Banking & Credit Cards

How Do I Delete or Remove an Existing Loan From Loan Manager?

Chief Mechanic · September 12, 2010 ·

To delete or remove an existing loan from Loan Manager, follow these simple steps:

Open Loan Manager from the Banking->Loan Manager menu in QuickBooks
Highlight the loan you want to remove by clicking on it in the Loan List
Click the Remove Loan… button
Click Yes in the Remove Loan? window

Here’s the main screen of Loan Manager with a single loan. If the loan you want to delete or remove isn’t listed, the GL liability account is probably inactive. In that case, close Loan Manager, make the GL liability account active, and restart Loan Manager. Here’s the Loan Manager after the loan has been selected:

Here’s the Remove Loan? window:

It’s important to understand that Loan Manager is primarily a tool to calculate payment schedules and to simplify the process of distributing interest and principal payments to the appropriate GL accounts. When you create a new loan in Loan Manager, the outstanding balance for that loan will start as $0 – until you record a transaction in the liability account in QuickBooks itself. Once the liability account is increased to reflect the loan’s principal, Loan Manager can assist you to record the regular payments. Likewise, when you remove a loan from Loan Manager, you are not making changes to the liability account balance.

Therefore, deleting or removing a loan by following these steps will not impact your financial statements or other reports produced by QuickBooks.

For more information on using Loan Manager, see our related articles on adding a new loan and recording a debt re-financing.

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How Do I Change an Onscreen Form Such As Create Invoices To Show More Line Items?

Chief Mechanic · September 12, 2010 ·

Making changes to the windows of QuickBooks is easy.

Let’s use the Create Invoices window as an example. By default, this window shows just 2 invoice lines. In this article, we’ll change the default look. An important point to keep in mind is that you should not close the Create Invoices window until you’ve completed all the steps in this article. Otherwise, you’ll lose your work and need to start over.

Here’s the Create Invoices window in its smallest form. Pay close attention to the right border. We’ve positioned our mouse pointer directly on the border, and it’s now turned into a left-right arrow. It only provides this functionality when your mouse is positioned directly on the border; if you move it off the border, your pointer shape and function will change.

QuickBooks Premier 2009 Create Invoices Right Border

With your mouse pointer positioned directly on the border, make the Create Invoices window bigger by dragging this border to the right. To drag something in Windows, hold down your primary mouse button while moving it to the desired position. Since we started with the smallest form, we can’t drag it to the left. Next, drag the bottom border down and watch more invoice line items immediately appear. Re-size the window to fit your needs.

Let’s carry our customization 1 step further. Position your mouse directly on the fine line between any 2 columns, such as the one between U/M and Rate. Your mouse pointer will change to another type of left-right arrow.

QuickBooks Premier 2009 Create Invoices Column

To change the width of a column, drag the pointer when it’s positioned directly on the line between 2 columns and is in the shape shown above. Again, it only provides this functionality when your mouse is positioned directly between 2 columns; if you move it away from this position, your pointer shape and function will change. One common need in re-sizing a window such as the Create Invoices window is to increase the width of the description field. With this knowledge, that’s now an easy task. Re-size any column to suit your needs.

Once you’ve completed customizing the look of your Create Invoices window, you need to save your work. To do that, do not close the Create Invoices window. Instead, go to the Edit->Preferences menu, and choose Desktop View from the submenu shown. Since QuickBooks can store different desktop settings for individual users, be sure you’re on the My Preferences tab.

QuickBooks Premier 2009 Preferences Save Current Desktop

Click the radio button Save current desktop and click OK. Your changes to the Create Invoices window are now saved. To confirm that, close the Create Invoices window and re-open it. It should now open to your customized size and layout. Since you’ve just saved your desktop with the Create Invoices window open, that window will open the next time you start QuickBooks. If you want different windows to open by default, simply open them and save the desktop in that state.

This same technique can be applied to most, if not all, data entry screens in QuickBooks.

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Are Credit Card Charges Included On a Cash Basis Report?

Chief Mechanic · September 5, 2010 ·

Yes, credit card charges are included on a cash basis report in QuickBooks.

Credit card charges are generally considered paid for tax purposes when charged, and this is how QuickBooks treats these expenses.

An internet search on this topic reveals a variety of unsupported claims about the application of this accounting treatment, specifically that it varies by the type of card issuer or the type of card. The claims we’ve investigated are unsupported. Simply put, credit card or other charge card purchases are considered paid for tax purposes when charged, and that treatment does not depend on the card type or card issuer.

Intuit offers additional explanation for the treatment of credit card charges in this Intuit knowledge base article.

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What Are the Procedures and Journal Entries To Record a Customer’s NSF or Bounced Check?

Chief Mechanic · September 4, 2010 ·

If you process enough transactions, sooner or later you’ll have to account for a returned check. A check that is returned unpaid is given many labels (such as NSF or bounced check) but the accounting treatment is the same.

The procedures outlined below work effectively for POS users in both single stores and chains. Activities such as receiving bank notices of fees and returned items typically take place at the headquarters rather than the store level, so these tasks are performed in QuickBooks financial software rather than POS. However, in POS a payment can be accepted by clicking the Take Payment button at the bottom of the New Sales Receipt window. This allows a customer to replace a returned check at any store in a chain. When POS exchanges data with QuickBooks, the customer’s account will be updated.

For this example, let’s assume we received a returned check for $50 from a customer named Customer with check returned unpaid. For handling the returned item, the bank charged a $25 fee, and we’ll only seek to recover from the customer the actual bank charges. Rather than investigating each fee separately, some firms set a fixed fee to charge customers. Hopefully, this customer will replace the unpaid check with another one, but we’ll need to record the activity in our cash account before that takes place.

Here are 2 methods to account for the returned check:

create a new invoice to the customer for the amount of the returned check and fees your firm adds and a general journal entry for the expense of the fees the bank charged
use 1 general journal entry for the entire process

Although the second method appears simpler, we recommend the first method because it preserves normal accounting procedures and provides a better paper trail by creating an invoice that can be sent to the customer to assist collecting the bounced check.

Method 1 – Re-invoice the Customer

Before accounting for this specific returned check, set up 2 new Other Charge Items on the Item List. These Items will only be set up once.

The first other charge will be used to invoice the customer for the amount of the returned check. At this point, it should be set to a $0.00 amount and have a Tax Code that is non-taxable. An Item Name of Returned Check will serve as a reminder for how this charge will be used. The Account must be set to the bank account into which the original returned check was deposited. Later, the amount of the returned check will be entered when the customer is invoiced for the returned check, along with any applicable bank charges. If you make deposits into multiple bank accounts, you’ll need a separate item for each bank account; in this case, include a reference to the bank account in the Item Name.

QuickBooks Premier 2009 New Item Returned Check

Next, add a second other charge for possible bank charges. Like the other charge for the check amount itself, this charge should have a Tax Code that is on-taxable. The amount can be set to either $0.00 (to indicate it varies depending on the situation) or a fixed fee representing a firm’s standard returned check fee. An Item Name of Returned Check Bank Charges will be a good reminder of how this charge will be used. The Account should be set to either an other income account or the expense account used for the original bank charge. In this example, we created an other income account for reimbursed bank charges.

With the other charges properly set up, make a general journal entry for just the charge the bank deducted from your bank account. To do that, click the Company->Make General Journal Entries… menu and enter the actual bank charge as a credit to the bank account and a debit to bank charges expenses as follows:

QuickBooks Premier 2009 GL Make General Journal Entries NSF 1

Next, click on the menu Customers->Create Invoices (or use the keyboard shortcut Ctrl + I) to invoice the customer for both the amount of the returned check and the fee charged by your firm. In our example, the returned check was $50, and the bank charges are $25.

Here’s the Create Invoices window:

QuickBooks Premier 2009 Create Invoices for Customer NSF Check

This invoice will be reflected on the customer’s account and will provide a document to present to the customer to collect payment. Hopefully, the customer will replace the returned check. At that point, use the normal procedure for recording a customer payment (Customers->Receive Payments) to record the replaced payment and depositing the funds (Banking->Make Deposits).

QuickBooks Premier 2009 Receive Payment for NSF Check

This approach has some important benefits. It creates an invoice to help collect both the unpaid amount and the bank charges. It also preserves the normal work flow for processing payments and making deposits. It’s also the approach recommended by Intuit in the documentation for QuickBooks.

To review the debits and credits of each step, press the Journal button (or Ctrl + Y). The general journal entry we first entered accounted for the actual bank charge. When we recorded the invoice, we produced a debit to AR in the amount of $75, a credit to our bank account for the $50 check, and a credit to an other income account for $25. The invoice in effect reduced the bank account by the amount of the returned check, so at this point, our bank balance is accurate.

Method 2 – Make 1 General Journal Entry

Some prefer to accomplish all of the above in just a single general journal entry. To do that, click on the Company->Make General Journal Entries… menu and make these entries:

AR: debit of $75 with the customer’s name entered in the Name field
Bank account: credit of $50 to reduce the bank balance
Bank account: credit of $25 to reduce the bank balance
Bank service charges (expense): debit of $25
Reimbursement income: credit of $25 to record the revenue (optionally enter the customer’s name in the Name field)

Ideally, although it’s not shown in the screen shot below, the debit to AR should be entered on the first line of the general journal entry.

QuickBooks Premier 2009 GL Make General Journal Entries NSF 2

The steps outlined above for recording a customer payment (Customers->Receive Payments) and depositing the funds (Banking->Make Deposits) are then used to complete the accounting when the customer replaces the returned check.

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How Does Quickbooks Handle Voiding a Check Dated In a Closed Period?

Chief Mechanic · August 30, 2010 ·

When you void a check, QuickBooks:

changes the original amount of the check to 0.00
adds the text VOID: to the beginning of the Memo
sets the cleared flag, Clr

When you’ve specified that your books are closed through a given date, in addition to performing the above steps, QuickBooks gives you the option of automatically adding reversing general journal entries so that accounting reports for the closed period are not affected. However, this option to automatically add a reversing general journal entry comes with a big stipulation: the accounts associated with the check must be expense accounts. If they’re other account types, you’ll have to construct reversing general journal entries on your own.

A bill payment check is similar to a check, but it is actually a different transaction type. QuickBooks only provides the option to automatically reverse voided checks, not bill payment checks. Later in this article, we’ll describe how to manually make the reversing general journal entries when voiding a bill payment check from a closed period.

To see this process in action, first verify your Closing Date. You can find it by clicking on the Company->Set Closing Date… menu selection.

QuickBooks Enterprise Solutions 10 Closing Date

For our sample company, the Closing Date has been set to 11/30/2013. If you void any check dated on or before this date, QuickBooks will give you the option of automatically creating well-documented reversing general journal entries that will maintain the accuracy of your accounting reports for the closed period.

To void a check, you can either right click on the check in the bank account register to invoke the context menu and select Void Check or you can select the check in the register and choose Void Check from the Edit menu. Both paths take you to the same destination.

QuickBooks Enterprise Solutions 10 Void Check

Since check # 5244 is dated before the Closing Date, voiding it will bring up this warning:

QuickBooks Enterprise Solutions 10 Void Old Check Warning

You have the option of simply voiding the check and not having QuickBooks create the reversing general journal entries. Just click the No, just void the check button. However, unless you manually create reversing general journal entries, financial reports from the closed period will no longer be accurate, since the check amount was just changed to 0.00. Even if you intend to modify the reversing general journal entries (such as to add more information to the Memo), it’s a good idea to click the Yes (Recommended) button.

Clicking the Yes (Recommended) button causes QuickBooks to automatically perform these steps:

create a reconciled general journal entry on the date of the original check
create a reconciled, reversing general journal entry on the date you voided the check
add additional text to the Memo of the voided check to refer to the journal entries made

The general journal entry on the date of the original check:

QuickBooks Enterprise Solutions 10 Void Check Reversing Journal Entry 1

The reversing general journal entry on the date the check was voided:

QuickBooks Enterprise Solutions 10 Void Check Reversing Journal Entry 2

The updated memo on the voided check that refers to the general journal entries:

QuickBooks Enterprise Solutions 10 Void Check Memo

Note that QuickBooks automatically sets the Clr flag for both journal entries, just like it does for the voided check. By doing so, voiding the check and recording the reversing journal entries will not interfere with your bank reconciliation.

Recording these journal entries preserves the accuracy of your financial statements for the closed period. If you simply voided the check and didn’t record these entries, rent expense for the closed period would be lower than previously reported on your financial statements or tax returns. That inconsistency can lead to questions about the reliability of accounting information and cause time to be spent trying to reconcile the difference. Well-documented general journal entries eliminate the potential for inconsistency.

The reversing general journal entry puts a credit to rent expense in the current period. If you were voiding the original check because it was never cashed and you now plan to issue a replacement, the credit and the replacement check will offset. That way, your expenses (or the accounts on the original check) are not overstated in the current period. If you were voiding the check and you don’t plan to reissue it, expenses for a closed period were overstated, and they’ve been adjusted in the current period – when the overstatement was discovered.

QuickBooks did a lot of work once you clicked on the Yes (Recommended) button. But don’t forget that the entire process is triggered by setting your Closing Date. If you haven’t done that, QuickBooks won’t go through these time-saving steps because it lacks the information to do so.

For bill payment checks, QuickBooks won’t automatically perform the steps described above, so you’ll have to go through them manually when voiding a bill payment check in a closed period. Those steps are:

void the bill payment check, noting the vendor; voiding the bill payment check will turn the bill into an outstanding A/P balance
record a general journal entry on the date of the original bill payment check with the first line on the journal entry as a debit to accounts payable; record the vendor in the Name column on this line; the second line of the journal entry is a credit to the bank account from which the bill payment check was written
record a general journal entry on the date the bill payment check was voided with the first line on the journal entry as a credit to accounts payable; record the vendor in the Name column on this line; the second line of the journal entry is a debit to the original bank account
use the Vendors->Pay Bills function to use the older general journal entry to pay the original bill
pay the newer general journal entry in the normal course of business

It’s important to note that the procedures described here cover voiding – but not re-issuing – a check. If you need to re-issue a check, you’ll have to do so in the current accounting period. Voiding a bill payment check leaves a current accounts payable balance for you to pay in the current period. If you want to void a bill payment check in a closed period and cancel the original bill, you’ll need to record a bill credit in addition to the steps outlined above.

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Banking & Credit Cards

Accounting

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