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December 2000 Here is your complimentary copy of The Desktop Accountant, our periodic newsletter with tips and tricks for using QuickBooks and QuickBooks Pro. AOL Users click here: <a href = "http://www.sleeter.com/newsletters/dec2000/dec2000.html"> http://www.sleeter.com/newsletters/dec2000/dec2000.html</a> NEW! - For a printable (pdf) version of this newsletter, click here (dec2000.pdf - 2.21MB).News and ViewsThe Sleeter Group has been busy the past several months developing a number of new products and services to help you learn, teach or troubleshoot accounting systems using QuickBooks. In this issue, we'll tell you about several of them and bring you up to date on the new events in the marketplace for desktop and online accounting systems.
State Payroll Reporter News - In case you haven't heard, The Sleeter Group has discontinued the sales and support of the State Payroll Reporter software. All rights have been returned to DGR Software. For more information, see our press release. Note that you must upgrade to DGR's new product "ReportWiz" in order to process FORM DE-7 for year 2000. Online Accounting - The Continuing Debate - Should You Switch to Online Accounting?In my last newsletter, I predicted that online accounting "would replace desktop software" by the end of 2003. After spending most of 2000 looking closely at NetLedger and other online applications, I'm starting to soften my position. Why? Because I'm still looking for some answers to some very difficult questions. For example: 1) How soon will mainstream users have access to high-speed Internet connections?
2) Can web-based applications ever measure up?
3) Will users ever get comfortable with storing their accounting records on someone else's server?
4) Integration is probably the biggest reason to switch to online accounting. But will the users really be able to integrate all their applications without the aid of a programmer-level consultant?
The bottom line here is that I just cannot see things moving ahead until we have good solutions to each of these points. Using online applications is a nice idea and there are plenty of needs that it solves, but online software developers have a long way to go. I just hope the venture capitalists that have placed so many bets in this area will hang in long enough.
Coming
soon - The Sleeter Group's New, Improved Website Exchange
files between consultants and clients online in a secure environment
(no need for email or ftp)! Above all, our site will have TONS of content for people who need help with accounting software. Visit our website at www.sleeter.com in late January for the new improved site! Changing
Sales Tax Rates at the Beginning of the Year: If your sales tax rate changes effective 1/1/2001, you must make this change after you record the last sale for 2000, but before you record your first 2001 sale. There is no need to make new sales tax items. Changing the rate WILL NOT affect the rate charged on previously entered transactions. When you create a sale transaction, QuickBooks uses whatever rate currently shows in the item definition, regardless of the date on the sale transaction. Be careful not to change the rate before you've finished entering sales transactions for 2000, otherwise those transactions entered after changing the rate will use the new rate. Last but not least, your success is what we are all about. Please feel free to drop us a line and let us know how we can be of greater service to you (newsletter@sleeter.com) This Month's Newsletter Topics are: "How
to Record Daily Cash Sales Summaries from Cash Registers",
and I hope you enjoy our tips! Drop me an e-mail with your comments.
Doug Sleeter |
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Recording Daily Sales Summaries |
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If you use a cash register or Point-of-Sale (POS) system to record sales in your retail business, you need to record those sales in QuickBooks, at least in summary. Summarizing these sales properly will allow you create accurate financial statements in QuickBooks as well as reconcile your bank statements and track sales tax. The method you use to record these sales depends on the answer to several questions, including: Do
you collect sales tax? Do
you accept credit cards as well as cash and checks? Do
you want to track sales by item in QuickBooks using the same items that
are used in the register or POS system? Do
you sell anything on account (store credit)? If so, do you need to keep
track of each credit customer’s account balance in QuickBooks? Do
you need to record some sales individually for any reason? The
more questions with a ‘Yes’ answer, the more complicated the method
you need to use. We are going to use an example of a computer store
that sells computer hardware and software. We will start with a simple
situation in which the store accepts only cash and checks and needs
to record only total sales per day. Second, we will add some complexity
by recording sales by item in QuickBooks and by accepting credit cards.
Lastly, we will look at a situation where all the above questions are
answered ‘Yes’. |
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For
our first example, assume that Computer Mania records all sales in the
register or POS system and that they accept only cash and checks. Assume
further that the only information they need in QuickBooks is total sales
for the day, sales tax, and total bank deposit. The store does not extend
credit to any customers. |
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Example One
On
this day, Computer Mania sold $500 worth of hardware and software and
collected $25 in sales tax. In this very simple case, you can use a
Cash Sale screen to record the total sales. Make a generic item that
is taxable and is mapped to a sales account. Notice
that QuickBooks will correctly accrue the sales tax. Sales tax reports
will work and sales tax can be paid in the normal way. QuickBooks will
increase Sales, Sales Tax Payable and your Checking account. If
you make any sales to tax exempt customers, you can use the same item
on two lines. Click in the rightmost column of the line with the tax-exempt
sales to remove the ‘T’ and mark those sales as non-taxable. Alternatively,
you could create another item that is set as non-taxable and use it
for tax-exempt sales. QuickBooks will calculate tax on only the taxable
sales.
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| If you pay for cash expenses out of the cash drawer, create a Bank type account called ‘Cash Holding Account’. Then create a 'Payment Item' called Cash Paidouts that points to this account. On the daily cash sale entry, enter the cash paid outs on a separate line with the total paid out of the register. |  |
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Use Write Checks to record the cash payments you made that day. These payments would be for expenses such as office supplies or postage, not for refunds. Refunds would simply decrease the total sales figure in the Daily Summary. Notice that the check is drawn off the Cash Holding Account. This method provides complete tracking for expenses since you have all the functionality of the Write Checks screen such as items, job costing and class tracking. |
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| Notice that the Cash Holding Account register now shows a zero balance, as it should as the close of every day. | |
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Example Two
To
complicate matters, let’s assume that Computer Mania decides to start
accepting MasterCard, Visa, Discover and American Express. They also
decide that they want to split the sales in QuickBooks into Hardware
sales and Software sales. |
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| To handle tracking of each type of
payment, create “Payment” items for each payment type. Notice here that
Checks and Cash are represented with just one item since they are deposited
together at the bank. |
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Also,
VISA and MasterCard are deposited together, so you only need one payment
item for VISA/MC. |
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You’ll also create payment items for
AMEX (American Express) and Discover. Notice that these two payment items will record receipts and directly deposit them into the Checking account. Since
American Express usually deducts a discount fee before depositing your
sales, select “Group with other
undeposited funds” at the bottom of the item. As you’ll see below, you’ll record the discount fees when you “Make Deposits” of your American Express receipts for the day. |
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| After you’ve set up the payment items, create a custom Invoice template like the one shown below. To create a custom Invoice template, select Templates from the Lists menu. Then duplicate an existing Invoice template and edit it to match the one shown here. | |
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At the end of each day, create a transaction summarizing the day’s sales as shown. Notice that the total sales are divided between the two items to reflect the sales of each for that day. This information will come from the cash register “z tape” or POS report.
If
you want more detailed reports on items sold, you can create more items
and record their sales separately. To
record separate amounts for each form of payment, use Payment items
on separate lines of the transaction along with the amount collected
for that type of payment. |
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| Notice
the total amount of the invoice is zero. This is a “self-proofing” transaction
that ensures all amounts have been properly accounted for. You may also
need to create an “Over/Short” item that points to an expense account.
Then, using the Over/Short item, you’ll enter whatever amount is necessary
to force this transaction to zero-out each day. |
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If you have several cash registers, you might want to create separate customers (e.g. Daily Sales – Register 1, Daily Sales – Register 2, etc.) and then create separate transactions for each register. That way, you could get reports of sales by register using the sales by customer reports. |
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| Since both the Checks/Cash item and the VISA/MC item are deposited directly to the Checking account, you’ll see two separate deposits in the checking account for those amounts. However, since the AMEX item sent is linked to Undeposited Funds, you’ll need to “Make Deposit” of these funds. Notice the second line on this deposit uses the Bankcard Fees expense account and records a negative amount for the discount fee. It’s negative because it reduces your deposit and records a debit to the expense account. |  |
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Now
the Checking register shows a separate deposit for each type of payment.
This will be important when you reconcile your bank account. |
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Example Three
Computer
Mania has now decided to start extending credit to some customers and
they need to keep track of the account balance for those customers in
QuickBooks. In addition, they began renting computers and they need
to record each payment received under the customer name so that they
can run a report at any time and see a list of payments received from
a rental customer for each rental contract. |
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Because you need to keep track of the account balance for your credit customers and since you probably want to keep a detailed record of their purchases, you need to create a customer record for each credit customer and record sales to them individually. The payment method in the POS system will be something
like ‘On Account’. You will need to create invoices in QuickBooks that
total that number. Since
these sales will be included in the totals from the register Z-tape
or POS report, you need to decrease total hardware and software sales
on the Daily Summary Sales invoice by the sum of these invoices. |
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Computer Mania is now renting computers to customers on a rent-to-own basis. They need to keep track of the payments from each customer and each rental contract. This is important so that at any time they can run reports on a customer and see all their payments. These reports will allow them to calculate the remaining balance of the contract if a customer decides to pay if off early and let’s them see who is late on rent payments.
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Create a customer record for each rental customer. Create a Job under the customer for each contract. Using jobs will allow you to track multiple rental contracts for a single customer. When you receive
a rental payment from a customer, create a cash sale to the Customer:Job
using a ‘Rental’ item. This item should also be used in the cash register
or POS system so the rental payments can be segregated from other sales.
Create individual cash sales that add up to the total ‘Rental’ item
on the POS report. Notice that the payment is included with other Undeposited
Funds. Since this payment will not be deposited separately, you need
to combine it with the other cash and checks received that day into
a single deposit. Hardware sales $1,800.00 Software sales
$568.00 Rental sales
$50.00 Total sales
$2,418.00 Sales tax
$120.90 Total sales + tax
$2,538.90 Cash/Checks
$108.00 MasterCard/Visa
$396.00 American Express
$0.00 On Account
$2,034.90 Total Payments $2,538.90 When creating the invoice to record the above totals, you must take the
sales entered individually into account and reduce the daily summary
sales invoice appropriately. Our summary invoice should record the following totals for the day: Hardware sales
$300.00 ($1,800 - $1,500) Software sales
$130.00 ($568 - $438) Sales tax
$21.50 ($120.90 - $96.90 - $2.50) |
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The summary invoice for this day will
look like this. Notice the hardware and software sold on account is not included here.
Those sales were recorded on a separate invoice. Also notice that no
rental sales are recorded on this invoice. In fact, the rental item
should never be listed on the summary invoice, because those sales always
need to be recorded individually by customer and contract number. The sales tax should automatically calculate correctly and total to the
correct amount for the day. Again, if cash payments were made out of
the cash drawer, use the method illustrated in example one that uses
the Cash Holding Account. |
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A couple weeks later, Computer Mania receives a check from Jones Law Office for $2,034.90 in payment of the above invoice. If you do not record Accounts Receivable payments in the cash register or POS system, simply record the payment in Receive Payments and combine this payment with the other cash and checks received for the day. If you do record such payments in the cash register or POS system, there should be an item called something like ‘paid on account’. You will enter the $2,034.90 as a ‘sale’ using that item and show it as paid with a check. The register Z-tape or POS report shows the following totals for the day: Hardware sales
$500.00 Software sales
$200.00 Rental sales
$0.00 Total sales
$700.00 Sales tax
$35.00 Paid on account $2,034.90 Total sales + tax
$2,769.90 Cash/Checks $2,434.90 MasterCard/Visa
$335.00 American Express
$0.00 On Account
$0.00 |
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| Record the check from Jones Law Office in QuickBooks on the Receive Payments screen as normal. Make sure to group the payment with Undeposited Funds since you received other cash and checks that day. |  |
| Record the Daily Sales Summary. Remember
to account for rental sales or sales on account as illustrated previously.
This time, since there some of the Checks and Cash were already received
(the payment transaction above), you won’t use the Checks/Cash item on
the daily sales summary invoice. Instead, you’ll leave the total of checks
and cash received as the balance due on the invoice. |
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| Next, record the remaining cash &
checks received and group them with Undeposited Funds. |
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Then, go to Make Deposits and select all cash and checks
received. Record a single deposit in QuickBooks for the total cash and checks received
that day of $2,434.90. |
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| Use the same process for credit cards,
if necessary. |
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Note: Some POS systems can create iif files containing
summarized daily sales information that can be imported into QuickBooks.
Be aware that many of these programs summarize these sales in QuickBooks
using a journal entry. However since most of the sales reports in QuickBooks
are item driven, using journal entries makes these reports less useful.
Also, if journal entries are used, you also lose the sales tax tracking
that makes preparing sales tax payments and reports so easy. One POS
program we know that does things right is AccuPOS, from Attitude Positive.
This product creates iif files with complete item-based information
so that all of your QuickBooks reports are preserved. For more information,
go to www.attitudepositive.com. Summary
Recording
daily sales from a cash register or POS system can be very simple or
somewhat complicated depending on how much information you need to track
in QuickBooks. As always, more information means more work. When entering
summaries in QuickBooks, always keep in mind the affect on bank reconciliation,
Accounts Receivable balances and sales tax tracking. Choose one of the
above three methods based on your information needs and use it consistently. |
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Recording Medical Billing Summaries |
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Most medical and dental billing systems track revenue in great detail. The amount of this detail you intend to capture in QuickBooks will determine which of the two following methods will work best for you. Our
sample company, Gentle Dental Care, Inc., is a small dental practice
that uses a billing system to track productivity and receivables and
they use QuickBooks to write checks and generate payroll.
In
the first example, the dental practice intends to capture summary information
only – just what is necessary to generate an accurate profit and loss
and balance sheet to streamline their year-end accounting and tax preparation. In
the second example, the practice intends to use financial reports in
QuickBooks as a management tool and will track the following information: 1. Productions
and adjustments by two different departments (classes): Dentistry and
Hygiene 2. Productions
by type of service performed (e.g. Root Canal, Filling, Oral Surgery,
etc.) 3. Adjustments
by type (e.g. Courtesy discounts, collection fees, etc.) 4. Cash receipts
by type (e.g. VISA, American Express, Cash/Check) In
both examples Gentle Dental Care will enter summary information on a
monthly basis because they do not have a need for daily or weekly management
reports. |
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Example 1
The monthly billing reports for Gentle Dental show the following information: Total Productions $47,835.00 Total Payments
$43,827.40 Total Adjustments $ 4,879.54 Bounced Check #1 $ 386.10 Bounced Check #2 $ 120.80 |
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| Use an
Invoice form (customized here with the title “Billing System Summary”)
to record the information above. The
productions item posts to an appropriate income account, the payment item
posts to an “other current asset” clearing account called “Billing Receipts”. The adjustment item posts to an income account
as an offset to productions income. Note:
if adjustments are recorded as a single entry to simplify the monthly
input, the accountant will need to make a year-end journal entry to re-class
some adjustments like collections fees and bounced check charges.
The bounced Check item is an “other charge” item that posts directly
to checking. |
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Once
productions, payments and adjustments (including bounced checks) are
entered, any difference will be an increase or decrease in accounts
receivable. Create an “Other Charge” item called “Receivable Change” and post
to a contra-receivable account called Net Change AR, a sub-account of
Accounts Receivable. Create
the accounts with the following structure:
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balance in Beginning AR will represent the balance of as December 31 of
the previous year. Net Change AR captures increases and decreases
each month. The two balances will
net into the main Accounts Receivable Account.
Each
of these accounts must be an “Other Current Asset” type (i.e. not Accounts
Receivable type) for the “Receivable Change” item to post correctly. |
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Recording Deposits
Each
time Gentle Dental makes a deposit, they post all cash receipts from
productions directly to the “Billing Receipts” other current asset account. They then post receipts for any other monies received directly to
their respective accounts (e.g. officer loan or vendor refunds). After all deposits have been entered for the
month and the billing system entry is posted, the balance in the “Billing
Receipts” asset account should be zero (or an amount equal to cash receipts
being held for deposit as of the end of the month). Cash will always be current. |
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Example 2
When tracking greater detail from the billing system,
create separate items for each service performed, each payment received
and each adjustment rendered. Since
Gentle Dental wants a departmental Profit and Loss, they created a class
column on the invoice form template. This figure is the productions section of a larger invoice. (See below) |
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To simplify the monthly data entry, create item names that correspond to the code number from the billing system or include the code number in the description field.
With
many medical billing systems, some adjustments that should be recorded
as negative amounts in the billing summary will show as positive amounts
on month end reports (and vice versa). To avoid confusion, provide specific posting
information in the description field as shown here. For example, on
the Family Discount item, the description is set to “Family Discount
(enter as negative)”. This helps the data entry person know to enter
discounts as negative amounts.
Memorize the invoice for future entry. To simply the monthly input, you may want to
provide cross-reference notations between each line of the printed invoice
and the corresponding line on the billing reports. |
(Billing
Summary - Continued)
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For
more information, contact www.sleeter.com. Copyright © 2000 The Sleeter Group, Inc. QuickBooks and QuickBooks Pro are registered trademarks of Intuit Inc. The Sleeter Group is not affiliated with Intuit. |
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The biggest news is Intuit's announcement of it's online accounting
product, QuickBooks for the Web. We're just getting our first
look at the product, but our initial reviews are quite positive. This
product is aimed straight at the market that NetLedger and others are
attacking, so it will be very interesting to see how things play out.
Intuit clearly has the customer base and they should be able to capture
the lion's share of the market relatively quickly. Intuit always develops
GREAT software - and they test it before they release it. The
same cannot be said for some of the other developers in the online applications
world. So even if Intuit appears somewhat late in the game, we expect
them to be the powerhouse in the emerging online accounting market.
Stay tuned for our upcoming review of this new product.
QuickBooks 2001 was recently released by Intuit. We're developing an
article on all the enhancements to fill you in on the specifics, but
so far, this new version looks great. One of my favorite things, the
iconbar is back! Stay tuned... For a list of new features, follow this
link - 
