And I’m going to say it’s going to be unrestricted. And then we don’t need anything here, the debit amount is going to be that 11 five, I believe is what we’re working with here. 11, five, yes, 11 500. We don’t need any any other categorization here. So we look good, the other side is going to be going out of that new account, we set up in the expenses, pp and e 8100. It’s also it’s going to be the fun should be unrestricted, I’m going to say unrestricted here, unrestricted. And then that’s going to be the credit of 11 500. Now, if you’re not good with with the debits and credits, obviously, if you went the wrong way, what would happen you’d see this account be doubled. And in that would be wrong way, right. And then you just switch the debits and credits, and you’d be back on so the total debits add up to the total credits, this is going to be our transaction.
00:00
So I’m going to say, post this, this should be taking this amount out of the income statement should go back down. The other side should be increasing the equipment. So we’ll say post that. And then if I go back to the income statement, and I say let’s refresh this report with a little refresh button up by the URL up top, and check this thing out. Now, we don’t have anything in that clearing account. So it’s been removed. That’s what we would expect to see. If we then go back over to our balance sheet and refresh in this report. Then we should see in our PP and E property, plant and equipment, which has or the fixed assets they call it here. The equipment here at the 24 five, if I go into that 24 five, there’s our 11 five there as well. Let’s take a look at one more Report. I’m going to go back to the first tab, right click on it. Actually just let’s just look at the report in here. We’ll go to the to the reports.
00:03
In this presentation, we will record transaction related to the acquisition of property, plant and equipment or long term assets or depreciable. assets, we’ll talk about a situation where there’s a purchase of a long term asset, a depreciable, asset, property, plant and equipment and a situation where there’s a donation or contribution of some type of property, plant and equipment, get ready, because here we go with aplos. Here we are in our not for profit organization dashboard, we’re going to head on over to Excel to see what our objective will be. We’re currently in tab number seven, tab number seven, I’m going to be down here on line 25.
00:40
So we’re an F 25, we’re gonna have two types of transactions here, we’re gonna have the purchase of property, plant and equipment and the contribution of property, plant and equipment starting with the purchase. So I’m going to highlight the purchase one, I’m going to make it green, because that helps me to kind of know where my eyes are going and be less likely to do something silly or pick up the wrong number, not that I will not do that, but I less likely to do that. So here we have it. So we have the property plant and equipment is going to be increasing. And then the cash is going to be decreasing, we’re going to say that we’re purchasing, purchasing the property, plant and equipment with cash.
01:14
Now, what’s the difference between this and any other type of transaction, simply that the property plant and equipment is going to be used at sometime into the future, this is the same for for profits type of organizations as well. And we have to say, Well, if I put that all as an expense, even though I paid cash in the current period in the in the current month, then this month, it’s gonna it’s going to distort the comparison of the income statement, because the income statement for this month is going to be a lot lower, even though that equipments going to be benefiting things in the future. And therefore if I compare this month, the next month, and if I had expensed it, then it wouldn’t be really fair to this month, right? Because they would make this month look bad. Because I purchased something that’s going to be benefiting into the future, how do you fix that, you put it on the books as an asset instead.
01:59
And then you’re going to depreciate it kind of over the useful life when you use it. So we’ll talk a little bit more about depreciation, we have a whole course on depreciation methods and how you’re going to deal with depreciation. But that’s the general concept. So in practice, basically, anytime you’re purchasing something that’s fairly large, possibly one $1 Mark limitation where you start to think about, okay, is this something that I can’t expense, but rather need to put on the books as an asset? And then depreciate it? And if you do, then you probably need to give that information and the detail of it to your tax preparer as jack that information in that format. So what’s that going to look like on the trial balance?
02:39
Well, if we go up to the trial balance, we know that the cash will be going down property plant and equipment then is going to go up here being the furniture and equipment. Now I have the two journal entries are both recorded here. So this is just the 13, it’s going up by the 13 and down 13 on the cash, and then we’ll depreciate it or have an allowance for it at a later time. And we’ll talk about that that will be an adjusting entry. And we will expense it in the form of depreciation with that adjusting entry. All right, so let’s then fairly fairly straightforward transaction, once we know it’s not an expense, and it’s going to an asset account. So then we can go back to our dashboard here and aplos and check out the transaction. So we’ll go to the fund accounting, and it’s going to be cash going down.
03:25
So I typically would use like a register type of transaction for that. So I think the easiest thing to do, then is going to go to the check register. So I’m going to just go transactions, and then the register here, the registers that we have noticed you got the drop down, anything that I put next to the account in the chart of accounts where they register, will typically have that let me show you that for a second. If I right click on this tab up top, cuz we will be going back to this register in the future to add an account most likely. And then if I duplicate this tab, we’re gonna have these two tabs open, let’s then go to the register or the chart of accounts, I mean, so we’re in the fund accounting, we’re gonna go to the accounting drop down, and then the account list, which is basically the chart Chart of Accounts.
04:12
And there’s all of our accounts. Now, anything that we put on the side that has basically a register type of format. This is the icon for it, or this is what will have means that we’ll have kind of this register, which looks kind of like a checkbook type register that you might be used to, if you ever, you know, track your information by hand in a checkbook. And so also note that we’re as we’re in the assets section we have down here under fixed assets, simply a building. So we’re gonna have to add to that and add another account or change that account name, possibly, to what type of assets we’re going to be using, which is going to be the furniture and fixtures. So let’s do that. Let’s do that as we go. So here we are. We’re going to save in the date. Let’s make the date January 8, so I’m going to say bring this on back to January the eighth Please.
05:01
And then we’re going to say, who’s just going to go to I’m going to, I’m just going to say Office Depot. So I’m adding a new contact. And this case, you would think of it as basically a vendor someone, we pay money to note that the vendors unless they’re going to be a major vendor probably don’t need as much detail, I need to, I need to know the name that I’m going to write them a check or whatever, or what I’m going to enter into the system. Whereas the contacts who are customers, you probably want, you’re going to spend time trying to get more detail on on them, so that you can communicate with them in the future, and hopefully collect more contributions. So that’s typically how that’s gonna work.
05:35
So in other words, when you’re writing the check to someone like Home Depot, or something like that, you probably don’t need too much too much more information. So whereas if it’s a customer, you may want more, all right, then the amount, the amount is going to be, I think, was 13,000. We’re talking 13,000. Here, yeah, the cash went down by the 13. So let’s do that 13000, it’s going to be a payment, not a deposits coming out of the checking account, not going to have a check number, I’m going to I’m going to basically assume it’s an electronic transfer transaction, and we’re going to be decreasing the checking account for it. Now the other account that’s affected is going to be this built wall, it’s going to be some kind of property, plant and equipment. Now I want to put it into furniture and fixture, the only type of property plant and equipment account we have is this building.
06:24
So what I’m going to do is I’m going to say, all right, I need to go back to my accounts over here. Let’s go back to the accounts. And I’m going to say well, maybe I don’t have a building, you know, maybe we rent. So maybe I’m gonna just change the name here and say, well, let’s just either they already have this account, let’s just change it from building and make it, this is gonna be what did we call it over here, let’s just double check. So we’re at somewhat consistent with the naming convention. So we’ll take the equipment, we’ll pick up the equipment, and we’ll put that here. So put the equipment in there. So that looks good.
06:58
Also know just the formatting of this, we have this account, I’m going to say save. So that looks good here. So we have this account under the fixed assets. So we have we can we can add more of these subsections. So these are common kind of subsections in the reporting, current assets, and then fixed assets. And then if you wanted to further break out, so you have property plants and equipment and automobiles and buildings and whatnot, you could further break out with the use of sub categories. So you could set up an account called equipment and furniture and then they two subcategories, why would you need two, one for the for the cost and one for the allowance or accumulated depreciation related to it, and then the total, so you could have the total in that format. Or you could basically put it all in the fixed assets and let the fixed assets represent the total amount. So that’s what we have there.
07:47
So that looks good. I’m going to go back to the first tab and say now, now we can pick up the proper account hitting the drop down, we want that 15,000 15,000 account number, furniture and fixture, the fund that we’re going to have, I’m just going to say the fund is going to be unrestricted, and noodles again, I’m most concerned with the funds. And that breakout on that statement of activities or the or the income statement, we’re not going to have any and these are to balance, this is going to be to balance sheet accounts affected cash and the furniture and equipment, not going to put anything in the unrestricted or restricted tax section to further break that out.
08:24
That’s going to be it what’s going to happen with the checking accounts going to be going down due to it’s coming out of the checking account, other side’s going to go into that new account that we adjusted or set up 1500, which is the equipment and furniture that’s an asset account no effect on the income statement. Alright, let’s go ahead and submit that. And check it out. Make sure that they don’t give me any kind of red thing like that I did something wrong or something down here. Also note you got the transaction detail down below. So as you enter this, you’re going to be interested in up top. And then you can easily see that the transaction details from you know the most current date is up top on the transaction detail.
09:01
Alright, let’s go back to the second tab. Let’s go back to the second tab. Let’s take a look at some of our reports. We’re going to go to the reports then. And check out those reports we want to take a look at our standard reports the balance sheet, but the balance sheet by fund. So if you haven’t set up the balance sheet by fund and your favorites here, you can find it down below but it really should be in the Favorites at this point. And then I’m going to go back on over to the first half right click on it, duplicate it again. And then let’s go to the reports. And then let’s pick up the income statement by fun. So we have the balance sheet by fund.
09:33
Now let’s take a look at the income statement by fund. Then I’m going to go back to the balance sheet. Let’s take a look at the balance sheet. And I’m going to change the date even though we probably don’t need to but I’d like to bring it back to the month we’re working in which is going to be January. I’ll bring it to the end of January January 31. Okay, so what happened here, we’ve got within the asset section now we have the equipment, furniture and fixture it’s going to be in we have a In the unrestricted categorization, Now note, you might be saying, Hey, I kind of am used to seeing the furniture and fixture broken out into another categorization. So if we want to see those subcategories, and you’ll recall, we we solve those lines on the subcategories under assets, we had current assets. And long term assets.
10:18
Notice is kind of like a simple, our simplified type of balance sheet that’s not showing those subtotals, which often is nice, especially if you’re giving this to someone that doesn’t understand financial accounting as much, because the subtotals will add more detail. And we already got two columns going on here, when you’re giving this to like the board or something like that. But if you hit the drop down up top, we’re going to say that, we want to add the subtotal by group. So let’s add the subtotal by group. And then you’ll get those subtotal. So you’ll recall that we have the current assets up top. So within assets, we have the subtotal group of the current assets, and the fixed assets. This is kind of like the default format that you’ll typically see in financial accounting for for profit types of organizations, like the standard report for like a QuickBooks or some other accounting software will typically be broken out and have the subcategories in it.
11:10
You’ll note that basically, the default setting here is to remove it, which is actually a little bit easier to move with, in some cases, because those subtotals, you could see how much longer Of course, the report is just because now you got a bunch of subtotals that you’re dealing with. So if we go then into the 13,000, of course, then we’ll find our transaction. So there’s the transaction, if we were to go into it further, we can drill down into that source document that we had input into the system, the other side, of course, came out of the cash. So within the checking account, if we go into the checking account here, we see that we have that decrease for the Office Depot of the 13,000. So there’s the two sides, you’ll note that there’s no effect here, on the p&l the profit and loss or income statement, if I go over to the income statement, we change the dates to this year to date, this year to date, then there’s no effect here.
12:06
The point being it’s not on an expense, we don’t see any expense happening, even though we paid cash. Okay, let’s go back on over to Excel and say, What about what if someone like donates, like this long term property, plant and equipment that we’re going to be using within the not for profit organization, I’m going to make this blue now, because it’s done. And then I’m not going to make the other one any color, because we usually work on the last one here. So now, we’re gonna say that property plants and equipment is going up again. But we didn’t pay cash for it, someone just gave it to us as part of the contribution.
12:53
And then the the donation, which is basically revenue, same kind of concept here, we’re gonna say, all right, well, we’re gonna put it on the books at property, plant and equipment, which is an asset rather than an expense this time, because we’re not consuming it, it’s going to be something we’re going to use into the future. And then the other side is going to go into the contributions without risk without donor restrictions. So it’s just like with the other property, they gave us something that’s not that is restricted in form. But they didn’t put any restrictions on how we can use it. So it’s going to go into the revenue account, but it’s going to have no restrictions, even though it’s kind of restricted in form, right, they didn’t tell us what we need to do with it.
13:34
Okay, so that’s going to be the transaction there. Also note that we would need to know the value. And we’d have to value this somehow, which isn’t always easy. With something like a fixed asset account, we have to use some kind of fair value method to value this to put this into our system in the proper format. little tricky of a way we got to put this in but have a very nice system with aplos. To to do this. Now, one of the reasons this is a little bit tricky is because we don’t just want to do the transaction, the two accounts affected. But we also want to make sure that we’re tracking the contribution. And so we typically want to go through that same kind of format, which is in the donations area. And then we would like to set it up as a contribution and then go into the contributions here instead of a contribution.
14:17
However, this contribution form is usually used when we’re talking about cash contributions rather than property, plant and equipment. So that’s what’s going to be a little bit tricky about it. It’ll be similar to a contribution we did last time, or we’ve done before with the rental property contribution. But however, you’ll recall the rental property, what we did is two income statement accounts basically affected one going up to revenue, the other an expense, this one’s going to be an asset account that’s going to be affected, which is going to throw us off a little bit we’ll have to do a little bit differently. And I’ll show you why here. So this is how we can enter this into the system and achieve, you know our objectives. So we’re going to say this is going to be a constant This is going to be I’m going to call it donor three, which I set up, I set donor three as a new contact.
15:08
So if you don’t have them set up, they’ll be a new contact, we’re still going to use the general, this is kind of like it acts kind of like a product or service item. For a for profit, if you’re making an invoice or a sales receipt, in other words, it’s going to be pointing that’s what we’re going to use to point to the proper accounts, as well as assign the proper categorization. I’m going to say it’s unacknowledged at this point, we haven’t sent a thank you letter or anything, let’s bring it back to January 8, as well, I think that’s what we were on the amount, then is going to be four, what’s the amount so let’s check that out. That’s going to be 411 five. So we’re going to say 11, five, there. And then down here. Now you’ll recall last time, this is where we allow this to be a transaction because what’s the next step on this usually is to do the deposit. Now we’re still going to do the next step, which is a deposit. However, we don’t want the checking account actually to go down, what we want is more the asset account to go up.
16:09
Now last time, what we wanted was the expense account rent to go up. Now last time, we did something similar to this where someone gave us donated rental property, this time we want an asset to go up. So it’s a little tricky, because we’re going to be limited to the expense account section, we’re gonna have to do a little bit different of a transaction to do so. So I’ll show you that in a second, I’m still going to enter the 11 five here. And so the objective is to assign this expense account. In the next step, we would like to assign it as an as an asset fixed asset account. But we’re not going to be able to we’ll be limited to the expense. And we’ll show you how we’ll deal with that. And we’re not going to enter anything down below. So that looks good. So I’m going to say Save and Close, Save and Close.
16:49
Now the next step is typically to take all those deposits that you have take them to the bank, this isn’t actually a deposit. So you don’t want to group this with any other deposit. Because we’re just using the deposit screen to zero this transaction out while still adding the donor and being able to track this information as the standard donation with the donation kind of reporting. So what I’m going to do is I’m going to say I’d like to check this off, I’m going to create a deposit then. So but they’re not. And then I’m going to say this is on the January 8. So let’s hit back and bring this back on to January number eight, January eight. And so there we have that. And note, once again, you could do this a little bit quicker by going directly to this deposit screen.
17:34
And you could populate, you know the same information. In essence, as we’ve seen before, the key point here is that it’s got the checking account affected, but it’s going up in terms of the amount and the expense is the same. So the amount of hitting the checking account is zero, nothing’s going to go in there. Last time this happened, we recorded the other side to an expense account for rent. Now, this time, we would like it to go into the asset account. So the thing that we would like to see here is to be able to see assets, but I can’t, I can only pick an expense. And but it’s not an expense, we didn’t consume it It should be it should be in the property, plant and equipment. So this is what I’m going to do, I’m going to create a clearing account here, which means I’m just going to put it into the expense account, and then reallocate it with a journal entry up to the property, plant and equipment account.
18:22
So to do that, then, and I know that might sound a little complicated, but it’s not too bad, we’re gonna we’re going to go back up top, I’m going to right click on this tab up top, I’m going to right click on this tab, we’re going to duplicate this tab. So we can we can be working on two tabs at the same time. And then we want to go back into our accounting. So let’s go into our accounting. Let’s go into our accounts. And we want to take a look at the account lists. So the account lists. And then I’m going to go down and say that note, we want this transaction to go here, but we can’t make it go there, we have to go down to an expense account. So what I’d like to do is make an expense account that will go into and then back out and I’m going to call it a clearing account. Now to make that very distinct, it should be zero at the end of the day, not a temporary account. Not that it’s going to clear out at the end of the month.
19:12
But but it’s a clearing account in that it’s going to be cleared like right after one, it’s going to go into that account and go out of it to make that very apparent that it should be a zero balance. At the end of the day, we’re going to add a new group, I’m going to add a whole new group and just call this clearing accounts. Right. And then I’m going to say save. So these are accounts that should have zero balances. If there’s any account in this category. It should be a zero balance type of account. Then I’m going to add an account within the category. And I’m going to say this is for PII property, plant and equipment. Let’s make it 8100. And the fund, I’m going to say is unrestricted, I’ll say unrestricted and then I’m going to pick the name which There’s going to be p p e contri bution property, plant and equipment contribution. And so there we have that, I’m going to go ahead and save it.
20:12
So now we have an expense. So 8100, then if I go back to the prior screen bracket the prior screen, I should be able to pick that 8100 as an expense considering it is an expense type of account. And then we have that. So what’s this transaction going to do when we record it, it’s not going to do anything the checking account, because it’s a zero transaction, it’s going to be recording the expense account, increasing your PP and E by that 11, five, the other side’s going to go to the income account for the 11 five agenda. And that’s going to be driven by that general setting for the purpose. So let’s go ahead and save it. And then we’ll check it out. So we’ll say save here. And then let’s go back up to our reports. So I’ve got a report, I’m looking at the this is the balance sheet. Let’s go to the income statement here.
21:02
So I want to go to the income statement, which I overrode somehow. So I’m going to go to the reports. Back to the reports, I’m going to open up the income statement again. So I’m going to say reports. And then I want to check out the income statement by fund. And then I want to make sure that I’m on this year to date this year to date. And Okay, so then we have the contributions. So contributions that are not restricted, unrestricted here should go up. So if I go into that 230 7000, we have the contribution, there’s the 11,500, that looks good. The other side, then, if I go back back on over is increasing the amount in the clearing account. So here it is. And that’s the 11,500. Now it’s in the clearing account, that means it should go back down to zero.
21:51
Now we’re going to take it out of there and put it where we want it to go, which is the property plant and equipment, we can do that with it with a journal entry. Or we can use a register I comfortable with the journal entry. So let’s check that out. I’m going to go back on over, we’re going to go to the accounting again. So we’ll go to the accounting transactions, we’re going to enter a journal entry. So let’s enter a journal entry here. And I’m going to say this is also on the date of January 8, so we’ll make that January 8. So property, let’s just call it p p. e donation. And then we’re going to say this is going to go into the account, now we’re going to increase this is with a debit of the 1500 account 1500.
24:44
And the other thing that we were achieving or looking to achieve by going through this kind of process is to see that donation by contacts. So these are the donations by contact and then we could still see the list. Have that donation happening here. So we can then, you know, sort our contacts, which I know these are just generic names, but we can sort our contacts. And we could see that that actual donation. So that’s one of our objectives. We want to get the accounts to be correct. And we also want to be tracking these donations as they come in, as well for our reporting purposes. That’s gonna be it for now. Let’s get out of here.