I sometimes get payments from my customers that exceed the amount due. This is a problem when it’s a check for an amount in excess of what is owed for that day’s service. The customer’s intention is to give a tip to one or more of my employees. So they might pay $90 when they owe $70, in order to give a ten dollar tip to each of the two employees that took care of them that day. I then give $20 out of petty cash (my pocket) to the employees.
My question is, how do I get the excess amount of the payment to show as a draw on petty cash?
(I’m not an accountant, so I hope that’s relatively clear)
Maybe I figured this out, but I wouldn’t mind a second opinion:
I think that I can just make an entry into the register for Petty Cash for the amount of the tip, which goes against the revenue account and that customer. This way it looks like the money was written back out in a “check” to the customer.
Hmm, looking at the accounts this doesn’t seem to quite balance out. Do I need to also generate an offsetting customer credit?
When you go to ‘receive payments’ and enter the amount over what’s owed, it should give a credit to the customer.
Then go to your “Petty Cash” register and enter a payment to the customer for the overage. Apply it to “Accounts Receivable”. (Payee is the customer and Account is “Accounts Receivable”.) This will deduct the tip from Petty Cash as if you gave the customer cash back. Then you tip out to your employees.
Go back into ‘receive payments’ and there will be a balance of the amount that you deducted from “Petty Cash” but there will also be a credit of the same amount. Check off the box that says “Apply Existing Credits?” without entering an amount received and it’ll clear the credit off.
All you’re doing is moving the money around on the books so that everything is in the proper place.
Create a new “item” called tips. This posts directly into Petty Cash as a receivable.
Created this item on the customer invoice (in this case I had invoices instead of just Sales Receipts).
Then reapply the payment.
So now my Petty Cash has decreased by the same amount that went out of my pocket and is balanced, but since this doesn’t ~exactly~ match your method, is it the same net affect? This way the customer doesn’t show any credits, I just apply the whole payment to my incoming services account and the tips account.
FWIW this is QB Basic 2004.
As a secondary question, as long as my business works ok is there any reason for me to upgrade QB every year, or is it just a waste of money?
Yes, I’m pretty sure that’ll work. You should probably set the item as a non-sales-taxable service, similar to the way you’d set up labor.
The only problem that could come up with this is if the customer uses a credit card or check. How do you get the money into petty cash if you’re depositing a check into the bank?
The only reason to upgrade is if you’re doing payroll or using some Quickbooks service that requires a subscription. They may stop supporting some older versions.
I’m still using 2001 because that’s what I started with and I know all the keyboard shortcuts and where everything is. I can get all of the accounting done quickly without having to ever learn anything new. The look and feel changed a little bit with the later versions and I didn’t want to have to bother with learning the new stuff. Also, Quickbooks is expensive.
I started with Basic 2001 and when the company grew, I paid about $30 for Pro 2001 Multi-user on eBay so we could open the company files on more than one computer.
Actually, I only do this if they pay with a check, since if they paid cash I can just separate the two before the deposit. There is the possibility, when creating the deposit, to get cash back. QB asks where this is going and I can just direct it to Petty Cash.
I don’t think anyone has ever asked to include a tip on their credit card, although if one used QBs to run a small restaurant I’m sure that would happen a lot. Maybe they have a specialized restaurant or retail module for this?
