vendor

Are There Restrictions On Making General Journal Entries To A/R and A/P Accounts?

Chief Mechanic · September 13, 2010 ·

Yes, there are a few restrictions on making General Journal Entries to Accounts Receivable (A/R) and Accounts Payable (A/P) accounts.

Normally, the preferred way to change the balance in an A/R or A/P account is by recording transactions, such as customer invoices or vendor bills. However, sometimes it’s more convenient to make a General Journal Entry. A common use of General Journal Entries to A/R or A/P accounts is to set up customer or vendor balances in a new QuickBooks company file.

If you opt to make a General Journal Entry to an A/R or A/P account, such entries are subject to these restrictions:

You can’t use more than 1 A/R or A/P account in a single journal entry
You must enter a customer name for a General Journal Entry to an A/R account and a vendor name for a entry to a A/P account

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

QuickBooks Premier 2009 General Ledger Warning 1

QuickBooks Premier 2009 General Ledger Warning 2

QuickBooks Premier 2009 General Ledger Warning 3

Here’s an example of a General Journal Entry to 1 A/P account that meets the restrictions:

QuickBooks Premier 2009 GL Make General Journal Entries Accounts Payable

While not an absolute requirement, QuickBooks prefers that transactions involving A/R or A/P accounts have that account on the first line of the General Journal Entry. The first line of a General Journal Entry is the source of the transaction. Sources and targets are an important concept in QuickBooks. For more information, see our article on sources and targets.

When you record a General Journal Entry to an A/R or A/P account, the General Journal Entry will appear in the transaction list for the customer or vendor specified in either the Customer Center or Vendor Center – provided that the A/R or A/P account is on the first line of the general journal entry and is therefore the transaction source. General Journal Entries that debit (increase) A/R will be similar to a customer invoice and can be paid in a similar fashion. General Journal Entries that credit (increase) A/P will be similar to a vendor bill and likewise can be paid just like other vendor bills. However, some data fields are not filled in when recording transactions for a customer or vendor via a General Journal Entry. For example, the Terms and Due Date fields on a General Journal Entry for a vendor are left blank, as shown below. (Note: The single screenshot below shows a customized Vendor Center with the separate Pay Bills window placed on top of it to illustrate several of the points discussed in this article.)

QuickBooks Premier 2009 Vendor Center Plus Pay Bills

Beyond restrictions on making General Journal Entries to an A/R or A/P account, there are other restrictions that apply to making General Journal Entries, such as currency restrictions in multicurrency environments.

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How Do I Add a New Loan To Loan Manager?

Chief Mechanic · September 12, 2010 ·

To add a new loan to Loan Manager, there are some preliminary steps to make before running Loan Manager:

Evaluate if this is a loan that Loan Manager can track. Loan Manager doesn’t track interest-only loans, so if your loan requires you to make regular payments of interest over time and the entire principal in a single payment at the end of the term, Loan Manager isn’t the right tool
Verify the liability account for the new loan exists in your QuickBooks chart of accounts and that it is active; if not, add it or change its status
Verify the payment account (normally a bank account) which will be used to make payments on the new loan exists in your QuickBooks chart of accounts and that it is active; if not, add it or change its status
Verify the expense account which will be used to record interest expense for the new loan exists in your QuickBooks chart of accounts and that it is active; if not, add it or change its status
Verify the expense account which will be used to record other fees (such as bank fees) for the new loan exists in your QuickBooks chart of accounts and that it is active; if not, add it or change its status
If your loan has escrow payments associated with it, verify that the asset account which will be used to record prepaid expenses (such as property taxes or insurance) for the new loan exists in your QuickBooks chart of accounts and that its active; if not, add it or change its status
Verify the vendor or other name to which payments will be made exists; if not, add the vendor or other name
Enter the journal entries in QuickBooks so the current balance of the liability account associated with your new loan equals the original amount of the loan
Have in front of you the following information about the new loan: the origination date, the term, the interest rate, whether your lender uses daily compounding (and if so, whether it’s on a 360 or 365 day basis), the payment amount, the sequential payment number, the due date of next payment, and the escrow amount (if any)

Since Loan Manager reads information from your QuickBooks chart of accounts when it first loads, if the accounts required to set up the loan do not exist when Loan Manager starts, you won’t be able to set up the loan properly – even if you open a window within QuickBooks to add the accounts while Loan Manager is running.

Here’s the main window of Loan Manager:

To add a new loan, click the Add a Loan… button. The Add Loan window, the first step in the process, appears. Since we’ve already followed the steps in our checklist, our accounts already exist and the balance of our liability account equals the Original Amount of the new loan. In this example, that amount is $200,000.00. Choose your liability account and Lender (a vendor or other name) from the pull down menus. Enter the Origination Date for the loan, the Original Amount (which in our example is $200,000.00), the Term and the type of number the entered Term represents (weeks, months, or years).

Once this information is correct, press the Next button to bring up the second screen in the process of adding a loan. On this screen, enter the Due Date of Next Payment, the Principal Amount, and the Next Payment Number. For a new loan, the Next Payment Number will normally be 1 provided that you’re setting up the loan before your first payment is due. Choose the Payment Period (one of weekly, bi-weekly, semi-monthly, monthly, bi-monthly, quarterly, semi-annually, or annually) from the pull down menu. Specify whether the loan has an escrow payment associated with it, and if so, enter the Escrow Payment Amount and the Escrow Payment Account. The Escrow Payment Account is normally an asset account because escrow payments are being made in advance of the expense being incurred. If you want QuickBooks to remind you before a payment is due, make sure the checkbox is checked.

Once this information is correct, press the Next button to bring up the third screen in the process. Enter the Interest Rate for your loan as a percent. Choose the Compounding Period for you loan, which will default to the Payment Period you entered on the previous screen. You’ll also have the option of setting the Compounding Period to Exact Days to specify that your lender is using either a 360 or 365 day year to calculate interest. If you choose this setting, you’ll have the additional option of specifying the Compute Period as either 365/365 or 365/360. This information would normally be found in your original loan documents. Choose your Payment Account, Interest Expense Account, and Fees/Charges Expense Account from the pull down menus. Normally, the Payment Account is a bank account, such as a checking account.

When this information is correct, press Finish. You’ll see a screen similar to the one below. In our example, we added a new loan with a principal of $200,000 at a 10% interest rate, a 60 month term with monthly payments, and a $2,000.00 monthly payment. Since this loan is not is not fully amortizing with those provisions, there is a balloon payment at the end of the term. Clicking on the Payment Schedule tab will display the payment information for the loan; the Contact Info tab will display the relevant information for the vendor or other name we specified as the Lender. This information is maintained in QuickBooks itself, not Loan Manager.

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. Since we completed our checklist steps before running Loan Manager, which included recording the loan balance in the liability account, the balance was displayed correctly once we added the loan. Had we not completed that step, the Balance column for our new loan would show the balance of our liability account, or $0.

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

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How Do I Resort Lists?

Chief Mechanic · September 11, 2010 ·

Lists are one of the foundations of QuickBooks, and from time to time they can become out of order. That’s when they need to be resorted. Some common indicators that it’s time to resort your lists include:

the list itself is out of order
an element is missing
new entries in a list appear at the top of the list instead of in their sorted order
you can’t turn on the account number preference
selecting a Customer:Job, Vendor, or Employee in a Center fails to display existing transactions for that name
Names don’t properly auto-fill when entering a Name filter on the Advanced tab of the Edit->Find… function

Resorting any list will undo any special order you’ve applied to the list, and this activity can’t be done in multi-user mode. It’s always a good idea to backup your company file before undertaking an action that can’t be undone.

There are 8 lists that can be resorted. They are:

Customers:Jobs
Vendors
Employees
Other Names
Accounts
Items
Memorized Reports
Memorized Transactions

Since this technique is often used to address possible data corruption, we’ll outline the most efficient technique to resort multiple lists, but you can also choose to resort an individual list by opening up a Center and right clicking on a list element.

The first 4 lists are collectively referred to as Names or Entities, and there’s an easy way to resort these 4 lists:

Open the Write Checks window by clicking on Banking->Write Checks or using the keyboard shortcut Ctrl + W
In the Pay to the Order of field, click Ctrl + L
Opt to include inactive list entries by clicking the Include Inactive checkbox
Click the Name button and choose Re-sort List from the menu
Click Ok to resort the lists
Uncheck the Include Inactive checkbox

The screenshot below shows the combined Name list in Step 4:

QuickBooks Enterprise Solutions 10 Resort Name List

Our related article explains how to provide easy access to this combined list of all Names.

Resorting the Chart of Accounts and Items lists follow similar procedures, except each of these lists will have to be resorted individually. To access the Chart of Accounts, click the Lists->Chart of Accounts menu selection or use the keyboard shortcut Ctrl + A. To access the Items list, click Lists->Items. Opt to include inactive list entries, resort the list from the button in the lower left of the window, and uncheck the Include Inactive checkbox before proceeding to the next list.

Resorting Memorized Reports and Memorized Transactions are similar to the above steps, except there’s no need to include inactive list entries since they’re not allowed on these lists. To access Memorized Reports, click the Reports->Memorized Reports->Memorized Report List menu selection; to access Memorized Transactions, click Lists->Memorized Transactions or use the keyboard shortcut Ctrl + T.

After resorting lists, close and reopen your company file (.qbw) to insure that all changes are successfully written to disk.

Resorting lists is discussed in this Intuit knowledge base article.

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Can I Produce an Inventory Stock Status Report for a Single Vendor and a Range of Items?

Chief Mechanic · September 11, 2010 ·

Without a custom report, you can’t produce that exact report: an inventory stock status for a single vendor and a range of items.

Let’s review the flexibility available when generating the default report by visiting the Reports->Inventory->Item Stock Status by Item menu and clicking on the Modify Report… button.

To change what records are reported, click the Filters tab.

Multiple filters can be applied to narrow the records reported. Unfortunately, this report does not offer the ability to choose the vendors whose products are included on the report, just a single Vendor Type. In this example, we’ll choose vendors whose Vendor Type is set to Materials.

QuickBooks Premier 2009 Report Inventory Stock Status by Item Vendor Type

Like our first filter, our second filter doesn’t perfectly address the requested report, but it comes fairly close. Move the slider in the Choose Filter box to Item and click on the pull down to select the type of filter to be applied to that entry. The off-the-shelf QuickBooks report can’t filter a range of items with starting and ending points on the range. This would be a practical necessity if there were a large number of items in the range. However, the filter can select all of 1 item type, such as all services, or multiple items. If the desired range is small, choosing individual items has the same practical effect as entering a range. In this example, we’ve selected 4 items: Cabinets, Cabinet Pulls, Light Pine, and Door Frame.

QuickBooks Premier 2009 Report Inventory Stock Status by Item Select Items

With those settings, our report will include those 4 items that also have a Vendor Type set to Materials.

QuickBooks Report Inventory Stock Status by Item Filtered

Our filtered Inventory Stock Status by Item report doesn’t perfectly match the requested report, but we’ve managed to narrow the information reported considerably. If you need to filter this information based on Vendor (rather than Vendor Type) and need to include a range of items because the number of items is too large to select individually, we can design a custom report that extracts just the information you need.

If you’d like more information on a custom report, just send us an email or submit our contact form.

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How Do I Produce a Report of Vendor Purchases?

Chief Mechanic · September 10, 2010 ·

Let’s assume that vendor purchases include both purchases of inventory and expenses paid. With that assumption, there no simple report to address all situations. Finding the right report depends on the information you want to include on the report.

QuickBooks provides 2 reports that include vendor purchases: the Purchases by Vendor Detail Report and the Purchases by Vendor Summary Report. Both of these reports can be found on the Reports->Purchases menu.

These reports are a simple way to identify vendor purchases, but they contain an important limitation: the reports only include purchases recorded on the Items tab of bills, checks, and credit card charges. They do not include transactions recorded on the Expenses tab or payroll-related expenses.

Another approach is to use the Expenses by Vendor Detail Report or the Expenses by Vendor Summary Report, found on the Reports->Company & Financial menu. However, this approach also contains a limitation: it only includes transactions sent to a general ledger expense account (whether or not the transaction was entered on the Items or the Expenses tab), not vendor purchases of inventory, which are additions to assets.

Vendor purchases (both purchases of inventory and expenses paid) are not the combination of the Purchases by Vendor and the Expenses by Vendor reports. That’s because it’s possible to enter a transaction on the Items tab where the amount is sent to a general ledger expense account based on the account for that Item. As a result, such a transaction would appear on both reports, and combining the values on these reports would result in double-counting.

Yet another approach is to start with a Custom Transaction Detail Report (or the Summary report if only summary totals are required) and to filter the report for certain transaction types. At the simplest level, filter the report by Transaction Type and choose Multiple Transaction Types from the pull down. When the Select Transaction Types window appears, select Check, Credit Card, Bill, CCard Credit, and Bill Credit. Those selections will capture vendor purchases by check, bill, or credit card, net of all credits.

QuickBooks Enterprise Solutions 10 Vendor Purchases

With that 1 filter applied, this report is a comprehensive list of purchases by vendor. However, the report includes the payment side of each transaction, and there is no easy filter setting to restrict which accounts appear on the report and avoid the risk that a vendor purchase in that account would be missed.

Which approach is best suited to identify vendor purchases ultimately depends on the how transactions are entered in QuickBooks and the information sought after on the report.

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vendor

Accounting

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Intuit