Establish a Database for an Existing...

Notes prepared by Suzanne Collings 1

Establish a Database for an Existing Business

School Book Supplies is a business that was established in 2000 to supply textbooks to schools. At 1 March 2010 the business decided to change from manual recording to computer-based recording using QuickBooks Premier. At that date, the business had the following assets and liabilities:

School Book Supplies

Trial Balance at 1 March 2010

Bank – NAX 4219

Debtors – Highgrove High School

Australia College

6700

9800

Premises 250000

Fixtures and fittings 30000

Accumulated Depreciation of Fixtures & Fittings

12000

Investment – term deposit 10000

Inventory 45000

Creditors – MacPan Publishers

Butterfield Books

16200

12800

Loan – Enterprise Bank 40000

Capital 274719

$355719 $355719

Use the following instructions to enter these balances before you commence processing.

To establish a new data base:

On the menu bar, click File > New company. The following screen appears:


Click Start Interview at the right of the screen to move to the next page of the interview.

Note Click Next at each step of the interview to move on. Do not press the Enter key.

Click Back at the bottom of the screen to return to the previous screen if you want to make alterations.

The following screen appears:

Enter your company information:

Details Then…

School Book Supplies

45 Stamford Road

Maintown Click Next

At the next screen, use the pull-down list

Field Enter Then

Type of business Product sales/Retail Click Next


Click on Individual Tax Return to select. Click on Next At the next screen, accept July for the start of the financial year (or use the pull down list to select July if this is not already showing). Click on Next twice.

At the Create your company file screen, click Next to save the set up details in the hard drive. Click Save. This takes a couple of minutes.

The name of the business now appears at the top of the screen. The next screen is Customising QuickBooks for your Business. Click Next to begin the Preferences which allows other features to be established:

Field Select Then

What do you sell? Products only Click Next

Do you track tax? Yes Click Next

Do you want to create estimates in

QuickBooks?

No Click Next

Do you want to create sales orders before you tax invoice your coustomers?

No Click Next

Do you want to use sales receipts in QuickBooks?

Yes Click Next

Do you want to use billing statements in QuickBooks?

No Click Next

Do you want to use invoices in QuickBooks?

Yes Click Next

Do you want to use progress

invoicing?

No Click Next

Do you want to keep track of the

bills you owe?

Yes Click Next

Do you want to track inventory in

QuickBooks?

Yes Click Next


Do you want to track time in Quickbooks?

No Click Next

Do you have employees? No Click Next twice

Select a start date to start tracking your finances

Accept 01/07/2009 Click Next

Would you like to add an existing bank account?

Yes Click Next

Key in NAX Cheque for the name of the bank account

Click on or after 01/07/2009 to select. Click Next three times.

Income and Expenses

At the next screen, you will be required to review the income and expense accounts for your business. Click beside any account which is not required, to remove the tick. If in doubt about which accounts you need, leave all accounts ticked because those which are listed but not used will be included in the chart of accounts but will not appear on the reports.

Click on Next, then on Finish as the interview is completed.

This next screen is the Home screen showing the most commonly used sections of QuickBooks. Access to these is obtained simply by clicking on the appropriate icon.


There are other ways of navigating around QuickBooks. The top line of the screen (menu bar) has pull down menus which can be used to access the same functions as the icons on the screen. The icons on the second top line can also be used.

Set up Lists and Opening Balances for Inventory, Customers and Suppliers.

Inventory On the menu bar, click Lists > Item List > Item > New and the following screen will be displayed:

Use the pull down list for Type and select Inventory Part and the screen changes to allow the keying in of details of the inventory items and opening balances.


From the table, key in the details of the inventory items on hand.

Field Select Then

Item name Accounting

Description on Purchase transaction

Accounting for Small Business

Cost 25

Purchase tax code NCG

COGS Accept Cost of

Goods Sold

Description on Sales Transaction Auto fill

Sales Price 45

Tax code GST

Income account Sales

Inventory account Inventory asset

On Hand 1000 (the total value will appear in the

next box $25000)

As of 1/03/10 Click Next

Item name Legal

Description on Purchase

transaction

Legal Systems

Cost 20

Purchase tax code NCG

COGS Accept Cost of Goods Sold

Description on Sales Transaction Auto fill

Sales Price 40

Tax code GST


Income account Sales

Inventory account Inventory asset

On Hand 1000 (the total value

will appear in the next box $20000)

As of 1/03/10 Click OK

The screen returns to the Item list where the inventory on hand will be displayed:

Customers On the menu bar, click Customers > Customer Centre and the following screen appears:

Click New Customer & Job > New Customer.


From the table, key in the details of the customers and their opening balances.

Field Key in Then

Customer name Highgrove High School

Opening balance 6700

As of 1/03/10

Company Name Highgrove High

School

Bill to Press Enter at the

end of each line

130 Sturt Street

Highgrove

Click Next, then OK

and return to the New Customer

screen

Customer name Australia College


As of 1/03/10

Company name Australia College

Bill to Press enter at the

end of each line

219 Canberra Road

Deakin

Click OK, then Yes

The Customer Centre will display the list of customers with their opening balances in the box on the left of the screen

Suppliers On the menu bar, click Suppliers > Supplier Centre > New Supplier.


From the table, key in the details of the suppliers and their opening balances

Field Key in Then

Supplier Name MacPan Publishers


As of 1/03/10

Company name MacPan Publishers

Name and Address Press Enter at the

end of each line

20 Moray Street

Port Melbourne

Click Next, Yes,

Supplier Name Butterfield Books


As of 1/03/10

Company name Butterfield Books

Name and Address Press Enter at the

end of each line

35 Pyrmont Road

Fig Tree Pocket

Click OK, Yes, OK

The Supplier Centre will display the list of suppliers with their opening balances on the left of the screen. The Australian Taxation Office is included as a default on the Suppliers list.

Entering other Opening Balances Assets On the menu bar, click Lists > Chart of Accounts. Locate the cursor on the NAX Cheque account and double click. The register for the account appears.

Key in 1/03/10 if it is not already displayed in the Date field. Move to the Deposit column and key in 4219. In the Account field, use the pull down list and select


Opening Balance Equity. Click Record, then close the account. When the Chart of accounts is displayed, the balance of the bank account will be recorded, and the balance of the Opening Balance Equity account will be updated. Accounts will need to be opened for the Premises, Fixtures & Fittings and Accumulated Depreciation of Fixtures & Fittings. At the bottom of the screen, click Account > New. Select Fixed Assets then click Continue. (For all of the accounts being opened in this section, the Account type must be Fixed Assets.)

In Account name key in Premises. At the bottom of the box, click Enter opening

balance. Key in 250000 as of 1/03/10. Click OK. Click Save & New to return to the box for entering new assets. In Account name, key in Fixtures & Fittings. Click Save & New. In Account name key in Original Cost. Click Sub account of and use the pull down list and select Fixtures and Fittings. Click Enter opening balance and key in 30000 as of 1/03/10. Click OK. Click Save & New. In Account name, enter Accumulated Depreciation. Click Sub Account of then use the pull down list and select Fixtures & Fittings. Click Enter opening balance and key in -12000 as of 1/03/10. Click OK, then Save & New. Open an account for Investment – Term Deposit and key in an opening balance of 10000 as of 1/03/10. Click OK then Save & Close. When the screen returns to the chart of accounts, locate the cursor at the beginning of Original cost click and drag above Accumulated Depreciation. Liabilities On the menu bar, click Lists > Chart of Accounts > Account > New (you will already be in the chart of accounts if you are working through this tutorial in order). Click Other account types and select Long Term Liability from the drop down list. Click Continue.


The Account Type should be displayed already (Long Term Liability). Key in Loan – Enterprise Bank as the Account name. Click Enter Opening Balance and key in 40000 as of 1/03/10. Click OK then Save & Close.

Cleaning up the Trial Balance Click Reports > Accountant > Trial Balance to check that the balances you have entered are displayed. Adjust the Date field to show 1/03/10. Click Refresh.

There are three items in the Trial Balance which require adjustment – Uncategorised income, Uncategorised expenses, and Opening Balance Equity (Capital).

Note When the details for existing debtors and creditors are keyed in, a corresponding double entry is needed. The program creates this in Uncategorised Income (for debtors) and Uncategorised Expenses (for creditors) because no details of the sales or purchases are required for transactions from the previous period. When these balances are cleared and transferred to Opening Balance Equity (Capital) the opening trial balance on the computer reflects the trial balance provided for the business.


Click Company > Make General Journal Entry (clear the box regarding general journal numbers).

Make the following general journal entry on 01/03/10:

Account Dr Cr

Uncategorised Income 16500

Opening Balance Equity 12500

Uncategorised Expenses 29000

Use the drop down list in the Account field to select the accounts, or enter the names – the full name appears as you commence.

Click Save & Close to return to the Trial Balance to see that the changes have been made.

If you prefer to call Opening Bal Equity by another name, eg Capital, this can be changed. Click Lists > Chart of Accounts > Opening Bal Equity account. Click Accounts > Edit at the bottom of the box, click the Name field and key in Capital. Click Save & Close.

Transactions

The processing of cash and credit transactions was covered earlier in Tutorial One. The following are a few cash transactions that are necessary to establish cash journals for the bank reconciliation process.


On the menu bar, select Customers > Receive payments or click Receive payments on the Home page.

Note: The default setting for Receive Payments in Quickbooks is to debit the money received into an account called Undeposited Funds. This appears as a current asset on the balance sheet. The amount is not included in the total of funds banked until it is transferred to the Bank Account. If preferred the amount can be debited directly into the Bank Account. To do this, click Edit > Preferences>Sales & Customers > Company Preferences and unselect Use Undeposited funds as default deposit to account. The screen above shows the drop down box which then appears in the top section of the Receive Payments form The Bank account must be selected from the drop down list.

Use the drop-down list to select the name and enter the following receipt (as you select the name the balance owing by the customer appears at the top right of the box).

Australia College 4/03/10 $8000

In the left column click to insert a tick against the details. In the Payment column, key in 8000.

Click Save & New.


Enter the details for the next receipt:

06/03/10 Highgrove High School $6000

Click Save & Close.

Click Banking > Make Deposits and transfer both of the deposits from Undeposited Funds to the Bank account. These will need to be transferred separately so that they appear on the correct dates on the reconciliation screen.

Click Lists > Chart of Accounts > Account > New to open accounts for Accounting fees, and Wages (as expenses). Reposition the wages account in the alphabetical list of expenses.

Click Banking > Write Cheques.

Note that the bank balance has increased by the $14000 which has been banked and that it is adjusted after each cheque is written.

Use this form to enter the details of the following payments. (For detailed instructions, refer to Tutorial One.) You will need to open some new accounts.

Use Quick add, Other for the details of the payee.

Note All payments other than wages and drawings have GST included in the amount. Use the tax code NCG for deductible expenses and CAG for the purchase of the computer.

Cheque

No

Date Payee Amount Payment for

982 03/03/10 Slick Books 440 Accounting fees

983 03/03/10 Andrews &

Wyatt

605 Rent

984 04/03/10 Yarra Power 242 Electricity

985 04/03/10 Excel Repairs 165 Equipment repairs


986 04/03/10 Compaq computers

1100 Purchase of new computer (use Original Cost A/c)

987 07/03/10 Cash 600 Wages

Click Save & Close.

Bank Reconciliation

The bank statement for this exercise:

Date Transaction Details Debit Credit Balance

Mar 1 Balance 4219 Cr

4 983 605 3614 Cr

4 Deposit 6000 9614 Cr

5 982 440 9174 Cr

5 Bank fees 15 9159 Cr

6 Deposit 8000 17159 Cr

7 984 242 16917 Cr

10 PP – Insurance 600 16317 Cr

Click Banking > Reconcile.

In the Account field select NAX Cheque for the account to be reconciled.

Key in the statement date 10/03/10

Key in the balance at the end from the bank statement 16317.

Click Continue.

On the menu bar, click on Banking > Write cheques to enter the details for Bank fees and Insurance from the bank statement. (If the asset approach is being used, open and use a Prepaid Insurance account for the insurance payment). Instead of the cheque number for both, enter BS (Bank Statement).


Click Save & New and enter the insurance payment.

Click Save & Close to return to the Reconcile screen.

To complete the reconciliation, click in the first column to insert a tick for any item that is on the bank statement. As this is done the balance at the bottom right of the screen adjusts until the difference becomes 0.00.


Click Reconcile Now.

What type of reconciliation report would you like to print? Select Close.

Balance Day Adjustments

Click Lists > Chart of Accounts > Account > New to open an account for Accrued Wages (other current liability) and Prepaid Insurance (other current asset).

On the Menu bar, click Company > Make General Journal Entry.

Key in the date 31/03/10; use the drop-down list in Account to select Prepaid Insurance (or Insurance if the asset approach is used). Tab to the debit column and key in 400. Locate the cursor on the second line and use the drop-down list in Account to select Insurance. Tab to the credit column and enter 400 (if not already shown).

Click Save & New to process the adjustment for wages.

Click Save & Close.

Depreciation

Once the necessary accounts are set up and arranged appropriately, the processing of depreciation is a simple general journal entry – all assets can be depreciated through one entry.

31/03/10 The insurance payment on 07/03/08 (on bank statement) was for 3 months

31/03/10 Wages for 3 weeks are owing to staff $600


Open expense accounts for Depreciation of Fixtures & Fittings and Depreciation of Computer, and a fixed asset account for Accumulated Depreciation sub account of Computer.

Depreciate the fixed assets as follows:

Computer $100

Fixtures and Fittings $200

From Company select Make General Journal Entry.

Enter the date (31/03/10).

Use the drop-down lists to select the accounts and use the down arrow to move to the next line of the journal.

The amount for the credit entry should appear automatically as the down arrow is used. This can be over-written if desired.

After the debit and credit for each depreciation entry have been completed, click Save & Close.

Stock Adjustments

There are two types of adjustment we need to process – stock gain or loss and write downs in value.

The stock take at the end of the period showed that there were 980 copies of Accounting for Small Business, and 950 copies of Legal Systems on hand. A new edition of Legal Systems will be published in June so it has been decided to offer the remaining stock at $15 per copy.

Click Reports > Inventory > Inventory status by item (adjust the dates to 01/03/10 to 31/03/10) refresh and check that there are 1000 items on hand for each stock line.


On the Menu bar, select Suppliers > Inventory activities > Adjust Qty/Value on hand.

In the Adjustment account field, key in Stock Loss and press Tab.

Use Set up to set up the account as a Cost of Goods Sold account. Click Save & Close.

At the next box, click OK.

In the New Quantity field enter the new numbers for both stock lines (Accounting – 980, Legal – 950).

The adjusted numbers on hand appear in the Quantity difference column and the value of the adjustment is shown at the bottom of the box.

Click Save & New.

In the Adjustment account field key in Stock write down press Tab and set up as a Cost of Goods Sold account.

Click Value Adjustment box (at the bottom left of the screen) and a new column appears: New Value.

Adjust the value of Legal Systems to 14250 (950 x $15).

The value of the stock adjustment is shown at the bottom of the box as you click Save & Close.

Choose Reports > Inventory > Inventory Valuation Detail adjust the dates and check the changes made.


The two new accounts for the stock adjustments should appear on the Profit and Loss statement in the Cost of Goods Sold section. On the Balance Sheet the stock value has been adjusted by the stock losses and adjustment to the value (Accounting for Small Business $24500, Legal Systems $14250 total $38750).

Petty Cash

Use vouchers to record each withdrawal of petty cash used. At the end of a period or when the petty cash advance runs out, use the Cheque section of the program to draw the reimbursement cheque and the allocate the expenses. Set up an advance for $200. Out of this, $75 is spent.

Click Banking > Write Cheques to establish the petty cash advance.

Enter the date 15/03/10, and make out a cheque for Petty Cash (add this to the list as ‘other’).

In the Account field set up a new account for Petty Cash as a Bank account. The amount is $200 (chq 988).

Click Save & New.

For the reimbursement, draw a cheque on 31/03/10 to Petty Cash for $75 (chq 989).

The item allocations are:

Filing fees $20

Supplies – office $30

Postage $25

A new account is needed for “Filing fees” (expense).

Click Save & Close.

Corrections

To cancel cheques:


Choose Lists > Chart of Accounts > NAX Bank.

Click Activities > Use Register. Scroll to find the cheque to be cancelled.

From the Menu bar, choose Edit > Void cheque.

This changes the amount of the cheque to Nil.

Click Record at the bottom of the box and the bank balance changes to reflect the cancelled cheque.

To adjust incorrect postings:

• General journal entries can be done where the entry doesn’t affect the items of stock.

To correct the amount on an invoice:

• The invoice that was issued can be altered or a credit can be issued.

• Click Customers > Create invoice. Click Previous to find the invoice to be adjusted. Make the adjustment and record it.

OR

• Click Customers > Create Adjustment Notes/refunds, to issue a credit note for the incorrect invoice then process a new invoice for the correct items.

If the wrong amount is recorded as received:

• Click Customers > Receive payment > Previous to find the receipt and adjust the amount.

Date post:	11-Mar-2020
Category:	Documents
Upload:	others
View:	4 times
Download:	0 times

Establish a Database for an Existing...

Documents