Transferring funds from one cash account to another does not present a problem for most Peachtree users, but depending on the type of transfer, care should be taken. The following sections take a close look at the Cash Transfer or Funds Transfer as it is sometimes called.
The examples assume the following accounts: #1000 Checking Account, #1010 Checking Account, and #1020 Savings Account. We assume that the Savings Account will not be reconciled, but the checking accounts will be reconciled using Tasks/Account Reconciliation.
Moving Funds From Checking to Savings
Moving money out of a checking account and into a savings account is quite simple and is done as in the following example:
Use Tasks/Write Checks to write a check from Checking #1000 for $500.00 and classify as #1020 for $500.00 where #1020 is the savings account.
RESULT OF THIS TRANSACTION: #1000 Cr 500.00 and #1020 Dr 500.00.
In this example, the Cash Receipts journal for the savings account will not be completely accurate since it will not show the funds that have been moved into the Savings Account #1020. Also, if reconciliation of the Savings Account #1020 is attempted, the $500.00 increase will show as a negative check instead of as a Bank Deposit - thus making the reconciliation awkward.
Moving Funds From Savings to Checking
Moving money out of a savings account and into a checking account is quite simple and is done as in the following example:
Use Tasks/Receipts to record a receipt into Checking #1000 for $500.00 and classify as #1020 for $500.00 where #1020 is the savings account.
RESULT OF THIS TRANSACTION: #1000 Dr 500.00 and #1020 Cr 500.00.
In this example, the Cash Disbursements journal for the savings account will not be totally accurate since it will not show the funds that have been removed from the Savings Account #1020. Also, if reconciliation of the Savings Account #1020 is attempted, the $500.00 decrease will show as a negative Deposit instead of as a check - thus making the reconciliation awkward.
Moving Funds From Checking to Checking
In this case, since the transfer involves two checking accounts, we'll assume both accounts will be reconciled. Therefore, we must be a little more careful about how funds are transferred. One reliable way to move money out of a checking account and into another checking account is shown in the example that follows:
1. Use Tasks/Write Checks to write a check from Checking #1000 for $500.00 and classify the transaction as #1099 CASH TRANSFERS. Result: #1000 Cr 500.00 and #1099 Dr 500.00.
2. Use Tasks/Receipts to record a receipt into Checking #1010 for $500.00 and classify as #1099 CASH TRANSFERS.
Result: #1010 Dr 500.00 and #1099 Cr 500.00.
The result of both transactions is as follows: #1000 Cr 500.00 and #1010 Dr 500.00. Note that #1099 Cash Transfers is a wash account and no balance remains. Using the Cash Transfer account ensures that as time goes by and transfers are made in both directions, the Cash Disbursements journal will be totally accurate for the funds spent for both accounts, the Cash Receipts journal will be totally accurate for the funds received for both accounts, and Bank Reconciliation will be totally accurate for reconciling both accounts.
In practice, this last Cash Transfer method is not used very often since most small businesses rarely transfer funds between checking accounts. Instead they transfer excess funds in or out of a savings account as in the first two examples on this page.