|
|
 |
 |
 |
 |
 |
 |
 |
 |
 |
Articles:Entering Fixed Assets as Journal Entries Estimating, Project Management Overview Paying Liabilities and Transfers Between Accounts Profits - Strategies to Improve |
Journal Entries
Entering Fixed Assets as Journal EntriesWhen entering fixed assets using the 1-3 screen, the correct accounts should be used for debits and credits. Typically, the accounts might be something like this: Account Debit Credit 18010 – Ford Truck (Purchase Price) 20,000.00 The important things are that: 1) Debits = Credits; 2) there is an asset account which declares the actual asset value of the vehicle (purchase price) and a long-term liability account which declares the principal loan amount. When a monthly payment is made again the loan, it would typically look like this: Account Debit Credit 28010 – Ford Truck Loan Payment 200.00 68010 – Loan Interest 34.77 10000 – Checking (actual check amount) 234.77 ____________________________ 234.77 234.77 This can be accomplished in the 1-1 screen by displaying the two debits in the grid. Or if you really want to run it through A/P and pay an invoice, display the two debits in the grid of the A/P invoice screen. When the asset is depreciated, your CPA should give you a journal entry to accomplish that. There other possible scenarios, such as when the interest and principal change every month. To implement that, you would need a schedule from the lending institution showing the principal and interest monthly over the life of the loan. This summary covers the basic idea.
Entering Payroll Records as Journal EntriesWhen entering payroll records using the 1-3 screen, the correct accounts should be used for debits and credits. Typically, the accounts might be something like this:
Account Debit Credit 64000 - Overhead Labor (or Direct or Admin) 1,000.00 1,210.00 1,210.00 The important things are that: 1) Debits = Credits; 2) all accounts for which payroll tax liabilities are Credit accounts (in the Current Liability range), not asset accounts. If a payroll advance is added, it’s a credit to Checking and a debit to the Payroll Advance account (an asset account in the Current Assets range). Other entries might include deductions for health insurance (reduces Net Pay and credit a separate liability account in the Current Liabilities range), an employer-paid benefit (debits an expense account and credits a separate liability account in the Current Liabilities range) or a reimbursement (debits an expense account and increases Net Pay). There are many other possible debits, credits and deductions or additions to Net Pay, but this summary covers the basic idea.
Paying LiabilitiesLiabilities are created in various ways. Your company might take out a loan, use a revolving credit line or overdraft protection, buy an item based on credit (such as a computer using Dell Credit), accrue a payroll liability to be paid in a deposit to the Federal or state government, or use a credit card to buy something. Liabilities do not include using a debit card (which is like writing a check), or transferring funds between asset accounts (such as a transfer from a checking account to a savings account, transferring between checking accounts, or a transfer from a checking account to petty cash). I will cover those topics later below. Making a payment against a liability account is almost always the same procedure. Using a check writing screen, such as 1-1 or 4-3, or making a journal entry in 1-3, the payment is a credit to a checking account and a debit to the liability account you are paying against. If the payment was a deposit of Federal Payroll taxes, the ledger side of the entry would look like this: Account Debit Credit 23000 – Federal Payroll Tax Payable 2,500.00
If it was to pay a credit card, it would look like that also: Account Debit Credit 24050 – Bank of America Visa 2,500.00 The same would apply for a line of credit payment (whether you initiated it or it was an automatic deduction by the bank), a payment against a loan or other credit account.
Transfer of Funds Between AccountsBecause of the way Master Builder’s bank reconciliation works, it is best to use a clearing account as an intermediate step between two accounts when transferring funds. If you were transferring $10,000 from Savings to Checking, the transactions would look like this. Account Debit Credit 10300 – Savings 10,000.00 Then, Account Debit Credit 10500 – Cash Clearing Account 10,000.00
The reason for this is that if you transfer directly from one cash account to another, the transaction only appears on one Bank Reconciliation. If you use the above method, you can use the Bank Reconciliation screen 1-5 in Master Builder normally for each cash account.
A Word About Debit CardsAlthough a debit card might look like a credit card, we know it’s like using cash. The best way to think about a debit card it that it’s like writing a check each time you use it. It credits the checking account, and often debits an expense account. If you purchased lumber at Home Depot with a debit card, the transaction would look like the one below. You can use screen 1-1 or 1-3 to produce the transaction. Account Debit Credit 50001 – Materials 2,500.00
Please contact me if you would like to learn more about instituting a comprehensive training process. Thank you.
Andy King
Consulting | Reports | Resources | About
Us | Links | Contact |
Disclaimer | Home
|
