With QuickBooks Premier you can keep a detailed listing of your fixed assets by using the fixed asset item list in QuickBooks.
From here you can see all your fixed assets and add new fixed assets.
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You can modify how the list looks by right clicking in the list and selecting CUSTOMIZE COLUMNS.
To add a new fixed asset, you can right click in the list and select NEW or just click on ITEM at the bottom of the screen and select NEW.
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Once you are in the new fixed asset screen, you can enter information about the asset. See picture below for an example of the new fixed asset screen and the information you can enter.
Most of the information you can enter on the new fixed asset screen is pretty basic, however, the one area that people seem to have the most trouble with is which asset account to assign the asset. Most companies will have several broad categories of fixed assets on their balance sheet such as:
• Furniture and Equipment
• Vehicles
• Buildings and Improvements
• Construction Equipment
• Land
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On you balance sheet you want to see a total of all your fixed assets in each category. However, your fixed asset item list will keep the detail that makes up the totals for each category.
You will still need to record the actual purchase of the asset in QuickBooks. For example, if you purchased a new vehicle for your business and you wrote a check for it, you would simply code the check to the vehicle account.
However if you took a loan to purchase the vehicle then you could record that transaction by making a journal entry.
If you have several loans setup, you might want to include the last four digits of the loan number in the name so you can distinguish the loans.
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There is a loan manager under banking (see the section on setting up loans for information on using the loan manager).
For example, if a company decided to buy a new 2010 Chevy truck to use for delivery. The company got a loan and purchased the truck. What steps do you need to take to account for this transaction in the QuickBooks file?
First, the company will need to set up the asset that it is purchasing. To set up the asset, begin in the Chart of Accounts (press CTRL+A). At the Chart of Accounts screen, click the ACCOUNT button at the bottom right-hand corner to start a new account or press CTRL + N.
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Next, choose Fixed Asset as the type of account you are setting up and click CONTINUE.
On this screen, enter the type of Fixed Asset you are purchasing. In this case, it is a 2010 Chevy Truck. Then click SAVE & CLOSE.
Now that you have recorded the asset, you can add the loan. In this example, assume they borrowed $15,000. You will need to add a Long Term Liability to accurately reflect this debt.
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From the Chart of Accounts screen, (CTRL+A) you will select ACCOUNT, then NEW . On this screen, the Account Type will be Loan.
On the next screen, change the account type to Long Term Liability and then type in the account name. In the example, we used “2010 Chevy Loan”. You want to type whatever name will identify that loan to the corresponding asset it purchased or make it easily recognizable.
Now that the Chart of Accounts reflects the loan and the fixed asset, you are ready to set up the loan amount. From the Chart of Accounts screen (CTRL+A) double click on the “2010 Chevy Loan. “
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This should take you to the loan register for the Chevy Loan. On this screen, you will make the entry to reflect the loan amount.
IMPORTANT NOTE: Be sure when you are selecting the Fixed Asset we set up in the earlier step, that you do not select the 2010 Chevy loan.
To make sure this is set up correctly, go back to the Chart of Accounts and look at the loan and the fixed asset. Each should have a balance of
$15,000.
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Now, when the company is ready to make a payment on the loan, it will need to go to the Write Checks screen (CTRL + W) and fill out the check for the payment amount, in this case it is $400.00.
IMPORTANT NOTE: If you look on the bill from the bank it should tell you how much of your payment went to interest and how much you paid on your loan. Be sure that your payment is broken up according to these amounts.
Let’s summarize the steps for handling a loan transaction 1. Add the asset you are purchasing
2. Add the loan you received
3. Add the amount of the loan in the “loan register”
4. Check the Chart of Accounts to make sure you have a balance in your fixed asset account and the loan account.
5. Write a check for the payments and make sure that you break the payment up between Interest Expense and Principal Amount paid.
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After you have completed the first three steps you can use the loan manager in QuickBooks to help manage the payments for your loan.
This feature will allow you to track your payment schedules, make payments and run loan scenarios if you are considering refinancing, changing interest rate or the amount of your payment. It also fills out the write check screen with the appropriate payment amount and an estimate of principal and interest paid for each payment.
www.hugocpa.com/fixed-assets/
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Classes
Classes can be used in QuickBooks to track the profit and loss from a specific segment of your business. If you run a profit and loss statement, you will see the results of the entire company. However, if you run a profit and loss statement by class, you will see the profit and loss for each class individually.
The first thing that must be done is to turn on the class feature in QuickBooks. To do this, select EDIT and then PREFERENCES.
Next, click on ACCOUNTING on the left hand menu. Then click on the Company Preferences tab. Then select USE CLASS TRACKING and PROMPT TO ASSIGN CLASSES.
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Application
For example, assume you are a construction company that does new construction and remodel work. You could setup a class called new construction and a class called remodel. The profit and loss below shows gross profit to be $832,878.25 for the entire company. By looking at this, you would think your entire business is doing very well. In reality, only one part of your business is doing well while the other part is lagging.
If you are using the class system in your QuickBooks file you can run a profit and loss statement by class and see specifically how each segment of your business is doing. The profit and loss by class will show you the revenue, cost of goods sold and general and administrative expenses for each class of your business.
Upon further review of your company’s financial statements, you will discover that new construction makes-up 90% of the gross profit while remodels are only 10%. Consideration needs to be given as to whether or not it is a good use of resources to continue doing remodeling jobs.
Maybe a change in the pricing structure should be considered.
www.hugocpa.com/classes/
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