QUICKBOOKS DESKTOP 2017 CERTIFICATION COURSE. Supplemental Guide. Module 4: Sales and Receivables

Transcription

1 QUICKBOOKS DESKTOP 2017 CERTIFICATION COURSE Supplemental Guide Module 4: Sales and Receivables

2 Copyright Copyright 2016 Intuit, Inc. All rights reserved. Intuit, Inc Headquarters Drive Plano, TX Trademarks 2016 Intuit, Inc. All rights reserved. Intuit, the Intuit logo, Intuit ProLine, Lacerte, ProAdvisor, ProSeries and QuickBooks, among others, are trademarks or registered trademarks of Intuit, Inc. in the United States and other countries. Other parties marks are the property of their respective owners. Notice to Readers The publications distributed by Intuit, Inc. are intended to assist accounting professionals in their practices by providing current and accurate information. However, no assurance is given that the information is comprehensive in its coverage or that it is suitable in dealing with a client s particular situation. Accordingly, the information provided should not be relied upon as a substitute for independent research. Intuit, Inc. does not render any accounting, legal or other professional advice, nor does it have any responsibility for updating or revising any information presented herein. Intuit, Inc. cannot warrant that the material contained herein will continue to be accurate nor that it is completely free of errors when published. Readers should verify statements before relying on them.

3 Table of Contents Table of Contents About the Author... 2 Module Guide Overview... 3 Guide Introduction... 3 Learning Objectives Overview of Sales Forms... 4 Payment Activities Power Tools for Invoicing and Receivables Management Correct Common Errors with Receipts Multiple Currencies Reporting on Sales and Receivables Topic 2: Sales Tax Setting Up and Using Sales Tax Reporting and Paying Sales Tax Correct Sales Tax Errors Guide Conclusion Module 4: Sales and Receivables 1

4 About the Author About the Author Esther Friedberg Karp, MBA President, EFK CompuBooks Inc. Esther Friedberg Karp is an internationally-renowned trainer, writer, business consultant and speaker who was named one of Insightful Accountant s Top 10 QuickBooks ProAdvisors in the world, with the title Top International ProAdvisor. Based in Toronto, Canada, Esther has the unique distinction of holding ProAdvisor certifications in the United States, Canada and the United Kingdom. She has authored materials and delivered educational and certification courses for Intuit in all those countries as well as Australia, where she conducted live QuickBooks Online training. She has spoken at Scaling New Heights, QuickBooks Connect and other conferences, as well as those of various accounting and professional organizations and written countless articles for Intuit Global. Esther counts among her clients companies from around the world, as well as accounting professionals who seek her out on behalf of their own clients for her expertise in various countries editions of QuickBooks Desktop and Online, and for her talent in customizing QuickBooks usage for different industries. Esther holds a BSc from the University of Toronto in Actuarial Science and Mathematics, and an MBA in Marketing in Finance from York University s Schulich School of Business. She can be reached at esther@e-compubooks.com or Module 4: Sales and Receivables 2

5 Overview Module Guide Overview GUIDE INTRODUCTION Welcome to the QuickBooks 2017 Desktop Certification curse. Besides in-product demonstrations and tips from your ProAdvisor presenters, you have access to the PDF Module Supplemental Guides that accompany each of the 10 modules in this course for easy review of the information covered. Each of the ten module guides provides contextual information and details to accompany its recorded counterpart. This guide was authored as a supplementary tool and contains written descriptions and illustrations. LEARNING OBJECTIVES Upon viewing the recorded Module 4 and reading the instructions provided in this Module Supplemental Guide, you will be able to do the following for each of these topics: Identify the customer needs served by various sales forms Identify the features to account for customer deposits, bounced checks and bad debt Specify the steps to use Multiple Currencies Topic 2: Sales Tax Specify steps to set up QuickBooks to track and use sales tax Identify and correct some mistakes that clients make when working with sales tax Module 4: Sales and Receivables 3

6 As you know, different types of companies employ different methods for capturing sales transactions. QuickBooks is flexible enough to accommodate these different methods. For example, some clients may send their customers an invoice for each sale; some might use sales receipts for their sales, while others might just need a single summary entry at the end of each day. First review the common sales methods used by your clients. Then, learn about workarounds and fixes to common errors made by clients. For example, how do you enter an NSF check? How do you write off bad debts? You will learn how in this topic. By the end of this topic, you ll understand the different ways to enter sales and receivables into QuickBooks. You ll learn how to fix some of the most common errors users make and you ll learn some powerful workarounds. Finally, you ll learn to run reports that can help your clients get a clear picture of their sales and receivables. OVERVIEW OF SALES FORMS Customer Center You can access the Customer Center from the Home page shortcut, icon bars, the keyboard shortcut is Ctrl + J or from the menu bar select Customers Customer Center. The Customer, Vendor and Employee Centers in QuickBooks Desktop contain all the relevant transaction and contact information about each name on the list. They all look similar and you will find many of the same options in each center. Module 4: Sales and Receivables 4

7 In the Customer Center, the Customer & Job list is on the left and the Information pane on the right. You can resize both of these panes. Below the Information pane, there is a customer-specific transaction list you can filter, print and view as a customizable report. In addition to transactions for customers, you have access to some CRM functions also. There is a Contacts tab to add additional contacts and a To Do tab where you can manage appointments, calls and other tasks. There is a Notes tab and a Sent s tab is where you can view the history of any forms you have ed to the customer from within QuickBooks. In some older version years of QuickBooks, you could not access the full history of sent s. Module 4: Sales and Receivables 5

8 The Transactions tab shows details about the eight types of sales forms. You can customize columns, filter, view reports and export information in this list. Transaction Ribbon The Transaction ribbon can be found at the top of many types of transaction forms in QuickBooks Desktop. Some of the functionality found in the ribbon can also be found in the right-click menus. Below is an example, using an Invoice s Transaction ribbon: There are four tabs on the Invoice ribbon. There will be different tabs and options depending on which transaction form you are working with and what features are active in the file. You can hover your mouse over any option in the ribbon to see an explanation. Let s go through the options so you are familiar with the kinds of actions you can take from the ribbon. Module 4: Sales and Receivables 6

9 Main Tab From left to right, the options on the Main tab are: Scroll through transactions in date order Create a New invoice Save and stay on the form or save to a PDF file Delete or Void Create a Copy of the form Find window you can also press Ctrl + F on the keyboard to open this window Memorize the transaction You can memorize most types of transactions in QuickBooks. The shortcut is to press Ctrl + M on your keyboard when you are on or in the transaction that you want to memorize for future use. Go to List Memorized Transactions list to view and modify Memorized Transactions. Mark an invoice as Pending This will save the data you have entered in the form, but not actually post any of the accounting transactions. It will change to Mark as Final once selected, you will click this to change the status to posting when you want to affect the accounts. There are several options in the Print button, including print preview and batch printing There are several options in the button. If a scanned document is attached, you can choose to the attachment along with the form. Print/ Later Checking these boxes adds the transaction to the print and/or queues. You can get to the queues by going to the Batch option under Print and buttons or by selecting File Print Forms or File Send Forms. The Attach File button opens the window where you can add a scanned or saved document to the transaction. Once a document is attached, click this button to view Add/Time Costs If the billable time and costs features are being used, you can add those items to the invoice here Apply Credits You can apply a credit memo or overpayment to the invoice If the Progress Invoicing feature is available and active in the file, then you will see the Create Progress Invoice button on the ribbon Receive Payments button will jump to the Receive Payment window for the invoice Create a Batch is a shortcut to the Batch Invoicing feature Module 4: Sales and Receivables 7

10 The Refund and Credit button will create a credit memo Formatting Tab From left to right, the options on the Formatting tab are: Preview the invoice Manage Templates, Download Templates, Customize Data Layout These three buttons let you access the Form Template list and customize the invoice form Spelling check Insert/Delete/Copy Line These buttons allow you to work with the lines on the form. You can copy an entire line on the form, not just singular items. You can also right-click in the body of the form to access these options or go to the Edit menu. Customize Design This is different from the Customize Template button. Here you can apply background and other styles to the form. It s free to create a customized design one time. There is a fee to make changes afterwards. You can apply a saved design to multiple QuickBooks Desktop forms. Module 4: Sales and Receivables 8

11 Send/Ship Tab From left to right, the options on the Send/Ship tab are: Shipping Manager functions You can ship directly from the QuickBooks Shipping Manager using your existing FedEx, UPS, or United States Postal Service account, or you can sign up for an account Mail Invoice You can mail an invoice through QuickBooks Billing Solutions, but there is a fee for this service Prepare a Letter This will take you to the screen to create a letter in Microsoft Word. You can also get to this from Company Prepare Letters with Envelopes. Reports Tab The Reports tab of the ribbon contains related reports QuickReport This will run a QuickReport on the customer Transaction History This button will show you any related transactions like payments, credit memos and the deposit. You can also jump to the related transaction by clicking the Go To button in the window. You can see the last time the invoice was sent from QuickBooks. This information can be printed. Transaction Journal This button will show you the accounting entries behind any transaction. You can also get to this report by pressing Ctrl + Y on your keyboard while you are on or in any transaction in QuickBooks. Module 4: Sales and Receivables 9

12 Other related reports Other Transaction Screen Functions This icon in the upper right that looks like two crossed arrows is the Maximize button; it will enlarge the viewing area of the transaction screens. You can click again to return to the normal view and you can hide the ribbon entirely by clicking the triangle shaped icon next to it. On the far right of the open Invoice transaction is the collapsible History panel. It consists of two tabs. The Name tab summarizes customer (or vendor if you re looking at a purchase form) information and recent transactions for the customer (or vendor). You can jump to the Edit Customer (or Edit Vendor) screen by clicking the Edit button. Clicking any blue links will take you to that form or to a report. Module 4: Sales and Receivables 10

13 The Transaction tab shows information related to the transaction you are viewing. You can see when it was created and modified and by whom. You can also create and view transaction-specific notes. Module 4: Sales and Receivables 11

14 Invoices and Sales Receipts Invoices You use an invoice when a sale is made but the money is not collected at the time of sale. This creates an Accounts Receivable due from the customer. A company that is a cash-basis taxpayer may still want to use the invoicing functions to help manage the business. You can get to the Invoice form from the Invoice icon on the Home page or the left or top Icon bars. Alternately, select Customer Create Invoices on the menu bar. The keyboard shortcut to open an invoice form is Ctrl + I. If the customer is already set up in the Customer list, their information will auto-populate when you enter the name or choose them from the drop-down list in the Customer:Job field. You can always set up list elements on the fly by selecting Add New from the drop-down list or by typing a new name into the Customer field. Module 4: Sales and Receivables 12

15 All versions of QuickBooks Desktop software now offer e-invoicing, a fee-based service which features a smarter way to send invoices and record payments. With e-invoicing you and your clients can: Send invoices with a Pay Now link, HTML view or plain text view using Microsoft Outlook or Webmail Accept payments by Visa, MasterCard, Discover, American Express or ACH bank transfer Update QuickBooks data automatically as payments are downloaded directly into QuickBooks Credit card payments and ACH bank transfers are permitted if you have a Merchant Agreement, subject to fees. ACH bank transfers have a $.50 fee per transaction (payment) regardless of the invoice amount. For more information: Sales Receipts If the payment, donation or other consideration has already been received, then you use a Sales Receipt to record the income right away. (Think of the Sales Receipt form as the QuickBooks equivalent of a cash register receipt when you buy a pack of gum.) You do not need to select a customer when using Sales Receipts. However, for easy access to transaction history in the Customer Center, you can use a generic name, like Daily Sales Summary or Cash Register instead of leaving the name blank. Retail businesses may use cash registers or a point of sale system to record sales. Those systems produce register tapes or reports to summarize income and payments by categories. The Sales Receipt form is good for summarizing these types of sales or any other type of sale that you want to summarize by Item. Module 4: Sales and Receivables 13

16 If a summary sales receipt covers payments by more than one method, like checks and credit card charges, you can show the breakdown by using a different Payment Type Item for each method. Another example of how to use a Sales Receipt form would be for a donation. A non-profit organization or church can change the Sales Receipt template to read Donation. The non-profit edition of QuickBooks comes with a Donation template. Don t forget that with the QuickBooks Accountant Desktop (or Enterprise Accountant), you can toggle to any of the industry-specific versions. In addition to using a POS system or cash register, some businesses may use another type of Accounts Receivable system (outside of QuickBooks) to track the details of sales. These businesses may not want to use Items in QuickBooks because they get all of their management type reporting on customers and sales out of the other system. In these cases, you may want to bypass using the QuickBooks forms and items altogether and post directly to the Income or other accounts through a Journal Entry or the Make Deposits window. If you need to post to an Accounts Receivable account using a journal entry, then create your own Other Current Asset type of account and do not use an Accounts Receivable type account in QuickBooks or else you will need to include a customer name. Also, you can only have one A/R line in a journal entry, so creating your own A/R as an Other Current Asset type account will get around these issues. Module 4: Sales and Receivables 14

17 The trade-off to using these methods is there are sales reports in QuickBooks that are item-based; therefore, if an Invoice, Sales Receipt or Credit Memo is not used, then that data will not be included in these item-based reports. All of the reports under Reports Sales are item-based, so any posting made through the register, the Make Deposits screen or a journal entry will not show up on these reports. An alternative to getting sales from another system into QuickBooks is to purchase a third-party program that can import the transactions into QuickBooks as invoices or sales receipts. Statement Charges and Statements Another way to record income is through the use of Statement Charges. QuickBooks allows you to create billing statements instead of invoices. Select Customers Enter Statement Charges. Statements work for clients who accumulate charges with their customers before requesting payment, or who assess a regular monthly charge. Enter Statement Charges directly into the A/R register for a customer. Do not use Statement Charges to track charges subject to sales tax because you cannot add sales tax to a Statement Charge. When you record Statement Charges, the customer s printed statement contains the date, description and amount of each charge. You can customize the statement to include columns for quantity and rate. Select Customers Create Statements to print a statement. Module 4: Sales and Receivables 15

18 When using Statement Charges all the charges will remain in the current aging bucket until you print a statement. This is because QuickBooks sets the date of expected payment (based on payment terms for the customer) for each new Statement Charge only when the statement is printed. Even if you don t send the statements, when using Statement Charges you should print them out or to a PDF file to set the due date of the Statement Charges so the aging at the bottom of the statement will be correct. You can also create a statement for customers to whom you send invoices, but if they are not needed, you do not have to create statements in order to set due dates (they are already calculated, either based on the payment terms for the customer, or based on the due date if it has been entered in the appropriate field of an Invoice). Credit Memos and Refunds You can record the return of items sold, enter a credit for the customer to be used toward a future purchase, create a refund check, process a credit card refund or apply a credit to an open invoice all from the Create Credit Memo & Refunds window. Select Customers Create Credit Memos/Refunds. You can issue a refund by check or credit card. Select the Use credit to give refund option from the Main tab of the Transaction ribbon. Select the Process credit card refund when saving checkbox for credit card refunds that you want to process when you re done entering the transaction. If you have more than one job for a customer, be sure to assign the Credit Memo to the correct job. A Credit Memo can only be applied to the same Customer:Job for which it was created. Module 4: Sales and Receivables 16

19 Another use for a Credit Memo would be when you will not receive payment and need to remove an invoice from QuickBooks. Cash Basis For a cash-basis client, use the same items on the Credit Memo that were on the original invoice. If you use the same items on the Credit Memo the net effect to the income account is zero. Use this method to adjust sales tax. 1. Open the invoice you want to write off. 2. Click the Refund/Credit button. The Credit Memo form will open; it will have the same items as the original invoice. 3. Save the form. Another way might be to set up Other Charge items to track the reason for the write-off then point these items to a Returns and Allowances income account. Accrual Basis If you are working with an accrual-basis company, posting to Bad Debt Expense might be more appropriate. 1. Create an Item that points to Bad Debt expense. 2. Use this Item on the Credit Memo. The Client Data Review tool in QuickBooks Accountant Desktop and QuickBooks Desktop Enterprise editions can also be used to write off invoices to bad debt. Discount Method Another method of writing off an invoice would be to apply a Discount for the outstanding amount. You do this in the Receive Payment window. (However, there is no possibility of affecting sales taxes by applying a Discount.) 1. Open the invoice you want to write off and click the Receive Payment button. 2. Click the Discount and Credits button. 3. On the Discount tab enter the amount of the discount then enter the account to which you want to post the discount. Module 4: Sales and Receivables 17

20 Estimates, Progress Invoicing and Sales Orders Estimates An Estimate is non-posting transaction and does not affect any account balances. If the preference to Create Estimates is turned on in the Preferences menu, then you can create these forms in the Create Estimates window. Select Edit Preferences Jobs & Estimates in Company Preferences tab to turn on. Then select Customers Create Estimates to create them. You can create multiple Estimates for each job or customer. Mark unaccepted Estimates as inactive, if needed. As well, one can change the name to something other than Estimate on the printed form (such as Quote or Proposal) by customizing the template. You can create an invoice from an Estimate by clicking the Create Invoice button in the Main tab of the Transaction ribbon. You can also turn an Estimate into a Sales Order or a Purchase Order in the same area. Progress Invoicing Progress Invoicing (also known as progress billing) lets you invoice for jobs you work on and complete in phases. When using Progress Invoicing, you start by creating an Estimate for the job. You don't have to give this Estimate to the customer, but the process in QuickBooks has to start with an Estimate. Then, as you complete each phase, you can easily transfer items from the original Estimate to an invoice. You can specify which items to include on each invoice and change estimated amounts or percentages. Module 4: Sales and Receivables 18

21 When you use Estimates to create Progress Invoices, you can run reports to help track the estimated versus actual costs. Sales Orders Clients who use QuickBooks Desktop Premier, Accountant Desktop or QuickBooks Desktop Enterprise can use Sales Orders to schedule work crews, plan labor costs, and estimate revenue flow based on services scheduled. Select Customers Create Sales Order to create a Sales Order. Some other uses of Sales Orders are: Creating a single invoice for multiple orders Some customers may place an order regularly enough that creating an invoice for every order is neither practical nor desirable. By using Sales Orders, it is possible to keep track of multiple orders and combine them onto a single invoice at an appropriate time, such as at the end of each month. Partial invoicing When you can fulfill only part of a customer's order, you can create an invoice based on the Sales Order and select only those items you can fulfill. The Sales Order keeps track of what has and hasn't been invoiced. Clients with Inventory can use it for Backorder tracking If you have some but not the entire quantity of a specific item, you can fulfill and invoice the quantity you do have. Then both the sales order and the invoice will show the quantity fulfilled and the quantity on backorder. When you create an invoice for a customer with outstanding Sales Orders, QuickBooks prompts you to select the Sales Order you want to reference. You must select items from this list to keep the Sales Orders and Invoices linked. When you ve invoiced for all the items on a Sales Order, QuickBooks stamps it as Invoiced in Full. Use the Open Sales Orders by Customer report to track open Sales Orders. Modify the report to include the Ship Date field, which indicates the date promised for delivery. You may want to memorize the modified report for clients. This report shows the Open Balance, the value of the Sales Order that remains unfilled. Another use for Sales Orders is as a scheduling tool that can be used in place of pending sales as a way of entering future services. To use Sales Orders to record information about services to be performed in the future, modify the Sales Order template by adding the Ship Date field to the form. You can change the field name to Date Scheduled on the template. When an order comes in for services to be performed in the future, record the order on the customized form. Enter the date the service is to be performed in the Date Scheduled field. Module 4: Sales and Receivables 19

22 To create a work schedule based on the information entered in the Date Scheduled field, modify the Open Sales by Item Report by removing the Due Date column and adding the Ship Date column. Then, sort the report by the Ship Date column. QuickBooks lists each scheduled service date in chronological order by service type. Auto Copy Ship-To Address on Purchase Orders QuickBooks Desktop Premier, Accountant Desktop and QuickBooks Desktop Enterprise allow you to auto copy the Ship To Address onto a Purchase Order. When a Purchase Order is created directly from a Sales Order or an Estimate, a checkbox next to Drop ship to customer is available to select. This populates the Ship To field on the Purchase Order with the customer s shipping address. Module 4: Sales and Receivables 20

23 Using this feature means no more hassle with manually copying addresses from the Create Sales Order or Create Estimate form into the Purchase Order Ship To field, required in earlier versions if materials were dropped shipped to the customer site. Once selected, QuickBooks will remember your selection and will default the same choice the next time a Purchase Order is created from these transactions. Backorders QuickBooks helps you track backordered items by adding a Backordered column to Sales Orders. You can add this column to invoices by customizing the Invoice template. Note that backordering always starts with a Sales Order and is only available in QuickBooks Desktop Premier, QuickBooks Accountant Desktop and QuickBooks Desktop Enterprise. Use the Sales Order Fulfillment Worksheet tool to view information about open Sales Orders. Select Customers Sales Order Fulfillment Worksheet. This tool enables you to quickly determine which orders can be fully or partially filled (and shipped) based on quantity available. You can choose to show only those orders that can be completely filled or all orders that can be fully or partially filled. Module 4: Sales and Receivables 21

24 PAYMENT ACTIVITIES Receive and Deposit Payments You must use the Receive Payment function to record a payment for an invoice. Select Customers Receive Payments. Once you save the payment, the Undeposited Funds account will increase and the outstanding A/R will decrease. Recording a Sales Receipt will also increase the Undeposited Funds account. Module 4: Sales and Receivables 22

25 All editions of QuickBooks Desktop Enterprise feature expanded functionality in the Customer Payment screen, the ability to sort on the various columns. Click on any column header to sort the displayed data by the contents of that column. Click once to sort and a second time to sort in reverse order. This makes finding specific invoices against which to apply the payment easier, especially when many outstanding invoices exist. You should recall from the module on the Chart of Accounts that the default file settings are to have customer payments received go to the Undeposited Funds account that QuickBooks uses to hold the payments until the client actually makes the deposit. Module 4: Sales and Receivables 23

26 Then you use the Make Deposit window to group the payments received into a single deposit entry into the bank account. Select Banking Make Deposits. That way you can compare the total dollar amount for a particular deposit slip or batch to the total dollar amount of the deposit on the bank statement, rather than having to use a calculator to add up the individual payments on a given day and compare them to the total deposit per the bank statement. This will help with reconciling the bank account. If there are items in the Undeposited Funds account, the Payments to Deposit window will pop up when you open the Make Deposits screen. If it does not appear, click the green Payments icon at the top of the Make Deposit window. Module 4: Sales and Receivables 24

27 If you are using pre-printed deposit tickets, you can print a deposit ticket. If you are not printing the ticket from QuickBooks, you can print a Deposit Summary. If cash back is received from the deposit, you can record that in the Deposit window as well. The mistake that clients tend to make with this process is they don t understand they must take action to deposit any received payments into the bank account. Because they don t see the payment in the register or on reports after they receive it, they often make a duplicate deposit entry into the bank account register and duplicate the income. Non-Sales-Related Deposits If you were to receive a non-sales-related payment that you need to deposit, like an insurance overpayment for example, you would simply click on the last blank line, and enter details of the check to add it to the deposit total. Turn Off Undeposited Funds Default Posting Once you and the client understand the workflow of using the Undeposited Funds account to group payments into one bank account, you may want to disable the default setting. Select Edit Preferences Payments in the Company Preferences tab. Uncheck the box next to Use Undeposited Funds as default deposit to account. Now you can choose whether to use the Undeposited Funds account to group payments or deposit directly into a bank register every time you receive a payment. Module 4: Sales and Receivables 25

28 Customer Deposits and Prepayments QuickBooks does not have a specific feature to manage prepayments. However, there are different methods of recording this information: creating a negative receivable and using a liability account. Create a Negative Receivable With this method, you record the advance payment on the customer s account before you enter the sale; as a result, you create a negative receivable for the customer. To do this, simply record the payment in the Receive Payment window and do not apply it to any open invoices. QuickBooks will ask you if you want to print a credit memo. This does not actually create a Credit Memo type of transaction. Once you create an invoice for the customer, you can apply this credit to the invoice to clear it. It s important to note that for cash-basis reporting, no income will be recorded until the credit is actually applied to an invoice. Use a Liability Account Using this method, you track the customer deposits in a separate liability account. Step-by-Step: Use a Liability Account 1. Create an Other Current Liability type account to hold the customer deposits. 2. Create an Item that points the sales transactions to the Other Current Liability account. 3. Use this Item on a Sales Receipt to record receiving the deposit or down payment. 4. When the invoice is created, use the same Item again and enter the amount as negative to apply the deposit to the invoice. This will remove it from the deposit account. 5. Create a report to help you keep track of what is in the Deposit Liability account. Module 4: Sales and Receivables 26

29 Over time, you may have a lot of transactions in this account. In order to keep it straight, you can create and memorize a Custom Transaction detail report. Step-by-Step: Create a Custom Transaction Detail Report 1. Select Reports Custom Reports Transaction Detail. 2. Click the Customize Report button. 3. Change the date range to All. 4. Click the Filter tab, select Account from the list and choose the Other Current Liability account. 5. Click OK to run the report. 6. In the Total Report field near the top of the window, click the drop-down list and select Customer. Now all the transactions are grouped and totaled by customer. Memorize this report to use it again. Reconcile the Deposit Liability Account If you want to remove the transactions from this report after the deposit has been applied, you would need to reconcile this account. Step-by-Step: Reconcile the Deposit Liability Account 1. Select Banking Reconcile and choose the Liability account. 2. Enter the current date as the Ending Statement Date. 3. Enter 0 as the Ending Balance. This is referred to as a zero reconciliation. 4. Continue to the Reconciliation screen. 5. Check off the items that have been applied to invoices; credit entries will be on the right and debit entries on the left. You should see one entry on each side for items that have gone into the account and come out of the account. Check them both off. 6. The cleared balance should be zero when you are done. Module 4: Sales and Receivables 27

30 Now modify the report you created for the Deposit Liability account. Add the Cleared Status filter, set it to No then memorize this report, replacing its earlier setting if it was memorized before adding the Cleared Status filter setting. The report will now only show the items that you did not mark as cleared. Therefore the report should only show current items in the Deposit account without all the past transaction history. Accounting for Returned Payments Record Bounced Check Tool There is a Record Bounced Check feature to help you quickly process NSF transactions received from customers. However, it only works if the payment was applied to an invoice and if the payment method selected was a check. If a Sales Receipt was used, you must use another method. Locate the payment that bounced then click the Record Bounced Check button in the ribbon. If the bank charged a fee, enter that here and choose the account you want to post the fee to. If you want to charge a fee to your customer, enter that on the screen as well. Module 4: Sales and Receivables 28

31 The Summary screen tells you what the transactions are. QuickBooks will mark the original invoice as unpaid. It will create a journal entry to back out the check and the fee from your bank account. It will also create a new invoice for the fee you want to charge the customer. It will automatically create a new income account in the Chart of Accounts called Returned Check Charge. Now you can create a statement or give the customer the original invoice and the fee invoice. The payment is stamped in QuickBooks as bounced. Create an Item to Record Bounced Checks Another way to handle bounced checks from customers (useful if the original sale transaction was a Sales Receipt, for example) is to create an Item in the Item list and use it on an invoice to adjust the bank balance and re-invoice the customer at one time. Step-by-Step: Create an Item to Record Bounced Checks 1. Create an Item called Bounced Checks and map it to the bank account you need to adjust. 2. Create another Item if you want to charge the customer for the fee. Call it Bounced Check Fee and map it to an Other Income type account if you charge more than the bank, or point it to the Bank Service Charges expense account if you just want to net the charge against what the bank charged the client. 3. Use both of these items on an invoice. This will reduce the bank account for the amount of the NSF check, increase the customer s A/R balance and bill them for the fee. Module 4: Sales and Receivables 29

32 Journal Entry You can also use a Journal Entry to back the payment out of the bank account and reinstate a receivable. Step-by-Step: Back a Payment out of the Bank Account and Reinstate a Receivable 1. Select Company Make General Journal Entries. 2. Debit the Accounts Receivable account. You must put in the Customer:Job name when you post to an Accounts Receivable type account. This increases the customer s A/R balance. 3. Credit the bank account. This reduces the bank account. 4. If the bank charged a fee, enter a credit to the bank account for that amount as well and a debit to the Bank Fee expense account. Optionally, if you want to show the original invoice as unpaid, the next step would be to apply the returned payment to the journal entry. This would make the Aging reports correct but it would alter any cash-basis Profit and Loss and Sales Tax reports for that period. 5. Open the original payment. 6. Uncheck the invoice that it was applied to and put the check mark on the line for the journal entry you created. This will mark the original invoice as unpaid and the Aging reports will be correct. 7. Create an invoice for the bank fee amount if you want to bill the customer for the fee. To do this, create a new Item in the Item list and point it to an Other Income type account if you charge more than the bank, or point it to the Bank Services Charges expense account if you just want to net the charge against what the bank charged the client. Module 4: Sales and Receivables 30

33 POWER TOOLS FOR INVOICING AND RECEIVABLES MANAGEMENT Income Tracker The Income Tracker is available in all Microsoft Windows editions of QuickBooks Desktop. Access the Income Tracker by selecting Customers Income Tracker. You can also get to it from the Customer Center and Icon bars. The Income Tracker makes it easy to find and work with your unbilled sales (Estimates and Sales Orders), unpaid sales (open and overdue invoices), and paid sales (payments and sales receipts). The paid items only include those paid within the last 30 days. The colored blocks are filters. If you click one, it will filter the list below accordingly. You can easily and quickly take action on these items from this list. For example, you can filter the list to see any active estimates by clicking on the Estimates section. Then you can select an estimate and click the Action button to convert it to an Invoice, Mark as Inactive, Print or . You can quickly work on collecting past due invoices by clicking the overdue filter. Customer phone numbers appear in the list and you can send clients an reminder. templates can be customized in the Preferences window. NOTE: The Income Tracker isn't available if Multiple Currencies is turned on. A user must have full access to the Sales and Receivable functions in QuickBooks Desktop to see it. Module 4: Sales and Receivables 31

34 Collections Center The Collections Center screen can be found in the Customer Center. You can now work with overdue invoices in the Income Tracker, so most of the Collection Center s functionality has been replaced by the Income Tracker. As a result, the Collections Center is no longer visible by default as it was in 2011 through 2013 editions of QuickBooks Desktop. If you don t see the Collections Center button in the Customer Center, you would turn it on in the Company Preferences tab of the Sales & Customers section in Preferences. The additional functionality of the Collections Center is that it also identifies invoices that are almost due and you can send customers s regarding those types of invoices. Module 4: Sales and Receivables 32

35 Lead Center You can get to the Lead Center by selecting Customers Lead Center. Use the Lead Center to track data about sales prospects in one place inside QuickBooks Desktop. You can batch enter or copy and paste leads from Microsoft Excel by clicking the Import Multiple Leads button. To add a single lead, click the New Lead button. You can add multiple locations and contacts to each lead. You can also add To Do s, Contacts, Locations and Notes for leads. To convert the lead to a customer, click the Convert icon in the upper left of the Lead Information pane. Module 4: Sales and Receivables 33

36 Batch Invoicing You can get to Batch Invoicing by selecting Customers Create Batch Invoices. This is an especially useful feature if the business typically invoices groups of customers for the same thing on a recurring basis. Step-by-Step: Create Batch Invoices 1. Choose the customers for whom you wish to create a batch. You don t have to save the group but if this is something you are going to do more than once, you should create a billing group that can be used in the future. Create the group first and then add customers to it. You can search for clients here. You can also customize these columns to help with searching and creating groups. Module 4: Sales and Receivables 34

37 2. Create the invoices. Select the Date and Invoice template here, then add the line items you want to appear on the invoices. Module 4: Sales and Receivables 35

38 3. Review the list of invoices. Note that the Send Method, Sales Tax and Terms are controlled by what is set up for each individual customer. You need to make sure those are all set up correctly beforehand. 4. Click Create Invoices to process the transactions. You will get a summary that tells you if the invoices are marked to be sent or ed. Bulk Clear Send Forms Has your client inadvertently marked customer invoices to Send Later? With all versions of QuickBooks Desktop, your client can remove forms in the Send Forms window in batch with a single click. Module 4: Sales and Receivables 36

39 Price Levels Enable Price Levels by selecting Edit Preferences Sales and Customers. Then select Lists Price Level List to set them up. Price Levels let you set custom pricing for different customers or jobs. Once you create a Price Level and associate it with one or more customers or jobs, each time you create an invoice, Estimate, Sales Receipt, Sales Order or Credit Memo for those customers or jobs, QuickBooks automatically pulls up the correct custom price (while offering the standard price and other price level prices in a dropdown menu as well). There are two types of Price Levels: Fixed Percentage and Per Item. Per Item Price Levels are available only in QuickBooks Desktop Premier, QuickBooks Accountant Desktop, and QuickBooks Desktop Enterprise editions. Fixed Percentage Price Levels let you increase or decrease prices of all items for a particular customer or job by a fixed percentage. For example, you might use a Fixed Percentage Price Levels for a customer who gets a 10% discount on all the products and services you offer. You can also set different rounding rules for Fixed Percentage Price Levels. Per Item Price Levels let you set custom prices for individual items. For example, you could create a Price Level that allows you to charge reduced per hour rates for labor, but charge the standard price for inventory items. Module 4: Sales and Receivables 37

40 Once you set them up, you can apply them to customers by editing the Customer record, selecting the Payment Settings tab and selecting the Price Level. Billing Rate Levels Billing Rate Levels are available only in the Contractor and Professional Services editions of QuickBooks Desktop Premier and Enterprise, as well as QuickBooks Accountant Desktop and QuickBooks Desktop Enterprise Accountant. Select Lists Billing Rate Level list to set up billing rates. Billing Rate Levels are similar to Price Levels, but they let you set custom Service Item rates for different employees and subcontractors. You might want to use them if you find that one standard rate for a given service is not always sufficient. For example, different employees doing the same service might bill at different rates based on experience level or labor burden costs. Or you might charge different rates for an employee based on the difficulty of the task. You can set a Fixed Hourly Rate for all Service Items, or you can set custom rates for each Service Item. Once you create Billing Rate Levels, you must associate them with employees and vendors. For employees, edit the Employee record and select the Billing Rate on the Additional Info tab. For subcontractors, edit the Vendor record and select the Billing Rate on the Payment Settings tab. Module 4: Sales and Receivables 38

41 The next step would be to track the employee or subcontractor time in QuickBooks Desktop and make sure to assign it to a customer or job. When you bill customers for that time, the custom Billing Rates should appear. We will learn more about invoicing customers for time in the job costing module. NOTE: When you track time in QuickBooks, the time information can be used for customer invoices, payroll, or both. Billing Rate Levels are used only when invoicing your customers; they have nothing to do with payroll. QuickBooks Payments These tools will help your clients get paid faster. If your clients want to accept credit card payments through QuickBooks, they can apply for a merchant account. The really nice thing about using QuickBooks Payments (instead of another merchant service) is the transactions can automatically be posted into QuickBooks and you don t have to match up the deposits as you would with a third-party service. You can learn more about QuickBooks Payments by going to Customers Add Credit Card Processing. CORRECT COMMON ERRORS WITH RECEIPTS Undeposited Funds Ignored Many clients don t understand that the default QuickBooks Desktop company setup is for received payments and sales receipts monies to go into Undeposited Funds. If they have to use the Make a Deposit function to record the payments to the bank account, usually they will make their own entry into the bank account register and post the entire amount to income (they generally do not think of sales taxes being charged). This will double their income figures because the income is recorded on the invoice and once again with the deposit entry. (In fact, if they charged sales taxes on the original invoices, this error would more than double their income as they also include the amount for sales taxes when posting a deposit to income.) A clue that this is happening would be a large amount listed on the balance sheet in the Undeposited Funds account. There are three ways to fix this error. The first and most detailed method is to edit each deposit entry. Module 4: Sales and Receivables 39

42 Step-by-Step: Edit Deposit Entry 1. Find the deposit entry the client made in error and open the deposit form. 2. Click the Payments button to view the payments sitting in the Undeposited Funds account. 3. Add the correct payments to the deposit form then delete the incorrect line item (Ctrl + D). 4. If the deposit has been reconciled, this will leave the reconciled status intact. Following this method would correct the income in the correct periods. The second method for fixing this error would be to create one large deposit into the bank, pulling in all the payment items erroneously remaining in Undeposited Funds at once, then enter the income account and the amount as a negative to create a zero deposit. This method simply moves the money out of Undeposited Funds and reduces the overstated income. This second method works well if your client only uses one income account. It s up to you to evaluate the best method to use. Another thing to consider is if this error spans multiple tax periods, the client may need to file amended income tax returns if they overstated income in prior years. The third method for cleaning up Undeposited Funds is the Clear up Undeposited Funds Account function, one of the Client Data Review (CDR) tools. CDR is available in QuickBooks Accountant Desktop and all editions of QuickBooks Desktop. You must be signed in to the QuickBooks company as an Admin or External Accountant user in order to access CDR. In QuickBooks Accountant Desktop and QuickBooks Desktop Enterprise, CDR tools are accessed from the Accountant menu. In non-accountant editions of QuickBooks Desktop Enterprise, CDR tools are accessed from the Company menu, under Accounting Tools. In addition, External Accountant users (with an active QuickBooks Accountant Desktop Plus subscription or an active ProAdvisor Membership) signed in to their clients QuickBooks Desktop Pro or Premier software can access this and other CDR tools using the Accountant ToolBox from the Company menu. You will learn about the Client Data Review tools and the Accountant Toolbox in a later module. Module 4: Sales and Receivables 40

43 Payments Not Received Against Invoice Another error you might see is if the client never applied a payment received from their customer to an invoice in the first place, but deposited it directly to the bank account register specifying an income account. There are two ways to fix this. You could first enter the payment and apply it to the invoice. Then you follow the steps outlined in the previous section to edit the original deposit entries to pull in the payments and delete the erroneous line item. The other method is to edit the original deposit entry, change the Account from an income account to Accounts Receivable. Make sure to put the customer s name in the From column. This creates a credit on the customer s account that you can then apply to the open invoice. Payments and Credits Not Applied Another common error clients make is to receive the payment on an invoice or create a credit memo but not actually apply it to an invoice. Step-by-Step: Correct Unapplied Credit 1. Run the Open Invoices report to find unapplied credits. 2. Drill down on Credit Memo transaction. 3. Click the Use Credit to Apply to Invoice button in the ribbon. You should review this monthly or at least at the end of the fiscal year. Any payments not applied to an invoice will not get picked up on a cash-basis Profit and Loss report as income. Alternately you could use the Fix Unapplied Customer Payments and Credits tool in Client Data Review and let QuickBooks do the work for you. Module 4: Sales and Receivables 41

44 MULTIPLE CURRENCIES If you have clients who work with customers or vendors outside the U.S., then you know about the complexities of multicurrency accounting. Turn on Multiple Currencies NOTE: Before turning on this preference, you should back up your client s file. Once you turn on the Multiple Currencies preference, you cannot turn it off. Step-by-Step: Turn on Multiple Currencies 1. From the menu bar, select Edit Preferences Multiple Currencies from the list to the left and click Company Preferences. Module 4: Sales and Receivables 42

45 2. Select Yes, I use more than one currency. 3. Review the list of warnings regarding backing up and features that are unavailable once multiple currencies are enabled. If you have backed up and are sure you wish to proceed with multiple currencies, select Yes. Module 4: Sales and Receivables 43

46 4. Select your client s Home Currency from the list. The Home Currency is in the country where your client pays taxes and processes payroll. Also, this selection determines the currency QuickBooks uses to present financial statements. 5. Select OK to turn on multiple currencies. 6. View the warning that the company will close and reopen; select OK. Module 4: Sales and Receivables 44

47 Select Currency and Update Exchange Rates Select Lists Currency list to open the Currency list from the Lists menu. By default, QuickBooks lists all available currencies and most of them are marked as inactive. You should activate the ones your client uses and hide the inactive currencies. Module 4: Sales and Receivables 45

48 There are two ways you can automatically update the exchange rate and two ways you can manually update them. Step-by-Step: Update Exchange Rate Automatically 1. Click the Activities button at the bottom of the Currency list. 2. Select Download latest exchange rates. 3. You can also get to this by selecting Company Manage Currency. Step-by-Step: Update Exchange Manually 1. Double-click on a currency from the list and enter the date and prevailing exchange rate for that date. 2. Select OK. 3. The other way is to change the exchange rate when you are creating the transactions. Module 4: Sales and Receivables 46

49 Set up Foreign A/R or A/P Account Once Multiple Currencies are enabled, QuickBooks adds a Currency field to the New Customer/Vendor window. When you select a currency for a customer/vendor, QuickBooks automatically creates an Accounts Receivable or Accounts Payable account for that currency if it doesn t already exist. NOTE: You cannot change an existing customer s/vendor s currency if they have any transactions. If your client has an existing customer (or vendor) they want to track in a second currency, you must set up a new name. When you enter invoices or bills, QuickBooks automatically updates the Foreign Accounts Receivable or Accounts Payable account. The balance on the Chart of Accounts and Customer/Vendor list is displayed in the foreign currency. The balance on financial statements is displayed in the home currency. Invoices When you enter an invoice, QuickBooks uses the latest exchange rate as of the date of the invoice to convert the item price into foreign currency. You can also change this rate manually on the invoice. QuickBooks displays the invoice in U. S. dollars and the foreign currency. If your client does not want foreign item prices to fluctuate based on exchange rate, use Price Levels to create foreign prices that don t change based on exchange rates. Go to F1 to get more info on how to do this. Payments When you enter a foreign customer in the Receive Payments window, QuickBooks automatically expects that foreign currency. You can change the exchange rate in the window or in the Make Deposits window. Here you enter the actual rate the bank used when they deposited the money. Bills When you enter a bill, enter the cost in the foreign currency. QuickBooks displays the cost in dollars based on the latest exchange rate. You can also change this rate at the bottom of the Enter Bills window. When you pay bills you must select the foreign Accounts Payable account at the top of the Pay Bills window. Enter the actual exchange rate used by the bank. Module 4: Sales and Receivables 47

50 Foreign Bank Account If your clients have a Bank or Credit Card type account in a foreign currency, you can select the currency in the New Account window. A bank or credit card account s currency cannot be changed once there are transactions in the account or it has a balance. For bank and credit card transactions, QuickBooks automatically creates transactions in the currency assigned to that account during setup. As with Accounts Receivable or Accounts Payable, QuickBooks displays the balance in the foreign currency on the Chart of Accounts, but displays the balance in U.S. dollars on the balance sheet. Use the Transfer Funds window to transfer money between local and foreign bank accounts. When recording checks or credit card charges for foreign accounts, clients should enter the amount in the foreign currency. QuickBooks automatically displays the cost in U.S. dollars. Your client can also change the exchange rate at the bottom of the Write Check and Enter Credit Card Charge windows. How QuickBooks Handles Reporting Differences in the Value of Multiple Currencies The balance in any foreign account is based on the exchange rate at the time you create each transaction. However, when the balance is settled or paid, the exchange rate may (and most likely will) have changed. This means your clients will experience a gain/loss due to exchange rate fluctuations. Fluctuations in exchange rates are shown on reports in three ways: Realized Gains and Losses Select Reports Company & Financial Realized Gains/Losses. This report shows the difference between what you expected to receive or pay and what you actually received or paid based on the exchange rate when the transaction was settled. QuickBooks posts this difference to an Other Expense account called Exchange Gain or Loss. Unrealized Gains and Losses Select Reports Company & Financial Unrealized Gains/Losses. If your client has outstanding foreign A/R, A/P or bank balances, they may want to see what those balances are worth based on the current exchange rate. QuickBooks prompts you for the current exchange and uses it to calculate the unrealized gain/loss. There is no effect on the General Ledger when running this report, it is for information only. After Home Currency Adjustment for Financial Statements Select Company Manage Currency Home Currency Adjustment. When it is time to prepare end of period financial statements, all foreign accounts should be updated based on the period end exchange rate. Until you do this, the balances will show at the exchange rate used at the time the transactions were entered. Module 4: Sales and Receivables 48

51 REPORTING ON SALES AND RECEIVABLES Insights on the Home Page Insights is a separate tab on the Home page. This view of Insights regarding the company as a whole is more a dashboard than a report, although you can generate reports from it. Module 4: Sales and Receivables 49

52 The Insights feature is comprised of various information panes that you can browse with sideways arrows to access. These panes include graphs and charts including Top Customers by Sales, on which you can drill down to get to detailed lists and individual transactions. It is also customizable (to specify the panes you want to have available) by clicking on the gear icon and it can be printed. Invoices and bills can be launched from this dashboard. NOTE: The Insights on the Home page feature isn't available if Multiple Currencies is turned on. A user must have full access to the Sales and Receivable, Purchases and Payables, and Sensitive Financial Reporting permissions in QuickBooks to see it. Module 4: Sales and Receivables 50

53 Item-based Reports As discussed earlier in this module, on Item-based reports, sales do not appear unless they are entered using an Item. That means the sale must be entered via an Invoice, Sales Receipt or Statement Charge (or a Credit Memo if the item is being returned). If you or your clients enter sales directly into the Make Deposits window, Check Register or with Journal Entries, then these reports will not be accurate. All of the reports found under Reports Sales are Item-based reports. Module 4: Sales and Receivables 51

54 Sales by Customer Detail is for clients who want to know exactly what each customer bought. This report shows the details of every line of every income transaction attributed to each Customer:Job. There is also a Summary version. Module 4: Sales and Receivables 52

55 Items have had custom fields for many years in QuickBooks. Now, all Windows versions of QuickBooks Desktop have the ability to run item-based reports filtered on custom fields attached to these items. The Filter screen below in the Sales by Customer Detail report produces just a small portion of the original report, filtered for the text in one or more custom fields (with a modified header to describe what is being displayed). Module 4: Sales and Receivables 53

56 Other Reports There are many reports to help your clients better understand their sales and receivables, but there are too many to review them all here! Go to Reports Customers & Receivables or Reports Company & Financial. The Income by Customer Summary report should be run for clients who want to know how much they are earning from each customer. It will show the net income for each customer sales less any expenses attributed to that customer. There is also a detailed version. Module 4: Sales and Receivables 54

57 There are tools in the Company Snapshot to analyze all different types of data about Customers & Sales. Select Company Company Snapshot. Module 4: Sales and Receivables 55

58 Topic 2: Sales Tax Topic 2: Sales Tax Sales tax can be overwhelming for many clients. The laws can be complicated, and the mechanics for collecting and reporting sales tax are complex. For example, some states have one state-wide tax rate, while others have multiple rates depending on your client s county or city. In some states, your clients pay taxes to one government entity. In other states they pay taxes to multiple entities. Fortunately, QuickBooks simplifies the process for tracking, reporting, and paying sales tax. SETTING UP AND USING SALES TAX If Sales Tax Tracking has not been turned on when the file was set up, select Edit Preferences Sales Tax Company Preferences tab. Select Yes to turn Sales Tax Tracking on. Now you must create a separate Sales Tax Item for each specific type of tax that clients have to pay to a tax agency. Click the Add Sales Tax item button to set them up. Module 4: Sales and Receivables 56

59 Topic 2: Sales Tax Some clients must either break out city, county and state taxes or pay different parts of the same tax to several different tax agencies. For this setup, you would create each individual rate first then create a Sales Tax Group Item from the Item list or the Preferences window. After the items are set up you need to add Sales Tax Codes. Sales Tax Codes allow you to report on the reason why the sales were taxable or non-taxable. QuickBooks comes with two sales tax codes already set up: Taxable and Non-taxable. If the client s state requires you to report the breakdown of taxable and non-taxable sales into categories, then you will need to change or add to these codes. Sales Tax Reporting Basis Select the reporting basis required by the sales tax agency and the frequency of the sales tax liability payments in the Preferences window. If you are unsure of what this should be, check the client s state s sales tax website for details. Select As of invoice date to handle the sales tax on an accrual basis, meaning it is due as soon as the invoice is created Select Upon receipt of payment to handle sales tax on a cash-basis, meaning it is not payable until the invoice has been paid Assigning and Using Sales Tax Codes You can assign Sales Tax Codes to customers on the Sales Tax Settings tab of the New/Edit Customer window. You can assign them to Items in the Item list. If you need to assign codes to many existing customers and/or items, use the Add/Edit Multiple List window. When you generate an invoice or sales receipt for a customer, QuickBooks fills in the code you assigned in the Customer Tax Code field on the invoice. A Customer Tax Code overrides the sales tax codes assigned to items. For example, if a customer has a Sales Tax Code of Non, the items on the sales form for that customer will also have the Non tax code next to them, even if those items were assigned a different Sales Tax Code. In addition, you can change the Sales Tax Code on any individual line item in a sales form, as well as the Tax Rate on the sales form as a whole. The Invoice and Sales Receipt forms calculate sales tax for taxable customers and items based on the Sales Tax Items you enter for the customers and items, and if necessary you can change the codes on the form. Module 4: Sales and Receivables 57

60 Topic 2: Sales Tax Aside from a Group item, another way to calculate multiple sales tax rates is to enter the sales tax item in the body of the form. To do this, set up a zero rate Sales Tax Item called See Above and use this in the sales tax section at the bottom of the form. Then enter the individual sales tax items in the body of the form. Make sure there is a taxable code assigned to the customer. REPORTING AND PAYING SALES TAX QuickBooks tracks the accrual and payment of sales taxes and provides detailed reports that show the liabilities by tax agency and sales tax item. Select Vendors Sales Tax to see the Sales Tax-related activities. Module 4: Sales and Receivables 58

61 Topic 2: Sales Tax Sales Tax Liability Report This is the report you run to see how much sales tax must be paid. The date range is important in this report. It should default to whatever you set as the reporting period in the Sales Tax Preferences. If you pay monthly, this will be last month. If you pay quarterly, it will be last quarter. Total Sales in this report means all of the taxable and non-taxable elements included on sales receipts, invoices or credit memos even if the amounts were not actually income. If you are using any items on invoices or sales receipts that are mapped to a Balance Sheet account, their dollar amounts will still be picked up in Total Sales column in this report. If your client collects down payments or deposits and uses an invoice or sales receipt, you can set up a Down Payment Sales Tax code to use on these transactions for these items. Then you will easily be able to back these amounts out of Total Sales by looking at the Sales Tax Revenue report. This report repeats the same sales again for each sales tax item in a sales tax group. A negative line item adjustment will appear on the report to back out the amount that is doubled. The Tax Collected column shows the sum of the sales tax calculated on the individual sales form for the date range shown. The Sales Tax Payable column shows the cumulative sales tax liability of the company as of the date shown in the title. These balances include either any prior credits or unpaid amounts from previous periods. Module 4: Sales and Receivables 59

62 Topic 2: Sales Tax Sales Tax Revenue Summary Report The Sales Tax Revenue Summary report shows taxable and non-taxable sales broken down by Sales Tax Item and grouped by vendor. This is the report to use to help fill out state sales tax reporting forms. Take a look at the client s state reporting form in order to set up your Sales Tax Codes to show up properly on this report. You should recall that the Total Sales amount on the Sales Tax Liability report will pull anything you have on a Sales form, even if it is not an income item. Again, if you set up a special Sales Tax Code to capture those items, you will have an easier time completing sales tax returns accurately. Module 4: Sales and Receivables 60

63 Topic 2: Sales Tax Pay Sales Tax After QuickBooks accrues the sales tax liabilities you can generate the checks for each agency using the Pay Sales Tax window. Select Vendors Sales Tax Pay Sales Tax. You must record the payment of the sales tax through this window in order for the Sales Tax Liability report to come out correctly. If a regular check is used, it won t be captured on that report. If you need to adjust the amount of sales tax due, you can do it right from the Pay Sales Tax window. A common reason you may need to adjust sales tax is if your state offers a discount for remitting the sales taxes early. In this case, click the Adjust button, then select the sales tax vendor and account to which the adjustment should be posted. In the case of early payment discounts, use an Other Income type of account. Here you select if you are increasing or decreasing the amount due. Select OK and be sure to checkmark the adjustment in the Pay Sales Tax window. Module 4: Sales and Receivables 61