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    Exercise 3

    Uploaded by

    Shena Mari Trixia Gepana
    The document describes how to enter and reconcile credit card charges in QuickBooks, including recording credit card charges, reconciling credit card statements by marking cleared transactions, and paying credit card bills. It also provides steps for setting up asset, liability, and expense accounts to track fixed assets, loans, and depreciation expenses.

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    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd

    Exercise 3

    Uploaded by

    Shena Mari Trixia Gepana
    32 views28 pages
    The document describes how to enter and reconcile credit card charges in QuickBooks, including recording credit card charges, reconciling credit card statements by marking cleared transactions, and paying credit card bills. It also provides steps for setting up asset, liability, and expense accounts to track fixed assets, loans, and depreciation expenses.

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    © Attribution Non-Commercial (BY-NC)

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    The document describes how to enter and reconcile credit card charges in QuickBooks, including recording credit card charges, reconciling credit card statements by marking cleared transactions, and paying credit card bills. It also provides steps for setting up asset, liability, and expense accounts to track fixed assets, loans, and depreciation expenses.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    32 views28 pages

    Exercise 3

    Uploaded by

    Shena Mari Trixia Gepana
    The document describes how to enter and reconcile credit card charges in QuickBooks, including recording credit card charges, reconciling credit card statements by marking cleared transactions, and paying credit card bills. It also provides steps for setting up asset, liability, and expense accounts to track fixed assets, loans, and depreciation expenses.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
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    COMPUTER ACCOUNTING WITH

    QUICKBOOKS EXERCISE #3

    Entering Credit Card Charges


    To enter a credit card charge: 1. From the banking menu, choose Enter Credit Card Charges. 2. In the Credit Card field, select Credit Card. 3. In the Purchased From field, select Optical Phone Networks from the drop-down list. The next field is called Ref No. Most credit card receipts have some sort of transaction number near the top, which exists for identification and tracking purposes. Entering this number from a credit card receipt gives you additional information for the credit card charge, but you don't have to use it. You dont need to enter one for this example.
    2

    Entering Credit Card Charges


    4. Click in the Amount Field, and then double-click to select the entire amount. 5. Type 300 and then press Tab. 6. Click the Expenses tab. 7. In the detail area, click the Account column and assign the charge to the Telephone:Mobile expense account.

    Entering Credit Card Charges


    8. Click Save & Close to record the transaction and close the window. After you record this credit card charge, QuickBooks adds a 300 transaction to the credit card account register (increasing the liability by 300). It also adds 300 to the Telephone:Mobile expense account. (You will see the increase when you create reports on their expense accounts.)

    Reconciling a credit card statement


    To reconcile a credit card statement:

    1. From the Company menu, choose Chart of Accounts. 2. Click Credit Card in the list once to select it
    3. Click the Activities menu button, and then choose Reconcile Credit Card or Right Click the credit card account. QuickBooks displays the Begin Reconciliation window
    5

    Reconciling a credit card statement

    To reconcile a credit card statement, all you have to do is enter the ending balance and check off each transaction listed on your statement. 4. In the Statement Date field, enter 12/15/2009 5. In the Ending Balance field, type 685. 6. Click Continue. QuickBooks displays the Reconcile Credit Card window.
    6

    Marking Cleared Transactions


    7. In the Charges and Cash Advances section of the window, select all charges and in In the Payments and Credits section of the window.

    8. Click Reconcile Now. QuickBooks displays the Make Payment window. When youve finished reconciling a credit card account, QuickBooks gives you a chance to pay part or all of the balance due on your credit card.

    Reconciling a credit card statement


    For this exercise, you want to write a check for payment now, so leave that option 9. Selected and click OK.

    10. In the Select Reconciliation Report window, select Detail and then click Display
    11. Click OK at the message that QuickBooks displays. 12. Close the report
    8

    PAYING A CREDIT CARD BILL


    To write a check for the bill now: 1. In the Write Checks window, make sure Checking is listed as the bank account. Notice that QuickBooks has already filled in the amount of the payment for you, and has assigned the expense to the Credit Card account. (If you change your mind and decide you only want to make a partial payment, you can change the amount) 2. Click in the Pay to the Order of field and select Optical Phone Networks as the name of the credit card company from the drop-down list. 3. Click Save & Close to record the transaction.
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    SETTING UP AN OTHER CURRENT ASSET ACCOUNT


    Suppose you need an Other Current Asset account to track a prepaid expense for rent. (The landlord requires a six-month advance payment.) 1. In the chart of accounts, click the Account menu button, and then choose New.

    QuickBooks displays the New Account window.


    2. For the Type, choose Other Current Asset from the drop-down list. 3. Click Continue. 4. In the Account Name field, type Prepaid rent.
    10

    SETTING UP AN OTHER CURRENT ASSET ACCOUNT


    5. In the Opening Balance field, type 6000 as of 12/15/2009. 6. Click OK. QuickBooks displays the new account in the chart of accounts.
    As each month goes by and you use part of that prepaid expense, you can enter each months rent as a decrease in the value of the current asset and assign it to the rent expense account. You would enter those transactions directly in the register for the Prepaid rent asset account.

    11

    SETTING UP ASSET ACCOUNTS TO TRACK DEPRECIATION


    Fixed assets are equipment or property your business owns that are not for sale. Since they last a long time, you dont completely charge their cost to the year in which you buy them. Instead, you spread their cost over several years. But because fixed assets wear out or become obsolete, their value declines constantly from the day you purchase them. The amount of this decline in value is called depreciation.

    12

    TO SET UP ASSET ACCOUNTS TO TRACK DEPRECIATION


    1. In the chart of accounts window, click the Account menu button, and then choose New. QuickBooks displays the New Account window. 2. In the Type field, choose Fixed Asset from the drop-down list. 3. In the Name field, type Trailer.

    4. Leave the opening balance blank, and click Save and close. QuickBooks displays the new fixed asset account in the chart of accounts.

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    TO ADD SUBACCOUNTS
    Now you need to add two subaccounts: one for the assets cost, and the other for depreciation

    1. In the chart of accounts window, click the Account menu button, and then choose New. 2. In the Type field, choose Fixed Asset from the drop-down list. 3. In the Name field, type Cost. 4. Select the Subaccount of checkbox, and then select Trailer as the parent account 5. Leave the opening balance blank. 6. Click Save & New

    14

    TO ADD SUBACCOUNTS
    7. Repeat steps 3, 4, and 5 to add a second subaccount to the Trailer fixed asset account. Call the subaccount Depreciation, and leave the opening balance blank. When you complete these steps, your chart of accounts should look like this.

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    ENTERING DEPRECIATION TRANSACTIONS


    When it's time to enter depreciation for an asset, you can use the register for the assets accumulated depreciation account. 1. In the chart of accounts, select the Depreciation subaccount for the Trailer 2. Click the Activities menu button, and then choose Use Register or Double Click 3. In the Decrease column, type 1300 and press Tab. This is the depreciation amount. 4 In the Account field, select Depreciation Expense from the drop-down list.

    16

    Your register should resemble the following figure

    5. Click Record. 6 Close the register window.


    17

    TRACKING A LOAN WITH A LONGTERM LIABILITY ACCOUNT


    Youve already added an asset account to track the value of the new trailer. Because the trailer loan is not going to be paid off in a year or less, you need to add a long-term liability account.

    18

    TO ADD A LONG-TERM LIABILITY ACCOUNT:


    1. In the chart of accounts, click the Account menu button, and then choose New. 2. In the New Account window, select Long Term Liability in the Type drop-down list. 3. In the Name field, type Trailer Loan. 4.Click Save and Close.

    19

    QuickBooks displays the new liability account in the chart of accounts.

    Because this is a new loan, you are either receiving money to deposit in your bank account or receiving a new asset. In this example, you received an asset (the new trailer), so you need to show an increase in the assets Cost account.
    20

    TO RECORD AN INCREASE IN THE ASSETS COST ACCOUNT:


    1. In the chart of accounts, double-click the Trailer:Cost subaccount. QuickBooks displays the Trailer:Cost register. 2. In the Increase field, type 30,000. 3 In the Account field, select the Trailer Loan liability account from the drop-down list.

    Make sure that you select the Trailer Loan longterm liability account, not the Trailer fixed asset account.
    4. Click Record.

    21

    Your screen should resemble the following

    5. Close the register window and chart of accounts. When you complete these steps, QuickBooks increases the value of your Cost asset account to 30,000. (This effectively sets the opening balance.) It also enters a liability of 30,000 in the liability account you use to track the loan.
    22

    TRACKING FIXED ASSETS


    1. From the Lists menu, choose Fixed Asset Item List. 2. Click the Item menu button, and select New. 3. In the Asset Name/Number field, type Trailer. 4. Enter the following information to complete the Purchase Information section:

    Item is: new


    Purchase Description: Trailer Date: 12/15/2009

    Cost: 30,000 Vendor/Payee: East Bayshore Auto Mall


    23

    5. Enter the following information to complete the Asset Information section: Asset Description: White trailer with company logo Serial Number: 123456789 Warranty Expires: 12/15/2010 6. From the Asset Account drop-down list, choose Trailer:Cost.

    7. Click OK. 8 Close the Fixed Asset Item list.


    24

    RECORDING A PAYMENT ON A LOAN


    When it's time to make a payment on a loan, use the Write Checks window to record a check to your lender. Youll want to assign part of the payment to a loan interest expense and the remainder to loan principal.

    25

    TO RECORD A PAYMENT ON A LOAN:


    1. From the Banking menu, choose Write Checks. QuickBooks displays the Write Checks window. 2. In the Pay to the Order of field, type Contruction Workers Union and then press Tab.

    3. For the amount of the check, type 500.00.


    4. Click the Expenses tab, and then click in the Account column and choose the Interest Expense:Loan Interest expense account from the drop-down list.
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    TO RECORD A PAYMENT ON A LOAN:


    5. In the Amount column highlight the amount that QuickBooks prefilled and then type 225.00.

    6. Assign the remainder of the expense (275.00) to the Trailer Loan liability account.
    7.Click Save & Close to record the payment.

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    WHEN YOU RECORD THE TRANSACTION, QUICKBOOKS AUTOMATICALLY UPDATES THE ACCOUNTS AFFECTED BY THIS TRANSACTION

    In your checking account, QuickBooks subtracts the amount of the check from your balance. In the expense account that tracks interest, QuickBooks enters the interest amount as an increase to your company's interest expense. In the Trailer Loan liability account, QuickBooks subtracts the principal amount from the current value of the liability (reducing the amount of your debt).

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