QuickBooks Asia

Foreign currency journal

Either MoneyWorks or QuickBooks can't do the expenses journal in SGD (foreign currency) when your home currency is set to USD.

In either software, only Bank, Accounts Receivable and Accounts Payable account can be in foreign currency. All other accounts will be default to home currency.

When passing a journal in QuickBooks in SGD (Home currency set as USD) for:

Debit Utilities expenses (USD currency type): 1000.00

Credit Accrual - Expenses (USD currency type): 1000.00

A warning message will be prompt:

"The currency of the journal entry must either match the currency of the accounts selected or be your home currency."

You cannot use more than one A/R or A/P account in the same transaction

When creating a journal involving Accounts Receivable (AR) and Accounts Payable account, or two Accounts Receivable accounts or two Accounts Payable accounts, a warning message “You cannot use more than one A/R or A/P account in the same transaction” will prompted on the screen and not allowing you to save the transaction.

This is one of the most common issues a user face when trying to contra between Suppliers and Customers, between Suppliers or between Customers.

If you want to contra between Accounts Receivable and Accounts Payable, more than one Accounts Receivable accounts, or more than one Accounts Payable account; you have to do it in two separate journals. Usually, I will use a Contra account to resolve it.

Example: 

ABC (Customer) owes you $100, and you owe DEF (Supplier) $100.  Supplier DEF wanted you to use the $100 which you owe them to pay on their behalf to ABC. You need to transfer the Accounts Payable, amount owing to DEF, to ABC account. So, how to do it?

Since QuickBooks does not allow having Accounts Receivable and Account Payable in one General Journal transaction, that is, debiting Accounts Payable $100 and crediting Accounts Receivable $100. You have to break it out into two General Journal transactions.

Usually, I prefer to create a dummy account, Bank account type, and I named it as Contra account. Next, I will do the two journals. First journal will be debiting Accounts Payable $100 and crediting Contra account $100.  Second journal will be debiting Contra account $100 and crediting Accounts Receivable $100.

In this case, the Contra account will be zero off and will not show in the Balance Sheet report. However, you have to do a Receive Payment to knock off the Outstanding Invoice with the Credit balance (Journal) so it will not show as an outstanding amount in AR Ageing report. As for Accounts Payable, you have to do a Pay Bill to offset the Bill with the debit journal too.

The above method does resolving the issue for contra between Accounts Receivable and Accounts Payable, but I prefer to use direct payment method to contra between Accounts Receivable and Accounts Payable in QuickBooks.

Same as the above Journal method, I create a Contra account, Bank account type, then, I do a Pay Bill to supplier DEF. In the Pay Bill screen, instead of selecting your normal bank account for payment, I use Contra account. Enter the $100 bill payment as per normal. Next, I will do a Receive Payment of $100 from Customer ABC into the contra bank account.

In this way, I cut down the two general journals, and result is the same as the general journal method, that is, zero off Accounts Payable, Contra account and Accounts Receivable account.

 

Adjustment amount disappear from Credits Used column

In some of the foreign currency transaction such as applying an adjustment amount (Credit Note) to a Bill, the Credit amount disappeared from the Credit Used column. Besides, the Pay Selected Bill button was grey off.

Scenario:

Software used: QuickBooks Enterprise 2009/10 Asia version

Home Currency: USD

Exchange Rate:  0.14972 Chinese Yuan Renminbi : US$1

01 Nov 2010, create a payment via Write Cheque to Supplier A (as a deposit) for the amount of Y59,570.00 (Renminbi). Since this was a deposit, the account used will be Accounts Payable – RB (Currency = Chinese Yuan Renminbi).

10 Nov 2010, received Bill from Supplier A, Bill amount was Y59,570.00; enter the Bill with item as per normal.

Since this Bill was already ‘paid’ earlier, you are required to knock off so that it will not show as an outstanding bill. To do it, simply do a Pay Bill to Supplier A.  In the Pay Bill window, select your bill to pay, click the Set Credit button and select the Payment which you did earlier.

Problem …

After you have selected this Payment from the Set Credit sub-window, the credit amount does not show up in the Credit Used column, besides, the Pay Selected Bill button was grey off.

It seems to be a bug in the default Chinese Yuan Renminbi currency. I did a test, when the amount was less than Y5,000.00, the bill can be knocked off by Set Credit method. However, any amount greater than that will have an error.

To resolve it, I created a new Chinese Yuan Renminbi currency in the currency list (I named it as RB, it can be any prefer name). Next, I created a new Accounts Payable account (I named it as AP-RB) and link it to this currency; all the supplier or customers that require trading in Renminbi will link to this currency too.

Now, when I created a Payment and Bill with this newly created currency, I can knock it off by using Set Credit method without any problem. 

 

Understanding QuickBooks Inventory (Stock) Module

To use QuickBooks inventory module, first, you need to turn on the inventory module. To turn on the inventory module, you go to Edit menu, select Preferences. From the Preferences Window, click on the Item and Inventory icon on the left side of the Window to get into the Item & Inventory preferences. Next, go to Company Preferences tab; check the check box for Inventory and Purchase Orders are Active field. Click the ‘OK’ button to save your setting.

When you add an inventory item into your item list, there are three accounts you need to associate this item with, they are COGS account (Cost of Goods Sold), Income account and Asset account (Inventory).

When you purchase an inventory item from your supplier, example: ten units of Item 123 at $100.00 each, the double entry for this item will be:

    Debit: Asset account (Balance Sheet account) at $1,000.00

    Credit: Accounts Payable (Balance Sheet account) at $1,000.00

At this stage, the transaction is only between Balance Sheet accounts (Inventory Asset account and Accounts Payable account). Therefore, you will not able to see this transaction as a ‘Purchase’ (Cost of Goods Sold account) in the Profit and Loss report.

When will it affecting the Cost of Goods Sold account?

When creating an invoice for the Item 123 (example: you sell five units at $150.00 each), the double entry for this invoice will be:

    Debit: Accounts Receivable (Balance Sheet account): $750.00

    Credit: Sales account (Profit and Loss account): $750.00

    Debit: Cost of Goods Sold account (Profit and Loss account): $500.00

    Credit: Inventory Asset account (Balance Sheet account): $500.00

Join my QuickBooks training class to have a better understanding of using QuickBooks inventory module.