have been due and paid whatever the following monday is I don't remember if february third what day of the week it wass um so let's assume that it was a sunday and the next day is the monday s o then it's due on the fourteenth because they take it out when the deposited in your bank account that's when that money goes missing right without another word um and so it's paid on the fourth and the account for that is merchant service fee loops that's not spelled right merchant service fees so we've taken care of the income the sale and we've taken care of that merchant service fees even though they're going to take that merchant service fee out later we're marking it down now because it's in that order statement and this is the order we're going in um okay so in now I'm going to look at the same order I'm going to find it by date december six for that mariana the anglerfish um and now I'm going to look at this just again this just says fees right what is this? Uh well this is your this is the commission that s he took because this is a transaction when it says transaction here in activity that means that that was a sale that took place and the fee associated with that is that three three and a half percent commission so let's go back and enter that in the ledger a dollar forty I need to remember that a dollar forty c this is so annoying on february third I paid an etsy commission fee it was a dollar forty there's only one quantity we'll push put one there not a zero uh there's no tax on that um and then uh the etc commission fee you can put in the payment when you actually pay your bill later so I'm going to leave this blank for now because I haven't paid my bill let's say because we're going to do our actual payments in a moment leaving that blank for now the commission fee will be due at the end of the month so to twenty eight almost wrote to thirty one which would be whole areas probably break the computer there is no such thing does not compute um and again I'll put in the payment the day that I actually paid when we get to that painted and I'm going to put commissions in here ok, now we've taken care of that now it's the end of the month and we've gotten our etc bill and we need to pay it let's go back and look at it all right it's the statement this is for your bill remember so here's the payment eleven thirty one well this is for the previous month um let's look at that bill payment that I made in the middle of the month because I hit that fee threshold you remember they made me pay after only one week of sales because, uh I had hit their sort of credit limit okay, so I made a bill payment on december seventh for fifty one dollars and eight cents so I paid for that stuff on the seventh again we're assuming it's february because that's what's convenient for me right now a supposed to december I have already forgotten the amount it was fifty one what fifty one o eight okay it's very fiddly this is why we need to have a class on these things uh ok, so on the seventh I paid my etc bill oh I'm not this is incorrect this is the wrong shape my apologies let's delete that we've already marked those expenses right were no we don't want to double count those um but it was the seventh that this that I paid this so it was due on the twenty eighth but I paid this on the seventh so I'm going to put that in my bill and then I paid for I don't know how I paid the bill let's assume paypal okay now let's go to that balance sheet so I need to find my paypal account if that's how I've paid for it and as soon as you start your balance she whether it's the first of the year or whenever you started your business you need to begin by putting in your opening balance so whatever the balance was on your paypal when you opened your business that's what you put in there um let's say it was one hundred dollars and now I'm going to enter in a payment so um let's make this a little bigger so you get it all on one sheet all right? Because we always want to start with the date every time I open this up it reform that's the columns and it makes them the size that I didn't want them to be so that's annoying but on the seventh I paid my etc bill um payment type was papal there's only one way to pay and it came uh it was a payment from my paypal account. So, uh this is an amount of what was a fifty one o eight um and then my account so this was not a bill from etc this is well, yes, the bill was from nazi. We'll put that in and then because this is a payment, not a deposit, what does this number need to be negative? Yeah, this negatively it's your balance sheet so if I had one hundred dollars in there to start and I paid via paypal or you could also write elektronik funds transfer in here if you want the ft if I paid that should probably be from slash to the bill was from etc but to make it less confusing um this was a bill to their, um and then under account uh so this covered both the transaction fees and the commission's right? That mean, those were the same thing the listing fees and the transit and the transaction fees, right? The listing fees and the commissions so, uh, what I could do here and what I might recommend doing is splitting this up so that you can track those separately if you want tio um if not, you could put them both in as selling fees so this is one possible way to do it. Um and then you can under the notes make a little note to yourself this is betsy bill for february. If you wanted to separate those out, you'd have to go back and you would have to adam up. You'd have to look and see how many of these were transaction fees and how many of these were, uh listing fees so anything with the transaction you would add up so we can set this up separately transaction fees and put it in here well that's equal to this is a transaction fee plus this one plus we have any other ones in here yeah this one and this one and this one and this one for another one just further up did I miss one which is oh yeah this one here okay so also plus this one good eye and your way farther away from this than I am bold on j k okay so um you can also search within a sheet to make it easier on yourself if you don't have a great I like I do so if I search for a transaction appear a tw the top it'll show me every place where it says transaction and then you just click through them one at a time there's transaction there's transaction so that you don't miss one ok so my transaction fees my commissions r nine dollars in twenty nine cents let's go back to that balance sheet come on computer here we go so we can put in minus nine dollars in twenty nine cents for the commissions themselves and then we can copy this and for listing fees oh you know what some of these air shipping labels too so we have to go back and look at the listing fees versus the shipping labels all right let's add those up also because we're here and this is what we're doing uh transaction fees separate now let's look at our listing fees let's see we've got this one this one this one shipping labels painted this one this this this this this and this. Okay, so two dollars in listing fees and then the rest are shipping labels so let's, go back that's an easy number to remember to two dollars. All right, I can do that. So this is listing fees and again, this is a negative number two dollars, and then the rest of this, uh, it's fifty one o eight minus whatever. These are together apps uh, this's negative. Negative. Okay. Aa minus forty three seven what did this wrong could also be a minus. All of this should be minus because all of this is payments. Aereo thirty nine, seventy nine in shipping labels. So if you were keeping track of your shipping supplies separately, you would put this in a shipping supplies. Um, otherwise you could make it office supplies if you wanted to break it out even further, you could take out the postage that's actually part of the label. Um, well, actually, this is just the label. So this if you wanted to label it, if in your ledger and in your chart of accounts you have these things separated out, buy postage by, um shipping supplies themselves that's how you can label it so office supplies, postage shipping supplies, whatever chart of account you're using for that that's what you've got ah and so now your balance is forty eight ninety two and these are all from your etc february bill and if you label them as such you can keep track of all of it in one place ok any questions about this so far okay, so I think we've captured all of our payments out we've captured the shipping label that we've paid for two etc we've captured the commissions that we've paid them out we've captured the listing fees that we've paid for the month and we've captured thie merchant service fees that they've charged through the direct check out okay we've taken care of that now we need to take care of the deposit from the shop payment account to our bank account so let's go and look at that so uh what we've got in here in the etc sold orders again which I find very strange that they put this in here and not in the statement itself all the way in column are is your order net this is what gets deposited to you uh every monday so you will get a new email if you haven't etc account every monday if he's made sales that previous week that says x amount was deposited in your bank account from direct check out um this is for the sweetmeat shop this is not for my other shop but let's assume that uh these first four transactions all happened in one week let's, add up these four. You can either print out the email that etc sends e or you could just save it in a little folder for when you do your bookkeeping, because those air your deposits, their automatic deposits, you don't do them normally what I do my bookkeeping, I have my a little business wallet, which is so walkie cut the pattern to small, like it's a mess. The bill stick out the top. Um, it's, like, really adorable and how horrible it is. Uh, but I take out the deposit slips that I get when I go to the bank and I set them down in front of me and like, in that order of operations, I showed you on the power point. Um, I go through, and I enter all those one by one, but because as he takes care of that for you and it's happening on the back in, you're not really paying attention to it. Um, the place that you would have to find that is either in your email, which is where I like to do it, because then I can keep them all in one place, or you have to go back to your etc account and look up in your shop payment account, all of those, uh deposits so let's assume I got an email from s e that said we have deposited two hundred two dollars and twenty six cents into your account from all of your sales the previous week how do I account for that? If we go back to the balance sheet we're going to do one of those deposits between accounts in which case it needs to be a debit from one and a credit into another so this is a slightly older version of this sheet uh ok that's fine let's make this the shop payment account instead of petty cash will put petty cash in later. Well, label this at sea for clarity's sake gypsy shop payment account all right, so, uh when you make a sale and we'll look at that you go back and look at the income sheet where that money goes is into your etc shop payment account at least until the next monday, right? So that's the first deposit that we're going to make we've just made a bunch of payments in order to pay our etc bill and all of those fees. Now we're gonna make a deposit from the sales that we've done so let's look at our income sheet and let's look at the mariana anglerfish um it was forty dollars it was fourteen dollars in shipping so it was a fifty four dollars total and then we paid that bill later um the merchant service fee for that was a dollar forty so the actual deposit that we got from that and you can double check this with your orders sheet where's the sole orders here we go fifty four dollars minus ah dollar eighty seven in those merchant service fees is fifty two thirteen so this is the deposit that we're going to record for that mariana the anglerfish sale fifty two thirteen all right so let's go back to this sheet what I say fifty two thirteen okay it's so hard to remember these numbers back and forth fifty two thirteen etc shot payment account on the third of february uh payment type electronic funds transfer from etc the amount was fifty two thirteen account product sales and that's your balance again you want to put the opening balance of your shop account for the year for the month for whenever you're starting this um and in notes I can put mariana anglerfish if I want to track this byproduct for example and then I've got two of these so I'm just gonna copy and paste this and then I also have two of the other things I sold here I've got to forty nine dollars deposits from the octopus so let's put that in as well so let's say the next day I sold to occupy again this was the ft from etc and the amount was forty nine dollars product sales and this is the octopus all right, product sales. So now all of these things together ah, we figured out was that two o two what now? Two hundred and two dollars and twenty six cents. Ok, so let's do the deposit between accounts. I've now deposited all of my sales to my etc shop payment account where it will hang out until monday and then it will automatically be deposited into my business checking account. So two o two twenty six so let's say it was the next day just gonna write down this number before I forget it tio to twenty six ok, so the next day the electronic funds transfer from etc and this now needs to be a negative number. This is now a payment from the shop payment account, and then it will be a positive number to my checking account. This I'm just going to write deposit it's not really an account. You could also say owners equity here if you want to because it's neither income nor an expense. I'm just moving money from one place to another, and now you'll see my balance is back down to zero, which is as it should be every week, right every monday that your shot payment account sends you a deposit, they deposit you all the money that's in there, so every time you have a deposit your bank balance for the etc shot payment account should zero out. If it doesn't, something is fishy. And this is part of your reconcile ing. This is part of checking to make sure that everything is ok. Uh, notes will just write auto deposit, and now we have to go and put the positive deposit into the business. Checking so again on the fifth of february payment type e ft from etsy groups in the amount of two o two twenty six, we can say product sales notes ah, auto deposit. So now the balance of my checking account should go up by two hundred two dollars in twenty six cents. The balance of my shop payment account should be zeroed out, right that's our deposit between accounts so at the end of the week or the end of the month, or however often it is that you do your reconcile ing your reconciliation. Um, you should look at that bottom bank balance and make sure that it matches. If this does not match what you have on your actual bank statement that you either of you online or get mailed something is fishy and you need to go back through and fix it. I like to actually take I have an example of my bank statement which I will show you without any of the pertinent account information um I like to actually go through it and check off individually every deposit and payment that has come through so you can see I have these like little blue check marks everywhere um and so whenever it matches what's in my ledger what's in my spreadsheet I make a checkmark uh it's the balance if the beginning and the ending balance matches what I have in my spreadsheet that I know that the checks are going to be really easy, right? They're all going to match up and it's not gonna be a problem nine times out of ten that balance does not match and I've been doing this forever um but I've always for gotten something or made some little mistake somewhere and that's why you want to reconcile? I've either made a number of positive when it should've been negative or vice versa maybe I put the decimal point in the wrong place maybe I miss categorize something maybe I entered in a transaction twice by accident. Um these air all errors that I have made on any number of occasions and the reason that we reconcile these things against each other is to make sure that we don't lose any of those areas because they can really build up over time and give you kind of a skewed picture of what's happening with your business so reconciliation is useful and very important