QUICKEN COMPUTER WORKSHOP EVALUATION. Please evaluate this workshop by filling in the appropriate number for each pair of phrases.

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2 QUICKEN COMPUTER WORKSHOP EVALUATION Please evaluate this workshop by filling in the appropriate number for each pair of phrases. What is your overall evaluation of this workshop? (Fill in appropriate number.) Excellent Poor CONTENT: In general, how do you rate the content of this workshop? What I expected Different than I expected Good style and delivery Poor style and delivery Organized Unorganized Too complex Too simple Informative Uninformative MATERIALS: In general, how do you rate the materials handed out? Very effective Ineffective Well prepared Useless HOW DID THIS WORKSHOP CHANGE: Your knowledge? Improved No change Your interest in topic? Increased Decreased Your confidence in using skills? Increased Decreased Comments helpful to instructors and conference planners: Would you be interested in participating in an advanced Quicken workshop? Potential topics of interest (fill in all that apply): Developing budgets Livestock inventory options More on reports and graphs Financial calculator features (refinancing, college savings, retirement planning) Investment Accounts Other

3 Table of Contents Evaluation Form... Green sheet inside front cover (0) Using Quicken for Farm/Ranch Financial Records...White (3) Introduction to Text Conventions, Keyboard Shortcuts and Desktop Setup... 4 Setting Up a File and Express Setup... 7 Importing a Farm Income and Expense Category List Setting Up New Categories and Deleting Unnecessary Ones Setting Up Subcategories for Reporting Purposes Setting Up Classes So Enterprise Reports Can Be Generated Adding Additional Accounts Entering Transactions Data Using the Categories, Subcategories, and Classes Specified Recording Loan Payments Creating Reports to Summarize the Data You Have Entered Viewing a Graph of Your Income and Expenses Backing Up Your Data Category Lists...Lavender (46) Standard Married Children Homeowner Rents and Royalty Business Farm Reports...Gold (52) Register Transactions London Cash Flow Last Year London Monthly Budget London Cash Flow by Enterprise Deere Transactions Summary Tax Schedule, All Transactions (Schedule A) Tax Schedule, Totals Only Reconciling the Bank Statement... Pink (63) Bank Statement Using the Budget Features in Quicken...Green (69) Using Quicken for Financial Planning...Yellow (78) Retirement Calculator College Calculator Refinance Calculator

4 Investment Savings Calculator Loan Calculator Various Topics...Ivory (85) Line of Credit/Credit Card Accounts and Alerts Saving and Locating Information for 1099s Recording Futures Market Transactions Scheduled Transactions Writing Checks with Quicken Year End Copy: Start New Year and Archive Category Clean-up Retrieving a Deleted Quicken File Backing Up Quicken Files Backing Up to Compact Disc (CD) Restoring a Backup from a CD-R or CD-RW Drive Building a Farm/Ranch Balance Sheet in Quicken Deluxe Blue (107) Develop a Complete Inventory of Farm/Ranch Assets and Liabilities, Documenting Market Value of the Assets at a Point in Time Import Asset Accounts Enter Beginning Balances in Asset Accounts Recording the Purchase of an Asset Recording Additions to Capital Assets Recording the Sale of an Asset Recording Changes in Inventory Recording Changes in Values of Assets Recording a Loan Payment Estimating and Recording Accrued Expenses Generating a Balance Sheet Report Backing Up Your Data Account List Glossary Please visit our website, to access additional topics and instructions including the Quick Tips newsletter, password security, recording paycheck information, and investments

5 Using Quicken for Farm/Ranch Financial Records 1 (Quicken Deluxe 2007) October 2007 This tutorial demonstrates a hands-on session to develop a simple set of financial records and reports for a case farm with a cow/calf herd and wheat for grain and pasture. Although our case farm is a simple one, you will be able to practice many of the steps that you might use in adapting Quicken Deluxe 2 to keep records on your farm or ranch. This tutorial is intended to be a step-by-step reference that can be used when working on computerized personal records at home or to supplement instructions in a workshop setting. An overview of what we do in an introductory workshop follows: 1. Introduce text conventions in the manual, keyboard shortcuts, and desktop setup. 2. Set up a file and Express Setup. 3. Import a farm income and expense category list (categories to match Schedule F) into the file. 4. Set up new categories needed and delete unnecessary ones. 5. Set up subcategories for reporting purposes. 6. Set up classes so that enterprise reports can be developed. 7. Create accounts (savings, cash, and liabilities) to be used in the file. 8. Enter transaction data using the categories and classes specified. 9. Record a loan payment. 10. Create reports to summarize the data entered. 11. View a graph of income and expenses. 12. Back up data. Specific instructions for accomplishing each of these steps are included in this tutorial. Additional instructions for common or farm related procedures follow the basic instructions. A glossary of financial and Quicken terms are at the end of the notebook. If you are using this tutorial at home, the new user setup in Quicken will prompt you to set up a file and your accounts, as described in the first three sections of this tutorial. Additional farm management information and Quicken tips for usage can be viewed online at The Quick Tips newsletter is a helpful companion to this tutorial. 1 Damona Doye, Extension Economist. Additional assistance from Lori J. Shipman, Extension Paraprofessional, and Anna Teague, Senior Secretary. 2 Quicken Deluxe 2007 is a registered trademark and will be written as Quicken or Quicken 2007 throughout the rest of the tutorial

6 1. Introduction to text conventions, keyboard shortcuts and desktop setup Text Conventions Throughout this tutorial, you will notice some text is printed differently than the surrounding text. This text requires special attention as it generally signifies an action to be performed. If, for instance, we want you to type the words My programs, you will see this: Type My programs. Buttons that you need to click, selections that you need to make, or text that is referenced in a document on screen appear in bold text: Click the Customize button. Select Expense. File and folder names are referenced in italics and use the case conventions for the operating system in which you are working. For example, a computer file name might appear like this: Document1 Keyboard and keyboard combinations that you may need to apply appear like this: Press [ENTER]. Press [CTRL+A]. A keyboard/mouse combination such as [CTRL+A] means to press and hold down the first key (Control) while pressing the second key (A), then release. Any text that appears within parentheses refers to steps that may be necessary depending on your computer s settings or an alternate approach. Parenthetical steps appear like this: (Click the Close button.) Titles of screens, programs, etc. will be underlined such as the name of the following Quicken screen: Create Quicken File Notes and helpful hints are in italics and sometimes enclosed in parentheses, for example: Note: The note may appear such as this. (The note may appear such as this.) Keyboard Shortcuts and Desktop Setup You may select an item from Quicken in one of four ways: a. Using the mouse, left-click (click using the left button of your mouse) on specialized buttons in the toolbar. b. Using the mouse, move the cursor to the appropriate line in a drop-down menu and leftclick

7 c. Use a shortcut key by simultaneously pressing [Ctrl] or [Ctrl+Shift] and the designated letter. For example, [Ctrl + S] takes you to the split transaction screen. d. In the check register, simultaneously press [Alt] and the letter key underlined in the word or phrase. Desktop navigation options are as follows: Drop-Down Menu Bar. Using the mouse, move the cursor to the appropriate item in the Drop-Down Menu Bar (also called Main Menu) and left-click. Drag the mouse to select the menu option. 2. Toolbar. Toolbar buttons provide quick access to options such as returning to the previous screen (Back button), accessing the Internet (Update button) for stock quotes and news or the Quicken website. 3. Account Bar. The Account Bar allows easy access to accounts by center. The centers display account summary information in one easy-to-read place. You can customize what appears on the centers by deleting, rearranging, or adding new components. You can also create different views of the center. When an account is opened, the account register occupies the desktop. 4. Services Bar. Links are provided to online updates and financial information

8 When you become more familiar with Quicken 2007, you may want to try using the shortcut features. We will typically use the Drop-Down Menu Bar for navigation. Press [Tab] to move forward to the next field in Quicken. Press [Shift+Tab] to move backwards one field. The step-by-step instructions that follow will not note every [Tab] needed to move through screens. Later in this tutorial, we will use the sample files provided on the Quicken Sample Files compact disc (CD) to review some of Quicken s features. For these files to run efficiently, copy them to the hard drive of your computer. Place the CD labeled Quicken Sample Files into the appropriate computer drive. Open the Windows Explorer program by clicking Start [Windows Key + E] All Programs (You may need to click Accessories.) Windows Explorer From the options on the left, double-click My Computer 07 Quicken Sample Files (D:) File names AssetAcct, Farm Categories, and LOND07 (with several file extensions) should be displayed on the right. From the taskbar at the top of the program, click Edit Select All (The shortcut for Edit, Select All is to press [Ctrl+A]). Then, click Edit Copy Note: The shortcut for Edit, Copy is to press [Ctrl+C]. You will not be able to use this particular command for copying within the Quicken program, as it is the shortcut for opening the Categories List. Now, click Local Disk (C:) (from the menu on the left) From the Drop-Down Menu Bar, click File New Folder To name the folder, type Workshop Files and press [Enter]. Open the Workshop Files folder by double-clicking it. Then click Edit - 6 -

9 Paste (The shortcut for Edit, Paste is to press [Ctrl+V]). Click X in the top right corner to close the window. You have completed the task of copying the 07 Quicken Sample Files to your computer. 2. Setting up a File and Express Setup Note to previous Quicken Users: Quicken 2007 will automatically uninstall previous versions of Quicken. You should make a backup of all data files before installing a new version! Follow the installation instructions as prompted after inserting your program CD or downloading Quicken from the Intuit website. If you have not yet installed the Quicken 2007 program on your computer, you must do so before you proceed. If you see the following screen, (for tutorial purposes) please select I am new to Quicken even if you are already a Quicken user. Then click Next. If you see the following screen, select I want to choose a different file name and location

10 Then click on Next. Or If you see the next screen, choose Start over and create a new data file. Next Or If you see this screen, select New Quicken File - 8 -

11 OK Or If you see this screen, you need to select: File New Through one of these paths you should now see a Create Quicken File screen. We do this to get everyone on the same page, in preparation for setting up our sample file. Setting up a file Just as a file cabinet can contain family and farm financial information, one Quicken computer file can contain information about both the farm and family finances with income and expenses recorded in different accounts (checking, credit card, etc.). Reports can be developed for all accounts, by individual account, or by class if you specify classes when you enter transactions. We will use classes to represent the different enterprises of our farm (for example, Wheat, Stockers, Overhead, and Family Living). This tutorial will familiarize you with the basic functions you may use in Quicken

12 Note: Quicken by default saves your data in a file named Qdata in the Quicken folder. However, you can create a unique folder and file name that you choose. To select the directory in which you want to save the new file, click the small down arrow near the top center of the Create Quicken File screen. You will see a drop-down list of folders that are stored on your computer. We will use the hard drive to create and store our new file. From the drop-down list of folders, click Local Disk (C:) Locate (within the large white area of the window) and double-click on the folder workshop files to open it. Type your name where yourname is shown in the box above, next to File name:

13 Click OK. You have completed setting up your data file. Quicken Express Setup When you start a new Quicken file the Express Setup will automatically open. Unlike the guided setup in some previous versions this one asks fewer questions and does not allow you to reopen it later if you Skip Setup. However, you can still have the ability to set up accounts or other features of the Express Setup in a different fashion later. Next Step (bottom right corner). The next screen helps you to customize your file

14 Marking options at the bottom of this screen allows Quicken to develop the default categories to be included in your category list. Some of these include, categories for married people (IRA contribution spouse, salary spouse, etc.), categories for those with children (childcare), categories for homeowners (mortgage payment, property tax, etc), categories for rentals and royalties (rents received, repairs, etc.), and categories for use with a small business (consulting, licenses and permits, etc.). The selected category types are merged into a customized list for your use. Examples of the category lists are in the lavender section of this tutorial. When completed, click Next Step. You will now be able to set up accounts for this file. This would be a good time to sketch out a list of the accounts you might want to set up for your farm and home. Types of accounts include checking, savings, investment, credit card, brokerage, IRA or Keogh, 401(k) or 403(b), individual mutual fund, house, vehicle, other asset, and liability accounts. The Express Setup now guides you to set up your primary checking account. For this tutorial we will enter all account information manually. For some financial institutions you can have online setup. However, there is no way to demonstrate this option and your institution may require different signup requirements. Type 1 st National Bank (Quicken will use Quickfill as you type. Delete any letters that appear after 1 st National Bank by highlighting them and pressing [Delete] twice or put the cursor at the end of the phrase and backspace over extra words). Click Next Step

15 In this screen, select None of these. Use the following name: to add your financial institution. Verify that the name shown is 1 st National Bank. Next Step Setup Checking Account Enter information for your primary checking account. It is preferable to use a current bank statement. If you aren t sure what the balance is, leave it a zero and enter the beginning balance later. Next Step

16 Add Paychecks/Income Paycheck earnings and deductions can be tracked using Quicken Although we will not set it up now, you can use our Set up Paycheck instructions to do so later. Click Next Step Add Credit Cards and Bills Here is where you can enter credit cards and recurring bills. We will cover this information later so we will skip this

17 Click Next Step. Summary Here you can review the information you have entered to this point. You can add additional accounts or edit the information you entered. (Even if you find errors later on, it can be corrected.) Click Next Step Note: If a transaction is post-dated, the amount will not affect the current balance until that date arrives. Finish

18 You will be directed to the Quicken Home page. 3. Importing a farm income and expense category list We are going to postpone adding our other financial accounts to add categories that will be used for our reporting purposes. After the category list is established, we can add our accounts without pause. Spend some time thinking about the kinds of income and expenses that you want to track. In the beginning, you may want to start with categories needed for tax reports or match an existing chart of accounts or record system. Start simple and add new levels of detail as needed for management purposes. A printed list of Quicken categories and descriptions built to match income tax Schedule F is included in your handouts (Farm Categories). This list can be imported into Quicken from a file named Farm Categories on the CD-ROM that you received with this tutorial. We will now import the farm income and expense categories to our current file to facilitate farm financial record keeping and tax reporting. The resulting category list will be a merger of the farm income and expense categories and the Quicken default category list(s) selected as you completed the Express Setup questions. The Farm Categories file is located in the C:\workshop files folder. From the main menu, click File Import QIF File

19 Complete the import screen as follows: Click Browse to locate the Farm Categories file in the C:\workshop files folder. Use the mouse or space bar to select Category List and deselect the other items. Click Next. Wait while categories are imported. A message stating items have been successfully imported appears. Click Done. Click Tools in the drop-down menu line at the top of the Quicken window and select Category List to verify that your category list now contains CCC Loans Forfeited, CCC Received, Co-op Distributions, and other farm categories in addition to the original default list. Scroll through the list to become familiar with the names and descriptions of the categories. If it is not already checked, click in the box to the left of Display tax information to reveal the tax information for the categories. When creating new categories, it is necessary to designate items that are tax-related and if possible, select the correct tax form and line. Next

20 Close the category list by clicking X in the upper right corner of the Category List window. 4. Setting up new categories and deleting unnecessary ones The category list is shared (accessible) across all accounts within your Quicken file. The farm income and expense category list (Farm Categories) provided to you is by no means sacred. It is intended to serve as a beginning point for your own personalized list. You may add, delete, or modify the list to make it useful for you. As an example of how to add a category, let's add a category for expenses associated with subscribing to an Internet service provider for checking the markets. Access the category list by clicking Tools Category List Click New (bottom left corner of the Category List window) Let s assume that this is a legitimate farm expense category, that is, something we will want to associate to a Schedule F tax line item. For schedule F categories, it is best to complete this screen in the following order: 1. Enter the name, AOL. 2. Select Expense. 3. Select the Tax-related box. (This allows transactions associated with this category to appear in tax schedule and tax summary reports.) 4. Select Extended line item list (Schedule F line items will now be made available in the Tax Line Item box.)

21 5. Select Schedule F: Other farm expenses from the Tax line item: drop-down menu. (You will have to scroll through a long list. Schedule F items are listed income items first, followed by expense items.) OK The category has now been added as you can see if you scroll down to the expenses in the category list on your screen. Don't stress about making mistakes in setting up categories you may rename or edit categories as needed. If you need to make corrections, go to the Category List and highlight the category name and click Edit. Changes made to an existing category are immediately reflected in previously recorded transactions. You can easily remove categories that aren t needed. Move the cursor to the Bonus (Bonus income) category. With the category name highlighted, you can delete by clicking the Delete button in the bottom right of the Category List window. A Delete Category screen will appear warning you that you are about to delete a category. Click OK Note: If you delete a main category the linked subcategories will be deleted simultaneously

22 5. Setting up subcategories for reporting purposes Setting up subcategories is similar to setting up categories; however, it adds a second level of detail. Our fertilizer purchase records, for example, can track and lime individually rather than as one lump sum in the Fertilizer & Lime category. Note: Subcategories should only be used for detailed information that is needed for financial reporting or management decisions. Otherwise, use the memo field or notes for recording data needed as a note or reminder. In the category list window, click New (bottom left). Note: If a subcategory has different tax attributes from the main category, select the correct tax line item. For example, if mortgage interest is the category, subcategories for farm mortgages and personal mortgages would be attached to different tax schedules, Schedule F and Schedule A, respectively. Click OK. Repeating the same procedure as above, add another subcategory for OK Close the category list by clicking the X in the upper right corner of the Category List

23 window. 6. Setting up classes so enterprise reports can be generated By using classes, you can add important report possibilities. We highly recommend using classes as a means to sort income and expenses by farm enterprise. Then you will be able to print reports summarizing income and expenses for specific components of the farm operation, for example, the cow/calf, wheat, or alfalfa enterprise. When you imported the farm income and expense categories, several classes Cow/Calf, Family Living, Hay, Milo, Oats, Overhead, Stocker, and Wheat were also imported. Let s add an alfalfa class. From the main menu, click Tools Class List (or press Ctrl+L) New (located in the upper-left of the Class List window) Click OK. Note: A description may be added. Copy Number (Optional): is used if you are filing multiple copies of a particular tax form because you have more than one business. Add any other classes needed. Recording a class along with a category for a transaction more fully documents how the income was earned or how the expense item was used

24 Close the Class List by clicking on the X in the upper right corner. 7. Adding additional accounts (savings, cash, liabilities) Now we will add the remainder of our current accounts for savings, cash, and several loans. To add an account go to: Tools Account List Click on the Manage Accounts tab. (You can add accounts from the View Accounts tab, but this will give you a better understanding of how accounts are grouped in Quicken). We have one savings account for emergencies and saving for capital purchases. Click on Add Account in the upper right corner of the Account List. Type 1st National Bank as you did when you entered the Checking account. Click Next. Select None of these. Use the following name: 1st National Bank. Click Next. In the next screen you will select the radio button next to Savings under Cash Flow

25 Next Name this account: Savings. Click Next. Enter the ending statement date as 1/9/07. Enter the ending balance as Click Done. If you were taken to the Savings account register, you can click on the Account List button at the lower left of the register window to continue to add accounts. Now, add a cash account to the list by clicking the Add Account button. This account is to keep track of where you spend your cash. Next Select the radio button next to: This account is not held at a financial institution. Select Cash Name this account: Cash Click Next. Enter the statement date as 1/1/07 Enter the ending balance as

26 Click Done. Go back to the Account List. Note: We demonstrate how to use a credit card account in the line of credit instructions. See the line of credit instructions at the end of the tutorial. Note: If you would like more information on how to setup and manage your investment accounts, please refer to the investment instructions by clicking Help and then Contents on the Quicken drop-down menu bar; then click Investing on the Quicken Help screen. Basic investment instructions can be found at our website: We will record only liability accounts in this section as the balance sheet features in Quicken are not very sophisticated (for example, you cannot calculate and record depreciation). However, users may want to evaluate Quicken s features for tracking net worth for themselves (see Balance Sheet instructions on page 109 for more information). Even if you do not use Quicken for maintaining a balance sheet, you may still want to amortize and/or record loans using the liability account features. If you do use Quicken for maintaining a balance sheet, use the appropriate asset/debt accounts and be sure to update asset values periodically. If tracking assets at cost basis, use purchase price minus adjustments for depreciation as the beginning balance. The Petes have two loans outstanding on January 1, 2007: a pickup loan for $1,455 and a land loan for $73, The pickup loan will be paid off this year so we will not amortize it. The land note at origination was for $94,936 to be repaid over 15 years at 10.5% interest with annual payments (9 years of payments remain). To set up a liability account, click the Add Account button. This account is held at the following institution: 1st National Bank Select the check box: This is a loan account. Click Next. Name this account: Pickup Note Click Next. Enter 1/1/07 as the date with which you want to start. (Date to begin tracking account in Quicken.) Enter as the amount you owe as of 1/1/07. Note: Enter Optional Tax Information is for tax deferred accounts, such as IRAs, 401ks and Keogh Plans that need to have transfers in and transfers out recorded on different tax lines

27 Click Done. A screen entitled Quicken 2007 for Windows will pop up asking if you would like to set up an amortized loan to be associated with this account. Click No. (We will not amortize this loan since it will be paid off with one payment in the next few months.) We will now set up the land loan. From the Property and Debt screen, click the Add Account button. This account is held at the following institution: Federal Land Bank Select the check box: This is a loan account. Click Next. Name this account: Land Note Click Next. Enter 1/1/07 as the statement date. Enter as the ending balance. Click Done. The Quicken 2007 for Windows screen will pop up to ask if you would like to set up an amortized loan to be associated with this account. Click Yes. We will amortize this loan as there are 9 years remaining. A Loan Setup screen will pop up. Click the Summary tab (at the top of the window to the right of Easy Step) and enter the information in the following three screens if not already there:

28 Next Here we enter the information about the origination of the loan. Next

29 Click Calculate in the Payment section if you do not have your Payment Amount. Quicken will calculate the payment amount (principal and interest only). Done OK

30 Note that a payment amount, $13,039.18, has been calculated and now appears in the Loan Setup window. Click Done again to accept the estimate. A Set Up Loan Payment screen appears to prompt you to specify details about the payment. Enter the additional information. We will use one of the farm categories and class that we imported earlier. Category, subcategory, and class should be entered exactly as Interest Expense:Farm Interest Mortgage/Overhead (this notation will be explained in detail later as we practice entering transactions). Note: If your payment includes the escrow of tax payments, you can add this amount by clicking on Edit and assigning a category, subcategory, and class for the additional amounts to be added

31 Click on Payment Method button to verify how the transaction is being saved as a scheduled transaction. You can change the settings to suit your situation. OK The loan payment requires a split transaction, that is, the principal paid is applied to the loan balance in the appropriate loan liability account (Land Note), while interest paid is recorded in the checking register as an interest expense (Interest Expense:Farm Interest Mortgage). We will demonstrate a payment transaction later. OK to close the Loan Payment window. A window will open asking if you would like to create an asset account associated with the loan account you just set up. Click No, then OK. Note: If you want to create a balance sheet in Quicken and have an asset account for each piece of property, you would respond Yes. If you choose No, you can always add the information later. See the balance sheet instructions for more information. You might receive a reminder that the loan is now a scheduled transaction OK Special Note: Line of credit notes are best handled as credit card accounts in Quicken. See the line of credit account instructions for more details

32 8. Entering transactions data using the categories, subcategories, and classes specified Payments, transfers, and deposits are generally referred to as transactions in Quicken. We will begin by entering payments and deposits in the checking account. Go to the checking register by clicking on Checking under Cash Flow Center (on the left sidebar). Each field in the register is described below: The name of the account register that is currently open is displayed here. In this case, we are viewing the Checking account register. 2. The Date appears in the first column of the register. The Quicken default is the current date. Simply type the date, or click on the calendar icon and highlight the correct date, or press the [+] or [-] keys to select the correct date. 3. The check Number (if applicable) may be typed in the second column. If the checks are in consecutive order, you may simply press the [+] or [-] key on your keyboard to increase or decrease the check number by one, respectively. Entering DEP for a deposit automatically moves the cursor to the Deposit column when entering the amount. It can also signify an EFT (Electronic Funds Transfer), ATM (Automatic Teller Machine) transaction, or TXFR (Transfer) to another account. 4. The name of the Payee (for payments) and the payor (for receipts/deposits) goes on the top line of the third column. 5. The name of the category, subcategory, and/or class goes on the line below the name of the payee. To sort reports by category and class, you must specify the category and class for each transaction. The format for labeling a transaction is Category:Subcategory/Class. The " : " after the category name signals that a subcategory will follow. The / after a category or subcategory signals that a class name will follow. Thus, at the Category

33 prompt for a transaction involving the purchase of lime for the wheat enterprise, you could type Fertilizer & Lime:Lime/Wheat where Fertilizer & Lime is the category, Lime is a subcategory, and Wheat is the class name. Here, the class is used to denote an enterprise for which cost and return information is of interest. 6. A payment made to someone else is recorded in the Payment column. If a payee name has been used previously, Quicken can recall the previous transaction amount (Quickfill). To enter the correct amount, highlight and type in the numbers. Credits or deposits to the account are recorded in the Deposit column. 7. The Split button allows you to divide payments and deposits among more than one category. An example is demonstrated later in the instructions. 8. Click on the paperclip icon to insert attachments such as check images, bills, or other graphics. You can also add flags or notes using this button. Clicking on the star icon takes you online to Zipingo, a business rating website. 9. If you wish to add further details about the transaction, you may enter it in the Memo field. 10. Click this button if you wish to shrink the reminder/online banking section of the window. To enlarge and only view the register, click on F11. Enter the transaction date, check number (if applicable), payee, payment/deposit amount, and category/class. You may also record a memo regarding the transaction. Memos are useful for recording quantities, signaling the potential need for a 1099, and noting more detail about the transaction that might be beneficial for filtering reports. Remember to use the [Tab] key to move from one field to another. Practice a sample entry: Date: 1/4/07 Num: 1001 Payee: Yukon John Deere Payment: 20 Category: Repairs and Maintenance/CowCalf Memo: Winch on pickup Once you type in a letter, Quicken will complete the word (Quickfill) by recalling from an internal list. Once enough distinguishing letters are typed to get the correct category name, you can type a / (slash) and enter the first letter of the class name. Again, once enough distinguishing letters are typed to get the correct word, press [Tab] to move to the next field. When you have finished typing in the information, click the Enter button on the screen or press [Enter] on your keyboard. Note: [Tab] is the default used to move between fields. If you see a pop-up window asking if you want to use the [Enter] key, you can decide which is most comfortable. If you choose to use [Enter], you will have to use [Ctrl + Enter] or use your mouse to click the Enter button on the screen to record the transaction. Often a transaction with a particular company or payee will include items that should be allocated to different categories and classes. In this case, you will split the transaction as needed. For instance, the co-op bill might include fuel used in the Wheat enterprise as well as feed used in

34 the Cow/Calf enterprise. First, enter the total amount of the check: Date: 1/4/07 Num: 1002 Payee: Klondike Co-op Payment: 421 Now, click Split (on the right of the line, or press [Ctrl+S]). Type in the following responses: Click OK after entering split information; then press [Enter] to record the transaction. If you are writing a check to a business or individual for whom an earlier check was a split transaction, Quicken assumes that you want to use the same format as before. Let s say that you now want to enter a check to the Klondike Co-op, which is for lime only. Let s practice this: Date: 1/5/07 Num: 1003 Payee: Klondike Co-op Payment: 355 Click the red X near the middle of the screen

35 Click Yes. Enter in the category field, Fertilizer & Lime:Lime/Wheat. Press [Enter]. (You may need to press [Enter] a second time.) Review split transactions, particularly those where the amount allocated to different categories varies each time. Deposits, as well as checks written to discount stores or the co-op, are good candidates for mistakes. If you don t clear all previous amounts and categories when you enter a new transaction, you can end up with unintended amounts in categories. To eliminate the need to clear split lines for payees that have varying payment/deposit amounts and attached categories, you can create a memorized payee without any other information. Tools Memorized Payee List [Ctrl + T] Then click New

36 Complete only the Type of Transaction and the Payee. Leave the rest of the form blank. OK Review the entry in the Memorized Payee List. A padlock icon should appear in the Lock column. If it is not locked, click in the Lock Column for the payee. This signals Quicken to use the locked transaction for Quickfill instead of the most current transaction used, which is the default. Likewise, you could create a memorized transaction for bills that have the same category or split category detail to be used frequently. Close the Memorized Payee List. Now, to record a deposit... Let s say that our farmer had some hay in storage and recently sold some to a neighbor, Paul Bunyan. Go to a blank line and enter Date: 1/11/07 Num: DEP (This will help ensure that your entry is made in the deposit column after you enter the payee name and [Tab]) Payee: Paul Bunyan Deposit: 800 (If you didn t enter DEP in the Num column, be sure to [Tab] over so the cursor is in the Deposit column!) Category: Raised Sales:OtherProducts/Alfalfa Memo: 8 tons hay Press [Enter]. Now begin entering the transactions for our farmer using the printed transaction register (gold sheet on page 52) from the checking account. Begin at the top of the sheet and practice recording transactions until you feel comfortable with the process. 9. Recording Loan Payments Let's assume it is now August 2007 and time to record a payment on the amortized land loan. Click

37 Property & Debt (from the drop-down menu at top) Loans [Ctrl+H] If the Land Note is not the loan in view, click Choose Loan and select it. Click the Make Payment button. You are questioned, Is this your regularly scheduled payment or an extra payment to this loan? Click Regular. Complete the screen as shown. You can view the amounts applied to principal and interest by returning to the land note payment line in the checking register and looking at the splits. Click Checking (at the left). Highlight the Federal Land Bank transaction by clicking anywhere within the transaction. Click Split (or press [Ctrl+S]) to open the Split Transaction window, or you may simply hover the cursor over - -Split- -, which will show a pop up window with the split information. You will see that Quicken has recorded the appropriate amounts to principal ($5, to the Land Note) and interest ($7, to Interest Expense:Farm Interest Mortgage). If you opened the Split Transaction window, click OK to leave the split. To switch from the Checking account to the Land Note account and view the principal payment applied to the outstanding loan balance, highlight the Federal Land Bank transaction right-click (click the right button of your mouse). Select Go To matching transfer and click in Land Note account. You will see a Balance Adjustment entry was made for earlier principal payments. The principal portion of the current payment from the checking account has been applied to the loan balance. (If you get a message that the transaction is not a transfer, you didn't click Enter to record the payment information and it was not posted.) Right-click the Federal Land Bank transaction and select Go To matching transfer to return to the Checking account. Click OK if the Split Transaction window appears

38 10. Creating reports to summarize the data you have entered. Let s look at some sample reports that you might want to use in monitoring your financial performance: Cash flow summaries, including one by class/enterprise (which also gives the overall total) A summary of payments made to a payee A tax schedule report Because you may have entered only a few transactions in this file, we will close the file with your name and open the sample file, LOND07. Click File Open Click the small arrow next to the Look in: box to reveal the drop-down list. Click Local Disk (C:). Double click workshop files. Click LOND07. Click OK. Click Reports (from the drop-down menu bar) Banking Cash Flow Note: You may receive a message that data is not available. Click Yes to change the date range. Select Last Year as the date range and Don t Subtotal in the column field. (The fields are circled in the screen below). This tutorial is written as though it is 2007; however, if you are using this in 2006, select Custom Date instead of Last Year and enter the dates as follows for the reports. Custom Date from: 1/1/2006 to: 12/31/

39 Scroll through the report to view individual inflow and outflow items as well as totals using the arrow keys and [Page Up] or [Page Down] keys on your keyboard. A copy of the report is included in this tutorial on page 53. The annual cash flow statement provides a summary of cash income and expenses for the last year using the categories associated with individual transactions. The cash flow report documents sources and uses of funds and can be useful in developing budgets for future years. Perhaps your lender requires a monthly cash flow report. Click the Customize button to edit the Title: London Monthly Cash Flow and Column: Month

40 OK If you think you might want to use this same report settings again, you can memorize its features by clicking Save Report (a disk icon in the taskbar). Type Monthly Cash Flow Description: by category Click on Create Folder Type new folder Name: Lender reports OK Click OK. Note: If you select Save report history, you can track the permutations that resulted in this report. Now, let's develop a cash flow report by class (farm enterprise). You may want to change the title of the report. Click Customize at right

41 Type the Title, London Cash Flow by Enterprise and select Class for the Column. Click OK. A report showing a summary of cash inflows and outflows by class (farm enterprise) for last year appears. Review it to see the cash generated and used by the cow-calf enterprise relative to the wheat enterprise and to note totals by category for family living expenses (see report on page 57). You may memorize this report for future use by clicking the Save Report button. Type Report name: Cash Flow by Class Create Folder New folder name: Farm reports OK Check Save report history Click OK. What if you want a summary of payments made to the Yukon John Deere dealer during the

42 year? Click the Customize button. Type the title, Deere Transactions Summary. Click the Categories tab. In the Matching column at right, Payee should read Yukon John Deere. (The spelling must be the same in all transactions or some transactions will not be found. You can select from the payee list by clicking the arrow at the right.) Click OK. You will now have a summary of expenses at the Yukon John Deere dealership by category and enterprise (copy on bottom of page 59). Click the X to close the window (or press [Esc]) to leave the Deere Transactions Summary. Don t Save All of the previous reports have been examples of cash flow reports. We will now switch to a different kind of report, the tax schedule report. When you begin gathering information to take to the tax preparer, consider the differences between the tax schedule and tax summary reports. Tax schedule reports list all transactions (or splits of a transaction) assigned to a category that is attached to a specific tax form or schedule. Tax summary reports will include transactions with categories that have been noted as tax-related, whether or not a specific tax schedule has been assigned. Click Reports Tax Tax Schedule Select Last Year as the date range (or, select Custom date from 1/1/06 to 12/31/06). This report lists every transaction assigned to a category attached to a tax schedule. To prepare a report showing totals only (not individual transactions), click Customize. Create a Title: Tax Schedule Totals Only. In the Show section (as circled in the center of

43 the Customize Tax Schedule Report screen below), select Totals Only. Click OK. You now have a summary of the information needed for tax reporting purposes by schedule. In our example, the report begins with Schedule A (deductions including charitable contributions), Schedule B (interest income), and continues to Schedule F (farm income and expense items) and ends with a W-2 (wages and salary) summary. Exit the Reports window by clicking on the X in the upper right corner. You can choose whether to save the report or not. 11. Viewing a graph of your income and expenses It's said that a picture is worth a thousand words. Quicken makes it easy for you to get a quick picture of income relative to expenses, as well as income and expense composition. Click Reports Graphs Income and Expense by Category Select the date range, Last Year (or select Custom Date from 1/1/06 to 12/31/06) and Month for the interval

44 You will see a bar chart showing monthly income and expenses. By double clicking on an individual bar you can see the categories, amounts, and percentage of the total for that month. Click X to close the Expense Comparison window. As with the reports, you may memorize useful graphs. Click the Save Report button. Click on Create Folder, Name: Personal reports

45 Enter the information as shown. OK To view a chart showing how money has been spent throughout the year, click Reports Spending Spending by Category Select the Date range, Last Year. To focus on farm expenditures, click on Customize Title: Farm Spending by Category Click on the Classes tab Remove the check mark on Family Living. OK

46 Double click on the Income bar to see the categories by descending amount/percentage spent (upper right corner). Click the X to close the Income Comparison Balance window. Click the X to close the Spending window. Don t Save To view your saved reports and graphs, click Reports Reports and Graph Center (or My Saved Reports & Graphs) Select the Type of report from the My Saved Reports (right column) Select the specific report or graph

47 Show Report Close the Report. 12. Backing up your data Quicken automatically saves the data that you have entered in the file on which you have been working as you enter transactions. However, you will want to regularly save a backup copy on a floppy disk, zip disk, or compact disc (CD) in the event of hardware problems. Instructions for backing up your data on a CD are given on pages 104. Since we copied the LOND07 file to the C: drive earlier and have been working from that file, we will back up our data on the D: drive. To back up your data, be sure your CD is in the computer and complete the information as indicated on the following screen. You can utilize the browse buttons to select both the file you want to back up and the backup location. Select File Backup (or press Ctrl+B)

48 Click OK. Note: Clicking the Add date to file name attaches the date to the file name for easier reference. This is not a good idea if you are using removable data storage (zip, thumb drive) as they may not be able to handle a file name of more than 8 characters. You should receive a message that the file has been backed up successfully. Click OK Now, click File Exit (This closes the Quicken program.) Note: It would be wise to back up your information on multiple sets of disks and back up often. Alternate the disks that you use so that you minimize the potential loss of information due to faulty disks CONGRATULATIONS! You have now completed the basic Quicken workshop for farm financial records! Hopefully, you will want to apply your newly learned skills to your own farming operation. Refer to this tutorial and the Quicken manual for assistance in setting up your own record keeping system

49 Category Lists Standard Category List Category Description Tax Tax Line Item Income Bonus Bonus Income T W-2:Salary or wages, self Div Income Dividend Income T Schedule B:Dividend income Gift Received Gift Received Interest Inc Interest Income T Schedule B:Interest income Invest Inc Investment Income T Other Inc Other Income T Form 1040:Other income, misc. Salary Salary Income T W-2:Salary or wages, self Tax Refund State/Local Tax Refund T 1099-G:State and local tax refunds Unemployment Inc Unemployment Compensation T 1099-G:Unemployment compensation Expense Auto Automobile Expenses Fuel Auto Fuel Insurance Auto Insurance Loan Auto Loan Registration Auto Registration T Schedule A:Personal property taxes Service Auto Service Bank Charge Bank Charge Cash Misc Cash Charity Charitable Donations - Cash T Schedule A:Cash charity contributions Charity-Non Cash Charitable Donations - Non Cash T Schedule A:Non-cash charity contributions Clothing Clothing Computer Computer Credit Card Payment Credit Card Expenses Dining Dining Out Education Education Entertainment Entertainment Gifts Given Gift Expenses Groceries Groceries Home Repair Home Repair & Maint. Household Household Misc. Exp Insurance Insurance Disability Insurance Disability Insurance Home Insurance Home Insurance Life Insurance Life Insurance Interest Exp Interest Expense IRA Contrib IRA Contribution T Form 1040:IRA contribution, self Medical Medical Expense T Schedule A:Medicine and drugs Doctor Doctors, Dentists, & Hospitals T Schedule A:Doctors, dentists, hospitals Medicine Prescriptions T Schedule A:Medicine and drugs Misc Miscellaneous Personal Care Personal Care Recreation Recreation Expense Rent Housing Rent

50 Standard Categories continued Category Description Tax Tax Line Item Subscriptions Subscriptions Tax Taxes Fed Federal Tax T W-2:Federal tax withheld, self Medicare Medicare Tax T W-2:Medicare tax withheld, self Other Misc. Taxes SDI State Disability Insurance T W-2:Local tax withheld, self Soc Sec Soc Sec Tax T W-2:Soc. Sec. tax withheld, self State State Tax T W-2:State tax withheld, self Utilities Water, Gas, Electric Cable TV Cable TV Garbage & Recycling Garbage and Recycling Gas & Electric Gas and Electricity Internet Internet Telephone Telephone Expense Water Water Vacation Vacation Expenses Lodging Motel/Hotel Costs Travel Transportation Expenses Married Categories Category Description Tax Tax Line Item Income Salary Spouse Spouse's Salary Income T W-2:Salary or wages, spouse Expense IRA Contrib Spouse Spouse's IRA Contribution T Form 1040:IRA contribution, spouse Tax Spouse Spouse's Taxes Fed Federal Tax T W-2:Federal tax withheld, spouse Medicare Medicare Tax T W-2:Medicare tax withheld, spouse Other Misc. Taxes T SDI State Disability Insurance T W-2:Local tax withheld, spouse Soc Sec Soc Sec Tax T W-2:Soc. Sec. tax withheld, spouse State State Tax T W-2:State tax withheld, spouse Children Category Category Description Tax Tax Line Item Expense Childcare Childcare Expense T Form 2441:Qualifying childcare expenses Home Owner Categories Category Description Tax Tax Line Item Expense Homeowner's Fees Homeowner's Fees

51 Home Owner Categories continued Category Description Tax Tax Line Item Housing Housing Mortgage Int Mortgage Interest Bank Mortgage Interest - Bank T Schedule A:Home mortgage interest (1098) Individual Mortgage Interest - Individual T Schedule A:Home mortgage int. (no 1098) Mortgage Payment Mortgage Payment Tax Taxes Property Property Tax T Schedule A:Real estate taxes Rents and Royalties Categories Category Description Tax Tax Line Item Income Rents Received Rents Received T Schedule E:Rents received Royalties Received Royalties Received T Schedule E:Royalties received Expense Rental Expenses Rental Expenses Advertising Rental Advertising T Schedule E:Advertising Association Dues Homeowners Association T Schedule E:Other expenses Dues Auto and Travel Auto and Travel T Schedule E:Auto expense Cleaning and Maintenance Cleaning and Maintenance T Schedule E:Cleaning and maintenance Commissions Rental Commissions T Schedule E:Commissions Insurance Rental Insurance T Schedule E:Insurance Legal-Prof. Fees Legal & Prof. Fees T Schedule E:Legal and professional fees Management Fees Management Fees T Schedule E:Management fees Mortgage Interest Expense Mortgage Interest Expense T Schedule E:Mortgage interest expense Other Expenses Other Expenses T Schedule E:Other expenses Other Interest Expense Other Interest Expense T Schedule E:Other interest expense Repairs Rental Repairs T Schedule E:Repairs Supplies Rental Supplies T Schedule E:Supplies Taxes Rental Taxes T Schedule E:Taxes Utilities Water, Gas, Electric T Schedule E:Utilities Business Categories Category Description Tax Tax Line Item Income Consulting Consulting Income T Schedule C:Gross receipts or sales Finance Charge Finance Charge Income T Schedule C:Other business income Gr Sales Gross Sales T Schedule C:Gross receipts or sales Other Inc, Bus Other Business Income T Schedule C:Other business income Services Service Income T Schedule C:Gross receipts or sales Expense Ads Advertising T Schedule C:Advertising Bad Debt Bad Debt Expense T Schedule C:Bad debts from sales/services

52 Business Categories continued Category Description Tax Tax Line Item Car Car & Truck T Schedule C:Car and truck expenses Commission Commissions T Schedule C:Commissions and fees Discounts Discount Expense T Schedule C:Returns and allowances Dues and Subscriptions Dues and Subscription T Schedule C:Other business expenses Expense Employee Benefit, Business Employee Benefit Programs T Schedule C:Employee benefit programs Insurance, Bus Insurance (not health) T Schedule C:Insurance, other than health Int Paid Interest Paid T Schedule C:Interest expense, other Late Fees Late Payment Fees T Schedule C:Other business expenses Legal-Prof Fees Legal & Prof. Fees T Schedule C:Legal and professional fees Licenses and Permits License and Permits Expense T Schedule C:Taxes and licenses Meals & Entertn Meals & Entertainment T Schedule C:Meals and entertainment Miscellaneous, Bus Misc. Business Expense T Schedule C:Other business expenses Mortgage Interest, Business Mortgage Interest Paid T Schedule C:Interest expense, mortgage Office Office Expenses T Schedule C:Office expenses Pension and Profit-Sharing, Pension and Profit-Sharing T Schedule C:Pension/profit sharing plans Business Plans Postage and Delivery Postage and Delivery Expense T Schedule C:Other business expenses Printing and Reproduction Printing and Repro. Expense T Schedule C:Other business expenses Rent on Equip Rent-Vehicle,mach,equip T Schedule C:Rent/lease vehicles, equip. Rent Paid Rent Paid T Schedule C:Rent/lease other bus. prop. Repairs Repairs T Schedule C:Repairs and maintenance Returns Returns & Allowances T Schedule C:Returns and allowances Supplies, Bus Supplies T Schedule C:Supplies (not from COGS) Tax, Business Taxes & Licenses T Schedule C:Taxes and licenses Fed Federal Tax T Schedule C:Taxes and licenses Local Local Tax T Schedule C:Taxes and licenses Property Property Tax T Schedule C:Taxes and licenses State State Tax T Schedule C:Taxes and licenses Travel, Bus Business Travel Expense T Schedule C:Travel Utilities, Bus Water, Gas, Electric T Schedule C:Utilities Telephone, Bus Telephone Expense T Schedule C:Utilities Wages Wages & Job Credits T Schedule C:Wages paid

53 Farm Categories Category Description Tax Tax Line Item Income Capital Sales Capital Sales CCC Loans Forfeited CCC Loans forft/repaid T Schedule F:CCC loans forfeited or repaid CCC Received CCC loans received T Schedule F:CCC loans reported/election Co-op Distributions Co-op Distributions T Schedule F:Total co-op. distributions Crop Insurance Benefits Crop insur benefits,recd T Schedule F:Crop ins. proceeds received Crop Insurance Deferred Crop ins. proceeds-defrd T Schedule F:Crop ins. proceeds deferred Proceeds Custom Income Custom Hire Income T Schedule F:Custom hire income Government Payments Govt. program payments T Schedule F:Agricultural program payments Category Description Tax Tax Line Item Livestock Resale Resales of purch lvstk T Schedule F:Resales of livestock/items Stocker Steers Stocker steers T Schedule F:Resales of livestock/items Margin Income Margin Income T Schedule F:Other farm income Marketing Income Marketing Income T Schedule F:Other farm income Other Farm Income Other farm income T Schedule F:Other farm income Raised Sales T Schedule F:Sales livestock/product raised Grain Sale of raised grain T Schedule F:Sales livestock/product raised Livestock Sale of raised lvstk T Schedule F:Sales livestock/product raised Other Products Sale of Other Raised Prod T Schedule F:Sales livestock/product raised Expense Auto Automobile Expenses Farm Auto Farm car & truck T Schedule F:Car and truck expenses Capital Purchases Capital Purchases Chemicals Ag Chemicals T Schedule F:Chemicals Conservation Conservation Expense T Schedule F:Conservation expenses Consultants Consulting expense T Schedule F:Other farm expenses Custom Hire Custom Hire Expense T Schedule F:Custom hire expenses Dues Dues Farm Dues Farm Dues T Schedule F:Other farm expenses Employee Benefits Employee Benefits T Schedule F:Employee benefit programs Feed Purchased Feed purchased T Schedule F:Feed purchased Fertilizer & Lime Fertilizer and lime T Schedule F:Fertilizers and lime Freight and Trucking Freight T Schedule F:Freight and trucking Gas, Fuel, & Oil Gas, fuel, oil T Schedule F:Gasoline, fuel, and oil Insurance Insurance Farm Insurance Insurance (not health) T Schedule F:Insurance, other than health Interest Expense Interest Expense Farm Interest Mortgage Farm Mortgage Interest T Schedule F:Interest expense, mortgage Farm Interest Other Farm interest (not mort.) T Schedule F:Interest expense, other Labor Hired Labor hired T Schedule F:Labor hired Livestock Basis Basis lvstk for resale T Schedule F:Cost of resale livestock/items

54 Farm Categories continued Category Description Tax Tax Line Item Margin Expense Margin Expense T Schedule F:Other farm expenses Marketing Expense Marketing Expense T Schedule F:Other farm expenses Mortgage Interest Mortgage Interest Exp T Schedule A:Home mortgage interest (1098) Office Office Expenses T Schedule C:Office expenses Farm Office Farm office expense T Schedule F:Other farm expenses Other Expenses Other Expenses T Farm Expenses Other Other farm expenses T Schedule F:Other farm expenses Rent Farm Rent Land Land rental expenses T Schedule F:Rent/lease land, animals Livestock Rent animals, misc. T Schedule F:Rent/lease land, animals Vehicles, Machinery, Rent vehic, mach, equip T Schedule F:Rent/lease vehicles, equip. Equipment Repairs and Maintenance Repairs T Schedule F:Repairs and maintenance Seed and Plants Seeds and plants purch T Schedule F:Seeds and plants purchased Semen Semen & certificates T Schedule F:Vet, breeding, and medicine Storage and Warehousing Storage & warehousing T Schedule F:Storage and warehousing Subscriptions Subscriptions T Farm Subscriptions Farm subscriptions T Schedule F:Other farm expenses Supplies Supplies T Schedule F:Supplies purchased Taxes Taxes T Schedule C:Taxes and licenses Farm Property Taxes Farm property taxes T Schedule F:Taxes Farm Taxes Other Other farm taxes T Schedule F:Taxes Utilities Water, Gas, Electric Farm Utilities Farm utilities T Schedule F:Utilities Veterinary Veterinary fees & med T Schedule F:Vet, breeding, and medicine Breeding Fees T Schedule F:Vet, breeding, and medicine Medicine Livestock Medicine T Schedule F:Vet, breeding, and medicine

55 Register Transactions - Jan /1/2007 through 1/31/2007 Date Num Description Memo Category Amount 1/4/ Southwestern Bell phone Telephone/Family Living Payment* 1/4/ REC electric Utilities/Family Living Payment* 1/5/2007 DEP Julie London Salary Spouse/Family Living Deposit** split Tax Spouse:Fed/Family Living Tax Spouse:Soc Sec/Family Living Tax Spouse:State/Family Living Tax Spouse:Medicare/Family Living /5/ James Herriot Veterinary/CowCalf Payment* 1/5/2007 EFT Manulife Insurance/Family Living Payment* 1/7/ Yukon John Deere Tractor overhaul Repairs and Maintenance/Wheat 7, Payment* 1/10/ Alan's Pharmacy Medical/Family Living Payment* 1/10/ Care Clinic Medical/Family Living Payment* 1/15/ St. Andrew Church Charity/Family Living Payment* 1/15/ Mastercard [Mastercard] Payment* 1/19/2007 DEP Julie London Salary Spouse/Family Living Deposit** split Tax Spouse:Fed/Family Living Tax Spouse:Soc Sec/Family Living Tax Spouse:State/Family Living Tax Spouse:Medicare/Family Living /22/ Hometown Homeland Groceries Groceries/Family Living Payment* 1/31/2007 DEP Bill's Service Salary Salary Deposit** split Federal Tax Tax:Fed State Tax Tax:State Social Security Tax:Soc Sec (FICA) Medicare Tax Tax:Medicare Disability (SDI) Tax:SDI 0.00 *Expenses are recorded in the payment column **Expenses that are part of a split for a Deposit are entered as a negative number

56 London Cash Flow - Last Year INFLOWS Uncategorized 0.00 Capital Sales 10, Co-op Distributions Government Payments 3, Int Inc Raised Sales Grain 42, Livestock 38, TOTAL Raised Sales 80, Salary 4, Salary Spouse 18, TOTAL INFLOWS 115, OUTFLOWS Auto Service Other Auto TOTAL Auto Bank Chrg Charity Other Charity 1, TOTAL Charity 1, Christmas Clothing Consultants Dining Dues Farm Dues TOTAL Dues Entertain Feed Purchased 1, Fertilizer & Lime 10, Freight and Trucking Gas, Fuel, & Oil 6, Gifts Groceries 2, Home Rpair 1, Household Insurance Other Insurance 2, TOTAL Insurance 2, Interest Expense Farm Interest Mortgage 8, Farm Interest Other TOTAL Interest Expense 8, Labor Hired 4, Medical Other Medical TOTAL Medical Misc 10,

57 London Cash Flow - Last Year continued Other Expenses Farm Expenses Other TOTAL Other Expenses Recreation 3, Rent Land 8, TOTAL Rent 8, Repairs and Maintenance 8, Subscriptions Other Subscriptions TOTAL Subscriptions Supplies Tax Fed Medicare SDI 0.00 Soc Sec State TOTAL Tax Tax Spouse Fed 1, Medicare Soc Sec 1, State TOTAL Tax Spouse 4, Taxes Farm Property Taxes 6, TOTAL Taxes 6, Telephone Utilities Other Utilities 1, TOTAL Utilities 1, Veterinary Other Veterinary 1, TOTAL Veterinary 1, TOTAL OUTFLOWS 89, OVERALL TOTAL 26,

58 1/1/2007 through 2/28/2007 Using Budget 2007 London Monthly Budget Jan-Feb 1/1/2007-1/31/2007 2/1/2007-2/28/2007 1/1/2007-2/28/2007 Category Description Actual Budget Difference Actual Budget Difference Actual Budget Difference INFLOWS Capital Sales 0 10, , , , Co-op Distributions Government Payments TOTAL Raised Sales Salary 1, , , , , , , , Salary Spouse 1, , , , , , TOTAL INFLOWS 3, , , , , , , , , OUTFLOWS Auto Bank Chrg Charity Other Charity TOTAL Charity Christmas Clothing Consultants Dining Dues Farm Dues Other Dues TOTAL Dues Entertain Feed Purchased , , Fertilizer & Lime , , , , Freight and Trucking Gas, Fuel, & Oil Gifts Groceries Home Rpair Household Insurance Other Insurance TOTAL Insurance Interest Expense Farm Interest Mortgage Farm Interest Other TOTAL Interest Expense

59 London Monthly Budget Continued 1/1/2007-1/31/2007 2/1/2007-2/28/2007 1/1/2007-1/1/2007- Category Description Actual Budget Difference Actual Budget Difference Actual Budget Difference Labor Hired Medical Other Medical TOTAL Medical Misc Other Expenses Farm Expenses Other TOTAL Other Expenses Rent Land Other Rent TOTAL Rent Repairs and Maintenance 7, , , , Subscriptions TOTAL Subscriptions Supplies Tax Fed Medicare Soc Sec State Other Tax TOTAL Tax Tax Spouse Fed Medicare Soc Sec State Other Tax Spouse TOTAL Tax Spouse Taxes Farm Property Taxes TOTAL Taxes Telephone Utilities Other Utilities TOTAL Utilities Veterinary Category Description Actual Budget Difference Actual Budget Difference Actual Budget Difference Other Veterinary TOTAL Veterinary TOTAL OUTFLOWS 9, , , , , , , ,

60 London Cash Flow by Enterprise - Last year 1/1/2006 through 12/31/2006 Category Description OVERALL Unclassified Family Transactions CowCalf Living Overhead Wheat TOTAL INFLOWS Uncategorized Capital Sales 10, , Co-op Distributions Government Payments , , Int Inc Raised Sales Grain , , Livestock , , TOTAL Raised Sales , , , Salary 4, , Salary Spouse , , TOTAL INFLOWS 14, , , , , OUTFLOWS Auto Service Other Auto TOTAL Auto Bank Chrg Charity Other Charity , , TOTAL Charity , , Christmas Clothing Consultants Dining Dues Farm Dues TOTAL Dues Entertain Feed Purchased , , Fertilizer & Lime , , Freight and Trucking Gas, Fuel, & Oil , , Gifts Groceries , , Home Rpair , , Household Insurance Other Insurance , TOTAL Insurance , Interest Expense Farm Interest Mortgage , , Farm Interest Other TOTAL Interest Expense , , Labor Hired , , Medical

61 London Cash Flow by Enterprise - Last year Other Medical TOTAL Medical Misc 9, , Other Expenses Farm Expenses Other TOTAL Other Expenses Recreation , , Rent Land , , , TOTAL Rent , , , Repairs and Maintenance , , Subscriptions Other Subscriptions TOTAL Subscriptions Supplies Tax Fed Medicare SDI Soc Sec State TOTAL Tax Tax Spouse Fed , , Medicare Soc Sec , , State TOTAL Tax Spouse , , Taxes Farm Property Taxes , , TOTAL Taxes , , Telephone Utilities Other Utilities , , TOTAL Utilities , , Veterinary Other Veterinary , , TOTAL Veterinary , , TOTAL OUTFLOWS 10, , , , , , OVERALL TOTAL 3, , , , , ,

62 Deere Transactions Summary - Last year 1/1/2006 through 12/31/2006 Category Description CowCalf Wheat OVERALL TOTAL OUTFLOWS Repairs and Maintenance , , TOTAL OUTFLOWS , , OVERALL TOTAL , ,

63 Tax Schedule Transactions (Schedule A) 1/1/ /31/02006 Date Account Num Description Memo Category Clr Amount Schedule A Medicine and drugs /29/2006 Checking 727 Dan Dentist Medical/Family Living R -70 4/12/2006 Checking 781 Mytown Medical Center Medical/Family Living R -20 8/12/2006 Checking 878 S Albertson's Medical/Family Living R /16/2006 Checking 881 Care Clinic Medical/Family Living R -26 8/18/2006 Checking 888 Don Dentist, DDS Exam & X-rays Medical/Family Living R /19/2006 Checking 890 Care Clinic Medical/Family Living R /17/2006 Checking 921 Care Clinic Medical/Family Living R -30 9/30/2006 Checking 933 Care Clinic Medical/Family Living R /9/2006 Checking 940 Alan's Pharmacy Medical/Family Living R /28/2006 Checking 948 Care Clinic Medical/Family Living R /6/2006 Checking 960 Tiger Drug Medical/Family Living R /25/2006 Checking 969 Care Clinic Medical/Family Living R /29/2006 Checking 972 Tiger Drug Medical/Family Living R /10/2006 Checking 985 Mytown Medical Center Medical Medical/Family Living R Cash charity contributions -1, /15/2006 Checking 717 St. Andrew Church Charity/Family Living R -30 1/15/2006 Checking 1006 St. Andrew Church Charity/Family Living R -30 1/21/2006 Checking 722 St. Andrew Church Charity/Family Living R -30 1/21/2006 Checking H Scholarship Fund Charity/Family Living R -25 1/28/2006 Checking 726 St. Andrew Church Charity/Family Living R -30 1/30/2006 Checking 729 OSU Alumni Chapter Charity/Family Living R -20 2/12/2006 Checking 736 St. Andrew Church Charity/Family Living R -30 2/18/2006 Checking 739 St. Andrew Church Charity/Family Living R -30 2/19/2006 Checking 743 St. Andrew Church Charity/Family Living R -30 3/18/2006 Checking 756 St. Andrew Church Charity/Family Living R -30 3/25/2006 Checking 761 St. Andrew Church Charity/Family Living R -30 3/30/2006 Checking 767 St. Andrew Church Charity/Family Living R -30 4/8/2006 Checking 779 St. Andrew Church Charity/Family Living R -30 4/21/2006 Checking 784 St. Andrew Church Charity/Family Living R

64 Tax Schedule Transactions (Schedule A) continued 4/29/2006 Checking 793 St. Andrew Church Charity/Family Living R -30 5/7/2006 Checking 799 St. Andrew Church Charity/Family Living R -30 5/9/2006 Checking 802 St. Andrew Church Charity/Family Living R -30 5/21/2006 Checking 806 St. Andrew Church Charity/Family Living R -30 5/30/2006 Checking 820 St. Andrew Church Charity/Family Living R -30 6/4/2006 Checking 824 St. Andrew Church Charity/Family Living R -30 6/17/2006 Checking 833 St. Andrew Church Charity/Family Living R -30 6/24/2006 Checking 835 St. Andrew Church Charity/Family Living R -30 7/1/2006 Checking 847 St. Andrew Church Charity/Family Living R -30 8/2/2006 Checking 867 St. Andrew Church Charity/Family Living R -30 8/17/2006 Checking 884 St. Andrew Church Charity/Family Living R -30 8/19/2006 Checking 889 St. Andrew Church Charity/Family Living R -30 8/26/2006 Checking 902 St. Andrew Church Charity/Family Living R -30 9/10/2006 Checking 915 St. Andrew Church Charity/Family Living R -30 9/23/2006 Checking 923 St. Andrew Church Charity/Family Living R -30 9/24/2006 Checking 924 St. Andrew Church Charity/Family Living R /1/2006 Checking 935 St. Andrew Church Charity/Family Living R /7/2006 Checking 939 St. Andrew Church Charity/Family Living R /28/2006 Checking 951 St. Andrew Church Charity/Family Living R /28/2006 Checking 952 St. Andrew Church Charity/Family Living R /2/2006 Checking 958 St. Andrew Church Charity/Family Living R /18/2006 Checking 963 St. Andrew Church Charity/Family Living R /19/2006 Checking 964 St. Andrew Church Charity/Family Living R /25/2006 Checking 967 St. Andrew Church Charity/Family Living R /4/2006 Checking 978 St. Andrew Church Charity/Family Living R /10/2006 Checking 986 St. Andrew Church Charity/Family Living R /17/2006 Checking 995 St. Andrew Church Charity/Family Living R

65 Tax Schedule - Totals Only /1/2006 through 12/31/2006 Amount Schedule A Medicine and drugs Cash charity contributions -1, Schedule B Interest income Schedule F Sales livestock/product raised 80, Total co-op. distributions Agricultural program payments 3, Feed purchased -1, Fertilizers and lime -10, Freight and trucking Gasoline, fuel, and oil -6, Interest expense, mortgage -8, Interest expense, other Labor hired -4, Rent/lease land, animals -8, Repairs and maintenance -8, Supplies purchased Taxes -6, Vet, breeding, and medicine -1, Other farm expenses -733 W-2 Salary or wages, spouse 18, Federal tax withheld, self[1] -52 Federal tax withheld, spouse -1, Soc. Sec. tax withheld, self[1] -31 Soc. Sec. tax withheld, spouse -1, Medicare tax withheld, self[1] Medicare tax withheld, spouse State tax withheld, self[1] State tax withheld, spouse -872 Local tax withheld, self[1]

66 Reconciling the Bank Statement in Quicken 2007 Reconciling a Quicken account with a bank statement serves as a good check on the completeness and accuracy of your data entry for bank accounts. The reconciliation process includes: Entering information from your bank statement. Marking cleared transactions in the Reconcile window. You may add missing transactions or edit existing transactions as you go. Comparing the cleared balance with your bank ending balance to see whether a difference exists. If you are not currently reconciling your bank statements in Quicken, you should be! This is why: 1. Banks can make mistakes. 2. It is possible to type numbers incorrectly, duplicate transactions, or forget to record a transaction. 3. Identity theft is on the rise. Reconciling your account may help you to catch irregular activity on your account, for example, transaction(s) you did not make, misuse of an ATM card, or incorrect electronic transfers. 4. Transactions must be reconciled for the Year-End Copy feature in Quicken to work properly. Using the LOND07 file with the Checking register open, click Reconcile at the top left of the check register screen (or click Cash Flow, Reconcile, and select Checking). Using the bank statement on the next page, enter the requested information on the screen: OK

67 N 1st NATIONAL BANK AND TRUST COMPANY Sixth and Main Streets P.O. Box 2157 Nowater, Oklahoma (555) Offices in Nowater, Tulsa, Oklahoma City, and Chickasha Member F.D.I.C. STATEMENT Jack and Julie London Account No. Rt. 1, Box Nowater, OK Statement Date 07/05/07 Services available. Call for details. Checking Statement Summary Previous Statement 6/5/07, Balance of $9, Deposits or other credits totaling Checks or other debits totaling 1, Current Balance as of 7/05/07 8, Deposits and other credits... Date Amount Transaction Description Cleared 6/ Direct deposit 6/ Direct deposit 7/ Interest earned Miscellaneous Debits. Date Amount Transaction Description Cleared 7/ Service fee Checks Date Check No. Amount Date Check No. Amount Cleared 06/ / / / / / * / / / / / / / / / / / *Indicates skip or change in numerical order The entries you made for service charge and interest earned in the opening screen are recorded as transactions and marked as cleared in the reconciliation screen that follows. Payments and Checks are listed at left and Deposits at right:

68 Continue the reconciliation process by using the space bar or clicking with the mouse to add a check mark by transactions that cleared the bank. Use the bank statement on the previous page to identify and mark cleared transactions. It may help to change the view. To do this, click View at the top right of the window and select the appropriate option (such as, Sort by Check Number or Sort by Date). You may add missing transactions, delete duplicate transactions or edit entries with mistakes as you reconcile. If you find that you forgot to enter a transaction, click New (top left of the Statement Summary window) to be taken to the Checking register. Enter the transaction and click Enter. You can get back to reconcile by clicking Return to Reconcile at the right of the transaction line or by clicking Reconcile in the checking register window menu line. Note: If you begin to reconcile the bank statement but are unable to complete it at the time, you can click Finish Later. Your work will be saved and you can finish reconcile at your convenience. Clicking Cancel will not save the work you have done. Continue verifying entries with the 1st National Bank Statement. If you ve managed to enter a transaction twice (you may want to view the duplicate entries in the Checking register, then edit one transaction to be sure all the appropriate information is stored in one transaction), highlight the duplicate entry and click Delete. Confirm that you want to delete the current transaction by clicking Yes

69 Have you ever transposed a number in your entry or recorded the wrong amount? With the transaction highlighted, click Edit in the reconcile Statement Summary window. You are taken to the original entry in the checking register and can make the necessary changes in the register and record the entry by clicking Enter. Again, click Return to Reconcile, which will return you to the Statement Summary screen. Once you have marked all cleared payments, checks, and deposits, the difference listed in the bottom right corner should be 0.00 (see below). If it is correct, congratulations! Select Yes

70 To send the report to your printer click on the Printer Icon (lower left). Adjust the print settings to match your needs. You can click Preview to see how it will look on paper. OK Note: One of the unique features of Quicken is the ability to change transactions. However, be advised that changing a reconciled transaction (date, amount, or reconciled clear status) can cause problems with the reconciliation feature. Quicken 2007 handles an altered previously reconciled transaction by automatically adjusting the starting reconciliation balance the next time you reconcile. This might be a good time to use the note or flag feature for transactions. If you track an account online, you can also choose to reconcile the account online. You should choose either manual or online reconciliation and stick with one method. It will be hard to switch back and forth as the online reconciliation works as you download and a paper statement is generally monthly

71 Reconciling Other Types of Accounts The process for reconciling savings accounts is the same as for checking. Credit card accounts have a different opening screen (as shown below), but the rest of the process is similar to the other cash flow center accounts. Cash accounts do not have a reconcile process. You should record transactions as they happen to keep the account up-to-date. However, if you forget to record transactions or get terribly behind and/or can t find documents of cash expenses, the balance can be updated. Click Update Balance. Enter the amount you want in the account, and an adjusting entry will be made. OK

72 Using the Budget Features in Quicken 2007 Quicken budgets can be used to summarize expected income and expenses for planning purposes. The budget can later be used in comparisons to actual income and expenses to determine whether expectations are being met. If expenses are "over budget", measures can be taken to rein in costs before financial problems are out of control. In this "hands on" session we will use a previously developed file of records for the London farm to practice generating budgets. You will be able to practice many of the steps that you might use in summarizing your own records. Using these instructions, you will: Develop a whole farm budget for 2007 based on 2006 transactions Compare actual records to the budgeted amounts Click File Open Double-click C:\workshop files LOND07 Click OK. To access the budget features in the file, click Planning Budget Note: If you don t get the following screen, click on the Setup tab at the upper left corner of the Budget screen

73 Select Automatic. (A budget is created using your existing information.) Click Create Budget. Note: If this is the first time a budget has been created in the file, the default name is My Budget. You can click on Rename in the setup screen if you want a more personal title. Complete the screen:

74 This will base the budget for the coming year on the transactions entered for the most recent full year of data, 2006, maintaining the same monthly pattern for income and expenses. Since the amounts are not likely to be exactly the same, we chose to round the values to the nearest $10 for planning purposes. Click OK. OK Click OK. Note: You will not get this pop up message if it is your first budget

75 A budget screen will be opened that contains (1) a summary budget by category on the left side and (2) a window to allow you to change the monthly amounts for each category at the right. If the (3) Show category group s box is checked at the bottom left corner of the screen, deselect it to eliminate the discretionary/non-discretionary labels and sorting. In creating a custom budget, you may want to select the categories and accounts to be included in the Income and Expense section, click on (4) the Choose Categories button at the bottom left of the screen. When the following window pops open, you can select the categories that should be included in the budget

76 Click on Clear 0 amounts to exclude previously unused categories, but include all categories that have an amount recorded. OK To view the annual total rather than the monthly or quarterly total, select Yearly from the Totals drop-down menu at the bottom of the screen. At the right of the screen, you can change the monthly amount for the item that is selected at the left (as shown, Government Payments):

77 Let's say that the Londons expect a few items to be significantly different this year and want to edit those amounts: 1. Government payments are currently budgeted for March. The Londons plan is to split government payments between March and December, so they want to budget government payments for $1,100 in March and $2,000 in December. Click Government Payments, click the box next to the appropriate month and enter the new numbers. Click Apply (button at top right of column). Note that the totals are automatically updated. 2. Jack has taken a part-time job and expects to earn $1000 each month. Move the cursor to the Salary row at the bottom of the Income section, then update the amount to 1000 in each month and click Apply (or press Enter). In the Salary Spouse row, enter 1850 in each month and click Apply. Note: Don t try to use [CTRL+C] to copy as you might in other software. You will be taken to the Category List. You can right click on the box to Cut, Copy, and Paste numbers in this screen. Click on the Expenses tab. 3. Jack and Julie underestimated fuel expenses last year, so they want to budget even more for fuel expenses in the coming year. Click on the Gas, Fuel, & Oil line. For January and February, the amount should be 230. Other fuel expense entries should be: March, 310; April, 320; May, 160; June, 4350; July, 3280; August, 660; September, 1010; October, 160;

78 November, 160 and December, 200. Enter these numbers in the appropriate cells and click Apply. Continue to edit items in the budget to reflect your planning assumptions for the year. Make the changes to each category line, clicking Apply (or pressing Enter) after the monthly detail is updated. Click the Summary tab at the top left of the Budget window to view your information. You will now see a summary of your anticipated income and expenses for the coming year by month. The note at the top alerts us that we may have to use savings or draw on a line of credit to cover expenses in some months this coming year. Note: If you have a printer, you can print the budget by clicking Print at the top left of the budget window. OK

79 Once you have created and saved a customized monthly budget, actual year-to-date income and expenses can be compared with the budget. Note: If you closed the Budget window, click Planning, Budget to open it, Click Reports Monthly Budget Report (Or from the main menu line, click Reports, Spending, Monthly Budget.) Click Customize. Select Date Range: Custom Date and type the starting date as 1/01/07 and the ending date as 2/28/07. Note: The Custom Date cannot be earlier than the current date so select Year-to-Date if using these instructions before 01/01/2007. Type the Title: London Monthly Budget Jan-Feb and select the Budget: Budget Click OK. This report can be used to see whether expected income and expenses are being realized. Scroll through the report to compare actual income (inflows) and expenses (outflows) to budgeted amounts by studying the Difference column. If income is below budget or expenses are above budget, changes in management may be needed to avoid financial problems. To save this report for future use, click on the Save Report icon at the top center

80 Look at the graphical presentation of budget variances (if the graph is not showing, click on the Show Graph button to the right of the report). The blue bar above the zero line show favorable variances, that is, cash inflows are above budgeted amounts and/or cash expenses are below budgeted amounts. Point at one of the bars and you ll see that a magnifying glass appears, meaning you can zoom in on the transactions that support the graph. Double click on the bar and you ll get a report listing the transactions for the month. To return to the original graph, click on the Back button. Click on the X in the upper right corner to exit. If you get a prompt, click on Don t Save

81 Using Quicken for Financial Planning Quicken Deluxe has a number of handy features that facilitate financial planning. From the menu line at the top of the Quicken program screen, click Planning Financial Calculators You will see the following calculators listed: Retirement, College, Refinance, Savings, and Loan. Click Retirement Calculator to view an example. 1. Retirement Calculator In the Retirement Calculator, you choose between calculating for: Current savings needed to have a certain level of income at retirement Annual contribution to determine savings needed to achieve a certain level of income Expected Annual retirement income given current savings and expected annual contributions Information that is required includes the annual yield on savings, current age of the candidate for retirement, retirement age, age at which withdrawals will stop, other income (social security, etc.), whether the investment is tax-sheltered, current and retirement tax rates, and inflation rates

82 Julie London is 45 and her husband, Jack, is 48. Their children are now (mostly) selfsupporting. Julie and Jack have started to wonder whether they are adequately preparing for retirement. Julie is a teacher and Jack manages their family farm. They have $16,000 in a savings account and expect to be able to add $4,000 to their savings each year. Their non-tax sheltered investments yield an average of 8% per year and economists expect inflation to continue at a modest 3% annually. Let s calculate Jack and Julie s expected retirement income. Select Annual retirement income. Enter the information as shown on the following screen Click Calculate. Expected annual income after taxes in this scenario is only $13, Delaying retirement for even a couple of years can increase significantly the amount of annual income after taxes. For instance, at the $4,000 contribution level, delaying retirement until age 70 increases the annual income after taxes to $23,514. What if they want to retire at age 65 but are able to double their annual contribution to $8,000? What does that mean for annual income after retirement? It increases to $23,182, still not a very comfortable level of support. The moral of the story is save early and save often! In the above analysis, we focused solely on the cash savings. Assume the family farm is paid for and half of the assets are sold at retirement (not given to children). Let s assume that half of the owned farm assets are expected to generate $200,000 after taxes when sold. This time focus solely on earnings from the farm assets at retirement. Again, select Annual retirement income at the bottom left of the screen. Enter the following information and click Calculate:

83 Thus, selling half of the farm assets at retirement and putting them into an alternative investment earning 8% annually will generate about $13,805 in annual income. A caution: While an 8% return may be possible in a long run investment with some risk, it may be difficult to find an investment with an annual 8% return for the short term. A combination of savings to generate income from offfarm investments in combination with the sale or lease of farm assets may generate the income needed in retirement but careful planning is needed to ensure that income objectives can be met. Click Done. 2. College Calculator Jamie is 13 and plans to attend college (OSU, of course) where tuition currently averages $2,500 per semester ($5,000 annually). She will study hard and graduate in 4 years. She is a smart girl and knows that she should start saving money now for her college expenses. She can determine how much she and her parents need to save each year. Click Planning Financial Calculator College Calculator In the College Calculator window, select the calculation that you want to make at the bottom right of the screen. In this case, it is the Annual Contribution. Enter:

84 Because college expenses have recently risen faster than the general consumer price index, we use 4.% predicted inflation. Click Calculate to see the Annual contribution of $2, It appears that Jamie and her family will need to save $2,500 annually if they want to pay the tuition for Jamie to attend college. Click Schedule to see the deposit schedule. Click Close to return to the College Calculator. Click Done to leave the College Calculator. 3. Refinance Calculator Interest rates moved lower in recent months and Jack and Julie are wondering whether they should refinance the house they bought 5 years ago. Click Planning Financial Calculators Refinance Calculators

85 Click Calculate. The refinance analysis indicates that approximately 21 months are needed to recoup the refinancing costs and break even. Monthly principal and interest payments are $355.07, and total closing costs are $4,200. If the family plans to remain in the house at least this long, then refinancing looks like a good deal. Click Done to leave the Refinance Calculator. 4. Savings Calculator Your family wants to be able to pay $100,000 cash for a different combine in 6 years. Currently there is $4,000 in savings. How much do you need to save each year to meet this goal if savings are earning 5% interest? Click Planning Financial Calculators Savings Calculator Calculate For: Regular contribution Then enter:

86 Click Calculate. The Quicken calculator indicates that $16, per year must be saved to meet this goal. Click Schedule to see the deposit schedule. Click Close to return to the Investment Savings Calculator. Click Done to leave the savings calculator. 5. Loan Calculator The loan calculator allows you to estimate either a loan amount (given an interest rate, number of years, periods per year, compounding periods, and payments per period) or payment per period (given a loan amount, interest rate, number of years, compounding periods, and periods per year). Click Planning Financial Calculators Loan Calculator Look at the bottom of the Loan Calculator screen. When Payment per period is selected, Quicken calculates the regular payments for a loan of a given amount based on your entries for the principal amount, annual interest rate, number of years the loan will be repaid, compounding periods, and the number of payments per year. For instance, let's say that you are considering purchasing a new truck. The truck that you have chosen, a four-wheel drive, has a sticker price of $35,000, but you talk the salesman down to $33,000. You have saved $4,000 to be used for a down payment so you need to borrow $29,000. The loan will be for 5 years at 6.5% interest with monthly payments. Enter the following information:

87 The anticipated Payment per period is $ monthly. You can see how much of your total payment is principal and how much is interest in a given month by clicking Schedule to display the payment schedule. To leave the schedule, click Close. A different question to answer with Quicken's loan calculator is "How much can you afford to pay for a new truck?" If you know how much you have available for regular payments, the loan calculator can also be used to solve for the amount you could afford. Let's say that you have around $350 per month to apply toward the purchase of a new truck. The expected interest rate is 6.0%. On the Loan Calculator screen, you want to calculate the loan amount instead of the payment, so select Loan amount, and enter the following information: Calculate The maximum principal amount you could borrow with these repayment terms is approximately $18, To leave the loan calculator, click Done

88 Line of Credit/Credit Card Accounts and Alerts A line of credit or short-term operating note is often best tracked using a credit card account. Money can be transferred into checking and payments made as money becomes available. You can also set alerts to warn you when you are approaching the account limit. To set up a line of credit note, click Tools Account List Add Account (top right of Account List window). In the Quicken Account Setup window, select: This account held at the following institution: 1 st National Bank Click Next. Select None of these. Use the following name: 1 st National Bank Click Next. Choose Credit Card as the type of account to add. Click Next. Type Line of Credit to name this account. Click Next. Enter 7/1/07 as the Statement Date and 75, as the Ending Balance from your statement. Click Next. It is optional to enter the credit limit for this account; however, we will type in 100,000. Click Done. To have Quicken warn when you are approaching your credit limit, click Tools Set Up Alerts Click the Setup tab. Then click the plus sign to the left of Cash Flow to expand the list of options. Then click Credit Card Limits. To the right, enter the Remind me at value as 90,

89 Click OK. If you exceed your alert limit or account limit, a message appears under Alerts on the Homepage and a pop up alert will appear when you reopen Quicken. Click OK. To record a transfer of funds into the Checking account from the Line of Credit, open the Line of Credit account, if not already open, and click Transfer in the menu line of the Register window. Enter information from the following screen

90 Click OK. To record a transfer of money from the checking account to the Line of Credit to pay down the balance, record a similar transaction switching the accounts: Transfer Money From: Checking To Account: Line of Credit This account can be reconciled with a loan statement just as the credit card account can be reconciled with the credit card statement. Information needed from the loan statement includes charges and cash advances, interest charges, payments and credits to the account, and the ending balance

91 Saving and Locating Information for 1099s One means of noting that a transaction may contribute to the need for a tax form 1099 is to type 1099 on the memo line in appropriate transactions in the account register. You can then generate reports that list or summarize all transactions with this notation in the memo line. For instance, let's say that you write check number 3267 on June 12 for $ to Joe Bob Baling for custom baling of alfalfa hay. Click Tools Account List Checking Type the following information into the checking register: Click Enter. Date: 06/12/07 Num: 3267 Payee: Joe Bob Baling Payment: Category: Custom Hire/Alfalfa Memo: 1099 Future payments should follow the same format with the payee spelled exactly the same and 1099 entered in the memo line. This allows Quicken to recognize transactions as a match when filtered reports are developed at the end of the year. You can then determine how much was paid to a specific payee where 1099 is in the memo field. You will develop a filtered cash flow report summarized by payee to show the amount. Let s look at last year s information. To generate the report, click: Reports Banking Cash Flow Click the Customize button (top right of screen), Date: should be set from 1/1/06 to 12/31/06, change the title of the report to 1099 Report for 2006, and select Payee for the Row heading. Click the Categories tab. In the Matching column at the right, select the Memo contains: and type

92 The report will pick up any memo notations (for example, invoice numbers, dates, weights) that include 1099, so thoroughly check the report. Click on the individual payees to review the supporting transactions. Our sample report demonstrates the importance of being consistent in how names are entered as Hepplers and Heppler s Machine Shop are viewed as different vendors. To correct this error click the Find and Replace button (at top right) on the report task bar. Enter the information as follows:

93 Click on Replace (bottom middle) Done To save this report, click on the Save Report button on the task bar. If you want, create a Tax folder in which to save it

94 OK

95 Recording Futures Market Transactions 1. Options An option allows a producer to pay a premium for a type of commodity price insurance. Many producers use put options to provide a floor price for their stocker cattle. For example, let s say you have 75 head of stocker steers to weigh approximately 650 pounds in May and want to insure a $70 floor price for their May sale. A feeder cattle contract is 50,000 pounds or 500 cwt, so one contract could protect the price for your 75 steers. You call a broker and purchase a $70 May feeder cattle put option for $1.20/cwt premium. The cost of the option purchase would be $600 ($1.20 x 500 cwt) plus a commission of $75. To record the purchase of the put using funds from the checking account, go to the Checking register and enter Date: 1/7/07 Num: 3456 Payee: ABC Brokerage Payment: 675 Category: Marketing Expense/Stocker Memo: $70 $1.20 for 500 cwt & $75 commission Click Enter. Often your option will expire without any value. However, if you realize any income from the option, you would record it as Marketing Income. This income is tax-related and should be linked to the tax form and line, Schedule F: Other Farm Income. You would then make the appropriate deposit entry. For example, in May, feeder cattle are trading at $68 and your $70 put is now worth $2/cwt or $1,000. You would sell your put and enter the deposit in the Marketing Income category. Date: 5/6/07 Num: DEP Payee: ABC Brokerage Deposit: 1000 (be sure to erase the automatic value of $675.00) Cat: Marketing Income/Stocker Memo: Settlement of put option Click Enter. 2. Hedges Hedges can be a bit more complicated to record because daily changes in market prices may also affect the margin money required for the trade. Enter your realized gain or loss after you have offset your hedged position in Margin Income or Margin Expense categories as appropriate

96 Scheduled Transactions In this section, we will use the LOND07 file. Click File Open (or press [Ctrl+O]) C:\workshop files\lond07 Click OK. If you want to be reminded of due dates for monthly bills, you can set up one or more scheduled transactions. For example, each month you get utility and cable television bills which are due on the first of the month. There are several ways that you can set up a scheduled transaction for a payment that has not been previously entered in the register. Click Cash Flow Scheduled Transaction List (or press [Ctrl+J]) Create New Scheduled Transaction Enter the information shown in the screen capture below. Click on the Options button to clarify how to handle this transaction

97 Click OK to close the Add Scheduled Transaction Options window. Click OK to record the scheduled transaction. Repeat the process for other scheduled transactions. If you open Quicken any time within three days of the date on which the bills are due, you will be reminded that you have bills to pay. Close the Bills and Deposits window by clicking on the X in the upper right corner. Another way to set up a scheduled transaction is to click Cash Flow Center (on left sidebar). In the Scheduled Bills and Deposits window at bottom, click Add Bill or Deposit. The Add Scheduled Transaction screen will open. Enter the information and click OK

98 Writing Checks with Quicken Quicken acts as a register for transactions, and also allows you to write and print checks from the computer (with the appropriate paper form). The check writing feature allows you to write the check as well as complete the memo, category, and class. Some people like to enter transactions using this format. Click Cash Flow Write Checks (or [CTRL+W]) Enter the Date, Pay to the Order of (payee), and $ (dollar amount); the written dollar amount fills in automatically. The Address and Memo are optional. The category is entered below the check and, as in the register entry, clicking the Split button or pressing [Ctrl+S] will allow you to enter information for a split transaction. Click the Record Check button to enter the transaction in the register. Before you print out checks, choose the appropriate printer settings. Close the Write Checks window

99 Click File Printer Setup For Printing Checks Select the appropriate page and printing style for the type of checks you will use. OK If you go to the Checking register you can see the check you recorded earlier. It has Print in the Num field of the register until printed or replaced with a check number. To print the checks that are prepared, click on Write Checks (left of center at the top in the Checking account register window) [Ctrl+W]. This takes you to the same screen in which you entered the checks. Click on Print

100 Note: If you are not actually printing checks using Quicken, but use this view to enter payment data, you can later go to the account register and enter the check number. Entering the check number removes the entry from the Select Checks to Print list. Note: We won t print during the workshop; however, if you do print the checks you will have a popup screen. If everything printed correctly, just click OK. Otherwise, you will enter the number of the first which printed incorrectly. A new number will be issued for the check that did not print correctly. Click Cancel since we do not actually wish to print this check

101 Year End Copy: Start New Year and Archive At the beginning of the year or when files start getting big, people wonder whether they should reduce the size of their files or remove some data. Now that large files can be backed up on CD-ROM, this is a less frequent concern. We prefer to maintain several years of data in the current file so that comparison reports showing performance by year can be easily created. However, if you feel the need, the Year-End Copy feature allows you to reduce the size of your working file and archive older information. Let s say that you ve been entering financial records in Quicken since 1998 in a file called FARM. Now you want to modify the current file to include only data beyond January 1, Click File File Operations Year-End Copy Click OK. If you choose Do nothing, your current file will remain the same, and you will only copy your data to a backup archive file. To modify the current data file, click on I only want transactions as in the screen above and indicate the January 1, 2002 cut-off date. The current file will be reduced to transactions for the date selected and forward (uncleared transactions and all investment transactions will remain in the current file--a good reason to reconcile your accounts). An archive file will automatically be created at the same time. When the current data file has been updated (if selected) and the archive file has been created, you will choose which file to use

102 OK We recommend you keep several years of data in one file for comparison purposes, but when files are hard to back up or information becomes dated, this is a good way to handle the situation

103 Category Clean Up Have you checked your category list lately? You may need to clean it up by eliminating unused categories and removing duplication so that your reports will be clear and meaningful. One way to determine the categories you use is to print a Spending by Category report. Click Reports Spending Spending by Category Customize the Date Range: Include all dates. Print the report and have it at hand while you view the category list on screen. Click Tools, Category List (or press [Ctrl+C]). 1. Delete unused categories Delete any categories in the list that do not appear in the printed category report. If it is a Quicken default category you can always retrieve it if you need it. Highlight the category and then click the Delete button. Click OK. 2. Merge Categories If you have created two or more categories that should be under one name, you can merge the duplicate category titles and transactions into one category. Assume you have recorded transactions using both Home Repair and Home Rpair. Select Home Rpair in the category list. You will see the Transaction Usage in the column on the right

104 With Home Rpair still highlighted, click on the Merge button. Because we do not want two categories for Home Repair, mark the Delete the category for Home Rpair. OK 3. Recategorize This option works well if you have a few transactions that need to be recategorized, but others belong in the original category. In the Category List window, click on Go to Recategorize (upper left)

105 Find category: type or choose Entertain. We had used this category for our cable TV bills. We have decided we would rather have these transactions attached to the category and class, Utilities: Cable TV/Family Living. 2. Click on Find All to bring up all the transactions with Entertain as the category. 3. Check Show matches in split transactions are included. 4. Check the transactions that have Cablevision as the payee. 5. Recategorize selected transaction(s) with: Utilities:Cable TV/Family Living. 6. Click Recategorize and you should see the selected transactions have changed categories. Click Done. Checking your category list is like a spring-cleaning task. It s not something you enjoy doing, but it does provide benefits in the long run. If your category list is in order, you will have more accurate reports and/or budgets

106 Retrieving a Deleted Quicken File Oops! If a Quicken data file is accidentally deleted or isn t functioning, a current backup file that you have created should be tried first. If you don t have a manual backup file that is current then try the Quicken automatic backup. Quicken automatically saves a backup copy of your working data file on a regular basis (the default is every third time Quicken is opened and five backup files. This can be adjusted by going to Edit, Preferences, Quicken Program, Setup:Backup). To retrieve the automatic backup file in Quicken, click File, Restore Backup File, Browse my computer, and select the Quicken data folder (default directory) or the folder where your data file is saved (for example, c:\workshop files). The subdirectory or folder named BACKUP should be listed. Double click on BACKUP and then choose the data file name with a 1 at the end of the file name (for example, LOND071.QDF). The file name with a number 1 at the end is the most current of the three or more backup copies that Quicken retains. Click OK to complete the retrieval. You should get a message that the file was successfully restored. OK Then go to File, Open in Quicken. The restored file should appear in the folder of the original data file. It is important to note that this is not a reliable backup method. This type of backup will be useless if the computer hardware is damaged. The best backup method is to manually back up to a diskette or compact disc (CD) and store at least one copy off-site. Backing Up Quicken Files A pat on the back to those who back up Quicken data on a regular basis. It is important to ensure backup files will be valid and not corrupted if you need them in the event of hardware failure. Quicken offers some suggestions for ensuring backup files will be there when you need them. 1. Backing Up Files to 3½ Floppy Diskettes It is essential that the diskettes you use for backups are free from damage. Even if you purchase diskettes that are formatted, it is a good idea to manually format them to check for bad sectors. In Windows, click: Start Help and Support Index

107 Type floppy disks. Double-click formatting to view the instructions. Follow the instructions to fully format the diskettes before first use. Remember that formatting deletes any information previously saved on a diskette. Do NOT format your hard drive. We suggest having two or more formatted disks on hand so you don t get caught without a disk during backup. Storing floppy disks If your Quicken file is getting large, it may take more than one diskette to make a backup. Be sure to carefully label diskettes in the order they were made (for example, one to five) so that they can be restored in the proper order. Proper care of the diskettes while storing them is also important. The following are damaging to diskettes: Extreme heat or cold. Keep diskettes out of direct sunlight and cold air. Dust. Keep diskettes in covers or storage boxes that are closed and sealed. Magnetism. Contact with magnets erases or damages data. Do not use a magnet near a diskette. Do not place diskettes near vacuums, phones, speakers, etc. Remember to have more than one set of backup diskettes. After several uses, discard or recycle diskettes for another use. General shelf life of a diskette is five years. 2. Backing Up to Compact Disc (CD) Quicken files may be backed up onto compact discs (CDs). CDs are a long lasting source of data storage when handled properly. They also can be a bit more complicated to use compared to diskettes, but don t let this scare you away from storing data on CDs. For newer computers and large files, this may be the best option. Windows XP is able to create CDs without third-party software, but earlier Windows versions will require third-party software (for example, Easy CD Creator). The software needs to be compatible with your CD burner hardware. Format the CD for data using the CD software before attempting to backup files on an empty CD for the first time. The procedure may vary depending upon your software. Generally, the preferred format style needs to be drag and drop which allows you to copy and paste files directly to a CD. Next, go to the Quicken drop-down menu and click File, Backup. Select the file you wish to backup. For backup location, select the location of the writable CD or DVD drive

108 Note: Windows XP users will see a Use Windows CD Writing Wizard. Click OK when the message that the file was saved to a temporary backup appears. Remember that the files are stored in a temporary folder on the hard drive until you back them up on CD. Or, you can bypass this step, but you may need third-party CD burning software to create the drag and drop file saving. Click OK When you receive the message File backed up successfully, click OK. At this point, your CD burner software may ask how to handle the closing of the CD. Generally, you will want to be able to open the files with any CD player, but keep the CD open to allow additional files to be written to the CD unless it is full. Storing Compact Discs CDs can store more information, so if your file is large, this may be the media to use for backups, assuming your computer is capable of writing to CDs. CDs need to be handled properly as well. The following are damaging to CDs: Dust. Dust on the CD can cause scratching, so keep in a jewel case or CD jacket. Flexing. Store CDs in a case and store vertically to minimize bending/flexing of the CD. Fingerprints. Fingerprints or smudges can distort how information is read. Handle CDs from the edges and wipe off smudges with a soft lint-free cloth

109 Restoring a Backup From a CD-R or CD-RW Drive If you find it necessary to use a manual backup copy of a Quicken file, use these instructions. To restore the file, go to the Quicken drop-down menu and click Note: If you do not wish to overwrite the original file on the hard drive, you will need to cancel and rename either the backup files or the files on the hard drive. File Restore Backup File Browse my computer Click OK. Note: We had selected to include the date in the file name. As you can see in the screen above, stand for YYYYMMDD (Year, Month, Date). Click OK. OK

110 Building A Farm/Ranch Balance Sheet in Quicken Deluxe 2007 To develop a fairly complete picture of an individual business' financial situation, a cash flow statement, an income statement and two balance sheets (beginning and ending) are needed for an accounting period. The balance sheet shows what is owned and what is owed at a point in time. Since Quicken is a cash accounting program and not intended for accrual accounting, some effort is required to record capital sales and purchases, change in values of assets owned or liabilities owed, and change in inventory, all of which are essential to generate an accurate balance sheet. And, because Quicken is designed to record financial data and not physical data (e.g. number of head or bushels, weight and price per cwt of livestock sold), it may be more difficult to record and summarize unit information in a Quicken balance sheet than it would be in a spreadsheet or hand record system. 3 The instructions that follow suggest one way of developing a balance sheet using market values for assets within Quicken. 4 You should: Inventory assets and liabilities Establish asset and liability accounts in Quicken with accurate beginning balances Adjust asset accounts to reflect: o Asset purchases and additions to assets o Asset sales o Changes in inventories o Changes in asset values Adjust liability accounts to reflect o Repayment of liabilities o Accrued expenses Step-by-step instructions follow for entering data and making adjustments during or at the end of the year. 1. Develop a complete inventory of farm/ranch assets and liabilities, documenting market value of the assets at a point in time OSU Fact Sheet F-752 explains the development of a balance sheet and contains a worksheet which will help you develop an inventory list. Be sure your list of assets owned and liabilities owed is complete and as accurate, as possible. Document sources for prices of assets (for example, local auction or trade magazine ad) and balances of liabilities (for example, loan statement from a lender). We will use the LOND07 sample file. 3 Integrated Farm Financial Statements (IFFS), an Excel spreadsheet-based program created at Oklahoma State University, is an alternative for creating balance sheets and other financial statements. IFFS is designed specifically for farm financial planning. It has better features for maintaining and updating balance sheets and whole farm financial statements. Cash flow information from Quicken records can be imported into IFFS. For more information go to: 4 The Farm Financial Standards Council ( recommends that both cost and market value of some assets should be documented in the balance sheet. In Quicken, you cannot record both cost and market values for an individual item in the same account (the investment accounts are an exception). Two separate asset account series would need to be developed to record both cost and market values

111 Click File Open (or [Ctrl+O]) Select C:\workshop files\lond07 2. Import asset accounts To develop a balance sheet, you will first establish a variety of asset and liability accounts. The types of accounts in Quicken include: checking savings credit card cash brokerage IRA, SEP, Keogh 401(k), 403(b) single mutual fund house (with or without mortgage) vehicle (with or without loan) asset liability Several accounts of one type can be developed, for instance, one liability account for each outstanding debt. A sample Quicken farm account list is included (page 124) and includes such things as accounts receivable, buildings and improvements, capital leases, purchased feed, market livestock and so on. In our sample list, the accounts are labeled with letters so that they are listed from most to least liquid, that is, accounts with items most easily converted to cash are listed first, the traditional order for balance sheet items. Note: Current assets are assets expected to be used up or sold in one year and are listed first. Examples include marketable securities, market livestock, and inventory. Noncurrent assets are ones that are used for longer periods of time in the farm operation. Examples include breeding livestock, machinery and equipment, vehicles, land, buildings and improvements. These designations were developed by the Farm Financial Standards Council. The account, h Other Farm Current Assets, is for farm current assets not included in other labeled lines. The account, r Other Farm Noncurrent Assets is for noncurrent (both intermediate and fixed) farm assets. For additional information on the London sample farm, see OSU Facts F-751, Developing a Cash Flow Plan ; F-752, Developing a Balance Sheet ; F-753, Developing an Income Statement ; F-791, Schedule of Assets ; and F-792, Liabilities Schedule. These can be found at Click File Import QIF file

112 Complete the information as shown on the following screen: Click Next. Quicken will give you a message verifying that items have been successfully imported. Click Done. Click Tools, Account List (or press [Ctrl+A] and scroll through the Asset Accounts list to verify that it contains the accounts a Marketable Securities, b Raised Market Livestock, etc. The accounts will be listed in the Property and Debt Center as well. The account list can be modified easily. Let's say that you don't expect to use the Capital Leases account and want to delete that account from the list. In the Account List click the account, n Capital Leases; click Delete; type Yes to confirm; and click OK. 3. Enter beginning balances in asset accounts The beginning balance in an asset account may be the sum of the market values of all assets in that group or an entry may be made for the beginning balance of each individual asset. The latter form ensures that you have a record of the values assigned to each item. Then, if an asset (for example, a disk harrow) is sold during the year, the harrow's market value is subtracted from the asset account so that the end-of-year balance sheet will be accurate. Begin updating the beginning balances in the London's individual asset accounts. Double click on the account b Raised Market Livestock. On a blank transaction line, enter the value of raised market livestock on hand January 1: Date: 1/1/07 Ref: Payee: Mixed stockers Increase: (Be sure to [Tab] over to the Increase column.) Category: (make sure to remove the category if one appears) Memo: 45 6 $70/cwt

113 Press Enter. Note: If you want to change the order so that the memo appears before the category in the register, in the main menu line click Edit, Preferences, Quicken Program, Register, in Register Fields: Show Memo before Category, OK. You may get a message asking if you want to select a category. Select Don t show this message again at the bottom of the screen, and click No. Now choose c Purchased Market Livestock from the account list at left. On a blank transaction line, enter the value of purchased market livestock on hand: Press Enter. Date: 1/1/07 Ref: Payee: Stocker Steers Increase: (Be sure to [Tab] over to the Increase column.) Memo: $70/cwt Category: Note: If you want to later create a report listing number of head of livestock, you must be consistent in the use of labels in the memo field. For instance, you must always use head (or hd) for a filtered report to include this information. If you purchase more than one lot of stockers, you may want to give different names to the lots in the Payee line. When you are finished entering values for purchased market livestock, choose d Inventory from the account bar. In this account, you will enter the value of stored crops, feed and supplies. For example, on a blank transaction line, enter Press Enter. Date: 1/1/07 Ref: Payee: Stored Wheat Increase: (Be sure to [Tab] over to the Increase column.) Memo: 1025 $3.10/bu Category: Values for growing crops should include expenses incurred to date in the production of the crop. Choose g Growing Crops from the account bar. On a blank transaction line, enter Date: 1/1/07 Ref: Payee: Wheat Increase: Memo: 450 $40/a Category:

114 Press Enter. As with the market livestock accounts, two accounts are included for breeding livestock, one account used for raised and one for purchased. Here the market value of raised breeding livestock-cows, sows, replacement heifers or gilts, boars and bulls-is recorded. For example, select j Raised Breeding Livestock from the account list. Enter Press Enter. Date: 1/1/07 Ref: Payee: 5-Year-Old Cows Increase: 7500 Memo: $500 ea Category: Note: You may add additional accounts if you have several livestock enterprises and want to maintain separate accounts for different species. Select k Purchased Breeding Livestock from the account list. Enter the values of purchased breeding livestock--purchased cows or sows, replacement heifers or gilts, herd bulls or boars. For example, on a blank transaction line, enter Press Enter. Date: 1/1/07 Ref: Payee: OBI Herd Bull Increase: 2500 Memo: 3 year $2500 Category: Select l Machinery-Equipment from the account list. Enter market values for each piece of owned machinery and equipment. Date: 1/1/07 Ref: Payee: 1994 Allis Tractor Increase: Memo: Category: Press Enter. Date: 1/1/07 Ref: Payee: 1993 Disk Increase: 500 Memo: Category:

115 Press Enter. Select p Land from the account list. Record market values for each piece of land owned. Date: 1/1/07 Ref: Payee: Smith Place Increase: Memo: 80 a. $900/a. Category: Press Enter. Select q Buildings-Improvements from the account list. On a blank transaction line, enter: Date: 1/1/07 Ref: Payee: Barns Increase: Memo: Home place Category: Press Enter. Continue until all assets owned are listed in the appropriate accounts. 4. Recording the purchase of an asset. Cash purchase Paying cash for the full purchase price of an asset results in the conversion of one asset, cash from either a cash account or bank account, into another. For example, let's say the Londons purchase a new pickup on January 12 from My Town Motors using money in their checking account. Select the Checking account from the account list (or press [Ctrl+A], highlight the checking account name and press [Enter]). In the check register, type: Date: 1/12/07 Num: 3414 Payee: My Town Motors Payment: Memo: 2003 Ford Ranger Category: [m Vehicles] (or press [Ctrl+C] for the category list, scroll to the bottom and click m Vehicles)

116 Click Enter. Note: The brackets around the "category" name indicate that an account, m Vehicles, is involved in the transaction as a transfer of funds. To verify that the purchase price has been listed as an increase in value in the m Vehicles asset account, right-click the transaction and left-click Go to Matching Transfer to switch to the asset account. Right-click on this entry and left-click Go to Matching Transfer again to return to the checking account. Credit purchase When credit rather than cash is used to purchase an asset, the purchase will result in an increase in a liability account equal to the increase in an asset account. If the Londons purchase a chisel with financing from Yukon John Deere, a new liability account must be established and an increase in an existing equipment asset account (in our list, l Machinery-Equipment) must be recorded. Setting up a loan is an activity facilitated by Quicken. Information is entered about the amount borrowed, payment period, interest rate, etc. Loan payments are then recorded using a split transaction with one line for principal and another for interest. The principal payment amount is automatically applied to the loan balance when the appropriate loan liability account is listed as the category for the principal payment. Let's practice recording a credit purchase for the Londons. The Londons are buying a new John Deere chisel for $11,000 and repaying the loan over 3 years with semi-annual payments at 9.75% interest. Begin by setting up the liability account. From the main menu, click: Property & Debt Loans (or press [Ctrl+H]) New (located in upper left hand corner of View Loans window) If you have not been through the Loan Setup series before, you may want to go through step-by-step using EasyStep. A shortcut is to begin with the summary screen, which is what we will do. Click the Summary tab and enter the appropriate responses:

117 Click Next. Click Next

118 Click Done. You will get a message that Quicken has estimated the amount of the next payment for this loan. Click OK. The calculated payment amount is $2, Click Done. Now that the loan repayment terms have been specified, you need to indicate how the payments will be made. Type in the payee (Interest Expense), add the subcategory (Farm Interest Other) and class (Overhead) for interest

119 Once the data entry is complete, click OK. A screen will appear asking if you would like to create a new asset account to go along with this loan. We have an existing asset account for machinery and equipment assets so we will choose No. Now a loan summary screen appears. Click on Payment Schedule to view the schedule of principal and interest payments as well as the balance remaining. Click Payment Graph to see another view of the repayment plan: Click X at the top right of the View Loans window to leave the loan setup process