QuickBooks Pro 2004 for Farmers

1
QuickBooks Pro 2004 for Farmers
RanchersInstructorsDeDe JonesJay
YatesDustin Gaskins
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Farmers Goals for QuickBooks

• Develop Balance Sheets and Profit Loss
  Statements (Income Statements)
• Develop Better Management Practices

3
Reasons to Use QuickBooks

• Strong Managerial Accounting System
• Accountants want it
• Good for Larger scale operations
• Class system
• Improve Communication with lenders

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Advantages of QuickBooks

• Ease of use
• Will write checks
• Manages accounts payable
• Has QuickPay
• Easy to reconcile produce reports
• Enterprise accounting

5
Why Not Quicken Instead?

• More for personal, not business finance
• Focused on cash flow
• Cannot line up income and expenses (i.e. is not
  accrual based)
• You have to buy QuickPay
• First stage of QuickBooks is just as easy

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All the Accounting You Need to Know

• Assets
• Liabilities
• Equity

• Cash
• Accrual

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Cash vs. Accrual

• Enter a bill when it is received, not when paid.
• Enter income when it is sold, not when you
  receive the money.
• Management orientated

• Enter expenses when you pay them.
• Enter income when it is received.
• Tax-based

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Accrual Adjusted Entries

• Provides truer picture of current state of
  business through
• Performance measures
• Financial measures
• Financial position evaluation

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Measuring Business Profitability

• Balance Sheets
• Profit and Loss Statement (Income Stmt) Income -
  Expenses

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The Balance Sheet
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The Balance Sheet Presents

• ASSETS - What the business has
• LIABILITIES - What the business owes (debt)
• OWNERS EQUITY - What the owner is worth

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Balance Sheet Reports

• The financial position of the business which
  shows
• The ability to bear financial losses (risk)
• Business wealth or equity
• The collateral for lenders in case of liquidation
  to meet debtors obligations
• Information to address issues of estate planning,
  deferred tax obligation, generation transfer and
  retirement

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Balance Sheet Components

• Assets
• Current
• Non-Current
• Liabilities
• Current
• Non-Current
• Equity (Net Worth)

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Balance Sheet Definitions Assets

• Current Assets are cash or items expected to be
  converted to cash in less than 12 months.
• Non - Current Assets are not expected to be
  converted to cash during the normal course of the
  business year.

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Quick, give me some examples of assets
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Asset Example

• Current Assets - cash, saving deposits, grain for
  sale inventory and accounts receivable.
• Non - Current Assets - breeding stock, machinery,
  vehicles and land.

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Balance Sheet Definitions Liabilities

• Current Liabilities are financial obligations due
  within the coming fiscal year.
• Non-current Liabilities are long term (greater
  than one year) financial obligations.

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Liability Examples

• Current Liabilities - accounts payable, accrued
  interest, operating loan principle.
• Non - Current Liabilities - principle due on a
  machinery or real estate loan.

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Most Important Accounting Relationship

• Assets Liabilities Equity
• Equity Assets Liabilities

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Understanding Debits and Credits
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Working with Accounts, Customer, Vendor Lists
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Why are lists important in QuickBooks?

• Most of whats involved when you enter
  transactions in QuickBooks is making selections
  from various lists.

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Lets look at a check for example
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You must choose an account, a vendor name,
possibly an item, and maybe a class. Each of
them comes from a different list.
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List Basics

• New list entries can be added at any time.
• List entries can be renamed at any time.
• In use list entries cannot be deleted, but they
  can be merged.
• List entries can be hidden by marking them
  inactive.
• The best place to do list management is in the
  lists window.

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Chart of AccountsThe Backbone of Your System

• Let each account represent a broad category of
  information.
• Resist the temptation to set up sub accounts for
  farm enterprises.
• Let accounts represent categories of income and
  expense that are meaningful to you.
• Before adding a new account, give it some
  thought.

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To display the chart of accounts
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 1. From the Lists menu, choose Chart of
Accounts (Ctrl A)

•  

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2. Scroll through the list.

•  

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To add an account
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 1. In the chart of accounts, click the Account
menu button and then choose New (Ctrl N)
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2. With the New Account window open, choose the
type of account (Bank, Expense, etc)
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3. Name the Account, put in an Opening Balance
and Date
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4. Enter a Description and Account number if
desired, then hit OK or Next
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Test
Repeat steps 1-4. Substituting Chemicals for
First National Bank Create another new account
entitled Farm Chemicals
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To add a sub account
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 1. In the chart of accounts, click the Account
menu button and then choose New (Ctrl N)
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 2. In the Type field, select Expense from the
drop-down list.
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  3. In the Name field, type Herbicide.
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  4. Select the Sub account of checkbox, and
then select Chemicals from the drop-down list.
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 5. Click OK.
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Test

• Repeat steps 1-5. Substituting Insecticide for
  Herbicide.

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Creating Customer Vendor Lists

• Customers refer to people who pay money to the
  business
• Vendors refer to people whom the business pays
  money
• Anytime you record the receipt of income
  (deposit), or the payment of an expense (checks),
  you must identify a customer or a vendor

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Why Spend Time Entering Names?

• Identifying the customer or vendor by name in a
  transaction adds useful detail.
• Identifying customers and vendors by name makes
  it easy to search for transactions.
• Supplying a mailing address when you add a name
  to the Vendors list lets you mail out checks in
  windowed envelopes.

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Why Spend Time Entering Names?

• You can do a customer mailing if youve entered
  mailing addresses for your customers.
• Having complete Customer and Vendor lists makes
  using QuickBooks faster and easier.

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Adding Customer, Vendor, and Employee Names

• To add a new customer  

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To add a new customer

• From the Customers tab at the top of the main
  menu window, choose Customer Job List (Ctrl J).
• 2. Click Customer Job at the bottom of the list
  menu.
• Choose New (Ctrl N).

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To add a new customer (cont)
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Type in relevant information
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Additional Info Tab
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To add a new vendor

• From the Vendors tab at the top of the main menu
  window, chose VendorVendor List.
• 2. Click Vendor at the bottom of the list menu.
• Choose New (Ctrl N).

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To add a new vendor (cont)
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Type in relevant information
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Vender List Example

• Add the Following Vender
• Company The Lumber Yard
• Contact Bill Scott
• Address 428 Alpine, Texline, TX 79087
• Fax [phone]
• Credit Limit 25,000
• Account 123456

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Other Ways to Manage Lists

• Sort lists
• Combine (merge) list items
• Rename list items
• Delete list items
• Make list items inactive
• Print lists.

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Sort Lists

• Use arrows at the top of the list to choose the
  format you wish to see
• Name A-Z ? Z-A
• Balance Minimum Balance ? Maximum Balance
• Maximum Balance ? Minimum Balance
• Type Income Statement Accnts ? Balance Sheet
  Accnts
• Balance Sheet Accnts ? Income Statement Accnts

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Merge List Items

• Highlight the account you want to be merged
• At the bottom of the list menu, choose
  AccountEdit (Ctrl E)
• In the name box, type in the name of the account
  you wish to merge with
• The program will tell you the account name
  already exists, and ask if you want to merge
  them. Select OK.

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Merge Test
Merge the Farm Chemical account with the Chemical
account
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Rename List Items

• Highlight the account you want to be renamed
• At the bottom of the list menu, choose
  AccountEdit (Ctrl E)
• In the name box, type in the new account name and
  click OK

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Delete List Items

• Highlight the account you want to be deleted
• At the bottom of the list menu, choose
  AccountDelete (Ctrl D)
• Remember that you can only delete accounts that
  have never had any activity against them

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Inactivate/Reactivate List Items

• Highlight the account you want to be inactivated
• At the bottom of the list menu, choose
  AccountMake Inactive
• To show all accounts, check the Show All box at
  the bottom of the list menu
• Accounts can be reactivated by highlighting the
  inactive account and selecting AccountMake
  Active at the bottom of the list

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Test

• Inactivate the Chemical account, then reactivate
  it

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Printing Lists

• At the bottom of the chart of accounts, select
  AccountPrint List (Ctrl P)
• To print a report on a certain account, highlight
  the account, then select ReportsQuick Report
  from the bottom of the list
• To print a whole farm report, select
  ReportsReports on all Accounts

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Setting Up Classes Enterprise Information
More
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Classes

• Classes are most often used as enterprise codes,
  to match transactions with specific farm
  enterprises rather than the business as a whole
• EX. 2007
• Corn
• Wheat
• Cotton
• Stockers

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Classes

• There is no right or wrong way to set up classes,
  only different ways.
• Each class should usually represent a profit
  center or a cost center, or should be a parent
  class for a group of profit or cost centers.
• Class names should not serve more than one
  informational goal.

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Classes

• The arrangement of class and subclass levels
  determines how easily you can get reports of
  specific class information.
• The number of ways to use classes is limited only
  by your imagination.

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Is Class Tracking Turned On?

• Choose EditPreferences at the top of the main
  menu window
• In the Preferences window, select the Accounting
  icon in the scroll box on the left side
• Select the Company Preferences tab at the top
• Select the Use class tracking check box
• Click OK to close the Preferences window

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How to Add Classes
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 1. Open the Class List window by choosing
Lists Classes from the main menu.
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 2. Click on the Class button at the bottom of
the window.
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3. Click on the New in the pop-up menu (Ctrl N).
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 4. Fill in information about the new class.
5. Click OK or Next to save the new class in the
class list.
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Test

• Add the following classes
• 2007 (as a parent class)
• Corn (as a subclass)
• Soybeans (as a subclass)
• Wheat (as a subclass)

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QuickBooks Training

• Lesson Two

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Forms and Registers

• Registers
• Show all of the transactions entered in a
  particular account
• Every asset, liability, and equity account has a
  register

• Forms
• Checks
• Deposits
• Bills
• Invoices

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Checks form

• Use the Checks form when you pay an expense
  directly by check. Do not enter a check to pay a
  previously entered bill.

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How to Enter/Write a Check
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• Choose Banking Write Check (Ctrl W)
• Fill in the check , date, payee, amount and
  account , then click Save and Close

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Test

• Write a check for 2000 in Corn Herbicide to
  Chemicals R Us

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Bills and Credit Cards

• Use the Bills form to enter purchases for which
  payment will be made at a later date.

• Use the Credit Card Charges form to enter farm
  business purchases made by credit card.

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How to Enter a Bill
83

• Choose Vendors Enter Bills
• Fill in the fields as desired, then click Save
  and Close

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How to Pay a Bill
85

• Choose Vendors Pay Bills
• Check the bills you want to pay, filling in the
  information (make sure the Payment Account is
  correct), then click Pay and Close

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Test
Enter a Bill to Chemicals R Us for Wheat
Herbicide on 1/5/2007. The amount is 2000, and
there is a 1 10 Net 30 Discount Pay the Bill
on 1/11/2007
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Printing Checks
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Printing a Check that was not Entered as a Bill

• Make sure you have preprinted checks in your
  printer
• Choose the Check button form the main toolbar

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Printing a Check that was not Entered as a Bill

• 3. Type in the required information to print
  the check
• 4. Choose the print button in the Print Checks
  window

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Printing a Check that was Entered as a Bill

• Make sure you have checks in your printer
• From the menu, choose FilePrint FormsCheck

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Printing a Check that was Entered as a Bill

• 3. Select the appropriate bank account and check
  number, place a v next to the bills you want to
  print, then click OK

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Printing a Check that was Entered as a Bill

• 4. The next screen will allow you to make
  several choices about your printer and what kind
  of checks you have.

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Cash Deposit The Easy Way

• The easiest way to handle a cash sale is to
  record the receipt of income by making a cash
  deposit. You can even add information in the
  deposit forms description field concerning
  details of the transaction

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How to Enter a Deposit

• 1. Choose Banking Make Deposit from the main
  menu window

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How to Enter a Deposit (Cont.)

• 2. Fill in the fields as desired.
• 3. Click Save New or Save Close to save your
  check entry.

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Test
Enter a deposit for 20,000 received from the
Happy Elevator for wheat sales on 6/25/07
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Automating Recurring Transactions
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AutoRecall

• When you select a customer or vendor name,
  QuickBooks automatically fills in the rest of the
  form with the most recent transaction entered for
  that customer or vendor. AutoRecall is a feature
  that is turned on by default when you install
  QuickBooks. If for some reason it has been
  turned off, follow these procedures

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AutoRecall

• Choose EditPreferences from the main menu to
  open the Preferences window
• Click on the General icon in the scrollable box
  along the left side of the window
• Check the box marked Automatically recall last
  transaction for the name, then click OK

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Memorizing Transactions

• Open the QuickBooks form in which you want to
  memorize a transaction
• Create a model transaction by filling out the
  form with the details you want to memorize

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Memorizing Transactions

• 3. From the main menu, choose EditMemorize Check
  (Ctrl M)
• 4. Select the options desired for memorizing the
  transaction, then click OK

102
Recalling a Memorized Transaction

• Choose ListsMemorized Transaction List (Ctrl T)
  from the main menu
• Select the memorized transaction to enter
• Fill out the rest of the form, correcting and
  adding information as necessary

103
Test
Memorize and recall a transaction for 2,000 in
corn herbicide to Chemicals R Us
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Reconciling Your Accounts
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1. Choose Banking Reconcile from the main menu
106

• In the reconcile window, select the account you
  want to reconcile and enter the statement date
  and ending balance. Compare the beginning
  balance field with the beginning balance shown on
  your statement.

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3. Mark all cleared transactions
4. Check difference at bottom of screen
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Farm Loan Basics
109
QuickBooks Loans - 2 Basic Types

• Current liabilities are debts that must be paid
  within a year. QuickBooks has 3 different
  current liability account types
• Accounts Payable monthly bills
• Credit Cards
• Other current liabilities operating notes,etc
• Long-term liabilities are debts to be paid off
  over more than one year.
• Ex. Machinery loans, breeding livestock, and land

110
Setting Up a Loan Account

• Open the Chart of Accounts window (Ctrl A)
• Open the New Account dialog (Ctrl N)
• Fill in loan information, and click OK

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Receiving Loan Funds 2 Examples

• If you receive a loan from the same bank you have
  a checking account with, simply make a deposit
• You can also enter a deposit each time funds are
  advanced on a line of credit

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Test
Make a deposit for 10,000 into the farms
checking account on 1/15/2007
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Receiving Loan Funds 2 Examples

• Entering Loans when Funds are Not deposited into
  Farm Checking
• Typical examples are dealer financing of
  machinery or input purchases, or owner financing
  of land
• In this case, you must make a General Journal
  entry

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Making a General Journal Entry

• Choose List Chart of Account (Ctrl A)
• Click on the Activities on the bottom of the
  screen
• Then click on Make Journal Entry
• Enter the loan and other information in the
  General Journal, then click OK

115
Test
Purchase a tractor for 55,000 from John Deere
credit on 1/15/2007. There is no down payment or
trade-in
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Test
Purchase a combine for 68,000 from John Deere
credit on 1/15/2007. There is a 10,000 down
payment and a 3,000 trade - in
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Entering Loan Payments

• Easiest way is to write a check. Be sure and
  separate the principle and interest amounts

118
Loan Manager Features

• Add and remove loans you want to track
• View payment schedules
• Set up loan payments
• Analyze different loan scenarios

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Adding a New Loan

• Set up a liability account for the loan, and add
  the opening balance
• Set up an expense account for tracking loan
  interest
• If you need to make escrow payments, set up an
  escrow account
• Make sure all transactions are current

120
To Use Loan Manager

• From the Banking menu, Choose Loan Manager

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Adding a Loan to Loan Manager

• In the Loan Manager window, click Add a Loan
• Enter account information

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Adding a Loan to Loan Manager

• 3. Enter payment information

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Adding a Loan to Loan Manager

• 4. Enter interest information, then click Finish

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Test

• Set up a loan for the tractor purchased on
  1/15/2007. It is a five year note financed at
  6.25 interest compounded monthly. The next
  payment of 1,200 is due on 2/15/2007

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Paying a Loan in Loan Manager

• From the Banking menu, choose Loan Manager
• Select the loan youre setting up for payment
• Click Set Up Payment

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Paying a Loan in Loan Manager

• Select a Payment Type (Regular or Extra)
• 5. Review the Account Information
• 6. Review the Payment Information
• 7. Choose a Payment Method (Check or Bill)
• 8. Click OK

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Test

• Set up a loan payment for the Tractor Note. It
  is a regular payment that will be paid by check.

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Setting up a What If Scenario

• From the Banking Menu, choose Loan Manager
• In Loan Manager, click What If Scenarios

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Setting up a What If Scenario

• In the What If Scenarios Window, choose a
  scenario
• What if I change my payment amount?
• What if I change my interest rate?
• How much will I pay with a new loan?
• What if I refinance my loan?
• Evaluate two new loans

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QuickBooks Reports
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QuickBooks Reports

• Summary reports
• Show a summary of transactions over a specified
  period of time (Profit and Loss Standard)
• Detail reports
• Show a list of all transaction that led to each
  account summary (Profit and Loss Detail)

132
Opening a Profit and Loss Report

• Choose Reports, Company Financial, Profit Loss
  Detail.

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Report Features

• Filtering Reports
• Filtering involves specifying or limiting the set
  of transactions a report includes. You can use
  filters to limit transactions to a specific
  customer, vendor, account, class, month, week,
  day, dollar amount, and more.

134
Filtering Reports

• 1. Click on the Modify Report button at the top
  of the report window.

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Filtering Reports (Cont.)

• 2. Click on the tab labeled Filters.

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Report Features

• Customizing Reports
• Customizing involves creating a specified report
  format. You can select from a variety of
  options, including date ranges, cash vs accrual
  formats, year to date comparisons, income/expense
  percentages, and more.

137
Customizing Reports

• Click on the Modify button at the top of the
  report window.
• Select the Display tab.

138
Customizing Reports (Cont.)
139
Report Features

• 3. Memorizing Reports
• After spending the time to customize your report
  to the desired setting, it is a good idea to have
  QuickBooks memorize it. Doing so will save the
  reports settings in the Memorized Reports list,
  which can be recalled when needed.

140
Memorizing a Report

• Click on the Memorize button at the top of the
  reports window.
• Enter a name for the memorized report in the
  Memorize Report dialog.

141
Exporting Reports to Excel

• Create the report you want to export from
  QuickBooks. For this example, choose
  ReportsCompany Financial Balance Sheet
  Standard

142
Exporting Reports to Excel

• 2. Once the report is created, click the Excel
  button at the top of the report window.

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Exporting Reports to Excel

• 3. A window will appear asking if you want to
  send the report to a new or existing spreadsheet.
  Select Send report to a new Excel spreadsheet

144
Exporting Reports to Excel

• 4. When you click OK, Excel will open showing
  your exported spreadsheet

145
Creating a Budget

• 1. From the Company menu, choose Planning and
  Budgeting, then Set Up Budgets

146
Creating a Budget

• Click Create New Budget
• 3. Choose the fiscal year for the new budget,
  then choose Profit and Loss or Balance Sheet
• 4. If you choose Profit and Loss, you can
  specify additional criteria of either
  CustomerJob or Class
• 5. Choose whether you want to create the budget
  from scratch or from previous years data
• 6. Click Finish

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Creating a Cash Flow Projection

• From the Company menu, choose Planning
  Budgeting, then Cash Flow Projector
• 2. Click Next on the welcome page
• Select accounts for your beginning balance
• 4. Select the projection method to enter your
  cash receipts
• 5. Enter your business expenses
• 6. Review and adjust your accounts payable

148
Contact Information

• DeDe Jones Texas AM Amarillo Center
• 806-677-5667
• Jay Yates Texas AM Lubbock Center
• 806-746-4056