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How Should I Use a Receiving Voucher In POS?

Chief Mechanic · September 4, 2010 ·

A receiving voucher in POS is used to update the Average Unit Cost, Order Cost, and On-Hand Quantity of items received that are not on a purchase order. How receiving vouchers should be used depends in large part on how POS integrates with your GL accounting software (typically, QuickBooks Pro, Premier, or Enterprise Solutions).

POS has a setting that determines where you enter vendor billing information: in POS or QuickBooks itself. By default, POS is configured for you to enter vendor billing information in QuickBooks rather than POS. In other words, the Enter vendor billing information in Point of Sale is not checked. If you are not using QuickBooks of if you prefer to enter receipts in POS, you can change this preference. A screenshot from the Edit->Preferences->Company window is shown below.

If this preference is not checked, vendor billing fields will not appear on voucher forms.

Here’s a portion of the New Receiving Voucher window where the preference Enter vendor billing information in Point of Sale is not checked:

QuickBooks POS 8 New Receiving Voucher Vendor Bill Off

And here’s that same area with the preference box checked. Note that Billing Information can now be entered in POS.

QuickBooks POS 8 New Receiving Voucher Vendor Bill On

Next, you need to consider whether you’re integrating POS with QuickBooks at all. POS is not a general ledger program, and therefore doesn’t produce financial statements. Since most businesses require financial statements and recognize that an integrated solution is the best approach, integrating POS with QuickBooks is the most common configuration.

When you run QuickBooks with POS together, your inventory is not synchronized. You should use POS to manage inventory items and use QuickBooks itself to manage and pay vendors.

Entering a receiving voucher in POS will always debit your inventory asset account on your QuickBooks general ledger. Other accounts affected depend on your preference setting for Enter vendor billing information in Point of Sale discussed above and on the values you enter on the New Receiving Voucher window if that preference is checked.

If the Enter vendor billing information in Point of Sale preference is not checked, POS will credit your AP account and increase the vendor balance by the amount of the receiving voucher.

If the Enter vendor billing information in Point of Sale preference is checked, the entries that POS makes depends on whether billing information (i. e., Invoice/Ref #) has been entered in POS. If billing information has not been entered, POS credits the Unbilled Purchases liability account; the vendor balance is not changed. If billing has been entered, POS credits your AP account and increases the vendor balance by the amount of the receiving voucher. Similarly, if billing information is not entered when the receiving voucher is first created but is entered later, POS debits the Unbilled Purchases liability account (reversing the earlier entry), credits AP, and increases the vendor balance by the amount of the receiving voucher.

If the Already Paid checkbox is checked, POS sends the voucher to QuickBooks as an item receipt. POS credits AP and increases the vendor balance by the amount of the receiving voucher. Presumably, a payment has already been recorded in QuickBooks (which is why the receiving voucher is Already Paid).

If you’re an existing business with inventory on hand setting up POS for the first time and you have already used QuickBooks financial accounting software to record at least some vendor purchases for that inventory, we recommend that you first get your retail inventory accurate in QuickBooks itself before using POS to record live data or checking the Use with QuickBooks Financial Software preference in POS. Once you turn that preference on in POS, you won’t be able to manage retail inventory in QuickBooks. Any changes you make to inventory in POS will affect vendors and AP in QuickBooks. Even if you record transactions in POS with that preference turned off and later turn it on, those transactions will be exchanged with QuickBooks. That in turn will modify vendor balances and AP in QuickBooks. For an existing businesses with at least some inventory, it’s far easier to get inventory balances and balance sheet account balances correct in QuickBooks and then turn on the the Use with QuickBooks Financial Software preference in POS.

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What Are the Procedures and Journal Entries To Record a Customer’s NSF or Bounced Check?

Chief Mechanic · September 4, 2010 ·

If you process enough transactions, sooner or later you’ll have to account for a returned check. A check that is returned unpaid is given many labels (such as NSF or bounced check) but the accounting treatment is the same.

The procedures outlined below work effectively for POS users in both single stores and chains. Activities such as receiving bank notices of fees and returned items typically take place at the headquarters rather than the store level, so these tasks are performed in QuickBooks financial software rather than POS. However, in POS a payment can be accepted by clicking the Take Payment button at the bottom of the New Sales Receipt window. This allows a customer to replace a returned check at any store in a chain. When POS exchanges data with QuickBooks, the customer’s account will be updated.

For this example, let’s assume we received a returned check for $50 from a customer named Customer with check returned unpaid. For handling the returned item, the bank charged a $25 fee, and we’ll only seek to recover from the customer the actual bank charges. Rather than investigating each fee separately, some firms set a fixed fee to charge customers. Hopefully, this customer will replace the unpaid check with another one, but we’ll need to record the activity in our cash account before that takes place.

Here are 2 methods to account for the returned check:

create a new invoice to the customer for the amount of the returned check and fees your firm adds and a general journal entry for the expense of the fees the bank charged
use 1 general journal entry for the entire process

Although the second method appears simpler, we recommend the first method because it preserves normal accounting procedures and provides a better paper trail by creating an invoice that can be sent to the customer to assist collecting the bounced check.

Method 1 – Re-invoice the Customer

Before accounting for this specific returned check, set up 2 new Other Charge Items on the Item List. These Items will only be set up once.

The first other charge will be used to invoice the customer for the amount of the returned check. At this point, it should be set to a $0.00 amount and have a Tax Code that is non-taxable. An Item Name of Returned Check will serve as a reminder for how this charge will be used. The Account must be set to the bank account into which the original returned check was deposited. Later, the amount of the returned check will be entered when the customer is invoiced for the returned check, along with any applicable bank charges. If you make deposits into multiple bank accounts, you’ll need a separate item for each bank account; in this case, include a reference to the bank account in the Item Name.

QuickBooks Premier 2009 New Item Returned Check

Next, add a second other charge for possible bank charges. Like the other charge for the check amount itself, this charge should have a Tax Code that is on-taxable. The amount can be set to either $0.00 (to indicate it varies depending on the situation) or a fixed fee representing a firm’s standard returned check fee. An Item Name of Returned Check Bank Charges will be a good reminder of how this charge will be used. The Account should be set to either an other income account or the expense account used for the original bank charge. In this example, we created an other income account for reimbursed bank charges.

With the other charges properly set up, make a general journal entry for just the charge the bank deducted from your bank account. To do that, click the Company->Make General Journal Entries… menu and enter the actual bank charge as a credit to the bank account and a debit to bank charges expenses as follows:

QuickBooks Premier 2009 GL Make General Journal Entries NSF 1

Next, click on the menu Customers->Create Invoices (or use the keyboard shortcut Ctrl + I) to invoice the customer for both the amount of the returned check and the fee charged by your firm. In our example, the returned check was $50, and the bank charges are $25.

Here’s the Create Invoices window:

QuickBooks Premier 2009 Create Invoices for Customer NSF Check

This invoice will be reflected on the customer’s account and will provide a document to present to the customer to collect payment. Hopefully, the customer will replace the returned check. At that point, use the normal procedure for recording a customer payment (Customers->Receive Payments) to record the replaced payment and depositing the funds (Banking->Make Deposits).

QuickBooks Premier 2009 Receive Payment for NSF Check

This approach has some important benefits. It creates an invoice to help collect both the unpaid amount and the bank charges. It also preserves the normal work flow for processing payments and making deposits. It’s also the approach recommended by Intuit in the documentation for QuickBooks.

To review the debits and credits of each step, press the Journal button (or Ctrl + Y). The general journal entry we first entered accounted for the actual bank charge. When we recorded the invoice, we produced a debit to AR in the amount of $75, a credit to our bank account for the $50 check, and a credit to an other income account for $25. The invoice in effect reduced the bank account by the amount of the returned check, so at this point, our bank balance is accurate.

Method 2 – Make 1 General Journal Entry

Some prefer to accomplish all of the above in just a single general journal entry. To do that, click on the Company->Make General Journal Entries… menu and make these entries:

AR: debit of $75 with the customer’s name entered in the Name field
Bank account: credit of $50 to reduce the bank balance
Bank account: credit of $25 to reduce the bank balance
Bank service charges (expense): debit of $25
Reimbursement income: credit of $25 to record the revenue (optionally enter the customer’s name in the Name field)

Ideally, although it’s not shown in the screen shot below, the debit to AR should be entered on the first line of the general journal entry.

QuickBooks Premier 2009 GL Make General Journal Entries NSF 2

The steps outlined above for recording a customer payment (Customers->Receive Payments) and depositing the funds (Banking->Make Deposits) are then used to complete the accounting when the customer replaces the returned check.

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How Does QuickBooks Calculate and Record a Home Currency Adjustment?

Chief Mechanic · September 2, 2010 ·

In QuickBooks the home currency adjustment is calculated based on the difference between the exchange rate recorded with each transaction and the exchange rate as of the home currency adjustment. It’s calculated on:

Open Accounts Payable transactions in a foreign currency
Open Accounts Receivable transactions in a foreign currency
Balance sheet account balances for which transactions in a foreign currency are supported (i. e., bank accounts and credit cards)

It’s important to note that income and expense accounts, as well as other asset and liability are always recorded in the firm’s home currency. Therefore, home currency adjustments do not apply to these account types.

Home currency adjustments are recorded on the Company->Manage Currency->Home Currency Adjustment menu selection.

A home currency adjustment represents the unrealized gain or loss from holding balances in a foreign currency after the original transaction date (for open transactions) or after the date the transaction was closed. For example, if a firm did not extend credit to customers (i. e., it has no Accounts Receivable), did not receive credit from vendors (i. e., it has no Accounts Payable), and had no bank or credit card balances, its home currency adjustment would be zero.

From the Home Currency Adjustment window, QuickBooks automatically posts home currency adjustments by a General Journal entry to the Exchange Gain or Loss account that is automatically created by QuickBooks as an Other Expense account type. Therefore, debits to this account will represent exchange losses and increase this expense; credits will represent exchange gains and decrease this expense.

Home currency adjustments are normally recorded to prepare financial statements, so that balances held in foreign currencies can be converted to the exchange rate as of the financial statement date. If foreign balances were not adjusted to current exchange rates, the balances reported on the balance sheet could materially mis-state a firm’s financial position. The home currency adjustment records an exchange gain or loss to reflect the change in the value of a firm’s balance sheet accounts.

Transactions in a foreign currency involve both realized and unrealized gains/losses. For closed Accounts Payable and Accounts Receivable transactions in a foreign currency, the difference between the exchange rate recorded with each transaction and the exchange rate at the time the transaction was closed (i. e., the vendor bill or the customer invoice was paid) represents a realized gain or loss. Thereafter, holding foreign account balances (i. e., bank and credit card balances) that result from closing such foreign transactions produce unrealized gains or losses. Holding open Accounts Payable and Accounts Receivable balances similarly produces unrealized gains or losses.

The Exchange Gain or Loss account automatically created by QuickBooks records both realized and unrealized gains/losses.

A few examples will better illustrate how QuickBooks calculates and records home currency adjustments. In all cases, the home currency is the US Dollar (or simply, USD).

Example 1 – Home Currency Adjustment for an Open Customer Invoice

An customer is invoiced for 10,000 € (Euros, or simply EUR) on 12/15/2012 and the invoice is unpaid. The exchange rate recorded with the transaction is 1 EUR = 1.5 USD.

The exchange rate later became 1 EUR = 1.75 USD; after this exchange rate change, the open customer invoice was more valuable in USD. The result would be an unrealized gain of $2500, or the difference between the converted value as of the home currency adjustment date ($17,500) and the converted value as of the transaction date ($15,000).

QuickBooks Premier 2009 Multicurrency Home Currency Adjustment 1

The Home Currency Adjustment records a General Journal entry as a debit (increase) to the foreign balance Accounts Receivable asset account and a credit (decrease) to the Exchange Gain or Loss other expense account.

QuickBooks Premier 2009 Multicurrency Home Currency Adjustment General Journal

Example 2 – Home Currency Adjustment for a Closed Customer Invoice

An customer is invoiced for 10,000 € (Euros, or simply EUR) on 12/15/2012 and the invoice is initially unpaid. The exchange rate recorded with the transaction is 1 EUR = 1.5 USD. A short time later, the customer paid the invoice in full after the exchange rate changed to 1 EUR = 1.6 USD.

Immediately upon recording the customer payment at the new exchange rate, QuickBooks records a realized exchange gain for $1000, or the difference between the converted value as of the date the transaction was closed ($16,000) and the converted value as of the original transaction date ($15,000). This realized gain is not the home currency adjustment. Because both realized and unrealized exchange gains/losses are recorded in the Exchange Gain or Loss account, that’s where we’ll find this gain. Here’s a QuickZoom report of the Exchange Gain or Loss account after recording the customer payment.

QuickBooks Premier 2009 Multicurrency Home Currency Adjustment Realized

After the customer payment, the company’s foreign bank account transacting in Euros has a balance – the funds just received from the customer. If the exchange rate then changed to 1 EUR = 1.75 USD, this would represent an unrealized gain that occured as a result of holding a foreign bank balance. However, only part of the overall gain is unrealized: the difference between the converted bank balance as of the home currency adjustment date ($17,500) and the converted value of the transaction as of when it was closed ($16,000). The home currency adjustment is only the unrealized portion of the overall gain, or $1500.

QuickBooks Premier 2009 Multicurrency Home Currency Adjustment 2

The overall exchange gain from this series of transactions is the same as the first example – a gain of $2500, because in both examples the exchange rate changed from 1 EUR = 1.5 USD to 1 EUR = 1.75 USD. Here’s the QuickZoom report for the Exchange Gain or Loss account showing the overall exchange gain/loss:

QuickBooks Premier 2009 Multicurrency Home Currency Adjustment Report

The first line is the realized portion of the exchange gain; the second line – the General Journal entry – is for the unrealized home currency adjustment.

This second example illustrates another aspect of foreign exchange gain/loss reporting: if every transaction were recorded using the same exchange rate, there would be no realized gains or losses. All exchange gains or losses would be unrealized and result from the difference between the converted value on the financial statement date and the converted value as of the transaction date for each foreign balance on the balance sheet. These foreign balances can include Accounts Payable, Accounts Receivable, bank accounts, and credit cards. If you do not record transactions using accurate exchange rates as of the transaction date, you’ll magnify the amount of the unrealized exchange gains or losses shown on financial statements when you do decide to perform a home currency adjustment.

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Intuit Delivers R8 Update For QuickBooks 2010

Chief Mechanic · September 2, 2010 ·

Early today, Intuit announced the delivery of Release 8 for the QuickBooks 2010 series of products, including QuickBooks Pro, Premier, Simple Start 2010 and Enterprise 10.0.

Along with a host of small fixes, the highlights of the changes in Release 8 are:

QuickBooks letter templates are now compatible with Microsoft Word 2010 64-bit for some QuickBooks products
QuickBooks can export reports to Microsoft Excel 2010 64-bit for some QuickBooks products
fix for problems with paycheck print order

It doesn’t look like R8 is the complete fix for Office 2010 compatibility, but it’s a step in the right direction.

For more information, click through the links to read the latest release notes for your QuickBooks product.

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How Do I Enable Automatically Invoicing Customers For Reimbursable Expenses?

Chief Mechanic · September 1, 2010 ·

The first step to automatically invoice customers or clients for reimbursable expenses is to set a QuickBooks preference.

For more information on handling reimbursable expenses, see our related articles on what distinguishes a reimbursable expense from other expenses, invoicing a customer for reimbursable expenses, removing expenses from the list of billable expenses to be invoiced to a customer, and finding out which reimbursable expenses haven’t been billed to a customer.

Click on the Edit->Preferences menu selection to open the Preferences window. On the Company tab, click on the Time & Expenses sub menu. Be sure that under the Invoicing options block, the preference to Create invoices from a list of time and expenses is checked. This preference must be set before entering vendor bills for which you plan to seek reimbursement from a customer or client by issuing an invoice.

QuickBooks Premier 2009 Preferences Time & Expenses Invoicing

If you select the preference Track reimbursed expenses as income, then the income – but not the markup – associated with billing a customer for each reimbursable expense can be sent to a specific income account as discussed below.

If you don’t specify an income account for each expense account, the income associated with invoicing a customer for a reimbursed expense will be sent to the expense account itself. The Default Markup Percentage is the percentage that the reimbursed expenses will be marked up. If your markup is a positive percentage – that is, you’re charging your customer more than the actual expense to account for administrative or handling charges – the markup is sent to the Default Markup Account. The amount charged to a customer excluding the markup is either sent to an income account you specify or to the expense account.

If you specify a positive Default Markup Percentage, QuickBooks will automatically create a new Item in your Item List – a Group named Reimb Group. With a positive markup, QuickBooks will automatically subtotal reimbursable expenses on an invoice and display the markup and the total of the markup and the reimbursable expenses themselves.

For each General Ledger Expense account that you’d like to match to a corresponding Income account, edit the General Ledger account by clicking on the Company->Chart of Accounts menu selection or using the keyboard shortcut Ctrl + A. Select the Expense account you’d like to match to an Income account and edit the account by clicking on the Account button at the bottom of the Chart of Accounts window or using the keyboard shortcut Ctrl + E. Click the checkbox for the Track reimbursed expenses in Income Acct. setting and specify the Income account in the pulldown list.

QuickBooks Premier 2009 GL Add Account Track Reimbursed

You must assign a different Income account to each Expense account. Otherwise, you’ll receive this warning:

QuickBooks Premier 2009 General Ledger Warning 7

Enabling the preference and setting the relationships between income and expense accounts for reimbursable expenses is just the first step in automatically invoicing customers or clients for these types of expenses. Other steps include marking expenses as reimbursable, finding uninvoiced reimbursable expenses, and removing an expense from the list of those to be billed to a customer.

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