Wednesday, March 27, 2013

QuickBooks: Create a Letter from Scratch

1.      Open the Letters and Envelopes wizard for customizing letter templates.
·         From the Company menu
-         Choose Company > Prepare Letters with Envelopes.
-         Click Customize Letter Templates.
·         From a center
-         Click the Customers icon, Vendors icon, or Employees icon.
-         Click the Customers & Jobs, Vendors, or Employees tab.
-         Go to the Word menu and click Customize Letter Templates.
·         From an invoice
-         Go to the Customers menu and click Create Invoices.
-         Click the Letters drop-down arrow and then click Customize Invoice Letter Templates.
2.      In the Letters and Envelopes window, click Create a Letter Template from Scratch and then click Next.
3.      Click the type of letter template you're creating. 
      Your choice affects where your letter template will be available. For example, when you prepare a collection letter, you can choose from the list of collection letters that come with QuickBooks as well as any that you created.
4.      Name the template making the name unique and memorable to you so that you don't overwrite an existing letter template you might want to use later. A blank letter template opens in Microsoft Word.
5.      Write and format the letter template in Microsoft Word.
While you're working in Word, use the QuickBooks toolbar to insert fields into your letters.
If you don't see the QuickBooks toolbar you can reopen it. In Word 2000, 2002, and 2003, go to View > Toolbars. In Word 2007 go to Add-Ins.
6.      Save the document in Word using the document name you entered in QuickBooks.
To use this template immediately, return to the Letters and Envelopes wizard and click Use Template, then follow the onscreen instructions to prepare your letters.

QuickBooks: Design Security Deposit Receipts



“I just purchased a rental property and am about to collect my first check – Security Deposit and first month rent. I know I need to have clear indication of what was collected for security deposit vs. what was collected for rent. I would like to design forms and receipts with our company letterhead – one for the monthly rent and one for the Security Deposit.  How would I go about this?”

First things first…. I am glad to learn that you know that you need to be specific about what has been paid toward Security Deposit and what has been collected for rent. Unfortunately, there are many landlords that do not know all the rules for accounting as a landlord.

Now to the heart of your question. Designing forms is the same process throughout QuickBooks – open a form and use the Customize Button on the tan tool bar.  However, a fast way to make a NEW design template as in your case is as follows:

Lists –> Templates –> Select a Sales Receipt. 

When it opens, select Manage Templates on the top left - copy it and name it Security Deposit Receipts. Then customize it to your design style (pay attention to the Additional Customization button). 

When that is done, you may want to copy that template and call it Monthly Rent Receipt and then change the default name on it. This way, all the design styles you just created on the prior receipt will be in place (colors, fonts….) and you will have two templates to use.

QuickBooks: Opening Bank Balance



“It is 2013, and I am entering the information for a client for 2012. They wanted to start a new data file for 2012 since the prior data files were not properly set up or maintained. Starting over was the best choice. 
My question is this, what should I use to start the bank accounts – that is, how do I have the reconciliation for January be correct when I know there will be checks from the prior year still in process of clearing?”

It is important to capture the true value for 2012, and you are correct, there are likely to be 2011 entries on the first few months of the bank and credit card statements. Here is what you should do:
  • Locate the last statement you received before your QuickBooks start date (in this case hopefully 12/31/11).
  • Create the first transaction in the bank register using the ending date and the ending balance of the bank statement. The account to use is opening balance equity.
  • As the current transactions are created based on each bank statement, you need to enter all the uncleared checks from the prior year. Be sure to use the date the original transaction happened. This will keep the past in the past, and the current year accurate.

This method is great for bank and credit card opening balances. However, if you are entering all the information from the prior year’s trial balance (hopefully prepared by a CPA) you may need to make some adjustments. This is because the trial balance ending values may include the uncleared checks.
Therefore, after all the information is entered from the prior year, review the trial balance on your new data file against that of the CPA and make one adjustment to Opening Balance Equity for each of the expense accounts that may be slightly different.
Now you have a correct check register and a correct trial balance for each expense account.

QuickBooks: Recording Vendor Invoices to Retainer Payments



I am confused about the proper way to enter the following scenario:

·         A retainer payment was made to the vendor in advance of service work
·         The vendor invoice came in and was less than the retainer payment

Now I need to apply the retainer payment to the actual invoice and show the overpayment credit on the vendor record.  I’ve already entered the retainer payment check to the expense code for the vendor service, but now don’t think that is correct.

This is an excellent question, and one that I am sure many users have. The answer is entering the payment without a bill using the following actions:
1)   When the original retainer payment is entered the coding should be on the expense tab and the account should be Accounts Payable with the vendor in the name column. This will show a credit in Accounts Payable.
2)   When the vendor invoice(s) are received, they can be entered as normal with the appropriate coding to the expense account. This will keep the history accurate for the transactions as they occur. This will reduce the negative balance on the Accounts Payable reports.
3)   And finally, the last step will be to “link” the bill by applying the credit from the retainer. This will clean up the Unpaid Bills report so only the remaining credit from the retainer payment will appear.
So to end your confusion, you need to change the original retainer payment from the expense code to Accounts Payable and enter the vendor name, and then follow step 2 and 3.

QuickBooks: Voiding Checks



“I just started working for a new employer and found that there were a few outstanding checks. In doing the research, I found that one was written on the wrong checking account, one had been “chewed up” in the printer and was reissued and one was just never going to be sent. I would like to get them out of the system and don’t know the best practice. Can you help me?”

Once a check has been recorded in QuickBooks, it is necessary to void it – not delete it. There are alternatives for voiding a check or bill payment depending on the timing.  The options:


1.      Voiding the check immediately, as soon as a problem is discovered.
2.      Voiding an older check (or bill payment) – in a different accounting period
3.      Voiding checks so the net effect is recorded in the current year (use with extreme caution)

Voiding Checks – Option 1

If a check or bill payment needs to be voided immediately, simply open the check or bill payment, and from the menu bar at the top, choose Edit > Void Check/Bill Payment.  The check is voided as of the original transaction date. 

If the transaction is a bill payment, voiding the payment will only void the payment portion of the transaction.  The bills will then be available to be paid again.  If the bills need to be voided, they will need to be handled as an additional step.

Voiding Checks – Option 2

If the check or bill payment is older, the void option does not work well since the transaction is voided as of the original transaction date, which affects a prior accounting period. 

Instead, enter a deposit with a current date, coded to the general ledger account that was used in the original transaction. When the next bank reconciliation is completed, place a check mark next to the deposit and next to the check.  The difference is zero so it will not affect the bank reconciliation in total, but both will be removed from future reports.

Voiding Checks – Option 3 (USE WITH CAUTION)

While the theory is great, in practical application, there are some significant issues that need to be addressed. What should happen when the original check is voided:  A journal entry is created with the original transaction date to adjust the General Ledger to what it was then and that entry is reversed with a current date to show the increase in the bank account in the appropriate period.

The theory of this approach makes Accountants very happy because voiding the check does not change the historical reports, most importantly, Retained Earnings.  Unfortunately, there are many limitations to how the process really works.

Issue #1:  Closed Period. This process is ONLY used by the software for voiding checks in a closed period.  If there is not an appropriate closing date entered any checks will be voided using the same procedures as option 2. It is critical that a closing date be entered and that it is updated as each period is reconciled and should be locked from future changes.

Issue #2:  Expense Only.  This process is ONLY used by the software for checks that have been entered and coded to an expense account. Any transactions coded to a Balance Sheet account will be voided using the same procedures option 2.

Issue #3:  Check type transactions.  This process is ONLY used by the software for checks, not for bill payments.  Bill payments are still handled using the same procedures as option 2.