Small Business Accounting using QuickBooks Online

Small Business Accounting using QuickBooks Online

I. Project 1: Small Business Accounting using QuickBooks Online

II. Introduction:

Your good friend Kyra recently opened an art studio, Kyra’s Krafts, LLC. She has been creating and selling art work for years, and subsequently already has a good customer base. In January of this year she started the process of setting up an LLC, filing for an EIN in February. She found and rented a studio on March 1st, and has been cleaning, painting, and setting up the space ever since. Her grand opening was April 1st.

She knows you are going to school for your master’s degree in accounting and has asked for your help setting up and using QuickBooks Online (QBO). You agree to help her set up her QBO business account, complete her first month of transactions, and then teach her how to do it. You are not very familiar with QBO, but you know that it will be beneficial to you in your accounting career to learn the program, since it is the most used accounting platform for small business in the United States, so you agree.

She has heard about and is interested in using the following features:

· Sales Receipts/Invoices

· Purchase Orders/Inventory tracking

· Bills and Bill Pay

Details of this project can be found below.

III. Steps to Completion:

For most of the steps below, you will have the option of viewing a short video or referring to the Intuit Education PPT, all page references given below.

Step 1 – Set up your QBO account.

Go to http://www.intuiteducation.com/ and follow the instructions for student registration for QuickBooks online.

Step 2 – Download Intuit Education PPT

· Skim over the first part of the PPT to learn about navigating QBO (the dashboard) (Pages 17- 23).

Step 3 – Set up the account and settings

· “How to Navigate in QuickBooks” – https://www.youtube.com/watch?v=vNdZmf_nLZs

· Account and Setting, Intuit Education PPT, Pages 27 – 44. NOTE: the important information is how to get to account and settings which can be found on page 28. Appendix A covers all the settings that you will need to adjust for Kyra’s Krafts. The purpose of the project is not to learn all the ins and outs of QBO but for you to get comfortable with the program. However, if you want to read all the details, feel free. It is just not required for the purposes of this project.

· Using the information found in Appendix A, set up Kyra’s Krafts account in QBO.

Step 4 – Set up and edit chart of accounts (COA)

· “How to Edit your Chart of Accounts in QuickBooks” – https://www.youtube.com/watch?v=xp-rcPZtUc0

· Chart of Accounts, Intuit Education PPT, Pages 51 – 56, 59 (subaccounts)

· See Appendix B.

Step 5 – Set up sales tax

· “How to Set Up Sales Tax: Settings, Sales & More” https://www.youtube.com/watch?v=CiIfTi0tSk0

· Sales Tax Center, Intuit Education PPT, Pages 60 – 61.

· See Appendix C.

Step 6 – Set up product items and contributed inventory –

· “Add Product Information” https://quickbooks.intuit.com/tutorials/lessons/add-products-information/

· Products and Services, Intuit Education PPT, Pages 62 – 69

· See Appendix D.

Step 7 – Create journal entries for all other (non-inventory) owner contributions

· “Journal Entries in QuickBooks Online” https://www.youtube.com/watch?v=Ud0de5gGJL8

· See Appendix E

Step 8 – Add customers and vendors

· “How to Add Customers and Vendors into QuickBooks” https://www.youtube.com/watch?v=MJK63XmrJ1E

· Customer Center and Vendor Center, Intuit Education PPT, Pages 95 – 99 (customers), Pages 121 – 124 (vendors)

· See Appendix F

Step 9 – Add invoices*, purchase orders (POs) and bills.

· “How to Create A Purchase Order” https://www.youtube.com/watch?v=lGGUSmFPJok – (NOTE: you should create the bill directly from the PO. If you notice in the video where he is showing the PO summary screen, to the right of PO there is a button called “Create bill”. You should use that button to create the bill to the vendor.

· “How to Enter Bills, Track Expenses, & Record What You Owe” https://www.youtube.com/watch?v=PGbS7GpdNTo

· Create Invoices and Create Bills, Intuit Education PPT, Page 103 (create invoices), Page 127 (creating bills) – NOTE: Do not spend time on fancy invoice. Just go with the basics, unless you want to play with this feature.

· See Appendix G

Step 10 – Enter all transactions for the month of April

· “Create Sales Receipts in QuickBooks” https://quickbooks.intuit.com/tutorials/lessons/sales-receipts/

· Create Sales Receipt, Intuit Education PPT, page 102

· “Receive Payments in QuickBooks” https://quickbooks.intuit.com/tutorials/lessons/receive-customer-payments/

· Receive Payments, Intuit Education PPT, pages 104, 106 -NOTE: make sure you are receiving the payment to Kyra’s Bank account, not undeposited funds

· “How to Record & Print Checks” https://www.youtube.com/watch?v=eNSPai2twcM

· Create Check, Intuit Education PPT, page 126 (& debit charges) –NOTE: Be sure to change the check number to Debit or EFT or something else. QBO will accept duplicate words so pick one and stick with it for consistency. However, make sure that checks are numbered correctly.

· “How to Record Bill Payments” https://www.youtube.com/watch?v=zan6MC0zSYY

· Create Check, Intuit Education PPT, page 128 – NOTE: Make sure you document the check number used to pay the bill.

Step 11 – Reconcile April Bank Statement –

· “Reconcile your accounts” https://quickbooks.intuit.com/tutorials/lessons/reconcile-accounts/

· Intuit Education PPT, pages 142 – 144.

· Appendix I

Step 12 – Review and Revise Financial Statements

· “Understanding Profit & Loss Statement: Income, Cost of Goods” https://www.youtube.com/watch?v=nSGeKUO4HHE

· “How to Customize Reports: Basics, Sorting & Date Ranges https://www.youtube.com/watch?v=Hy5MQAPDa-U

· Intuit Education PPT, page 77 – 84.

· Appendix J

Step 13 – Print Reports

· P&L and Balance Sheet for the current month. Make sure the report basis is Accrual.

· Print the General Ledger for “all time”

· Intuit Education PPT, pages 77 – 84

Step 14 – Performance Excel Analysis

· Using Excel, perform a:

· Vertical analysis for the Income Statement and Balance Sheet, and

· Financial ratio analysis using a minimum of 10 financial ratios

Step 15 – Create a Manual Journal

· Using Excel create a manual journal including all the transactions.

Step 16 – Create a Bank to Book Reconciliation

· In other Excel worksheet, create a bank to book reconcilation.

Step 17 – Write Report

· Prepare a 2-page summary of the company’s financial status based on the financial statements, vertical analysis, and specific ratios you chose to compute.

IV. Deliverables:

1. Balance Sheet, accrual basis ending April 30, 20XX

2. Profit & Loss, accrual basis for April 20XX

3. General Ledger Report for all time

4. Using Excel, perform a vertical analysis for the accrual basis Income Statement and accrual basis Balance Sheet, and financial ratio analysis using a minimum of 10 financial rations and

5. In Excel, prepare a manual journal for all the transactions in April.

6. In Excel, perform a bank to book reconciliation.

7. Prepare a 2-page summary of the company’s financial status based on the financial statements, vertical analysis and specific ratios you chose.

V. Hints and Tips:

· Appendix A: QBO – Account and Settings

· Appendix B: Chart of Account Changes

· Appendix C: Overview of Sales Tax

· Appendix D: Overview of Inventory

· Appendix E: Owner Contributions

· Appendix F: Customers and Vendors

· Appendix G: Invoices, POs, and Bills

· Appendix H: April Transactions

· Appendix I: Bank Statement

· Appendix J: Financial Statement Review (JEs)

· Review and refresh your memory of APA style formatting.

· Prepare a draft version of your report and ask a classmate, friend, or family member to read your report before submitting it to the Graduate Writing Center.

· Submit your draft to the Graduate Writing Center at least 1 week before this project is due. This FREE resource can be accessed in your LEO classroom.

· Make edits to your report after reviewing feedback from the writing center tutors.

· Submit the Project deliverables on or before the due date.

· Ask your supervisor (professor) questions as needed.

VI. Rubric:

QBO Rubric
Top of Form

Criteria

Exceeds Performance Expectations 22.5 points

Meets Performance Expectations 20 points

Does Not Meet Performance Expectations 0 points

Income Statement

All accounts and amounts were accurate.

Most accounts and amounts were accurate.

Most accounts and amounts were NOT accurate. Or did not submit.

Balance Sheet

All accounts and amounts were accurate.

Most accounts and amounts were accurate.

Most accounts and amounts were NOT accurate. Or did not submit.

General Journal

All general journal entries were accurate.

Most general journal entries were accurate.

Most general journal entries were not accurate. Or did NOT submit.

Financial Analysis

Vertical analysis of Income Statement and Balance Sheet were accurate. Financial ratios were accurate. Summary of financial status was accurate and written at the graduate level.

Vertical analysis of Income Statement and Balance Sheet were mostly accurate. Financial Ratios were mostly accurate. Summary of financial status was mostly accurate and written at the graduate level.

Vertical analysis of Income Statement and Balance Sheet were mostly inaccurate. Financial Ratios were mostly inaccurate. Summary of financial status was mostly in accurate and not written at the graduate level. Or did not submit.

Overall Score

Exceeds Performance Expectations 90 or more

Meets Performance Expectations 80 or more

Does Not Meet Performance Expectations 0 or more

Bottom of Form

Appendix A: QBO – Account and Settings

Remember – “QuickBooks is a very forgiving program. Most mistakes can be fixed as you have the ability to go back and make historical changes, however a correct setup will prevent the need in most cases.” (Intuit Education PPT).

The following are the important pieces of information you need to set up Kyra’s Krafts, LLC in QBO. Each of the Bolded items are Categories in the Account and Settings page.

COMPANY:

· Owner Name: Kyra Forester

· Email: use your email address

· Telephone: use your phone number

· Company Name: Kyra’s Krafts, LLC

· EIN: – LEAVE BLANK. EIN not received yet

· Company Type: Limited Liability Company (Form 1065)

· Address: 94-1278 Front Beach Road, Suite 12

Panama City Beach, FL 32413

· Tax form: 1065

· She will not be using track classes or track locations.

SALES:

· Kyra’s terms are Net 15 unless otherwise stated

· She does offer shipping, which she charges for

· She does offer occasional discounts

· She does commission work and takes 50% upfront deposits for all commission work.

· She tracks quantity and price/rate.

· She also tracks inventory quantity on hand for her art prints.

EXPENSES:

· She wants to use purchase orders, so make sure you check the box. All other default settings are fine.

PAYMENTS:

· This setting is used to allow clients to pay an invoice through their system, right on the invoice. Although Kyra is possibly be interested in this in the future, she has no current interest.

ADVANCED:

· She is a calendar year tax payer. She received her LLC paperwork but hasn’t received her EIN yet. (First month of fiscal year stays January).

· Tax form: 1065

· She does not want to use account numbers and she will not be using track classes nor track locations.

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Appendix B: Chart of Account Changes

Add:

Name:

Account Type

Detail Type

Subaccount of:

Kyra’s Bank

Bank

Checking

Refundable Deposits

Other Current Assets

Other Current Assets

Art Displays

Fixed Assets

Furniture & Fixtures

Consignments Payable

Other Current Liabilities

Other Current Liabilities

Art Sales

Income

Sale of Product Income

Original Artwork Sales

Income

Sale of Product Income

Art Sales

Print Sales

Income

Sale of Product Income

Art Sales

Commission Income

Income

Service/Fee Income

Consignment Income

Income

Service/Fee Income

Discounts Given

Income

Discounts/Refunds Given

Print Expense

Cost of Goods Sold

Supplies & Materials – COGS

Art Supplies Expense

Expenses

Supplies & Materials

Gain on Sale of PP&E

Other Income

Other Miscellaneous Income

Loss on Sale of PP&E

Other Income

Other Miscellaneous Income

Group Art Classes

Income

Service/Fee Income

Edits:

Change from:

Change to:

Owner’s Pay & Personal Expenses

Owner Distributions

Equity

Owner’s Equity

Opening Balance Equity

Add “DO NOT USE”

Equity

Opening Balance Equity

Rent & Lease

Rent

Expense

Rent or Lease of Building

Office Supplies & Software

Office Expense

Expense

Office/General Administrative Expense

Delete:

Job Supplies

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Appendix C: Overview of Sales Tax

NOTE: Sales Tax must be set up in the “TAXES” area in QBO. Proceed with this section carefully. QBO is very user friendly for the most part; however, there are areas that are hard to fix should you set it up incorrectly and Sales Tax is one of those areas so do not rush here. Read all the way through this appendix, watch the how to videos and then proceed with caution.

Kyra’s new art studio is located in Panama City Beach Florida. Because of the location, she is required to pay 7% sales tax to the State and 1% to the City of Panama City Beach.

The State of Florida requires most tax payers to file monthly sales tax returns, Kyra falls into this category. April 1st she must start collecting taxes and her first return is due no later than May 20th (QBO knows when it is due) for the reporting period of April 1 – April 30.

Kyra needs to make sure she charges customers and remit sales tax for everything she sells except her group art classes. Those are not taxed because they are for services only.

Address: 94-1278 Front Beach Road, Suite 12

Panama City Beach, FL 32413

Go to the “TAXES” area and set up sales tax for the state of Florida and the city of Panama City Beach. If you entered the business address when you were setting up the account, QBO should suggest both of the above agencies. If not, it should ask you for an address here. Make sure you select both taxing bodies from the dropdown list. You will have to select them individually, just make sure you go back and select the 2nd one as well. Again, make sure you find the taxing bodies in the dropdown list to select. Do NOT manually add any taxing body. QBO already has all the information it needs to correctly tax products and it will automatically update taxes should laws change but only if it is set up correctly from the beginning.

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Appendix D: Overview of Inventory

The set up of Inventory will be done in the “SALES” area of QBO. Once in SALES, got to the Products and Services tab.

· The “initial quantity on hand” will be the owner contributed inventory.

· As of date will be 4/1/2018.

· Do not put any quantity in the “Reorder Point” field for any items.

· The Inventory asset account is “Inventory asset”

· She does not use product codes aka SKU numbers.

· She does want you to put the Sales price in for each item for all items that have a fixed sales price associated with it.

· She also wants you to put in the costs price for the prints.

· Remember, all but the Group Art Project, is taxable so make sure you click the “Is taxable” box. NOTE: Just click the “Is taxable” box. Do not put anything in to the “Sales tax category” nor “What you sell”. These should stay blank.

Kyra primarily sells 3 types of original artwork and prints – large, medium, and small.

Pricing and Cost of Original Artwork:

Pricing:

She uses the standard linear model to price her original artwork at $20 per linear inch. Calculations:

Size

Calculation

Sales Price

Quantity

Large artwork 24″ x 36″

(24 + 36) x 20

$1200.00

5

Medium Artwork 11” x 14”

(11 + 14) x 20

$500.00

12

Small artwork 5” x 7“

(5 + 7) x 20

$240.00

32

All of the artwork in the table above should set the product Income account to: Art Sales:Original Artwork Sales

Cost:

She was instructed years ago by her tax accountant that her original artwork inventory should not have a COGS associated with it. Instead she needs to expense all of her art supplies purchases. However, if she buys a painting or has prints in her inventory, the cost of those items should be considered COGS. So although her original artwork inventory will have zero cost associated with it, you will be able to enter the sales price of the inventory she transfers in to the business.

Cost and Pricing of Prints:

She transfers all her print inventory (reproductions of original artwork) to the business April 1st, as follows:

Size

QTY

Cost

Sales Price

Large Prints 24″ x 36″

10

$40 each

$200 each

Medium Prints 11” x 14”

50

$20 each

$100 each

Small Prints 5” x 7“

110

$5 each

$25 each

All of the artwork in the table above should have the following setting:

1. Income account to: Art Sales:Print Sales

2. Expense account to: Cost of Goods Sold

In addition to original artwork and prints, Kyra has several non-inventory items that you will need to add.

Service item:

Sales Price

Income Account

Group Art Classes*

$30 each

Group Art Classes

Non-Inventory Item:

Commission Work

Art Sales:Original Artwork Sales

Consignment Artwork**

Consignment Income

Unusual Sales: PP&E***

Gain on sale of PP&E

For all commission work, Kyra requires 50% deposit due at time of order and the remainder due at time of pickup.

* Remember, this is the only non-taxable item.

** She also displays and sells consignment pieces. She gets 20% commission on each piece sold. The consignee sets the price, so Kyra keeps those records on an Excel spreadsheet and won’t put them in QBO until she sells the pieces. In other words, the consignment inventory is not an inventory item but you need to set up a product item to handle the transaction when you do. However, make note of all consignment sales because in order to complete the sales transaction, you will need to make a JE to move 80% of the sale from the P&L to the balance sheet as Consignments Payable.

*** Sales of PP&E will also require a JE to remove the item from the balance sheet and reduce the gain (or increase the loss) on the sale. The transaction is not complete until this JE is made.

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Appendix E: Owner Contributions

To enter all owner contributions you will need to create one or multiple JEs, your choice. You will need to select the correct expense account to debit for the list below and the credit entry will be to: Owner’s Investments. Remember all of the items below were paid by Kyra from her personal accounts. Also remember to put the description of each item in the JEs.

Owner deposit to open bank account-use Kyra’s Bank

$ 5,000.00

*Electric Deposit (refundable)-use Refundable deposits

$ 500.00

*Phone Company Deposit (nonrefundable)- use Utilities

$ 150.00

*Rental Deposit (Refundable)- use Refundable deposits

$ 1,250.00

*1st month rent – March (prior to opening)- use Rent expense

$ 1,000.00

*Gallery set up supplies – paint for walls, cleaning supplies, lumber for building shelves/racks- use Office expense

$ 350.00

*Miscellaneous art supplies for classes-use Art Supplies expense

$ 852.75

4 large Art displays (fair market value at time of contribution- $400 each)-use Art Displays

$ 1,600.00

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Appendix F: Customers and Vendors

Enter all customers in the “SALES” area and all Vendors in the “EXPENSES” area.

Customers

Name

Phone Number

Email

Address

Sherry Thomas

850-474-1111

Sherry.Thomas@lookout.com

Lifetime Learning

850-474-1111

admin@lifetimelearning.com

1173 Front Beach Road; Panama City, FL 32412

Joy McMasterson

850-747-5200

joyous@mail.com

Kevin Smith

905-872-2152

ksmith@example.com

Debbie Reynolds

619-421-1478

debbier112@getgoing.com

Customers

She uses this to capture sales to non-recurring customers and Daily Sales Receipts

Vendors

Ace Real Estate – Stacy is manager

850-393-5555

leasemanager@acerealestate.com

3630 Bay Avenue, Panama City, FL 32542

Salem Prints

850-981-0000

Orders@salemprints.com

Dish Network – Mike Bossie

850-424-7900

mike.bossie@dish.net

78-541 Wildcat Drive, Dade City, FL 33624

USA Art Supply

858-585-8500

jennifer.lopez@usaartsupply.com

2554 Underwood Avenue, San Jose, CA 95413

Consignment Vendors:

JoAnne Lopez original artwork

904-546-7300

415 Orange Avenue, Tampa, FL 33616

Michael Koltes

850-778-2211

857 Rose Lane, Panama City, FL 32551

back Appendix G: Invoices, POs, and Bills

INVOICES – Purchases from Customer

Date

Customer

Terms

Discount*

Product Purchased

QTY

Subtotal

1-Apr

Lifetime Learning

Net 15

10%

Art Classes

10

$270

2-Apr

Kevin Smith

Due on receipt

Commission Work

1

$5,000

30-Apr

Lifetime Learning

Net 15

10%

Art Classes

45

$1,215

*Lifetime Learning is the only customer that receives a discount because they buy individual art classes in bulk.

PURCHASE ORDERS – Orders to Vendor

Purchases:

Description

QTY

Each Price

Totals

Salem Prints order 4/1/20XX

24 x 36 large prints

5

$40

$200

11 x 14 medium prints

10

$20

$200

5 x 7 small prints

20

$5

$100

Total Order (Price includes shipping and tax)

$500

NOTE: Make sure you create the bill for the Purchase Order from the Purchase Order. It is very easy. Just make sure the dates are correct, see table below.

BILLS – Payable to Vendors

Received

Due

To

For

Amount

1-Apr

1-Apr

Ace Real Estate

April Rent

$1000

1-Apr

16-Apr

Dish Network

Telephone and internet bill

$150.09

4-Apr

19-Apr

Salem Prints

Print order 4/1

$500

*

24-Apr

9-May

USA Art Supply

Purchased large glass art display

$3524.33

30-Apr

30-Apr

Ace Real Estate

May Rent

$1000

*Make sure you create the bill from the P.O.

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Appendix H: April Transactions

Make sure you pay all bills through the EXPENSES area and receive all invoice payments in the SALES area.

Make sure you pay the sales tax through the TAXES area. If your sales taxes due for the period of April is different than the transaction amount below, there is a problem with your sales tax somewhere along the way.

All receipts that were not invoice payments will require a Sales Receipt. You will create Sales Receipts in the SALES area. All sales can be considered cash. Just make sure the dates are correct and the account the money is deposited to is Kyra’s bank.

Unless Kyra does recurring business with a customer, or it is a special sale, all Sales receipt transactions will be from customer “Customers”

Write checks for all expenses that are not bill payments. However, if there is no check number associated with the transaction, it is a debit card transaction so change the check number to sometimes like EFT, DEBIT or something like that. Just be consistent.

Small purchases, under $500, are usually expensed. Make sure you select the appropriate account for each transaction. You should not have to add any more accounts as you enter these transactions. Think macro instead of micro. For example, paying for a PO Box or making small furniture purchases should be considered an Office Expense.

QBO is sometimes limited in what you can do in a single transaction. This is where JEs will be necessary. Make note of the transactions where JEs will be necessary (hint: sale of fixed assets, sale of consignment artwork). I suggest you make the JEs as you go to complete the transactions; however, you can also take care of all adjusting journal entries after the bank reconciliation during the financial statement review.

Date

Description

Expenses

Deposits

1-Apr

Owner deposit to open bank account (this was already done in Appendix E as long as your debit entry was to Kyra’s Bank)

5,000.00

1-Apr

Paid April rent (bill) check #1001

(1,000.00)

1-Apr

Sold medium print

108.00

1-Apr

Coffee and fingers foods for grand opening – Kroger DEBIT

(221.54)

2-Apr

Sold medium original artwork

540.00

2-Apr

Deposit to complete a commissioned piece – Kevin Smith (Paid ½ of Invoice. Receive partial payment)

2,700.00

4-Apr

Sold 4 large, 2 medium and 9 small prints at art fair

1,323.00

5-Apr

USA Art supplies (art supplies) DEBIT

(187.21)

5-Apr

Paid phone bill received 4/1 check# 1002

(150.09)

12-Apr

Sold 4 small art prints

108.00

12-Apr

Paid for Post Office box through 4/11/20XX (1 year) DEBIT

(80.00)

13-Apr

Sold a consignment piece for Lopez $1000 to J. McMasterson

1,080.00

14-Apr

Received payment from Lifetime Learning for invoiced amount

270.00

14-Apr

Paid Lopez for consignment sale check # 1003

(800.00)

14-Apr

Sold large original artwork

1,296.00

15-Apr

Goodwill – Purchased shelving to store art supplies DEBIT (put to office supplies)

(285.24)

19-Apr

Took out cash for personal use DEBIT

(2,000.00)

19-Apr

Paid bill for prints to Salem Prints 4/4 bill check # 1004

(500.00)

21-Apr

Commission piece completed and picked up for Kevin Smith – (Receive the remaining invoice amount)

2,700.00

24-Apr

Sold 1 large, 5 medium and 10 small prints

1,026.00

25-Apr

Sold 1 large art displays

1,080.00

30-Apr

Bank Fees

(12.50)

30-Apr

Paid Sales Tax to Fl Dept of Revenue Online-DEBIT (Pay through TAXES area)

(775.25)

30-Apr

Paid Sales Tax to Panama City Dept of Rev. Online – DEBIT (Pay through TAXES area)

(110.75)

30-Apr

Paid rent May rent check # 1005

(1,000.00)

30-Apr

Paid Bill for art display on 04/25 check #1006

(3,524.33)

Subtotals:

(10,646.91)

$17,231.00

Total:

$6,548.09

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Appendix I: Bank Statement

Business Checking Statement: Kyra’s Krafts, LLC

April 1, 20XX to April 30, 20XX

Account number:

0001247588

Account summary

Beginning Balance on March 31, 20XX

$0.00

Deposits and other additions

17,231.00

Withdrawals and other subtractions

(2,773.99)

Checks

(2,450.09)

Service fees

(12.50)

Ending Balance on April 30, 20XX

$11,994.42

Deposits and other additions

Date

Description

Amount

1-Apr

Counter Deposit

5000

1-Apr

Counter Deposit

108.00

2-Apr

Counter Deposit

540.00

2-Apr

Counter Deposit

2,700.00

4-Apr

Counter Deposit

1,323.00

12-Apr

Counter Deposit

108.00

13-Apr

Counter Deposit

1,080.00

14-Apr

Counter Deposit

270.00

14-Apr

Counter Deposit

1,296.00

21-Apr

Counter Deposit

2,700.00

24-Apr

Counter Deposit

1,026.00

25-Apr

Counter Deposit

1,080.00

Total deposits and other additions

$17,231.00

Withdrawals and other subtractions

1-Apr

Kroger

(221.54)

5-Apr

USA Art Supplies

(187.21)

12-Apr

United States Post Office

(80.00)

15-Apr

Goodwill

(285.24)

19-Apr

Counter Withdrawal

(2,000.00)

Total withdrawals and other subtractions

($2,773.99)

Checks

1-Apr

#1001

(1,000.00)

5-Apr

#1002

(150.09)

14-Apr

#1003

(800.00)

19-Apr

#1004

(500.00)

Total checks

($2,450.09)

Total # of checks

4

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Appendix J: Financial Statement Review (JEs)

Review Accounts:

Balance Sheet ACCRUAL BASIS

Check Figures

Report period: ALL DATES

Bank Statement

Book to Bank Reconciliation Required

A/R

$1,215.00

Inventory Asset

$1,975.00

Refundable Deposits

$1,750.00

Fixed Assets

$4,724.33

Total Assets

$16,248.42

All Payables

$0.00

Owner Distributions

– $2,000

Net Income

$5,595.67

Opening Balance Equity

$0.00

Note, make sure the basis for the financial statement is accrual.

Other than the accounts listed above, make sure you scan and make sure all balances make sense. For example, the only negative numbers in the financials should be the Owner Distributions and Discounts given.

You may notice a balance in the Opening Balance Equity account (QBO “junk” account). QBO made this entry against the owner contributed inventory when you created the product inventory. If there is a balance, you will need to create a J/E to move the balance from Opening Balance Equity to Owner Contribution. (Debit: Opening Balance Equity DO NOT USE to Credit: Owner Investment)

If you have not already done so, you will also need to create a J/E to account for the consignment sale/consignment due. You already paid the vendor so Consignment Due should also be zero. However, if it is a negative number then you need a J/E (Debit: Consignment Sales Income to Credit: Consignments Payable.)

If your fixed asset account is incorrect, another J/E will be required is to remove the art display PP&E that was sold from the books because it hasn’t been done yet. (Debit: Gain on Sale of PPE and Credit: Art Displays.)

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