general journal entry

Are There Restrictions On Making General Journal Entries In a Multicurrency Environment?

Chief Mechanic · September 6, 2010 ·

Yes, there are a few restrictions on making General Journal entries in a multicurrency environment.

Only 1 foreign currency is allowed per General Journal entry
The currency of the General Journal entry must match the currency of the accounts selected or be your home currency
If you enter data in the Name field, it must match the currency of the Account field

The Currency selected in a General Journal entry represents the currency units used in the entry. A General Journal entry to an account transacting in EUR with the Currency set to USD (where USD is the home currency) is permitted – the entry will simply be converted at the Exchange Rate recorded with the General Journal entry. However, a General Journal entry between 2 accounts, 1 transacting in EUR and the other transacting in GBP (where the home currency is USD) is not permitted. Further, if the Currency for the entry is set to something other than the home currency (such as EUR if your home currency is USD), you can’t enter a General Journal entry to an account transacting in GBP even though there is just 1 foreign currency on the entry.

Here’s an example of a General Journal entry in Euros (EUR) that meets these restrictions:

QuickBooks Premier 2009 Multicurrency Make General Journal Entry

Here are some of the warning screens you’ll see if you attempt to violate these restrictions:

QuickBooks Premier 2009 General Ledger Warning 4

QuickBooks Premier 2009 General Ledger Warning 6

QuickBooks Premier 2009 General Ledger Warning 5

The restrictions on General Journal entries in a multicurrency environment are in addition to the restrictions that apply when only 1 currency is used.

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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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What Distinguishes a Reimbursable Expense From Other Expenses?

Chief Mechanic · September 1, 2010 ·

A reimbursable expense is an expense that you expect to invoice to a customer or client either at the actual cost or with a markup. QuickBooks includes features to distinguish reimbursable expenses from other types of expenses and to track which reimbursable expenses have in fact been invoiced to a customer.

For more information on handling reimbursable expenses, see our related articles on enabling automatically invoicing customers for reimbursable expenses, invoicing a customer for reimbursable expenses, removing expenses from the list of billable expenses to be invoiced to a customer, and finding out which reimbursable expenses haven’t been billed to a customer.

In QuickBooks, the 4 principal ways to record expenses for a business are:

Recording a vendor bill using the Vendor->Enter Bills menu selection
Writing a check using the Banking->Write Checks menu selection or Ctrl + W keyboard shortcut
Recording a credit card transaction using the Banking->Enter Credit Card Charges menu selection
Via a General Journal entry using the Company->Make General Journal Entries… menu selection

When you record an expense using 1 of these 4 methods, you can associate line items on the transaction with one or more Customer:Jobs. Doing so will enable you to analyze both the expenses as well as the revenues from a job.

When you add a Customer:Job to a line item on a check, vendor bill, credit card charge, or General Journal entry, QuickBooks will automatically put a check mark in the Billable? field. That check mark in the Billable? field indicates this is a reimbursable expense to be invoiced to a customer or client. If it’s not, simply remove the check mark by clicking on it.

Unfortunately, there’s presently no way to set the default for the Billable? field to being unchecked for those organizations who want to simply assign expenses to customers and not seek reimbursement. Leaving this field checked won’t interfere with associating expenses with customers; it’s an important detail if your organization does want to use it to track reimbursable expenses. In either case, with a Customer:Job associated with the line item for the expense, you’ll be able to use QuickBooks to perform job profitability analysis, more commonly known as job costing.

The screens for each of the 4 principal ways to record an expense are shown below. Here’s the Enter Bills window:

QuickBooks Premier 2009 Enter Bill Reimbursable Expense Tab

The Write Checks window:

QuickBooks Premier 2009 Write Checks Billable

The Enter Credit Card Charges window:

QuickBooks Premier 2009 Enter Credit Card Charge Billable

And the Make General Journal Entries window:

QuickBooks Premier 2009 Make General Journal Entries Billable

Note that the field where you enter the Customer:Job on the Make General Journal Entries window is actually called Name because General Journal entries can be recorded for an entity that isn’t a Customer:Job, such as a Vendor, Employee, or Other Name.

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general journal entry

Accounting

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Intuit