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Thread: Need Help with QuickBooks Pro 2004

  1. #1
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    Need Help with QuickBooks Pro 2004

    I am new to this product. I am starting at ground zero in learning it. I created a company and now want to start entering information.

    I created a Petty Cash account and put money into it. At this point, I purchased some items from a store and use the CASH from Petty Cash. My items total $40.00 -There is $50.00 in Petty Cash.
    Example:
    Vendor: Lowe's
    item1 - $10.00
    item2 - $25.00
    item3 - $ 5.00

    Items 1,2, and 3 are resell-able items. So I want to record those.

    Let's say, I sell item2. How do I (or can I) record all this in Quick-Books?

    When I pull a report (I don't know what one), I want to see Item2 as sold and item1 and 3 as still in Inventory.

    Is all of the above possible to do using Quick Books Pro 2004?

    If it is, another question would be using the same scenario above except the $40.00 spent was paid by Credit card. How would that be recorded?

    Thanks,
    Sam

  2. #2
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    Re: Need Help with QuickBooks Pro 2004

    Sam,

    I believe all that you mentioned can be done in QuickBooks. Reason I believe this can be done is I saw an office where everything was handled in QB. Inventory, invoices, shipping labels, reports. However, I'm sorry to say, I don't know how to do it myself.
    -tony d

  3. #3
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    Re: Need Help with QuickBooks Pro 2004

    Thanks tony: I'm starting to go through this new book I purchased on QuickBooks Pro 2004. I've reloaded the initial data file several times so far. One of these times I may get it right.

    Sam

  4. #4
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    Re: Need Help with QuickBooks Pro 2004

    Sam,

    Did you setup your chart of accounts? Did you setup up your General Ledger, Accounts Payable, Accounts Receivable, Inventory?

    You also MUST realize that QB is a LOW level accounting package - it will allow you to delete any entry without more than a "are you sure" dialog box. It ALSO will change ALL of your pricing on an inventory item that can effect your P/L statements.

    Example - suppose you buy a hard drive for $49.99 (including shipping) one month and sell it for $69.99 = $20.00 profit. Ok that is straight forward. BUT now let's say you buy the SAME hard drive off a GREAT deal on E-bay and only pay $29.99 and sell it for $69.99. Now you have a $40.00 profit or you have sold 2 hard drives for a total of $60.00 profit. NOW the issue with QB! When you enter the SECOND hard drive costing (remember you already HAVE that model in your inventory) it changes the COST of the ENTIRE inventory item - so when you run a P/L report you find that you made $80.00 profit WHICH IS ENTIRELY INCORRECT!

    Now for someone who has a constant cost of materials - this is not a problem - you buy a widget for $2.00 and you sell it for $5.00 - no costing issue or P/L errors.

    This one of the issues with problems most have in the computer business since parts can fluctuate so dramatically.

    As to your question about Petty Cash - you have to credit your GL for the $50.00 cash to debit Petty Cash (I know this sounds backwards - but it is ACCOUNTING). Once you use a portion of your petty cash, you have to credit petty cash and debit inventory and debit the GL so you have an accounting of Inventory being created. When you sell your inventory you will credit inventory and GL, which Zero's the debit and credit accounts receivable.

    You might want to look at Temple Ft Washington campus - my boss teaches QB there for users also.

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  5. #5
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    Re: Need Help with QuickBooks Pro 2004

    Sam,

    The best way to learn to QuickBooks is to:

    1) Study the navigators flowchart
    Click on Customers and EVERYTHING related to selling and Accounts Receivables is there and you MUST follow it to the T.
    2) Go through the tutorials, videos, and HOW DO Is and the Help for your business or industry
    3) Start with the Dummies book (only one in the Dummies series I actually recommend)
    4) Take a course (am I allow to blatantly advertise? --- got me in trouble last time)
    5) Get started with a Certified QuickBooks ProAdvisor, which I am.

    Assuming you started QB, it asks you what type of business. I assume you are consulting and selling retail incidentally. If so, choose Consulting; otherwise, choose Retail. By doing so, you create a list of financial accounts, called the Chart of Accounts. In this list you will find a few income accounts (you probably only need one, SALES or FEES), several expense accounts (utilities, phone, rent, materials, etc.).

    The heart of QB is the Item list (goods and services). These items appear on invoices, sales receipts, etc. Most importantly they link to your financials, your Chart of Accounts. So, for example, if you offer consulting services, you must have an item, call it CONSULTING, and in the setup of this item, you choose SALES or FEES for the income account.

    QB's has two kinds of inventory: inventory parts, whereby you are counting widgets. If you buy the same widget later on (as Dan hinted at), QB uses what is called average price costing. In an accrual accounting setup, the cost is NOT reflected until you actually sell the widget, but again it uses average cost, not the absolute cost. In order to use this kind of inventory tracking, you must answer yes to inventory during the Easy Interview or later turn on inventory under Edit | Preferences.

    The other kind of inventory is: non-inventory parts, whereby either you purchase one thing and sell another (buy tomato sauce, cheese, but sell pizza or are simply not interested in keeping track of quantity on hand and getting inventory valuations). In this case, and on an accrual basis, either when you enter a bill for the parts or 'write' a check from your petty cash account for the part, you will hit an expense or preferably a COGs (Cost of Goods Sold) account.

    You should set up Petty Cash as a Bank Account?

    When you buy the items:
    1) Write a check from Petty Cash, designate the item if you set it up as an inventory-part item or simply as an appropriate expense or COGs. There are two tabs when writing checks or entering bills: expenses, items. Use items only if you created items.

    When you sell an item:
    1) Enter a Sales Receipt for the customer, designate the item, the amount, (sales tax is another issue).

    2) So far, you are on cash accounting basis. To see your profit, run a Company & Financial Report | Profit and Loss Standard. Keep in mind, ALL reports are date sensitive, so watch the reporting period.

    3) Invoicing instead of issuing a Sales Receipts generates an Accounts Receivable automatically. But in either case, you MUST follow the flowchart: Receive Payments, Record Deposits. Similar, Entering Bills, Paying Bills handles the Payables side.

    Buying items with credit cards can be simple to complex. In a strict sense, you should enter charges as you go: Banking | Enter Credit Card Charges. At the end of the month, QB requires that you reconcile your Credit Card Statement and allows you make a full and partial payment and allocates any finance charges.

    A simpler way is to enter the purchase as a Bill under Vendors but use the name of your credit card as the vendor. On an accrual basis, this immediately counts as an Expense or COGs (for non-inventory parts). When you get your statement at the end of the month, you 'write' a check for all of your line items that you purchased by going to Pay Bills under Vendors again.

    QuickBooks is the only accounting software that people love. Think of using pieces of paper (invoices, bills, checks, deposit slips), follow the navigator exactly while learning the program, and leave the debits and credits to others.

    Fred
    Fred Kagel, Dir
    Freehold Computer Training Center at PC Warehouse
    Training | Consulting | Developer | Tech Support
    QuickBooks AllStar
    Certified QuickBooks Enterprise, Point of Sale, and ProAdvisor®

  6. #6
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    Re: Need Help with QuickBooks Pro 2004

    Dan,

    In QB, you have an option to have an inventory price be updated in the item list and to pop-up next time, but this does NOT change your P&L!

    QB uses AVERAGE INVENTORY COSTING only, so that in your scenario, when you sold one HD and then the other, the COGS is for each HD separately, $49.99 and $29.99, and the profit is $20+$40=$60, which is CORRECT!

    However, if you purchased both HDs, and sold one at a time, the profit for the first one would be $30 ($69.99 less avg cost 39.99), and the profit for the second one would also be $30, again totalling $60 for both. Now if the price dropped further, NOTHING changes in the past; but AVG COST going into the future starts all over.

    IF you need FIFO, or if everything is a one-of-a-kind, then QB is not the program to use.

    If you are somehow still getting $80, send me a backup copy of the file and a sequence of the transactions that generated the $80. Let me know if you have deleted any transactions.

    Quote Originally Posted by Dan18960

    Example - suppose you buy a hard drive for $49.99 (including shipping) one month and sell it for $69.99 = $20.00 profit. Ok that is straight forward. BUT now let's say you buy the SAME hard drive off a GREAT deal on E-bay and only pay $29.99 and sell it for $69.99. Now you have a $40.00 profit or you have sold 2 hard drives for a total of $60.00 profit. NOW the issue with QB! When you enter the SECOND hard drive costing (remember you already HAVE that model in your inventory) it changes the COST of the ENTIRE inventory item - so when you run a P/L report you find that you made $80.00 profit WHICH IS ENTIRELY INCORRECT!
    Fred Kagel, Dir
    Freehold Computer Training Center at PC Warehouse
    Training | Consulting | Developer | Tech Support
    QuickBooks AllStar
    Certified QuickBooks Enterprise, Point of Sale, and ProAdvisor®

  7. #7
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    Re: Need Help with QuickBooks Pro 2004

    Quote Originally Posted by Freehold Fred
    Dan,

    In QB, you have an option to have an inventory price be updated in the item list and to pop-up next time, but this does NOT change your P&L!

    QB uses AVERAGE INVENTORY COSTING only, so that in your scenario, when you sold one HD and then the other, the COGS is for each HD separately, $49.99 and $29.99, and the profit is $20+$40=$60, which is CORRECT!

    However, if you purchased both HDs, and sold one at a time, the profit for the first one would be $30 ($69.99 less avg cost 39.99), and the profit for the second one would also be $30, again totalling $60 for both. Now if the price dropped further, NOTHING changes in the past; but AVG COST going into the future starts all over.

    IF you need FIFO, or if everything is a one-of-a-kind, then QB is not the program to use.

    If you are somehow still getting $80, send me a backup copy of the file and a sequence of the transactions that generated the $80. Let me know if you have deleted any transactions.
    Fred,

    I (we) actually use Business Works for our accounting. It is a "true" accounting application since it does NOT let you delete ANYTHING. There has to be a trail of all transactions. If I make a mistake in posting - I have to make the correction in all areas of the post. I can't just say "oops" and hit the delete key.

    Checks written and voided are always tracked. The reports show when it was written, who it was written to, the check number, the amount of the check, AND THE VOID timestamp in the register. Sooo, IF that check mysteriously goes missing - there is a red flag that goes up! And it stays in the historical record forever.

    Of course, Business Works isn't a sub $1000.00 software either! But it isn't in the $20k area of Great Plains or MAS 2000 either. It meets that middle of the road accounting need for companies that want accountability over convenience.

    I am not saying there is anything wrong with QB or Peachtree - but they do leave a lot of tracking to be desired for someone wanting NOT to make it easy for a "shady" bookkeeper.

    As for the inventory - that is constantly brought up on several forums I subscribe to.

    Rich (my boss) is a QB ProAdvisor and instructor AND that is why we are NOT using QB in our accounting. He also is a Sage Advisor for Business Works and MAS 2000 and a CPA. SOOOO, I think I am covered - but thanks for the offer.

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  8. #8
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    Re: Need Help with QuickBooks Pro 2004

    Fred

    Great response! I'm sure that Sam appreciates your detailed getting-started tutorial.

    4) Take a course (am I allow to blatantly advertise? --- got me in trouble last time)
    5) Get started with a Certified QuickBooks ProAdvisor, which I am.
    You don't have to worry about that here. We consider you a resource, not someone who might steal our limelight.

    Thanks for posting

    Terry

  9. #9
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    Re: Need Help with QuickBooks Pro 2004

    Even though I have QB Pro 2004, It might be too complex for what I want to do. I' thinking about writing an app that is lsot less complicated. I'll do it in VB 6. This is not a firm decision but I am toying around te idea.

    Question: Is there a way to capture data directly in eBay, programmatically? I'm thinking this: If I write the app, I would have and field call "Shipping Cost" ; another one called "Listing Fees", etc. Now, I can copy and past from eBay into my application but it would be nice to have my application get the information programmatically rather than have human interruption.

    Anybody know if this can be done? If so, can you explain how????

    Thanks,
    Sam

  10. #10
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    Re: Need Help with QuickBooks Pro 2004

    Dan,

    Although in previous versions, one had to turn on the audit trail under preferences, in QB2006 the audit trail and audit reports are always on!

    Quote Originally Posted by Dan18960
    Fred,

    Checks written and voided are always tracked. The reports show when it was written, who it was written to, the check number, the amount of the check, AND THE VOID timestamp in the register. Sooo, IF that check mysteriously goes missing - there is a red flag that goes up! And it stays in the historical record forever.
    Shady bookkeeping has nothing to do with the s/w being used nor the price of the s/w. What was Enron using? Good procedure to follow is that the person authorizing the check payments is NOT the same person writing the checks.

    Quote Originally Posted by Dan18960
    I am not saying there is anything wrong with QB or Peachtree - but they do leave a lot of tracking to be desired for someone wanting NOT to make it easy for a "shady" bookkeeper.
    Inventory is not one of QBs strengths and I do not recommend QB for Manufacturing. My Big Boys use SAP.

    Quote Originally Posted by Dan18960
    As for the inventory - that is constantly brought up on several forums I subscribe to.
    Tell Rich (your boss) that any issues with erroneous data to post on the QB ProAdvisor Forum at http://intuitmarket.intuit.com/QBA/Home.asp. This forum is a high caliber forum. If the $80 profit scenario that you outlined for Sam still holds, we all would like to know the sequence of events that led there. Otherwise, you must again understand that average costing gives rise to 'unexpected' results when inventory which was purchased at various prices remains in stock. If inventory is fully consumed or bought and sold one at time, average cost is not a factor over the full life cycle of the inventory and the $60 paper and pencil profit is the same in QB's P&L. It has to be!

    Quote Originally Posted by Dan18960
    Rich (my boss) is a QB ProAdvisor and instructor AND that is why we are NOT using QB in our accounting. He also is a Sage Advisor for Business Works and MAS 2000 and a CPA. SOOOO, I think I am covered - but thanks for the offer.
    Lost in all this are Sam's needs and I think we both scared him away!
    Fred Kagel, Dir
    Freehold Computer Training Center at PC Warehouse
    Training | Consulting | Developer | Tech Support
    QuickBooks AllStar
    Certified QuickBooks Enterprise, Point of Sale, and ProAdvisor®

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