Balancing General Ledger - Where does everything come from

1. Balancing General Ledger- Where does everything come from Trainer: David Michael Title: Accounting Trainer Phone: 877-359-5492 Ext: 1225 Email: dmichael@tenmast.com

2. What will we cover? • Overview of Integration – what modules post to the Ledger • Tenant Accounts Receivable • Section 8 Tenant & Landlord • Accounts Payable • Payroll • Consumable Inventory • Fixed Assets

3. What will we cover? • TAR Integration Mapping – some basic rules of what NOT to do. • Cash Drawer Mapping • Separate GL Accounts for TAR and Repayment Agreements • Security Deposit • Data Flow for Transactions • TAR How to trace back a Ledger Journal Entry to the originating action that created it. • Search for a specific transaction and finding why

4. What will we cover? • Payroll • Department Profiles and Compensation Distributions • Accounts Payable • Direct Charge to a single account or • Allocation Table – Percentage Distribution • Section 8 T&L • Tracking Different Voucher Types total HAP Cost • Consumable Inventory • Central Inventory vs. Multiple Warehouses

5. What will we cover? • Ancillary programs – How does Purchase Orders or Work Orders create General Ledger Journals • Follow the flow of a Purchase Order to General Ledger • How does Work Order Transactions affect the General Ledger. • Fixed Assets • Tracking Depreciation • Disposal of an Asset • Transferring an Asset

6. Tenant Accounts receivable • First, let’s talk about the Basic Setup for Account Management. Within TAR, there are four different Types of Accounts. • Accounts Receivable Account. This is the master account that all customers will have. This type of account records charges and payments. Each charge on the account is due in full as of the date of the charge. Periodic payments are allowed, but any charge not paid or credited off is past due as soon as the charge date is passed. • Escrow Account. An escrow account is a Security Deposit, Pet Deposit, FSS Escrow account, or other account where the value on the account accumulates or increases as payments are made into the account. There are no charges, thus no transactions associated with this type of account. The user may setup a Receivable (not a charge – see 6.a.i and 6.a.ii above), to show how much the tenant should be paying, but receivables are not associated with any ledger account number thus this does not create a journal transaction. The Payment, however, does create a transaction, Crediting the Account and Debiting the Cash Drawer. The balance of the escrow account continues to accumulate as a negative balance to show that the Agency Owes the Tenant the amount reflected on this account.

7. Tenant accounts receivable • Revolving Credit Account. This is a Repayment Agreement type account. Amounts Charged on the primary Accounts Receivable Account are Transferred to this account. This transfers the balance due. Then, recurring Receivable amounts are defined for the monthly payment amounts that should be paid to reduce the overall balance due. Unlike the Accounts Receivable Account, while the whole amount is due, but the current payment amount is only part that is Due Now. Again, there are no Transactions on this account as all Charge Items have already been recorded on the AR Account and transferred. • Mortgage Accounts. These are similar to the above Revolving Credit Accounts in setup and actions.

8. Tenant accounts receivable • There are two different terms on showing a tenant owning money to the agency. • Charge – This is where you record the income at the time of the charge. A charge is usually used when an amount due from the tenant for services rendered is not already on their account. I.e. Rent, Work Order Charges, Utilities. • Receivable – This is where the increase on the tenant’s account (or decrease depending on the type of account) is done when the tenant actually pays on the account. I.e. Security Deposit payments, FSS Escrow Payments, etc. A Receivable is added to an account to show an amount due without actually affecting the account balance.

9. Tenant accounts receivable • There are three types of Actions you can take on a tenant account. • Transaction – This is a type of Charge or Credit Memo. This action directly results in an adjustment within the Ledger to reflect this action. • Transfers – These would be internal transfers between accounts or transfer to another program such as Accounts Payable for a refund request. This action also results in an adjustment within the Ledger. • Receivable – Showing the amount due, but not changing any balances until collected or paid. This action only references a future action, that when entered will create an adjustment to the Ledger. This action by itself does not affect the Ledger balances.

10. Tenant accounts receivable • Charging a tenant for Rent, Services, late fees, or basically anything. This will create an entry to Increase (Credit) an Income account and Increase (Debit) the Receivable Account associated with the type of charge and the tenant’s development. • The Tenant makes a Payment. This will create an entry to Decrease (Credit) the amount the tenant owes on the associated Receivable Account and Increase (Debit) the amount of money held in the cash drawer (physical drawer or desk or box or where ever they put the money until the deposit is made).

11. Tenant accounts receivable • A Deposit is made. This will Decrease (Credit) the cash drawer account and Increase (Debit) the Cash in Bank account. • Note that Items C and D require different GL Account numbers to account for this data to flow correctly. Failure to use different account numbers for Cash in Bank and Cash Drawer will result in incorrect dated entries in the Ledger Cash in Bank account and no cash data flow integrity.

12. Tenant accounts receivable • Special Note on Direct Debit Functions. • There are two ways to process a Direct Debit. One is to debit the tenant’s bank account for the full amount the tenant owes. This would include the normal monthly rent amount and any additional charges or credits that have been applied to the tenants account. The second method is a fixed monthly payment amount; usually this is the amount of the monthly rent. • These are treated differently within the system for GL Account posting. The first method is treated just like a normal payment, the amount is received into a cash drawer and then the cash drawer is deposited. • The second method skips the cash drawer function and the GL Account posting is directly into the bank account. However, this last function still requires the Cash Drawer to be setup, just the base GL Account Number selected for the cash drawer is the Cash in Bank account, not the normal cash drawer account.

13. Tenant accounts receivable • The tenant’s check was returned by the bank as an NSF check. This will record a series of transactions, Decreasing (Credit) Cash in Bank, Increasing (Debit) the appropriate Accounts Receivable account, and also creating an additional Cost for the charge the bank charges the client, Increasing (Debit) Bank Charge Expense and an additional Decrease (Credit) of the amount of Cash in Bank. There could also be a Tenant Charge for the Returned Check Fee which will Increase (Debit) the appropriate Accounts Receivable account and Increasing (Credit) an Income account. • Credit Memo to remove a previous charge will also create entries in the Ledger. This will be the reverse of the original charge function.

14. Tenant accounts receivable • Transfer of Balances from one Account to another. As an account is a detail listing of transactions that add up to the balance in the Ledger, any transfer of the transactions or balance in the account to another account also requires corresponding transactions in the Ledger to reflect this transfer. • The tenant owes on an Escrow Account. Here you use a Receivable action to show the amount due, but not to change the balance on this account until the payment is actually made. • Requesting a Refund. This action does not, by itself, create any journal transactions in the Ledger. It does, however, transfer the amounts and appropriate ledger account numbers to Accounts payable to generate a check to affect the refund. This check then creates the Journal entry to record this action taken.

15. Tenant accounts receivable • Then, there are the really fun specialty transactions. A Public Housing Tenant signs up for the FSS program. When they qualify for a transfer of Rent Paid into the FSS Escrow Account, there are specific transactions and actions that are use to record this function. The first three steps are done at the beginning of each month. The fourth or Payment is done when it happens. • First, you record the normal Rent Charge. • Next, there is a Credit Memo to reduce the amount due to the regular TAR Account for the amount that will be paid into the FSS Escrow Account. See item 6.g. This may be recorded in a different GL Account Number so that Total Rent Charge is tracked and the Reduction of Rental Income due to FSS Escrow Actions may also be tracked. • Next, add a Receivable in the FSS Escrow Account for the amount of Rent Payment that is to be transferred to this account. See item 6.i. • Finally, the tenant pays. • Interest Earned or Charged on an account. Escrow accounts would increase the balance due to the tenant when interest is added.

16. Tenant accounts receivable • First, let’s talk about the Basic Setup for Account Management. Within TAR, there are four different Types of Accounts. • Accounts Receivable Account. This is the master account that all customers will have. This type of account records charges and payments. Each charge on the account is due in full as of the date of the charge. Periodic payments are allowed, but any charge not paid or credited off is past due as soon as the charge date is passed. • Escrow Account. An escrow account is a Security Deposit, Pet Deposit, FSS Escrow account, or other account where the value on the account accumulates or increases as payments are made into the account. There are no charges, thus no transactions associated with this type of account. The user may setup a Receivable (not a charge – see 6.a.i and 6.a.ii above), to show how much the tenant should be paying, but receivables are not associated with any ledger account number thus this does not create a journal transaction. The Payment, however, does create a transaction, Crediting the Account and Debiting the Cash Drawer. The balance of the escrow account continues to accumulate as a negative balance to show that the Agency Owes the Tenant the amount reflected on this account. • Revolving Credit Account. This is a Repayment Agreement type account. Amounts Charged on the primary Accounts Receivable Account are Transferred to this account. This transfers the balance due. Then, recurring Receivable amounts are defined for the monthly payment amounts that should be paid to reduce the overall balance due. Unlike the Accounts Receivable Account, while the whole amount is due, but the current payment amount is only part that is Due Now. Again, there are no Transactions on this account as all Charge Items have already been recorded on the AR Account and transferred. • Mortgage Accounts. These are similar to the above Revolving Credit Accounts in setup and actions.

17. Tenant accounts receivableCharging a tenant This is the Accounts Receivable Ledger Account Number. This is used to define Which Cash Drawer any payment on this account for this development will be held in. This can be left blank and select the Cash Drawer at the time the payment is received.

18. Tenant accounts receivableCharging a tenant For each Charge Type, Select the Account mapping button

19. Tenant accounts receivableCharging a tenant Select the Appropriate Income Account to record the income derived from charging the tenant. This example shows the Rental Income account where the Transaction Type description is Rent.

20. Tenant accounts receivablepayments received For each Cash Drawer available, Enter the Ledger Account Number for the Cash on Hand account. This is NOT to use the Cash in Bank account.

21. Tenant accounts receivablepayments received This is the associated account for Cash in Bank.

22. Tenant accounts receivableOverview • So, when you Charge a Tenant, you will be Increasing (Debit) the Customer Account Development Posting Account and Increasing (Credit) the appropriate Income Account. • When the family pays you money, you will be Decreasing (Credit) the Customer Account Development Posting Account and Increasing (Debit) the Cash Drawer Account • When you deposit the money, you will be Decreasing (Credit) the Cash Drawer Account and Increasing (Debit) the GL Account Number associated with the Bank Account.

23. Section 8 hap payments Select the Ledger Account to track Landlord HAP Payment Amounts. Select the Ledger Account to track Tenant URP Payment Amounts. Select the Ledger Account to track any payment made for an Outgoing Portable Tenant where the Landlord is the Receiving Housing Authority. Also, select the account to track the Administrative Fee that is paid over to the receiving Housing Authority. Which HAP – FSS Account do you want to track the Cost of FSS Transfers? This could be the regular HAP Account above, or a Sub-HAP Account to track separately. NOTE: This is Not the Liability Account if you have TAR.

24. Section 8 hap payments • The process of writing and posting Section 8 Checks will create the Leger Journals accounting for the cost of Housing Assistance Payments. • Thus, printing and posting Section 8 Landlord checks will Decrease (Credit) Cash for the account linked to the Bank Account the checks are written from and Increase (Debit) the Cost of HAP paid, or the Landlord HAP account noted above. If the payment is for an Outgoing Portable Tenant, then the account selected by posting checks is the account number defined for the Landlord Portable Voucher Payment account and the Administrative Fee will be accounted in the Portable Administrative Fee account. These accounts are for the Outgoing Portable transactions only.

25. Section 8 hap payments • The FSS Escrow account will be the Expense or Cost of transferring any money into an Escrow fund for the tenants. The full transaction for a transfer to the FSS Escrow is: • An Increase (Debit) to the FSS Escrow Investment Account • A Decrease (Credit) to the General Fund where the check is written. • An Increase (Credit) to the Tenant Payable – FSS Liability account • An Increase (Debit) to the HAP Expense to record the cost of transferring money. • The second and forth items above are processed and posted from the Section 8 Tenant & Landlord Check writing system and items 1 and 3 are posted by TAR to record the cash received and deposited.

26. Maintenance programs • Consumable Inventory, (CI) tracks the items the housing authority purchases and stores to be used, primarily, for maintaining the property. That is, maintenance materials, parts and supplies. It could track office supplies, but this is not the normal or customary process used by our clients. Any change to the Inventory Account must have an equal and opposite action on another account, but never the same account as the inventory account itself. Using the same account nullifies the action in the ledger and thus the Ledger Balance will never match the Detail Listing from Consumable Inventory.

27. Maintenance programs • Material Received Actions • A Purchase Order is issued to buy inventory items that are low or new. • The Purchase Order is received and the material is put on the shelves in the maintenance warehouse and recorded on the inventory log. • A Receiving ticket is signed and sent to the accounting office to match up with the invoice for the materials. • Accounting gets this invoice, and on approval enters it into the Accounts Payable system for payment. • If Accrual Method of accounting is used, this is where the Ledger is updated for the cost of material ordered. • A check is written to pay the vendor for the material purchased. • If Cash Basis Method of accounting is used, this is where the Ledger is updated for the cost of material ordered.

28. Maintenance programs • Material Used Actions • Material is taken out from the warehouse and either held in the maintenance staff’s truck or used in a unit. • If held in the truck, eventually the material is either returned or used in a unit. • At the point used, the cost of the material is recorded as an expense at the program level or AMP that owns the unit where the material was used. • Material Transfers • Transferring material from one warehouse to another warehouse.

29. Maintenance programs • So, since the Warehouse staff has a bit more to worry about than what Accounting is up to, the program is designed to allow Accounting to set the GL Account Numbers to be used when actions occur. • There are two area’s where GL Account Numbers are defined • In the Warehouse settings • And in the Development Cost settings.

30. Maintenance programs First, Select Setup

31. Maintenance programs Select Warehouse

32. Maintenance programs For each Warehouse, Enter the GL Account Numbers for each type of Transaction.

33. Maintenance programs The Warehouse Account is the Balance Sheet Account where the total value of all Inventory is maintained.

34. Maintenance programs Dispose Account and Adjustment Accounts are General Expense Accounts that record changes in Inventory not associated with Using the material.

35. Maintenance programs Select the Development option

36. Maintenance programs For each Development, enter the Cost of Material Used account to be used for any Usage of Material at a Development

37. What Questions would you like to ask?

38. Trainer: David Michaelbalancing general ledger – where does everything come from877.359.5492 x1255dmichael@tenmast.com