Customer Deposits Control Account

Hello,

I’m aware that I can use accounts receivables to record customer deposits/advancement. But what if I want those amounts to show in a separate account (Customer Deposits) under liabilities. I tried to create a control account, but when I’m recording a receipt, no customers are showing under customer field selection in the line item.

Any suggestions?

Thanks

It seems you created a custom control account but did not assign any customers to it. Be aware that a customer can only be assigned to one control account at a time. So if you assign a customer to Deposits, that control account will function like the Accounts receivable control account for that customer.

To account separately for customer deposits, you should use the Special Accounts tab. See this Guide: https://www.manager.io/guides/10342. You can use your Deposits control account. Then create a special account for each customer for whom you have a deposit. The dropdown list that appears after you select the Deposits control account will not list customers, but those special accounts you create in the customers’ names.

Thanks for your reply.
I guess using this method will not show related transactions in the customer statement, am I right?

You are partially correct. Customer statements only include transactions processed through Accounts receivable or custom control accounts to which customers are assigned. However, when a special account is used to reduce the balance due on a sales invoice, the debit for the sales invoice is reduced on the customer statement. This is true for both types of customer statements. So you will not see the deposit on a customer statement when it is received, but you will see its effect when it is used.

The way to think of this situation is that deposits credited to special accounts are held in trust. They are liabilities of your business and not yet income. They are not actually applied to the customer’s account until you take action to do so. Then, they reduce the receivable asset associated with the sales invoice. So if you want them to be immediately applied to the customer’s account and show up in customer statements, you need to credit them to Accounts receivable. The consequence of that approach is that, because all money is interchangeable, the deposit will be applied to any unpaid sales invoices.

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Thanks again. It is clear now