QuickBooks Pro Plus desktop 2022 purchase of furniture and investment transactions Get ready because we bookkeeping pros are moving up the hilltop with QuickBooks Pro Plus desktop 2022. And we are in our get great guitars practice file going through the set up process with a view drop down open windows list on the left hand side company dropped down home page in the middle maximize on that homepage to the gray area. Reports drop down company and financial looking at that balance sheet standard changing the dates and customizing the reports the range change from Oh 101 to two to 1231 to two fonts and the numbers change in that font size to 14.
Okay, yes, please. And okay, let’s go to the profit and loss reports drop down company and financial P and L Profit and Loss reigns change. Oh 101 to two to 1231 to two reports, customization fonts and the numbers thought change that to 14 and okay. Yes, please. Okay. Trial Balance reports drop down. Accounting and taxes, TV Trial Balance, not tuberculosis reigns change from Oh 101 to two to 1231 two to customize that report fonts and the numbers change that font to 14.
Okay, yes, please. And okay. In prior presentations, we put the cash into the business we did. So by putting our own personal investment into the business and taking out a loan. Now we’re going to do the next kind of thing, that’s not a normal kind of process, that would be a day to day type of transaction. But often the case when we’re starting up a business or expanding on it being now that we have the capital now that we have the cash, we’re going to invest in whatever we need to invest in, in order to have revenue generation in the future.
Oftentimes, that will be into large pieces of equipment, the fixed asset pieces of equipment. So if you’re in construction or something like that, then clearly a lot of your money then would be going into the tools that would be needed, so that you can then generate revenue with them into the future. Here we are imagining ourselves to be buying and selling guitars and being in the service industry of renting guitar equipment possibly and or guitar lessons.
Therefore, we got to at least set up the shop in which we’re going to be doing that. So we’ll be concentrating in on the purchase of that whatever we need, basically in the shop, that would be the idea, and then the equipment that we would need in the shop. And then of course, the buying and the selling of the inventory, which is one of our primary sources of revenue generation. Let’s take a look at this by going up to the balance sheet now.
So now we’ve got our cash and we’re going to start spending that cash. The idea then being that we’re going to be buying the equipment that we need, and then any excess cash that we still have, we’re going to put temporarily into an investment account like stocks and bonds to see if we can get a return on it. But realize that when you’re thinking about your business here, and this goes for a corporation, this goes for a partnership, this goes for a sole proprietorship, this business, the way they make money is through we’re imagining here, the generation of revenue through the selling of guitars and or services like guitar lessons, or renting equipment. It’s not through financial basically investment type of activity,
receiving interest and capital gains and dividends and so on and there, but we might put some investments in temporarily because we’re parking the money there to get a short term return. So that we can then use it in the future for whatever we want to use it for, which is going to be the expansion, buying more equipment, buying more, you know, real estate, and so on, so that we can have more of our store presence or something like that. If on the other hand, we have excess cash that we’re not planning on putting into the business, the typical idea, then would be that you would take that excess cash, and you would give it to the owner in the form of a distribution,
so that the owner can then invest it in their own investment portfolio for their own strategy. So that’s going to be the general idea. So unless you’re in a business that is in the business of investing, then your business generally will be using cash for a tool of revenue generation in the business of whatever the business is in. And then again, the excess revenues that are generated. Typically, if you’re not going to be reinvesting them in the business to generate more revenue in the business, you would want to distribute them possibly to the owners in the form of a draw for a sole proprietorship, or partnership or in the form of dividends, typically for a corporation.
Okay, so first thing we’ll do though, is we’re going to park some of this cash into a short term investment for we’re matching that short term timeframe. If I go to the homepage, there’s no type of transactions that’s related to just a short term investment because this is not a typical type of transaction.
Cash is effective however, so we could Think of what’s the tools to increase or decrease the checking account, and this case, decreasing the checking account. So we’re gonna have a check, we could write a check here, anytime we decrease the checking account. And so if I open up the check, it looks like this, we will be selecting the checking account, we will be saying whoever we’re going to pay it to, in this case, it’s kind of a transfer going from one institution to another, basically a financial institution, but investment, and then the account that we would choose down below.
And this case, we’re going to set up another account, which is going to be an investment type of account. Closing this out, I will typically, however, not use the check form, if I’m going to enter directly into something that’s a cash transaction. But once again, use the register. So you can find the register a few different ways, I think it’s a nice way to do it by going to the lists drop down and the Chart of Accounts, because then you can realize that you have a similar register for all of the balance sheet accounts, even though the checking account that’s most likely the most familiar type of register for most people.
So double clicking on the checking account there, we’ve got our registered, I’m going to add this to the four. So I’m going to say on one, four, and then we have a number here now the number we might have an actual check, we might be using something else. If it was something else, you would not want to use the check number, I’m going to imagine it is a check this time and type in a 1001. As you enter checks into the system, the question would then be are you printing the checks out of the QuickBooks system?
Or are you going to be basically just using a checkbook and tying out that you’ve written a check into the QuickBooks system. And if it were not a check, we could still use the same transactional form, in essence, and just not use the check number, we have to type in the first check number imagining that that’s the first check number basically, in our checkbook, right, and then we’re gonna move on from there. So who are we going to be paying, I’m going to say it’s Vanguard. So that’s going to be an investment type of broker, that we don’t have them set up yet as either a vendor, customer or other.
So I’m going to say quickly set it up, I’m going to set it up as an other because they don’t really fall into a vendor customer or employee, he, although so we’ll keep it there and say, okay, and then we’re going to say there’s a payment out of our checking account, that’s going to go into this investment, let’s say for $12,000. And then the other side is going to go into an investment account. When you’re tracking the investment side of things. If you’re putting money into stocks and bonds or some kind of short term investment, you have a few different options to do to go there as well,
you could be you could try to track the multiple kinds of investments that you’re tracking in, that’s one option. But it can be a little bit tedious to do that in QuickBooks. Or you could try to say I’m going to put all of my investments possibly by institution, for example, you might say that, I’m going to put this into my short term investments. And then you might break out the institutions, you’re investing in the financial institutions like Vanguard, your Bank, Bank of America, or something like that, that you could be investing in that way.
And then you would use the financial statements to give you the more detail about your actual investment activity. In other words, you might be thinking that I’ll use QuickBooks to track my day to day activity, and so on, probably not the best place to track your day to day activity, although you can track basically your gains, and so on. But you probably want to do that on a periodic basis, and then get the detail of the activity on the from the financial institutions listing out the detail, you know, per account, and so on and so forth. That’s a general idea.
So I’m going to try to make a new account here that we don’t have set up, we don’t have one in our chart of accounts, it’s going to be in a live, it’s going to be an asset account. So we’re taking it out of cash or putting it into another asset we’re hoping to get a return on we don’t have one here yet. So I’m just going to call it short term investments investments, and say tab, and it’s going to ask me, if I want to set it up, I’m going to say set it up, please, it’s not going to be an expense account, that’ll be the typical kind of drop down, but rather,
I’m going to put it into an other current asset account. And you could think, should it go into a to a checking account or bank account, it’s not usually that liquid, although it’s still fairly liquid, so I put it into an other current asset. Gonna list the name here, that’s all we need, we’re never going to deal with anything on the opening balances again. So we’re going to save it and close it. There we have it.
And then we’re going to say this is an investment in short term Assets tab, and it records it decreasing the balance in the checking account to 120 8000. If we go to the trial balance to check it out, we got the checking at the 120 8000 double clicking in on it. There it is it’s a check form that has been used even though we entered it into the check register, double click and there we got the check form which populates even though we entered it directly into the register. Here’s who we paid.
And here’s the account. We could also have used to check for it to enter it directly there although I think it’s a little bit longer of a process to do so. Closing that back out. Before I close it back out You could also mark it off to print the check. If you’re actually printing remembering that you would actually need to order the checks, then still, if you were printing the checks through the QuickBooks system, and then put those checks into the printer, lining up the check numbers in QuickBooks to the numbers on the check. So I’m going to close this back out, close this back out.
And then the other side went to our what do we bought short term investment, which is an other current asset, there it is. Closing it back out, we can consider this on the balance sheet. Looking at the balance sheet, there’s our checking account. And there’s our short term investment that we put down here. So we just took money out of the checking account, put it into an other asset type of account, one, which we hope will generate some money in the short run until we cash it out, in order to help us generate revenue in the business of guitar sales.
What about the P and the L, nothing’s on the P and L as of yet, because we’re still basically kind of investing at this point. So let’s go now the next thing is, we’re going to say that we buying equipment, we’re going to buy equipment with this money we’ve got, we still got 120 8000. So we’re going to go and say we’re gonna buy equipment, if I go to the homepage, there’s not a normal transaction for the purchase of equipment we might buy, say, for with a pay bill or check again, because the cash transaction is happening, but usually large pieces of equipment, we don’t buy all the time.
And I’m going to go directly into the register to do this, noting that as we buy large equipment we’re gonna pay cash for because we already took the loan out. However, sometimes you might be financing the equipment as you purchase it, in which case, it’s a little bit more complicated of a transaction, we’ll talk more about those kinds of transactions that have an accrual basis to them. And the second month of transactions here, we’re just going to be paying cash for a larger piece of equipment. So I’m going to go on over to to the register, again, the checking register,
I’m going to say that this happens, let’s say on the ninth here, on the ninth, I’m going to say this is check 1002. And we’re going to purchase from Office Depot, that’s a vendor this time that we don’t have setup. So I’m just going to type it in, do we want to set it up with a quick setup? Yes, do I need a full setup know the full setup, meaning it’s going to give us more detail about all the contact information, I really just want to know anything I need to know to pay the pay them, I don’t need to know their contact information too much. This time, it’s going to be a vendor,
because we are purchasing something from another vendor, someone that’s selling items to us, we’re gonna say it’s for 16,000, that we will be then painting and the other side is going to go to a fixed asset, it’s not going to be an expense. Because even though we paid cash for it, we paid we’re buying a substantially large thing. So therefore, it’s going to go up top to to an asset that we’re going to use to generate revenue into the future, expensing it in the form of depreciation, we’re gonna put it into the furniture and equipment.
So we’ll imagine we’re buying, we’re buying your whole furniture or something I don’t know and in the store that we’re gonna sell guitars with. So then we could put a memo here. And so I won’t put the memo on this one, but they get both a memo, and notes. Also, whenever you purchase furniture and equipment, those are things that you want to, you want to have more detail about them most likely so that you can tell your accountant, your tax preparer at the end of the year, because they’re gonna have to put it on the books for the tax preparation.
And they can probably provides you then with a depreciation schedule to help you to allocate the cost over the useful life with adjusting entries, which we will talk about in a future components. So that brings the cost down to the 112 on the on not the cost of cash down to 112,000. If I go to the trusty tbw, there’s the 112. Double clicking in on it, we’ve got the Office Depot, another check form that has been created going into it. There we have our Office Depot, the furniture and equipment, which is not an expense account note that does that’s kind of a misleading term,
they call it expenses because it’s an acid account here. But that’s the same. So don’t let that throw you don’t let that throw you off. So we’ll close this out. And then we’re going to go back up to the balance sheet. The other side is going to be in the furniture fixed asset area. So it went right here into the to the furniture and equipment. So it’s in the correct category, there’s the 16,000, we increased, we would also want to tell our tax professional about it, those changes to this account, noting that there shouldn’t be a whole lot of changes, obviously,
in the first year there will be but after that we don’t have a lot of big purchase items, right, you’re gonna have a few big purchase items in the year. So we’re just going to look at the changes to those types of accounts, no activity and the profit and loss here because once again, we did not expense the furniture and fixture even though we paid cash for it, because it’s a big item that we’re going to expense or allocate the cost in the form of depreciation. So now let’s do it again. We’re going to purchase another piece of equipment, same process.
So if we go to the homepage, we could use the check to do it. We’re going to imagine we’re just paying straight cash for it once again, but we’re going to go to the checking register over here. And we’ll say that this happened, let’s say this happens on the 11th. Just to switch things up a bit, we’re going to keep the check number, notice the check numbers populating automatically. If it’s not a check that you’re actually writing, then you could just delete the check number, you might put something other to refer to a transaction like a Trent trans or something like that,
a tea that you can report to show that it’s not a cheque ver, and the check numbers will populate automatically. And you can match those out to the checks that you will either be printing through QuickBooks or to the checkbook that you’re kind of matching up to as you enter the data here.
So then we’re going to say this is going to go into let’s say, it’s going from Amazon, we’re buying from Amazon this time. And we’re gonna say it’s a quick add, I don’t need to fully add the vendor, I’m just gonna say Quick Add, vendor, there we go. That’s what cuz that’s who we’re paying, paying someone to. It’s a vendor 7000 to Amazon. And now the other side is just going to go right to it’s already there. So I’m just going to type it in this time, furniture, and equipment, it populates, basically, on its own.
Note that as we enter this information into the register, when we get into the second month of transactions, it will start to memorize these vendors, so that it can then populate the proper account here by memorizing the prior account that we use. So that’s going to be a useful tool, you could also try to go into these vendors and try to assign an account that it should be going to, but you don’t really need to oftentimes, because after you do the first month of operations, the second month will start to memorize transactions, making it a little bit a little bit easier to do.
So in other words, if I record that, that brings us down to the 105,000. And notice if I go up to the vendor drop down and the vendor center, and we go into the vendor center. And we can now see that we have Amazon up top, if I double click on Amazon, we’ve been adding these vendors as we go, we just needed the name, that’s all I really cared about. If we if we take a look at the payment settings, we could set up you know, like the general terms with it, but we just paid them cash.
So we don’t have in essence, a general term. And then the account settings, here’s where you can basically try to assign an account that it would typically be going to Amazon’s a little tricky, because you might have, you know, different types of things you purchase at Amazon, some large, some small. So it’s one of those vendors that can be a little bit tricky, you might actually try to have different vendors at Amazon that will be in categories, according to the categories, so that you can make the data input a little bit easier and assign the proper account to it.
So that’s one thing you might want to keep in mind, you might actually have multiple vendor names, basically, that you can set up, that will be slightly different variations on Amazon so that you can then tie them out to different expense accounts, possibly designated by dollar limit or something like that. And then you can you can assign the accounts here. But in any case, we’re just going to use it, we’re going to go to the second month of data input.
And we’ll try to do what we did last time, it’ll memorize the prior transaction. If you’re taking over an accounting situation from books that have already been started, then what you want to do is try to see what happened last time, and copy what they did. And then only deviate from that if you have a justification for doing that. So that you have the consistency, and then deviate when you think an improvement needs to be made. So I’m going to close this back out. So there we have that if we go back to the balance sheet, let’s take a look at the trial balance. first trial balance, nice easy look at it, we’re going to go to the checking account,
there is another check has been entered. Once again, 7000. It’s a check type form closing that out the splits go into the furniture and equipment right there. So now we’ve got the stuff we need to make money. In the future. We took that money that we got that we put in and the loan, and we bought stuff put in putting the money down on the line, it’s on the line, so that we can now use it to generate revenue. So we got this stuff, that’s what we’re going to use to make revenue in the future.
And it’s under the fixed assets section here. Nothing has happened yet on the P and L because we haven’t actually earned any revenue with the stuff we bought. But we’re going to open those doors and people are going to start buying guitars and getting guitar lessons and like renting stuff. So that’ll happen shortly. So note that you could take a look at the trial balance and just check your numbers. Basically as we go here. We’ll try to make backup files and hopefully we can access those backup files if you want to jump forward or if you’re something’s wrong and you want to rework something. Hopefully you can have access to those as well.