QuickBooks Pro Plus desktop 2020 to purchase and finance equipment and get ready because we bookkeeping pros are moving up the hill top with QuickBooks Pro Plus desktop 2022. Here we are in our geek Ray guitars practice file going through the setup process with a view drop down the open windows list on the left hand side company dropped down home page in the middle, maximizing that homepage to the gray area. Reports drop down company and financial taking a look at that balance sheet standard report customizing it with a range change a 1012 to 1231 to two fonts and numbers change in that font size to 14. Okay, yes, please.
00:44
Okay. Reports drop down company and financial profit and loss standard range change a 1012 to 1231 to two, customizing it for the font sake fonts and numbers change in that font to 14. Okay, yes, please. Okay, one more time with the reports accounting and taxes this time TB range change a 1012 to 1231. Two to customize it, pour five or fonts and numbers change in that font to 14. Okay, yes, please. And okay.
01:22
So now we’re going to be looking at a situation where we’re buying more equipment, and we’re going to be financing the entire thing, meaning we’re not paying for it upfront, but financing the purchase, what’s gonna happen, let’s take a look at the trusty balance sheet over here this time, and we’re gonna say, Well, that means that it’s equipment. So it doesn’t matter that we’re not paying cash for it in that we’re not expensing it not because in other words, we’re not paying cash for it, we’re not going to expense it, because it’s a large piece of equipment that we’re going to be purchasing. And therefore, we need to put it on the balance sheet as an asset and expense that with the use of the depreciation.
01:58
So we’re going to put it on the books as an asset, increasing the fixed assets here, as we do so in the fixed assets. Notice that we don’t have a lot of different kinds of transactions that happen fixed assets, meaning it’s not something that happens all the time, we don’t buy big pieces of equipment all the time. And therefore we want to kind of sort how we’re going to be organizing the fixed assets. We’ll talk more about that in a future presentation. But note here, we got the one category of furniture and equipment, we’ll talk more about maybe breaking that category out and how to reconcile that with your tax professional possibly to make that as easy as possible.
02:34
And then in the adjusting section, we’ll talk about how to calculate and record the depreciation allocating the cost to the the period that the equipment will be used, then we’ve got the loan down here. Notice we have one account for the loan. We talked a little bit about the loan when we put those loan on the books in that how do you how do you there’s a couple things with a loan.
02:55
One is going to be well, if I have multiple loans, do I want to have one account or multiple accounts, I would suggest multiple accounts, one for each loan, what if there’s a short term portion and a long term portion, then I would, I would suggest you put them in one account at a time and then adjust out the short term and long term portion periodically when you need to for reporting purposes, possibly at the end of the month, or a year possibly with the help or assistance from your CPA or tax professional, if necessary. So those are some of the issues that we’ll take a look at as we record this.
03:26
When you do record it. If I go to the homepage, and look at the forum to recording a purchase of equipment on on that we’re going to finance there’s no real form that ties out to that transaction, exactly the closest one being a bill. But if I enter a bill, it’s not going to increase the loan payable, but rather it’s going to be increasing accounts payable, I want to put it into a loan other than an accounts payable because I’m going to have to pay over a longer extended period of time. And so that one is not going to get not going to do it for us.
03:59
Therefore the next question is, well, what what kind of thing can I use to enter it is cash impacted if cash was impacted, then I can typically use a check to input it. But cash is not impacted. In this case, because we’re financing the whole thing with a loan. Therefore I can’t use a check. The other method would be that we could use a journal entry drop down, we could enter a journal entry. But you might be more familiar with using a register, which is in essence the same thing, it’ll still create a journal entry. But it might be easier to do with a register, not the check register,
04:30
but a different register. So if I go to the list strapped down Chart of Accounts, here’s my options with regards to the registers that we have. And we need a balance sheet account. So I could use either the furniture and equipment account or the loans payable account in order to in order to create this now on the loans payable. I’m going to go with our assumption now that I would like to have multiple loan accounts at this point in time a loan account breaking out each individual loan I’m going to assume that this loan is actually one loan at this point, and then have another loan account.
05:04
So what I’d like to do also is make a parent account called loans payable, and then have my sub sub accounts in under that loan. So for example, what I’m going to do is edit this account right here and change the name for it, I’m going to go up to the bottom rise up and say, I’m going to edit this account. And instead of calling it just simply loans payable, I’m going to call it the the loan from, you know, the bank that we got it from or something like that. So like Chase loan, and imagine we have the last four digits of the loan number to tell me which loan I’m talking about here.
05:40
And then I’m going to put that in a subcategory of loans payable to adjust our grouping a little bit, so that I’m going to save it and close it. And then I’m going to make another one which is simply going to be loan payable, just loan payable, which will be the parent account. So account rise up new account, this is going to be called then loan payable, it’s going to be it we’ll call it a loan account down here and say continue. And this one, I’m just going to call loan payable, loan payable, payable. So there we have it in that is all we need for that one, save it and close it.
06:19
And then I’m going to go back into this one again, and make it subordinate to the loan payable account. So I’m going to go with the account rise up edit that account. And we’re going to say I want to make that account subordinate to the loan payable grouped under a subcategory of the loan payable account. And then there we have it. So now it’s a subcategory. So now, let’s do it. Let’s do that again and make our new loan another account where the new loan is going to go making it subordinate to the loan payable account.
06:50
For this new loan we’re taking out in order to finance the piece of equipment that we’re going to be financing, hit in the account drop down or rise up, I’m going to say that we want a new account, again, this one being another loan continue. And let’s just say it was from Bank of America or something, this time be of a loan. And we’re going to make it subordinate to the loan payable account. So then I’m going to say okay, so now we got these two loans there, I might want the last four digits of the loan number. If it’s in the same institution, I’m going to edit that, then that last four digits could help you to kind of verify the loan.
07:32
So you want to make those distinct, so it’ll be easy for your internal data input for the loans, then when I make the transaction, I can either go into the loan payable account increase in the liability, or I can go into the furniture and equipment, let’s go into the furniture and equipment because I think that one is probably because it is increasing, the easier one to kind of see the register for so if I just double click on it, I get a register that’s similar to a check register, I’m going to close the caret. But now it’s going to just be a normal kind of register, I’m going to make this as of the 27th.
08:07
So I don’t have too much stuff on the 28th. And then we’re going to say that this is going to be another loan, which we said was from Bank of America, which you may or may not need, because that’s not exactly a vendor is not a name. So I’m going to add the name, let’s add it it’s not really a vendor, not a customer. But other it might be it might be well let’s go with other we’re going to say other, we’re then going to say that we’re increasing the equipment and we said we’re going to increase it by we’re just going to say $5,000 piece of equipment, some guitar equipment that we’re purchasing, like an amp or something maybe.
08:46
And then we’re going to say that the other side is going to go to that new loan account that we just set up. So it’s going to go to the new loan account. So we’re going to say the new loan account is going to be this one, so that so then you might have an MO a memo that would you know, be financing the equipment of some kind, possibly more detailed than that so that you know exactly what equipment you are financing because you do want to give this information to your accountant at the end of the year because they’re going to need to add that for taxes and calculate the tax and or the book depreciation on it. So if I if I record this, then it’s going to be increasing here.
09:26
So it increases our our account here and the other side should go to the loans payable. It is a journal entry. So if I double click on that journal entry, the form that’s being entered is simply a journal entry. So I’m going to then close this back out and close this back out, open the carrot on the left hand side. And let’s go back then to our balance sheet. So within the balance sheet, now we’ve got then nothing happened into the checking account. Instead we got the furniture and equipment going up.
09:54
So if I double click on it, we’ve got that increase. It’s just a journal entry there if I was to double Click on that, it takes us to our register double clicking on the journal entry takes us to the actual debits and credits that are being recorded. Closing this back out closing this back out. So notice that’s the, that’s what happens if there’s no default form, it just uses a journal entry. That’s every if there’s no other transaction that’s normal like a deposit a check a bill, then it will be a journal entry, closing this back out the other side, then going to the Bank of America.
10:27
And now we got the subcategory for these two loans that are happening. So I can close this up, I’ve got the one loan amount for my forte to show other people if I’m providing the financial statement, and then for my internal purposes, I can then open this back up, and I see the two loans that I can pay and basically track those two loans individually tying them hopefully to their amortization tables, or whatever format I choose to be doing. And then at the end of the month, and or year, if I have to break out a short term and long term portion, I can do so by each loan individually, that which could make it easier and then reverse that transaction.
11:05
We’ll talk more about that in the adjusting area. So there’s the loan that we have. And so I’m going to put it into one account right now we’ll talk more about breaking it out between short term and long term and the adjusting entries. So that’s going to be that now we’re left with up top, then this this, this account for the fixed asset account. Notice that we put it on the books as an asset, we’re going to depreciate it but with with depreciation schedules in the adjusting area, that’s how we’re going to allocate the cost and expense it over time.
11:38
And we got the one accumulated depreciation here. Next time we’ll talk more about what what if I want to break out this category into different categories that might tie out a little bit more closely to what we would see on the the taxes. So in other words, you might want to coincide what you have on your books to what you see on the tax return, possibly having one big group of fixed assets and just putting the whole thing in there and one group that would be the easiest thing to do, or possibly trying to break out the categories in what is likely to be seen on the tax return, because that’s the categories that you might use their depreciation schedule.
12:14
So that is the next you know level of detail that you can provide and still be pretty easy to tie into the tax return. So we’ll talk a little bit more about re categorizing possibly these fact fixed assets possibly using again your sub categories down here, in order to do so this is where we stand at this point, you can take a look at the trial balance, check out your numbers, if they tie out great if they don’t try changing the date range, it’s often a date issue.
12:40
We will be doing the transaction detail reports at the end of the section and looking to provide those backup files to help you to rework something if you so choose taking it back to that point in time where you want to be to rework whatever you want to rework