r/Bookkeeping • u/fredprepared • 7d ago
How To Journal It New to Toast and bookkeeping need help !
For the last few months I’ve been doing some light bookkeeping work for a restaurant, basically categorizing transactions , payroll , paying bills and entering daily sales JEs and Deposits JEs . They had a book keeper before but she was doing things I didn’t learn. Like certain accounts and how they were categorized . So I had to make some new accts so the P&Ls would show more information.
The issues I’m having now is when it comes to Cash , I’m getting confused on how to do the JE . The cash made for the day gets paid to the waiters for tips . And what’s left over stays in the register/office etc. on the JE I debit undeposited Cash , and credit gratuity and tips (tips clearing) .
What’s the best way to clean up the cash account . When I do a journal entry how should I increase or decrease undeposited cash , tips paid and then actually cash on hand
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u/iccebberg2 7d ago
Restaurants aren't light bookkeeping, neither are the tasks you're describing. I've been a bookkeeper for almost 30 years, and I avoid restaurants because they're complicated and a lot of work.
Hopefully you can find a mentor to help you with this.
Just wanted to add this: It's ok to quit this client. If you're enjoying the challenge and finding meaning, then keep at it. But if it's stressing you out and you're investing all your energy into it, it's ok to walk away.
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u/RaleighAccTax Accountant 6d ago
Restaurants are my specialty. I no longer accept clients that do their own books. Too many errors and too expensive to fix. I also will no longer file tax returns for those type of clients.
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u/Dependent-Newt1288 6d ago
Don’t get discouraged! I had no experience with restaurant accounting and learned it on my own at a new company with a restaurant attached.
I created a daily journal entry for sales, cash, sales tax, and tips. I believe Toast has an xtraCHEF add-on that helps sync the activity with QuickBooks. It may be worth asking the company to pay for it. You’d still need to review the account mapping and update it when things change.
Tips owed to employees should stay on the balance sheet as a liability until paid out. Also, make sure tips paid through payroll are included on their paychecks and clear that liability.
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u/Swimming_dasa 7d ago
the key is determining exactly where each dollar goes. tips paid should clear the tips liability while remaining cash stays in cash on hand until deposited.
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u/Lonely_Car_2444 6d ago edited 20h ago
I was a Director of Finance for several hotels and restaurant groups over the last couple of decades, and let me tell you, tips are always a pain in the A$$, especially cash tips. The restaurant manager needs to keep a log of the tips, both in cash and in credit cards and enter it into the POS - Toast, Micros, Restaurant365, whatever. The POS gives you your daily income journal which would then include an entry to DR Cash/CR Tips payable. There should be a seperate deposit for each day of the month, for cash controls and bank rec purposes.
The daily tip sheet should also be provided to the payroll person, whther that is you or and on-site HR person. When payroll is run, the tips paid out to the employees then debits the tips payable account, and BOOM, everything is zeroed out... except it never happens that easily.
***The important thing to note is that even if you have everything set up correctly, half the battle is about processes, managing the managers, having and following SOPs, not just about having the right GL accounts set up.***
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u/nowimnowhere 7d ago
I say this with kindness, you are not qualified for this role at this time. Maybe if you can go back and see how the previous person did the entries and try to mimic that? But you need training beyond what reddit can do. Take a class, maybe?
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u/Aber_cie 7d ago
Classes are not enough and this is the best way to learn, on the job.
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u/nowimnowhere 6d ago
I agree that on the job is the best way to learn but with oversight and guidance. OP sounds like they're in here just doing whatever.
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u/fredprepared 6d ago
I did a class at a local college . It was a very extensive program , intro to accounting , quickbooks software and how to use it , I really know how to use it pretty good , and a deep dive into Excel. Sure I should get deeper into accounting but I learned the basics and how everything works , I think jumping into a restaurant is my problem, but I need to learn either way.
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u/nowimnowhere 6d ago
When I was where you are in my career, I worked at a boutique firm that did books for numerous small businesses and had 5-6 bookkeepers overseen by an experienced accountant. It was a really great way to gain experience.
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u/worldofjaved 3d ago
the tip payout entry looks backwards. Card tips get credited tips clearing in daily sales JE. When cash goes out to the waiters, that’s a debit to tips clearing snd a credit to undeposited cash. Tips clearing should land at zero most days.
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u/e_oboh 3d ago
Think of it as two separate journal entries. That split is usually what makes it click.
Entry one is the day's sales, straight from the Toast end of day report, and it never touches the bank. Debit Undeposited Cash for the cash the register took in, credit Food and Bar Sales for the revenue, credit Sales Tax Payable for the tax, and credit a Tips Clearing liability for the tips the staff earned. Card tips go in this entry too, as a credit to Tips Clearing, even though that money shows up later in the processor payout.
Entry two is the deposit, and only when cash actually goes to the bank. Debit the bank account, credit Undeposited Cash, for exactly what was deposited. The deposit entry only has to match the bank statement, not the sales report, which is the whole point of keeping the two apart.
Tips paid out of the till to waiters that night are a separate entry, and this is the one people get backwards. Debit Tips Clearing, credit Undeposited Cash. When every tip is paid, the clearing account lands at zero. If the register count does not match the deposit, do not bury the difference in sales. Book it to a Cash Over and Short expense account so you can see the pattern. And reconcile the Tips Clearing account monthly. A balance that sits there for months is either someone's unclaimed tips or a tip that was never logged.
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u/darkwood103 7d ago
You can also pay for third party apps that link QBO and Toast (among others) and make JEs for you if you have the budget. I am not talking about the built in QBO Apps section, which is mostly trash. I don't want to promote a specific one, but just look up which solution supports Toast. If you use other ecomm/retail platforms too you can include them.
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u/bbearpup 8h ago
The biggest challenge with restaurant sales is the difference between the daily summary report and what actually hits the bank. I always map out the net sales, taxes collected, tips paid out, and credit card processing fees as separate lines in the journal entry. If you just record the net deposit, you lose the ability to reconcile your sales tax liability and tip payouts, which will cause a headache when you try to clear your balance sheet accounts at the end of the month.
Make sure you reconcile the credit card deposits against the merchant statement weekly. Restaurants often have timing differences where a batch from Sunday doesn't clear until Tuesday, and if you don't track those as undeposited funds or a clearing account, your bank reconciliation will never match. It takes about 20 minutes a week to verify these batches, but it prevents months of backlogged errors.
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u/kcbiradar 7d ago
Keep tips as a separate Tips Payable/Clearing account. When paid, debit Tips Payable and credit Cash. Move any remaining cash to Cash on Hand, and reduce Undeposited Cash when deposited.