Paying with Cash in QuickBooks

 If you carry company cash around in your wallet (called petty cash) or if you receive a cash advance toward travel expenses, you eventually have to record the details of your cash transactions in QuickBooks. For example, on a business trip, you might pay cash for meals, parking, tips, and tolls. When you return with your receipts, your bookkeeper can enter a transaction documenting those

expenses in the petty cash account. Entering cash transactions in the petty cash account register (to open it, in the Chart of Accounts window, double-click the account you created for petty cash) is even easier than entering checks in the checking account register. For cash transactions, the key fields are the amount and the account. You can skip the Payee field altogether to keep your Vendor List concise.

If you want a record of where you spent the cash, type the business name in the Memo cell. QuickBooks assigns a check number to such cash transactions, which you might as well keep. If you hand out petty cash receipts that have receipt numbers, you can type that value in the Number cell instead.

 Paying with Credit Cards When you make credit card purchases, the easiest way to record those charges in your company file is by signing up for online banking and downloading your transactions. But you can also enter credit charges manually.   

╉Paying with Credit Cards

Tip: Whether you download charges or not, entering charges manually is a great way to catch erroneous or fraudulent charges that appear on your statement. For example, after entering your charges manually, you can download the charges from your credit card company. If you see additional charges that don’t match the ones you entered, either you forgot a charge or there’s an error in your account.

Recording credit card charges is almost the same as writing checks. Instead of the Write Checks window, you work in the Enter Credit Card Charges window, shown in Figure 9-20. Behind the scenes, QuickBooks adds the credit card charge to your credit card account, which is a current liability account. That means the balance in the account increases because you owe more money. (On the other hand, when you write a check out of your checking account, the payment decreases the balance because you have less money in that asset account.) Figure 9-20:╇ Unless you want your Vendor List awash with every pizza parlor, gas station, and toll booth you patronize, consider creating generic vendors such as Gas, Restaurant, and Parking. If you want to track the specific vendors, type their names in the Memo field. In the Ref. No. field, you can type your receipt number or leave the field blank. Allocating a charge to multiple accounts or to a customer works the same as for bills.

To open the Enter Credit Card Charges window, choose Banking➝Enter Credit Card Charges. You can also enter charges directly in the credit card account register, just as you do with checks.

Note: To enter a refund for a credit card charge, in the Enter Credit Card Charges window, choose the Refund/Credit option and fill in the rest of the fields based on the refund you received.   â•‰â•‰â•‰â•‰Recording Vendor Refunds and Credits

Recording Vendor Refunds and Credits Say you ordered 30 dozen lightweight polypropylene t-shirts for your summer Death Valley marathon, but your vendor mistakenly silk-screened the logo on long-sleeved cotton t-shirts heavy enough to survive a nuclear blast. If you raise a ruckus, the vendor may issue you a refund check or a credit. Either way, it’s easy to record the money you get back in QuickBooks. Here’s how to deposit a vendor’s refund check:

1. On the Home page, click Record Deposits. You can also choose Banking➝Make Deposits.

2. If the “Payments to Deposit” window appears, click OK to open the Make Deposits window. The “Payments to Deposit” window opens if you have other deposits to make. If you want to deposit them along with the refund check, turn on the checkmark cell for each deposit you want to make and then click OK.

3. In the Make Deposits window’s Deposit To drop-down list, choose a bank account. If you selected other deposits in the “Payments to Deposit” window in the previous step, they appear in the table.

4. In the first blank Received From cell, choose the name of the vendor who issued the refund check. You can choose a customer, employee, or other name if the check isn’t from a vendor.

 5. In the From Account cell, choose the account associated with the refund. For a refund for shirts you purchased, you might choose a cost of goods sold account that you use for products you buy specifically for a customer. If the refund is for office supplies, choose the expense account for office supplies.

6. Fill in the other fields and then click Save & Close. Fill in the Memo cell with a note about the refund, the check number and payment method to record a refund check or a credit card refund, and the amount of the refund.

If the vendor insists on issuing a credit instead of a refund check, here’s how you record that credit in QuickBooks:

1. On the Home page, click Enter Bills (or choose Vendors➝Enter Bills). QuickBooks opens the Enter Bills window as if you’re going to enter a bill.

2. Just below the window’s menu bar, choose the Credit option. QuickBooks changes the heading in the window to Credit, and the Amount Due label to Credit Amount. The other fields stay the same.   

3. On the Expenses and Items tabs, fill in the cells with the items for which you received credit. You can enter positive numbers just as you did when you entered the original bill. QuickBooks takes care of posting the credit amounts to your accounts. Your inventory account decreases due to the inventory items you return, and your expense accounts decrease due to expense credits. The total credit amount also reduces the balance in your Accounts Payable account. 4. Click Save & Close. That’s it!

                                                                                                                      

 Running Expense-Related Reports Vendors & Payables reports (choose Reports➝Vendors & Payables) tell you how much you owe each vendor and when the bills are due. The reports in the Purchases category (Reports➝Purchases) on the other hand, focus on how much you’ve bought from each vendor you work with. This section tells you how to put the reports in these two categories to work.

 A/P Aging and Vendor Balance Reports If your company is flush with cash and you pay bills as soon as they appear in the Pay Bills window, your A/P Aging reports and Vendor Balance reports will contain mostly zeroes. In fact, because the Pay Bills window lets you sort bills by due date, discount date, vendor, and amount, you might not find any reason to run these reports. For example, if you juggle payments to vendors to conserve cash, you can easily pay the oldest bills first by sorting bills by due date. But if you want an overview of how much you owe each vendor and how much is overdue, use one of the following reports:

• A/P Aging Summary. This report shows all the vendors you owe money to, and how old your balances are for each one. Double-click a value to see a report of the transactions that produced the amount owed, for example, to look at a bill that’s more than 90 days overdue.

 • A/P Aging Detail. Run this report to see each unpaid bill sorted by the billing date and grouped by bills that are current, those that are 1 to 30 days overdue, 31 to 60 days overdue, 61 to 90 days overdue, and more than 90 days late.

• Vendor Balance Detail. Run this report to see your bills and payments grouped by vendor.

• Unpaid Bills Detail. If you want to evaluate all your unpaid bills before you pay them, this report displays the bills due up to the current date, grouped by vendor. To include bills due in the future, in the Dates box, choose All. If you want to inspect a bill more closely, double-click anywhere in that bill’s row and the Enter Bills window opens with the bill’s details.     â•‰â•‰Paying Sales Tax

Purchases Reports When you run the “Purchases by Vendor Summary” report and see high dollar values, you might want to negotiate volume discounts or faster delivery times. This summary report can also show when you rely too heavily on one vendor—a big risk should that vendor go out of business. The “Purchases by Item Summary” report shows how many inventory items you’ve purchased and the total you paid. The “Purchases by Item Detail” report shows each purchase transaction with the quantity, cost, and vendor. If your supplies are dwindling, the Open Purchase Orders report shows when more items are due. To see your open purchase orders, choose Reports➝Purchases➝Open Purchase Orders. The report shows only the date, vendor name, purchase order number, and delivery date. Double-click a purchase order to open the Create Purchase Orders window, which shows the products on the order.