Chapter 2: Managing Expenses

Teaching Tips

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Chapter 2

Managing Expenses

TopicsThis chapter covers the following topics:

• The Expenses Workflow

• Setting Up Vendors

• Turning On Class Tracking

• Entering Bills

• Paying for Expenses

• Printing Checks

• Handling Vendor Credits

• Viewing Accounts Payable

Teaching TipsThis chapter covers various ways of recording and paying expenses: writing checks, paying by credit card, entering and then paying bills later. It concludes with a few reports that help review the status of accounts payable.

Using Multiple Bank AccountsThe sample file used in this book includes only one checking account, so QuickBooks fills in the correct checking account for transactions like writing checks and paying bills. An additional topic you might cover is how to work with multiple checking or credit card accounts. For example, you can show the students the Checking preferences, which specify which account to open by default in the Write Checks, Pay Bills, Pay Sales Tax, and Make Deposits windows. Chapter 7, Customizing, provides more information about preferences.

Using the Memo FieldAnother additional topic is using the Memo field in transactions windows. You might instruct the students to fill in the Memo field for each transaction they create to document important facts or reminders about the transactions.

Answers to Review Questions and Exercises

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Answers to Review Questions and ExercisesAnswers are bolded:

Review QuestionsSelect the best answer(s) for each of the following:

1. You can display the Vendor Center by:

a) Clicking Vendors on the Home Page.

b) Clicking Vendor Center in the icon bar.

c) On the Vendor menu, choosing Vendor Center.

d) All of the above.

2. You can add a vendor in the Vendor Center by:

a) Right-clicking within the Vendors tab and then choosing New Vendor.

b) In the Vendor Center icon bar, clicking New Vendor, and then choosing New Vendor.

c) In the Vendor Center icon bar, clicking New Vendor, and then choosing Add Multiple Ven-dors.

d) Pressing Ctrl+N.

e) All of the above.

3. You can pay vendors by:

a) Recording a transaction in the check register.

b) Using Write Checks to record and print a check without using Accounts Payable.

c) Using Enter Bills to record a transaction using Accounts Payable and then using Pay Bills to pay open bills.

d) All of the above.

4. Which statement is true?

a) When you pay a bill, QuickBooks records the payment in a bank account (or credit card account) and the Accounts Payable Account.

b) Bill payments increase the balance in your bank account and Accounts Payable account.

c) You apply discounts when you enter a bill.

d) You must use items to fill out a bill.

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Managing Expenses Exercise 1

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5. Which QuickBooks feature should you use to categorize income and expenses that span different customers, vendors, accounts, and time periods?

a) Jobs

b) Class tracking

c) Customer types

d) Vendor types

e) Job types

Managing Expenses Exercise 1Restore the sample file, sample_product-based business 2015 (Portable).QBM. (Or, if you are using QuickBooks 2014, restore sample_product-based business 2014 (Portable).QBM.)

1. Is class tracking turned on in the sample file? If not, turn it on.

2. Create a new vendor using the data in the following table. If the table doesn’t contain data for a field in the New Vendor window, leave the field blank.

Figure 2-1 Turn on class tracking

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Figure 2-2 New Vendor window - Address Info tab

Figure 2-3 New Vendor window - Payment Settings tab

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Figure 2-4 New Vendor window – Tax Settings tab

Figure 2-5 New Vendor window – Account Settings tab

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3. Print a vendor contact list. (On the Reports menu, choose Vendors & Payables, and then choose Vendor Contact List on the submenu.)

4. Record check number 10080 in the Checking account register.

• Set the date to 1/4/2019. Use Quick Add to add the vendor, Tough Tools.

• Set the check amount to $800. Split the amount of the check to assign $600 to Tools and Machinery for Remodel and $200 to Tools and Machinery for Overhead.

Figure 2-7 Vendor Contact List

Figure 2-6 New Vendor window – Additional Info tab

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5. Enter bill number 84-6542.

• Set the date to 1/5/2019 and choose Gallion Masonry.

• Set the check amount to $500, Terms equal to Net 30, and choose the Tools and Machinery account. Allocate the expense to New Construction.

6. Print a report of all unpaid bills. (Create and print an Unpaid Bills Detail report dated 01/31/2019.)

Figure 2-8 Adding a Check

Figure 2-9 Entering a Bill

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7. Pay all of the bills due on or before 02/28/2019.

• Pay the bills from the Checking account and set the check date to 2/28/2019.

Figure 2-10 Unpaid Bills Detail Report

Figure 2-11 Paying Bills

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Managing Expenses Exercise 2

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Managing Expenses Exercise 2Restore the sample file, sample_product-based business 2015 (Portable).QBM. (Or, if you are using QuickBooks 2014, restore sample_product-based business 2014 (Portable).QBM.)

1. Is class tracking turned on in the sample file? If not, turn it on.

2. Create a new vendor using the data in the following table. If the table doesn’t contain data for a field in the New Vendor window, leave the field blank.

Figure 2-12 Turning on Class Tracking

Figure 2-13 New Vendor Window - Address Info tab

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Figure 2-14 New Vendor window - Payment Settings tab

Figure 2-15 New Vendor Window - Tax Settings tab

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3. Print a vendor contact list. (On the Reports menu, choose Vendors & Payables, and then choose Vendor Contact List on the submenu.)

Figure 2-17 New Vendor Window - Additional Info tab

Figure 2-16 New Vendor Window - Account Settings tab

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4. Enter check number 10080 in the Checking account register on 01/15/2019.

• Choose Zeng Building Supplies as the vendor. Set the amount to $700. Split the expense to $350.00 for Office Supplies allocated to Overhead and $350.00 for Tools and Machinery allo-cated to Remodel.

5. In the Write Checks window, write a check to print later.

• Record a check to Cal Telephone dated 01/16/2019 for $297.50 for Telephone allocated to Overhead. Don’t print the check.

Figure 12-18 Vendor Contact List

Figure 2-19 Entering a Check

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6. Enter a credit card charge on the QuickBooks credit card on 1/16/2019.

• Use Quick Add to add the vendor, Super Supplies. Fill in a reference number: 1234. The charge was for $125.69 for office supplies allocated to Overhead.

Figure 2-20 Writing a Check

Figure 2-21 Entering a Credit Card Charge

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7. Enter bill number 2204 from Kershaw Computer Services dated 01/22/2019.

• Set the bill amount to $600.00 and choose Net 30 for Terms. Choose the Computer Repairs account and allocate the entire amount to Overhead.

8. Enter bill number 4215 from Gallion Masonry dated 01/22/2019.

• Set the bill amount to $3,500 and choose Net 15 Terms.

• The bill is for the Mark Bauman Home Remodel job. Choose the Subcontractors Cost of Goods Sold account. Link the cost to the appropriate job and class.

Figure 2-22 Entering a Bill

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9. Print a report to look at unpaid bills.

• Create and print an Unpaid Bills Detail report dated 1/31/2019.

Figure 23 Entering a Bill

Figure 2-24 Unpaid Bills Detail report

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10. Pay all of the bills due on or before 1/31/2019 from the Checking account.

• Record the payments on 02/1/2019 and set the checks up to be printed.

11. Print the checks you recorded with a Print Later setting. Print them on blank paper and start the check numbers at 517.

Figure 2-25 Paying Bills

Figure 2-26 Printed Checks

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12. Enter bill number 14956 from Daigle Lighting on 01/25/2019.

• Set Terms to Net 30 and the amount to $1792.33. Choose the Job Materials Cost of Goods Sold and assign it to the Heather Campbell remodel job. Allocate the cost to the correct class.

Figure 2-27 Entering a Bill

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13. Enter a bill credit on 01/30/2019 for $500.00 from Daigle Lightning.

• Enter reference number Credit115. Choose the Job Materials Cost of Goods Sold and assign it to the Heather Campbell remodel job. Allocate the cost to the correct class.

14. Apply the credit to bill number 14956.

Figure 2-29 Applying a Credit

Figure 2-28 Entering a Bill Credit

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15. Pay the remainder of the bill on 2/1/2019 using a handwritten check.

Figure 2-30 Paying Bills

Figure 2-31 Printed Check

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16. Generate a Vendor Balance Summary report for All transactions.

Figure 2-32 Vendor Balance Summary report