Tag Archives: Equipment Rental

A solution for equipment rental

Software: MoneyWorks accounting software

MoneyWorks is a back-end accounting system which helps to manage your business finance. You can create recurring invoices for those customers who have rent the equipment on a monthly basis and use the inventory module in MoneyWorks to track the movement of the loan item which happens occasionally but not replacing the resource planning and scheduling system.

If you are looking for resource planning and scheduling for an equipment rental (a.k.a. equipment hire) or loan of equipment, then you should be looking for a front-end solution such as JobPro Central or a custom app developed from FileMaker, etc., which possible to integrate with the accounting software to form a complex system for small businesses. An equipment rental solution takes care of resource booking, damage claims, equipment maintenance, resource crash checking, availability of the resources (both human and equipment), calendaring, etc.

Contact us if you like to know more about JobPro Central software or to develop an app for your business with FileMaker.

The workaround solution with MoneyWorks is creating multiple warehouses in version 8 and use the stock transfer journal to allocate the loan item to a temporary loan store. The stock transfer journal transfers the quantity and item cost from one location to another without affecting the cost of goods sold of the profit and loss report. Then, use a Sales Order or Sales Invoice to record the loan.

transfer stock.png

Sales Order is non-posting, it will not affect the stock on hand nor cost. Issue a Sales Order when the product is on loan and delete it once the item returned. This method works if you are not using the Sales Order as part of your daily operation such as using it as a sales confirmation. If not, you may have a missing order number and confusing.

Another alternative is to use a Sales Invoice transaction. Sales invoice method is to create a sales invoice of the loan item with $0 selling price (You can flag the invoice as Loan to ease filtering if required). Although the selling price is $0, the item cost gets transferred from the inventory asset to the cost of goods sold.

You have to record a reverse Sales Invoice (Credit Note) when the loan item returned to adjust the item cost and quantity on hand. Then, issue a Sales Invoice with a selling price when the customer converts the loan item to sales.

It may not be a good solution as this method causes a movement in the cost of goods sold unless the conversion rate from loan to sales is high, you should discuss with your accountant before implementing.

Another possibility is converting the inventory to a fixed asset when using the item as hire equipment. You can remove the product with a WriteOff journal, transfer the inventory cost to a fixed asset account. Then, create a new non-inventory item with the Count feature turned on to track the item movement. So, the count decrease when a Sales Invoice has posted ($0.00 selling price), and count increase with a reverse Sales Invoice. Depreciation journal has to record either monthly or yearly in this case since the rental equipment is now part of your fixed assets. This method seems better as all other accounts remain unchanged when quantity moved.

product available.png

Lastly, you may consider creating a new company file, which separated from your financial data to track the rent or loan equipment since MoneyWorks allows the user to create multiple company files in the same system without incurring additional cost.

Depends on your need, discuss with your accountant to find out which is a better alternative to use. However, do consider a dedicated system, such as customised from FileMaker or an off-the-shelf solution like JobPro Centre to record your equipment loan/rental if equipment rental is your business. You should get the right tool to solve your business challenges instead of compromising with a workaround solution.

Sign up a free demo to find out how MoneyWorks helps you manage your business finance or contact us if you are interested in developing an app to ease the operation.

How to use QuickBooks Sales Receipt as an internal maintenance service note?

Generally, we use QuickBooks Sales Receipt to record Cash Sales transaction or charitable organisation using it as a donation receipt. However, for those who are in rental services (renting out equipment or facilities such as a conference room, studio, etc.) or chartering service (bus, car, boat, etc.) may use Sales Receipt feature to record the part used in serving the equipment or facilities. For example, you may change the worn out seat belt or car seat on the chartered bus. In this case, seat belt and car seat are your service part which you used it internally to maintain your asset.

Create the service parts as an inventory item, so when the item purchased it will debit the inventory asset of the maintenance part and credit the accounts payable or bank account.

Then, use the QuickBooks Sales Receipt (you can rename the form as ‘Service Note’ or something which relevant to your business) to record the part used on the equipment. The customer name on the receipt can be the equipment/asset name or vehicle number, which depending on businesses. Next, use those service part which you have purchased in the detail line with $0.00 selling price.

QuickBooks Sales Receipt

Assuming the cost of the part used is $1,000, then the double entry of the sales receipt will:

Debit Accounts Receivable 0.00
Debit Cost of Good Sold (or your prefered expense account) 1,000

Credit Sales 0.00
Credit Inventory Asset of the maintenance part 1,000

You can print an Inventory Valuation Detail report to check the transaction history of the part. Inventory Valuation Detail report is like a stock card where you can see the in/out of an item.

QuickBooks Inventory Detail Report

Next, print a Sales by Customer Report, which you can customise the report to something like ‘Service Parts Used by Machine’, to find out the items used on each machine (or vehicle).

QuickBooks Sales by Customer Detail

QuickBooks is a simple yet feature-rich accounting system for small businesses.

QuickBooks Desktop 2019 has launched, contact us if you like to upgrade your system.

 

Equipment Rental

Software: QuickBooks accounting software

In Equipment Rental business, the equipment that you purchased are your assets, which you need to track the depreciation of it useful year. Besides, you need to keep track of the ins and outs of the equipment so to have a good feel of the stock availability.

If you are using QuickBooks, how are you going to track the cost and depreciation of the asset to fulfill the accounting requirement and at the same time tracking of the stock movement of your equipment?

Assuming you purchase an equipment at the cost of $9,000.00 and depreciate it over three years at $3,000.00 per year; and you are going to rent it out at $300.00 per day.

Before you recorded the transactions, first you create a set of fixed asset account for your equipment, assuming we name it as “Equipment ONE”, so, the accounts will be:

Equipment ONE

Cost – Equipment ONE

Accumulated Depreciation – Equipment ONE

I preferred to create the fixed asset accounts as above so I am able to view the cost, accumulated depreciation and net book value of the individual asset in my balance sheet report. Some user may preferred to create it as:

Equipment assets

Equipment ONE

Equipment TWO

.

.

etc

In this method, both the cost and accumulated depreciation will be sharing the same account (Equipment ONE). When printing of Balance Sheet, report, you can simply use the collapse function to show just the Equipment assets account instead of breaking down into individual assets.

Next, in the item list, you need to create a stock item for “Equipment ONE”. This is to track the movement of Equipment ONE; the income account used for Equipment ONE will be Disposal of Fixed Asset (an Other Income type of account). So, in the event when Equipment ONE is sold, the sales value will be automatically posted to the Disposal of Fixed Asset account.

Besides, you are require to create a Service item, such as “Rent – Equipment ONE”, this is to be used in the Sales Invoice (you use this item to charge your customer), and the account associated with this Service item (Rent – Equipment ONE) will be the Sales Income account.

Enter Bill

When entering bill from the supplier of Equipment ONE, in the expenses tab, we use the fixed assets account, Cost – Equipment ONE, with the purchase value of 9,000.00. Next, at the items tab of this bill, we use Equipment ONE stock item with a quantity of 1 but leave the cost as 0.00.

In this way, the double entry for this bill will be:

Debiting Cost – Equipment ONE account (Fixed Asset account): 9,000.00

Crediting Accounts Payable account: 9,000.00

Debiting Inventory Assets account: 0.00

Note: Inventory Assets account is involved in this transaction is due to Equipment ONE stock item was used. Since we didn’t input any amount in the cost field of this stock item, the amount debited to Inventory Assets account is 0.00.

If you were to view your stock status by item report, you will see that you have 1 quantity of Equipment ONE in the stock on hand column.

Invoices – renting of equipment

Assuming you rent out Equipment ONE for three days, you need to create two invoices. First invoice will be using the “Rent – Equipment ONE” service item, with the quantity of 3 (three days) and the amount of 900.00 (300.00 x 3 days). This invoice will be given to the customer during rental service for them to make payment to you. The double entry for this sales invoice will be:

Debiting Accounts Receivable account: 900.00

Crediting Sales Income account: 900.00

The second invoice is for internal use, at the detail line, you use Equipment ONE stock item with quantity of 1 and amount of 0.00. This invoice is to track the out going of the equipment and the stock on hand will be 0 after invoice is recorded. Since there isn’t ant value in this transaction, no values will be posted to the relevant accounts.

Credit Note – equipment returned

In the event when equipment returned, you need to create a Credit Note (Adjustment Note) to credit back the Equipment ONE with the amount of 0.00. This quantity will be added back to your stock on hand. Like the second invoice that you have created earlier, this is for internal use only.

Depreciation

Monthly or yearly depreciation for Equipment ONE will be recorded via a General Journal Entry. The double entry will be:

Debiting Depreciation Expense (Expense account)

Crediting Accumulated Depreciation – Equipment ONE account (Fixed Asset account)

Deposal of Fixed Asset

In the event when you sell off your equipment, you need to pass a journal to revert your fixed asset and follow by an invoice to bill your customer.

The double entry for your disposal of fixed asset will be:

Debiting Accumulated Depreciation – Equipment ONE

Crediting Cost – Equipment ONE

Debiting Disposal of Fixed Asset (Other Income account type)

Equipment ONE stock item will be used in the detail line of the invoice for sale of fixed Asset with a quantity of 1 and a sale amount. The double entry for this sales invoice will be:

Debiting Accounts Receivable

Crediting Disposal of Fixed Asset account (Other Income type of account)

In the Balance Sheet, the Equipment ONE fixed asset account will be zero off and the Profit and Loss report will show the net income/loss for the sale of Equipment ONE under the Disposal of Fixed Asset account.