Tag Archives: QuickBooks Singapore

Contra QuickBooks’ Credit Memo with Sales Invoices

Software: Intuit QuickBooks Desktop accounting software

Credit Memo (aka Credit Note or Adjustment Note) is an accounting document given by the seller to the buyer for goods or services returned. A refund of the credit amount can be given or offset against the future purchase.

Use the “Create Credit Memo/Refund” feature in QuickBooks to record the return of goods/services from a customer. QuickBooks gives the user an option to retain as an available credit to offset against the future purchase, give a refund immediately, or apply to an invoice when the credit memo saved. Among the three options, “Retain as an available credit” is most commonly used.

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“Retain as an available credit” is use to contra the credit memo against the future purchases. Let’s say you have issued a credit memo and some invoices for a customer. When making payment, the customer can opt to apply the credit memo to the outstanding sales invoices. In the QuickBooks’ Receive Payment transaction, click the “Discount & Credit” button after you have highlighted the sales invoice and apply the credit memo to an invoice accordingly.

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Define Fields in QuickBooks Desktop accounting software

Software: Intuit QuickBooks Desktop Accounting Software
Data field is a place, a container, in a database which stores information. For example, when recording a contact in QuickBooks, the Company, Phone, Address, etc. are data fields.

QuickBooks allows the user to define up to 7 Custom Fields in Name (Customer, Vendor, and Employee) and 5 in the item (The item such as Inventory, Service, Inventory Assembly, etc.). You can insert the Name’s Custom Fields in the Header section of an invoice form and the Item’s Custom Field in column section of the template. The Custom Fields are non-calculative, it is a text field for inputting static information.

define-fields

For example, you require a field to capture since when the contact starts buying from you. You may add a Custom Field in the Name and label it as “Customer Since”. Whenever you create a customer, add the date in it. You can use the Custom Field in the item to capture information such as size, colour, product measurement, etc.

Besides inserting the custom field into a template, you can pull it out to the relevant reports or use it in the Find function.

Although QuickBooks has limited custom fields available, it should be enough for most of the small businesses to manage their accounts.

 

How to record a Hire Purchase transaction in QuickBooks accounting software?

Software: QuickBooks #accounting software

Hire Purchase (HP) is a financial product which allows businesses to purchase an asset with monthly instalment. Although the payment of an asset with hire purchase is higher comparing with full payment upon purchase, it eases the cash flow.

Assuming a copier cost $15,000 before 7% GST ($16,050 inclusive of GST) and you decided to get the Copier with a Hire Purchase plan. If the monthly instalment is $320 and based on five years hire purchase plan, the amount paid is $19,200 ($320 * 12 months * 5 years) inclusive of $3,150 hire purchase interest. Although it cost more to buy an asset with hire purchase, it helps small businesses acquire an asset with a low monthly repayment.

Let’s say the first bill received from the finance company is:

Cost of Copier: $15,000.00
Add 7% GST: $1,050.00
Total financed amount: $16,050.00

You record the bill into QuickBooks with the accounts under the Expense tab as:

Row1: Cost of Office Equipment (FA): 15,000 (with 7% GST Code)
Row2: Interest in Suspense (LTL): 3,150
Row3:: Hire Purchase (LTL): -19,200

quickbooks-accounting-software-hire-purchase

You create both the Interest in Suspense and Hire Purchase account as a Long-Term Liability since the payment term is more than a year. The double entry of the Enter Bill transaction:

Debit Cost of Office Equipment 15,000
Debit GST Input: 1,050
Debit Interest in Suspense: 3,150

Credit Hire Purchase 19,200

Use a General Journal transaction in QuickBooks to reclassify the current year Interest in Suspense and Hire Purchase repayment amount from the Long-Terms Liability to the Current Liability. Assuming the current year interest is $630 (3,150/5 years), the journal:

Debit Hire Purchase (LTL): 3,840 (19,200/5 years)

Credit Interest In Suspense (LTL): 630
Credit Hire Purchase – Current (CA): 3,840

Debit Interest in Suspense – Current (CA): 630

Subsequently, use Enter Bill (or Write Cheque if no bill received) transaction in QuickBooks to record the monthly repayment bill from the finance company. If you have the monthly repayment schedule, which shows the breakdown of the principal repayment and the interest charged, then record the bill as:

Row1: Hire Purchase – Current
Row2: Hire Purchase Interest
Row3: Less Interest in Suspense – Current

For example, if the monthly interest is 52.50, the transaction will be:

Row1: Hire Purchase – Current: 320.00 (debit)
Row2: Hire Purchase Interest: 52.50 (debit)
Row3: Interest in Suspense – Current: -52.50 (credit)

If you only received a yearly statement from the finance company showing the outstanding hire purchase principal amount instead of a monthly repayment schedule, then pass a journal during year-end closing to debit the Hire Purchase Interest and credit Interest in Suspense – Current account for the interest paid for the year. In this case, the monthly repayment bill shows only the Hire Purchase – Current account of 320.00. The double entry of this bill debits the Hire Purchase – Current account and credit Accounts Payable (or Bank account if Write Cheque is used instead of the Enter Bill transaction).

You should consult your accountant if you have doubt in the accounting entries or classification of accounts.

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