If you run into the scenario in which you actually have a negative deposit (a banking debit/withdrawal from your account) by your merchant services processor, you will need to move the expected deposit from the Undeposited Funds account to your Bank Account via a journal entry. This can happen in the event you have a large credit card refund that exceeds your new credit card sales on a particular day.
The following is the suggested resolution from QuickBooks.
- Choose Plus Sign (+)> Journal Entry.
- Set the Date of the transaction.
- On the first distribution line of the Journal Entry:
- In the Account column to Undeposited Funds.
- In the Debit column to the amount of the deposit.
- On the second distribution line of the Journal Entry:
- In the Account column to appropriate bank account.
- In the Credit column to the amount of the deposit. (Note: You are already accounting for the negative by crediting the bank account.)
- Click Save. This will show a deduction from the bank account.
Next, you will want to group the Journal Entry with the payments to create a $0 deposit and remove the payments from Undeposited Funds.
- Choose Create (+) > Bank Deposit.
- Select the payments and the Journal Entry you just created (the total should be zero).
- Click Save.