QuickBooks Asia

Why the COGS pick up the foreign currency value instead of the home currency value

Why the Cost of Goods Sold account shows the foreign currency value instead of the home currency value?

 

Scenario:

Home currency was in Singapore Dollar.

01 Dec 2010, invoiced your customer for item A at S$1,000.00. 

05 Dec 2010, received Bill from your supplier for item A at US$550.00

The exchange rate for the month was at S$1.40 : US$1.00 and Item A was a new item in your inventory list.

 

After the above transactions were recorded into QuickBooks, you discovered that the Cost of Goods Sold in Profit and Loss report for Item A was recorded as 550.00 instead of showing 770.00, which was the correct value in Singapore dollar; it shows the US dollar value. 

What causes this problem?

When user recorded the invoice for Item A at S$1,000.00, it causes the quantity on hand for Item A to fall into negative (that is -1). Since it is a new item, there is no prior cost, when user recorded the Bill on 5 Dec; QuickBooks did an auto-correction in Cost of Goods Sold.

This seems to be a bug, by right, when Bill was entered, the auto-correction feature should pick up 770.00 (amount in Singapore dollar) but it pick up the US dollar value (550.00).

To correct this issue, user can consider changing the date of the bill to be before the invoice date (consider adding the original date in the memo of the bill). This will increase the stock on hand for Item A to 1 and update the average cost to 770.00. So, when invoice is done after the bill, the cost of goods sold will pick up the average cost correctly at 770.00.

The proper way of doing this is to record the invoice after the bill. You should not issue invoice when there is no stock. If you need to issue Proforma invoice, consider using Sales Order in QuickBooks instead of using Invoice feature.

 

How to read your Bank Reconciliation report?

In the Bank Reconciliation report there are three balances which you need to take note of:

• Beginning Balance
• Cleared Balance
• Register Balance

 

Beginning Balance is your physical bank opening balance.  In your Bank Statement usually will show as Opening Balance or Balance brought forward.

Cleared Balance is your physical bank closing balance. In your Bank Statement usually will show as Ledger Balance or Balance carried forward.

Register Balance is your Balance Sheet ending balance. You are able to see this balance figure in either your Balance sheet or Bank Register.

Usually the amount in Cleared Balance will not be the same as the Register Balance. This is because of the un-presented cheque (cheque recorded in your QuickBooks but bank have not clear this cheque) or un-presented deposit (deposit recorded in your QuickBooks but bank have not clear this transaction).

When doing your Bank Reconciliation, this month’s Cleared Balance will be your following month’s Beginning Balance. 

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How to use QuickBooks to manage fund from client?

Some users who are doing accounts for law firm or payroll outsourcing firm did ask me how to use QuickBooks to manage their client’s fund which was temporary parted with them.

Example:

Client A parted $100,000.00 with you.

Client B parted $150,000.00 with you.

Client C parted $200,000.00 with you.

You banked all these money into your Bank account.

In QuickBooks, you can make use of the Sub-Account in Chart of Accounts to record these funds from Client. First, you create a Bank account in QuickBooks, then, you create Client A, B and C as a sub-account of the Bank account (Cash at Bank).

Next, you make deposit into your client’s account accordingly.

 

This client’s bank account can be used as a Bank account in either Pay Bill or Write Cheque function to pay off the expense incurred for client.

Besides, you can also print a General Ledger report to list out the transactions incurred.

 

Foreign Opening Balance amount in Custom Transaction Detail Report was not sum up

Some of the user did mention that when they creating a report using Custom Transaction Detail Report; the Foreign Open Balance field was not sum up at the bottom of the report. Comparing with the Open Balance column (Home Currency), the Open Balance field did sum up at the bottom but Foreign Open Balance was showing ‘0.00’.

 

Was it a bug? Any work around solution?

Am not sure was it considered as a bug to Reckon. However, I do have a work around solution for this. To display the Foreign Open Balance with a total of this column simple export it to Microsoft Excel. To export the report, click the ‘Export’ button at the top of the report. In Microsoft Excel, this report does show the total amount of Foreign Open Balance column.

 

In Microsoft Excel, the total field has a formula of [ =ROUND(SUM(Sheet1!P2:Sheet1!P5),5) ], am not sure why the original report in QuickBooks was not total up.

Hope this is helpful to you.