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Chapter 3

Chapter 3. Managing Expenses. 109. Objectives. Set up vendors in the Vendor list Understand how to use classes in QuickBooks Use QuickBooks for job costing Enter expense transactions in several different ways Manage Accounts Payable transactions Print checks Void Checks

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Chapter 3

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  1. Chapter 3 Managing Expenses 109

  2. Objectives • Set up vendors in the Vendor list • Understand how to use classes in QuickBooks • Use QuickBooks for job costing • Enter expense transactions in several different ways • Manage Accounts Payable transactions • Print checks • Void Checks • Track Loans using the QuickBooks Loan Manager • Create and apply vendor credits • Handle deposits and refunds from Vendors • Track petty cash • Track credit card charges and payments • Create reports about vendor transactions 109

  3. Entering Expenses in QuickBooks • Cash Vendors • You’ll skip the Accounts Payable account and just write checks, coding the checks to the appropriate expense accounts • Credit Vendors • Track bills and bill payments using the Accounts Payable account which will track how much you owe these Vendors 110

  4. Steps for Entering Expenses 111

  5. Objective 1. Set up vendors in the Vendor list

  6. Setting up Vendors • Vendors include everyone from whom you purchase products or services • When your vendor is also your customer: • Setup a vendor record in the Vendorlist • Setup a customer record in the Customer:Joblist • The customer name must be slightly different from the vendor name • Select the Lists menu, and then select Vendor List 111

  7. Objective 2. Understand how to use classes in QuickBooks

  8. Activating Class Tracking • In QuickBooks, classes give you a way to classify your transactions • You can use QuickBooks classes to separate your income and expenses by • Line of business, Department, Location, Profit center or Any other meaningful breakdownof your business • If you use classes, you’ll be able to create separate profit and loss reports for each class of the business • To activate Class Tracking: • Select the Edit menu, and then select Preferences • Scroll to the top and click Accounting • Select the Company Preferences tab, and check the box next to Use class tracking 117

  9. Objective 3. Use QuickBooks for job costing

  10. Tracking Job Costs • If you want to track the expenses for each customer or job (i.e., track job costs), link each expense with the customer or job to which it applies • When you record an expense transaction, use the Customer:Job column to link each expense account or Item with the customer or job to which it applies • When you track job costs, you can create reports such as the Profit & Loss by Job report that shows income and expenses separately for each job • Select the Reports menu, select Company & Financial, and then select Profit & Loss by Job 119

  11. Objective 4. Enter expense transactions in several different ways

  12. Paying Vendors • With QuickBooks, you can pay your vendors by check, credit card, electronic funds transfer, or in cash (although cash is not recommended) • The three common situations are: • Manually write a check or initiate an electronic funds transfer and then record the transaction in a QuickBooks account register • Use the Write Checks window to write and print checks • Use the Enter Billswindow to record Accounts Payable and then use the Pay Billswindow to pay the bill 120

  13. Using Registers • Select the Lists menu and then select Chart of Accounts • To display the Checking account register, double-click the Checking account in the Chart of Accounts • Enter the transaction and press Record • To apply your purchase to more than one account • Click the Splits button at the bottom left of the register • QuickBooks displays an area below the check where you can add several lines, memos, and amounts for splitting the expenses among multiple accounts 121

  14. Using Write Checks without Using A/P • Use the Write Checks window to record your expenses • If you’re tracking job costs or classes and are not using the Accounts Payable • If you use Items to track purchases and you are not using the Accounts Payable • To display the Write Checks window, select the Banking menu and then select Write Checks 124

  15. Objective 5. Manage Accounts Payable transactions

  16. Entering Bills • When you receive a bill from a vendor, enter it into QuickBooks using the EnterBills window • Select the Vendors menu and then select Enter Bills • For a bill to be considered paid by QuickBooks, you must pay it using the PayBills window 126

  17. The Unpaid Bills Detail Report Select the Reportsmenu, select Vendors & Payables, and then select Unpaid Bills Detail 129

  18. Paying Bills • QuickBooks keeps track of all your bills in the Accounts Payable account • When you pay your bills using Pay Bills function, the balance in Accounts Payable is reduced • To use Pay Bills function: • Select the Vendors menu and then select Pay Bills 129

  19. Objective 6. Print checks

  20. Printer Setup • Select the Filemenu and then select Printer Setup • Select the form name from the drop-down list • Select the type of printer and checks you have, (voucher checks should be used) • You will need to order preprinted checks from Intuit or from another vendor that supplies QuickBooks-compatible checks 134

  21. Printing Checks • You can print checks either individually or all together in a batch • As you write checks and pay bills, you have the option to record each check with a To be Printed status • Select the Filemenu, select Print Forms, and then select Checks • Select the Checking account on which the checks are written, press TAB • Set the number of the first check you put in the printer • Select the checks to be printed, QuickBooks assigns check numbers when it prints checks • Confirm your printer settings on the Print Checks window and click Print when you’re ready to print • When QuickBooks has finished printing the checks, you’ll see a message verifying if all the checks printed ok 135

  22. Objective 7. Void Checks

  23. Voiding Checks • QuickBooks allows you to keep the information about voided checks, so that you retain a record of these checks • It’s important to enter each check into your register even if the check is voided, this will prevent gaps in your check number sequence • To void a check • Open the Checking account register and then select check to be voided • Select the Edit menu and then select Void check option • When you void a check, QuickBooks changes the amount to zero and it marks the check cleared • Click Record to save your change 138

  24. Objective 8. Track Loans using the QuickBooks Loan Manager

  25. Tracking Loans using the Loan Manager • Setting up a Loan in the Loan Manager • Making Loan Payments using the Loan Manager 140

  26. Setting up a Loan in the Loan Manager • If you have QuickBooks Pro or Premier, you can track detailed information about your loans • You can individually track and amortize each of your loans so that QuickBooks will automatically allocate the principal and interest on each payment • To set up a loan: • From the Banking Navigator, click the Loan Manager icon • In the Loan Manager window, click Add a loan 141

  27. Making Loan Payments using the Loan Manager • The Company can record each payment using • Enter Bills or Write Checks • In the Bill or Check, they can split the payment between principal and interest manually according to the breakdown provided by the bank • The Loan Manager which automatically calculates the principal and interest for each payment • To make loan payment using Loan Manager: • Select the Banking menu and then select Loan Manager • Click Set Up Payment to make a payment for the loan • Confirm that Regular payment is selected in the This payment is drop-down list • Click OK to create a check to make a payment for this loan 144

  28. Objective 9. Create and apply vendor credits

  29. When a vendor credits your account, you’ll need to record that transaction in the Enter Bills window using the Credit radio button Apply the credit to one of your unpaid bills for the vendor Creating Vendor Credits 148

  30. Applying Vendor Credits • In order to apply a Bill Credit, the vendor name must be the same on both the Bill and the Bill Credit • To apply the Bill Credit to a Bill for that vendor • Select the Vendors menu and then select PayBills • Enter date in the Due on or beforefield • Verify information in the PaymentAccountfield, the Payment Methodfield and the Payment Datefield • Click in the checkmark (√) column to the far left of the bill and then click the Set Credits button • On the Discounts and Credits window, select the credits to be applied to the bill • Click Pay & Closeto pay the bill using the vendor credits 149

  31. Objective 10. Handle deposits and refunds from Vendors

  32. Handling Deposits and Refunds from Vendors • Vendor Deposits — When You Use Accounts Payable • Vendor Refunds — When You Use Accounts Payable • Vendor Refunds — When You Directly Expensed Payment 152

  33. Vendor Deposits — When You Use Accounts Payable • For Vendor Deposits • Select the Banking menu and then select Write Checks coding it to Accounts Payable • This creates a credit in QuickBooks for the vendor that you can apply to the bill when it arrives. • You only code checks to A/P when you are sending deposits to a vendor prior to receiving the bill 152

  34. Vendor Refunds — When You Use Accounts Payable • When you receive a refund from a vendor, the kind of transaction you enter in QuickBooks will depend on how you originally paid the vendor • If you prepaid the vendor and the amount of your prepayment was morethan the bill • your Accounts Payable account will have a negative (debit) balance for that vendor • In this case, you will apply the refund check from the vendor to this credit balance in A/P. • On the other hand, if you simply wrote a check to the vendor and coded the check to an expense account • you’ll need to reduce the expense by the amount of the refund 153

  35. Vendor Refunds — When You Directly Expensed Payment • If you did not use the Accounts Payable features, but instead wrote a check to the vendor and coded the check to an expense account • Record the refund using a deposit transaction • Use the same expense account you used on the original payment to the vendor 157

  36. Objective 11. Track petty cash

  37. Tracking Petty Cash • It is sometimes necessary to use cash for minor expenditures, such as office supplies, postage, parking, or other small items • In order to track these expenditures, you can set up a separate bank account in QuickBooks called Petty Cash • To track a deposit to your petty cash account (and the withdrawal of cash from your Checking account), simply write a check to a designated payee, and code the check to the Petty Cash account • When you use the cash for a company expense, enter the expenditure in the Payment column of the Petty Cash account register • You can code each cash expenditure to the appropriate payee, account, class and job • You can also split the expenditure among multiple accounts or to assign customer names or classes to the transaction 158

  38. Objective 12. Track credit card charges and payments

  39. Tracking Company Credit Cards • Set up a separate credit card account in QuickBooks for each card • Enter each charge individually using the Enter Credit Card Charges window • Select the Banking menu • Select Record Credit Card Charges • Select Enter Credit Card Charges • To pay the credit card bill, use Write Checks and code the check to the credit card account 158

  40. Objective 13. Create reports about vendor transactions

  41. A/P Reports • Vendor Balance Detail • Select the Reports menu, select Vendors & Payables, and then select Vendor Balance Detail • Transaction List by Vendor • Select the Reports menu, then select Vendors & Payables, and then select Transaction List by Vendor • To print the report, click Print at the top of the report 163

  42. Summary of Key Points • Set up vendors in the Vendor list • Understand how to use classes in QuickBooks • Use QuickBooks for job costing • Enter expense transactions in several different ways • Manage Accounts Payable transactions • Print checks • Void Checks • Track Loans using the QuickBooks Loan Manager • Create and apply vendor credits • Handle deposits and refunds from Vendors • Track petty cash • Track credit card charges and payments • Create reports about vendor transactions 165

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