The Balance Sheet by Class Report is new in QuickBooks 2011 and it gives users the option of selecting “Classes” (fund, location, profit center, or other category) as their column/class grouping.
Over the last several days, I’ve been discussing and sharing some information about how we all will need to change our data entry procedures in order to utilize the Balance Sheet by Class Report available in QuickBooks 2011; little did I realize when I started delving into the specifics of this report, that making it work would be so complex.
Previous QuickBooks 2011 – New Balance Sheet by Class Report articles include:
- Part 1, we touched briefly on the fact that transactions will have to be entered in a very specific manner and there are many data entry transactions that are not supported by the Balance Sheet by Class Report
- Part 2, we discussed how accounting professionals and end users would need to change their procedures when creating journal entries so that they were balanced
- Part 3, we discussed how users and accounting professionals would no longer be able to assign multiple classes to a single paycheck.
- Part 4, we discussed how you would need to classify Payroll Liability Payments in order for them to be appropriately recognized on the final report.
- Part 5, we discussed how you need to classify Sales Tax Liability Payments using a Journal Entry AFTER you actually make the payment.
- Part 6, we discussed the effect of handling customer prepayments when using the Receive Payments window.
- Part 7 – we talk about invoices with multiple classes and how offering customer discounts in the Receive Payments window would cause discrepancies between the Profit & Loss by Class and the Balance Sheet by Class reports.
In this article, we’ll talk about how entering a single Vendor bill with multiple classes and taking advantage of vendor discounts in the Pay Bills window causes discrepancies between the Profit & Loss by Class and the Balance Sheet by Class reports and how to correct this.
Many business owners make it a policy to take advantage of any early payment discounts offered by their vendors; after all in this tough economy every penny counts! However, paying and taking an early payment discount for a vendor bill that has multiple classes causes a difference in net income between the Balance Sheet by Class and the Profit & Loss by Class reports.
Entering the bill itself doesn’t cause an issue on either report and is recorded correctly on both.
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Paying the bill and actually taking the discount in the Pay Bills window causes the problem because the discount can only be assigned to a single class.
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The solution to this discrepancy is to enter a bill for each class, even if the vendor sends you a single bill.
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That way when you pay each bill individually and take the discount, you can assign the discount to the appropriate class.
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You can then pay the invoices using a single bill payment check IF you select each individual bill and apply the discount with the appropriate class assigned to it.
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When handled in this fashion, the Profit & Loss by Class accurately reflects your expense and the amount of the discount taken for each class.
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While Net Income is accurately reflected and classed on both the Profit & Loss by Class and the Balance Sheet by Class reports.
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Accounts Payable personnel who work for business owner’s who make it a practice to take advantage of vendor early payment discounts will need to put in place new procedures and protocols that include the requirement of entering vendor bills that are internally assigned to different classes individually. This will cause additional data entry time.
Additional procedures will include a method of tracking class that is assigned to each bill so that the same class can be assigned to the discount.
One way to track this is to enter the Class in the Memo field of each bill and then starting with a standard Unpaid Bills Detail report (Reports menu -> Vendors & Payables -> Unpaid Bills Detail) OR a Vendor Balance Detail (Reports menu -> Vendors & Payables -> Vendor Balance Detail). Once either of these reports are displayed, click the Modify Report button and on the Display tab in the Columns section choose (check) Memo, Terms, and Class so that you have record of this information.
NOTE: You must enter the Class information in the Memo field for each bill, because even though both of these reports offer to display Class information, the class information that is entered in the Bills windows does not flow through into these reports. Personally, I feel this is a bug in Intuit’s code and will report it as such.
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Once you are satisfied with the information being displayed in these reports, Memorize them so that you do not have to customize them each time you use them.
As with the other special requirements required to ensure the accuracy of the Balance Sheet by Class report, make sure that you inform your tax preparer so that any year end journal entries they make do not negatively effect the accuracy of this report.
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Request our FREE 142-page “What’s New in QuickBooks 2011? eBook, by completing a simple request form.
This eBook will provide you with with all the information I’ve posted here in our blog, plus MORE! Once you’ve completed our simple request form, you’ll have instant access to this 142-page .pdf eBook, designed to be duplex printed and put in a binder for future reference. |
The Balance Sheet by Class Report is new in QuickBooks 2011 and it gives users the option of selecting “Classes” (fund, location, profit center, or other category) as their column/class grouping.
Over the last several days, I’ve been discussing and sharing some information about how we all will need to change our data entry procedures in order to utilize the Balance Sheet by Class Report available in QuickBooks 2011.
In previous articles:
- QuickBooks 2011 – New Balance Sheet by Class Report – Part 1, we touched briefly on the fact that transactions will have to be entered in a very specific manner and there are many data entry transactions that are not supported by the Balance Sheet by Class Report
- QuickBooks 2011 – New Balance Sheet by Class Report – Part 2, we discussed how accounting professionals and end users would need to change their procedures when creating journal entries so that they were balanced
- QuickBooks 2011 – New Balance Sheet by Class Report – Part 3, we discussed how users and accounting professionals would no longer be able to assign multiple classes to a single paycheck.
- QuickBooks 2011 – New Balance Sheet by Class Report – Part 4, we discussed how you would need to classify Payroll Liability Payments in order for them to be appropriately recognized on the final report.
- QuickBooks 2011 – New Balance Sheet by Class Report – Part 5, we discussed how you need to classify Sales Tax Liability Payments using a Journal Entry AFTER you actually make the payment.
- QuickBooks 2011 – New Balance Sheet by Class Report – Part 6, we discussed the effect of handling customer prepayments when using the Receive Payments window.
In this article, we’ll talk about invoices with multiple classes and how offering customer discounts in the Receive Payments window cause discrepancies between the Profit & Loss by Class and the Balance Sheet by Class reports.
Business owners who offer early payment discounts to their customers will need to carefully review their billing procedures, especially if they frequently create a single invoice to a customer which contains multiple class assignments.
For example, let’s say that you create an invoice as follows:
| Description | Amount | Class |
| Plumbing | $2,000.00 | Contracts |
| Electrical & Lighting | $3,000.00 | Contracts |
| Cabinets & Vanities | $5,000.00 | Installation |
A net income difference between the Balance Sheet by Class and the Profit & Loss by Class reports occurs when the customer pays you and you use the Receive Payments window to record an early payment discount, because you can only assign a single class to the discount.
The Profit & Loss by Class report shows the full amount of the Discount ($100.00) in the “Unclassified” column of Net Income.
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While the Balance Sheet by Class Report allocates the discount based on the classes from the original invoice.
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The only solution is to enter a single class for each invoice, this also means, based on our example, that you would have to create two different invoices for your customer; one for $5000.00 assigned to the Contracts class and another for $5000.00 assigned to the installation class.
This also means that you will have to receive two payments from the customer, even if they send you a single check, so that you can properly apply the correct class to the discount.
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When discounts are handled in this manner, the Profit & Loss by Class report accurately reflects the discount for each class.
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And the Balance Sheet by Class accurately reflects Net Income.
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While this is an adequate work around, it is my opinion that it increased the work load and will be a very unattractive solution for most businesses because it will double the time it takes to bill customers and receive payments.
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Request our FREE 142-page “What’s New in QuickBooks 2011? eBook, by completing a simple request form.
This eBook will provide you with with all the information I’ve posted here in our blog, plus MORE! Once you’ve completed our simple request form, you’ll have instant access to this 142-page .pdf eBook, designed to be duplex printed and put in a binder for future reference. |
The Balance Sheet by Class Report is new in QuickBooks 2011 and it gives users the option of selecting “Classes” (fund, location, profit center, or other category) as their column/class grouping.
Over the last several days, I’ve been discussing and sharing some information about how we all will need to change our data entry procedures in order to utilize the Balance Sheet by Class Report available in QuickBooks 2011.
In previous articles:
- QuickBooks 2011 – New Balance Sheet by Class Report – Part 1, we touched briefly on the fact that transactions will have to be entered in a very specific manner and there are many data entry transactions that are not supported by the Balance Sheet by Class Report
- QuickBooks 2011 – New Balance Sheet by Class Report – Part 2, we discussed how accounting professionals and end users would need to change their procedures when creating journal entries so that they were balanced
- QuickBooks 2011 – New Balance Sheet by Class Report – Part 3, we discussed how users and accounting professionals would no longer be able to assign multiple classes to a single paycheck.
- QuickBooks 2011 – New Balance Sheet by Class Report – Part 4, we discussed how you would need to classify Payroll Liability Payments in order for them to be appropriately recognized on the final report.
- QuickBooks 2011 – New Balance Sheet by Class Report – Part 5, we discussed how you need to classify Sales Tax Liability Payments using a Journal Entry AFTER you actually make the payment.
In this article, we’ll discuss how you must handle Customer Prepayment when you record them using the Receive Payments option.
As a business owner who frequently receives customer prepayments on upcoming work, if you receive the prepayment from the customer using the Receive Payments window and selecting the option to Leave the credit to be used later, the prepayment amount will appear in the report in the “Unclassified” column.
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The prepayment displays in the Unclassified column on the Balance Sheet by Class because you cannot enter a class in the Receive Payments window, and QuickBooks doesn’t have a prior transaction in the work flow to reference class information, because there isn’t any prior transactions in the work flow – such as an invoice, which could be used to obtain the class.
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Unlike many of the other special requirements we’ve discussed, there is some good news about Receiving Customer Prepayments, and that is — this problem corrects itself; when you create and apply an invoice to the payment at a later date; because the invoice will have a class assigned to it.
Because this problem is self-correcting in the long run, many business owners may decide to not bother to correct the prepayments.
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Request our FREE 142-page “What’s New in QuickBooks 2011? eBook, by completing a simple request form.
This eBook will provide you with with all the information I’ve posted here in our blog, plus MORE! Once you’ve completed our simple request form, you’ll have instant access to this 142-page .pdf eBook, designed to be duplex printed and put in a binder for future reference. |
News to share from Mike Purdy’s Public Contracting Blog.
A task force of the New Hampshire legislature is examining whether the state should adopt bidding preferences for New Hampshire firms competing against out-of-state firms on state contracts. The task force will report their recommendations on December 1, 2010.
The Balance Sheet by Class Report is new in QuickBooks 2011 and it gives users the option of selecting “Classes” (fund, location, profit center, or other category) as their column/class grouping.
Over the last several days, I’ve been discussing and sharing some information about how we all will need to change our data entry procedures in order to utilize the New Balance Sheet by Class Report available in QuickBooks 2011.
In previous articles:
- QuickBooks 2011 – New Balance Sheet by Class Report – Part 1, we touched briefly on the fact that transactions will have to be entered in a very specific manner and there are many data entry transactions that are not supported by the Balance Sheet by Class Report
- QuickBooks 2011 – New Balance Sheet by Class Report – Part 2, we discussed how accounting professionals and end users would need to change their procedures when creating journal entries so that they were balanced
- QuickBooks 2011 – New Balance Sheet by Class Report – Part 3, we discussed how users and accounting professionals would no longer be able to assign multiple classes to a single paycheck.
- QuickBooks 2011 – New Balance Sheet by Class Report – Part 4, we discussed how you would need to classify Payroll Liability Payments in order for them to be appropriately recognized on the final report.
In this article, we’ll discuss how Sales Tax Liability Payments must be handled.
When you create an invoice, the sales tax that you owe will be accurately displayed on the Balance Sheet by Class report under the appropriate class heading.
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However, when you create the Sales Tax Liability check, the amount will appear in the Unclassified column of the Balance Sheet by Class Report in both cash and accrual based reports.
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The reason that your Sales Tax liability payment is not accurately allocated is because there is not a Class column available in the Sales Tax check form.
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The resolution in the QuickBooks Help file provides pretty clear instructions on how you, as the QuickBooks user or accounting professional, can manually allocate classes to the payment AFTER you create the Liability Check, through the use of a Journal Entry. However, you must follow the instructions carefully in order for your Balance Sheet by Class report to be accurate.
In order to resolve this problem, you will need to create a journal entry to move the sales tax payment amount from unclassified to the correct class. In order to accomplish this, you’ll need to:
Create a special “Clearing” Bank account in your Chart of Accounts, if you currently do not have one.
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Run a Balance Sheet by Class report as of the date that you will be paying the Sales Tax through, (1/31/2010) to determine the amount of Sales Tax that you owe for each class ($108.00 liability for the Installation class).
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Make a journal entry to move the payment from the unclassified column to the appropriate class, using the Clearing Account.
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The Clearing Account should ALWAYS have a zero balance.
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While this work around will provide an accurate Balance Sheet by Class Report, procedures will need to be changed, documented, and followed carefully. Business owners will need to inform the accounting professionals that they work with of these new procedures.
How will this procedure impact you, as a business owner or accounting professional?
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Request our FREE 142-page “What’s New in QuickBooks 2011? eBook, by completing a simple request form.
This eBook will provide you with with all the information I’ve posted here in our blog, plus MORE! Once you’ve completed our simple request form, you’ll have instant access to this 142-page .pdf eBook, designed to be duplex printed and put in a binder for future reference. |
