Premium 2011 RECEIVABLES Module Beyond Basics

Contents Simply Tools –Tracking Additional Transaction Details 3 –The Calculator 4 Journalizing Deposit 7 –Balance in Cash or Cheque 8 –Balance on Credit 9 Journalizing Cash Sales 10 Journalizing Credit Card Sales 11 Journalizing Customer’s NSF Cheque 13 Journalizing Customer Account Write-Off 15 Journalizing Owner Investment 16 Customer Statements 17 Period-End Reports 18 Contents Slideshow 2B

Simply Tools: Tracking Additional Transaction Details When entering journal transactions such as purchases, sales or paycheques, you can store additional pieces of information. In this example, Havanah Leather Goods’ cheque was received 1 day late for a discount. G. Morgan, the Accounting Manager approved an extension of the discount period. You might want to note his name for this special transactions. To use the Additional Information, click the button with arrow pointing. Click the Additional Information button at the right now (see arrow top right). … you can enter the information related to the current transaction. The information will not show on the journal where you enter the transaction, but will display when you view the journal entry. Click to see the additional information on the journal entry window. Click to continue.

Simply Tools: The Calculator When you wish to calculate something while processing transactions, you can use the Calculator icon on the Toolbar. For example, if you wish to calculate the shipping charges on an invoice which is 8% of the repairs charges, you would click in the appropriate column Click the AMOUNT column (see arrow) … then click the Calculator button. Click the Calculator button now. You can then click on the numbers and symbols to do the calculation, just as on a calculator. The result will show on the window (see arrow). Click to continue. Calculator button Jan 31, 2016

Journalizing Deposit A seller may require a regular customer to make a partial payment for a special (custom-made or non- returnable) order or a large order. Sellers may ask for an advanced payment (deposit) for an order from a customer who has not yet established credit. In Simply, a deposit is entered as a sales order. As soon as you select Cheque for Paid By, boxes that refer to the Deposit appear, and you will be able to enter the deposit along with the details for the order. Remember, you would click RECORD (instead of POST) for a sales order. Click and study resulting Sales Journal Entry. Notice that ACCOUNTS RECEIVABLE is credited. Click to see the resulting Customer Aged Detail report. This entry, in effect, gives the customer a credit balance of $3, Click to continue.

Journalizing Deposit: Invoice with Deposit – Balance in Cash or Cheque Invoice with Deposit – Balance in Cash or Cheque Depending on the arrangements between the seller and the customer, the balance of the invoice with a deposit may be paid in cash/cheque or on credit. In the case of a new customer that does not have established credit, the seller will most likely demand cash on the balance of the invoice. The sales order with the deposit should then be converted into a sales invoice. Click. When the goods are delivered, you would record the sale ($6,000.00) in full plus $ HST (Total $6,780.00) Click. In the customer subledger, the previous credit balance will be deducted from the total owing. Study the Customer Subledger summary after the balance of the sale after deposit is paid. Click to continue. Journal Entry for a Deposit Dr Accounts Receivable6, Cr Sales 6, CrHST Charged on Sales _______ , Customer Subledger Details Invoice 6, Deposit(3,500.00) Balance 3,280.00

Applying a Deposit to an Invoice – Balance on Credit When you deliver the merchandise for which a deposit have been made, you would convert the sales order to an invoice. Click Study the converted sales invoice. Notice that Pay Later is selected in the Paid By box. The deposit is shown in the Deposit Applied box. Click and study the journal entry. Notice that the total amount of the invoice is debited in ACCOUNTS RECEIVABLE. Click. The Customer Aged Detail report for Opal Kong Luggage Ltd. shows the deposit entered and applied. The total of the invoice is entered and the deposit is subtracted to show the customer balance. Click to continue.

Journalizing Cash Sales Cash sales, although not all, are usually to one-time customers. If so, you have three options: 1. Create a customer subledger for the cash sale customer and enter the sale just like a regular sale. 2. Select and not include customer’s data on the invoice, or 3. Select and enter the customer’s data (name, address, contact) on the invoice without creating a customer subledger. Using any of the three options, you can produce and print a proper invoice from Simply. Study the sales invoice at right and the corresponding sales journal entry. In this particular case, Option 3 above is used. Notice that when Cheque is selected, the Cheque (no.) and Cheque Amount boxes appear. Cheque Amount is automatically filled in according to the Total amount. Click to continue.

Journalizing Credit Card Sales Remember that in Accounting, a credit card sale is considered a cash sale. However, Simply treats credit card and cash sales differently. Before using the credit card payment option, the credit card company information and arrangement details have to be set up in Setup Settings which in effect adds the credit card company’s name to the Paid By option selection (see illustration below right). Click. Notice that a discount fee (3.50% in this example) is entered. This is the agreed fee charged by the credit card company to the seller for processing credit card receipts. You will learn how to set this up in Chapter 4. Click to continue.

Journalizing Credit Card Sales (continued) When journalizing this type of sale, select the credit card company’s name among the Paid By options, and enter the invoice as usual. Click. Notice that the invoice TOTAL is automatically entered in the Visa Credit Amt box. Click. The Sales Journal Entry shows that credit card charges $5.34 (also referred to as discount fee) are debited, which is in effect deducted from the total amount charged on the credit card (see Visa Credit Amount box in invoice). SALES is equal to the invoice total less taxes. Click to continue.

Journalizing Customer’s NSF Cheque When you deposit a cheque from a customer, the bank adds it to your account balance. If the cheque does not clear, that means that the payor does not have enough funds (Not Sufficient Funds) in their bank account. The bank then reduces your bank balance by the amount of the cheque plus an NSF penalty fee (if the bank decides to charge it). One thing to keep in mind: The bank records transactions opposite from the way you record them in your books; i.e., when your bank account increases, the bank credits your account, whereas you debit your bank account in the company records. Therefore, an NSF cheque would be a credit in the Bank account in your company records, a debit in the bank records. Study the illustration at the right. Click to continue. Customer’s cheque NSF Customer cheque received and deposited Company Records Bank Company Records Bank

Journalizing Customer’s NSF Cheque (continued) When an NSF situation occurs, record it in a sales invoice, just like a new sale, but filling in only the Description, Amount and Account columns (or customize your journal). You would use the original Invoice No. with a suffix to indicate that it is the invoice that correspond to the NSF cheque (see right). Click. Enter the original invoice amount using Bank Chequing Account under Account. You may also add an NSF fee as a separate item (add a new Income type account if necessary) to cover the amount charged by the bank. The textbook shows the service charge added to the invoice amount; either way is correct. This alternate way shown here provides more transaction detail. Enter an appropriate message. Click. Study the corresponding Sales Journal Entry. Click to continue.

Journalizing Customer Account Write-Off There are instances when all attempts to collect unpaid invoices from customers fail and the vendor decides to write it off. A write-off, whether partial or full, results in a reduction in ACCOUNTS RECEIV- ABLE and the customer’s subledger reduced by the invoice total. Click. An account write-off is recorded in a sales invoice entered with a negative amount. Assuming that the direct write-off is used, it is posted to the BAD DEBT EXPENSE account. Click and study the Write-Off Invoice and the corresponding Sales Journal Entry. The Invoice No. on the original sale is used, prefixed by Wo for Write Off. This allows you to reference the original invoice with the write-off invoice. Notice that Amount is the Subtotal of the original invoice; HST is also the same, both negative. Click to continue. Original Invoice Write-Off Invoice

Journalizing Owner Investment (GAAP: Business Entity Concept) When the business owner invests more money into the company, an entry should be made into the company records. (GAAP: Business Entity Concept) Although it is considered a cash receipt, this transaction is entered in the General Journal because it is a bank transfer between a personal bank account and the business bank account. If, instead, a cheque was received, the entry can be done in either the General Journal or in the RECEIVABLES module as a Miscellaneous Receipt. Whatever method you decide must be consistently used. Study the General Journal and the general journal entry at the right. Click to continue.

Customer Statements It is good practice to send statements periodically to customers. This not only helps in the collection of outstanding invoices, but it also gives a chance for the customers to check their own records so that they would coordinate with yours. In Simply, you may print or a statement to an individual customer, a group of customers, or all of your customers. As a default, Simply prints a very simple statement (see right). If you wish to send professional-looking statements with your company logo and grid for the detail columns, set them up in Reports & Forms with Simply Custom Form or take a sample of a statement to your printer and have custom-made pre- printed statement forms done. Click. At the right is a sample customer statement printed on plain paper. Click to continue.

Period-End Reports (GAAP: Time Period Principle) Accounting records are summarized periodically and reported to business owners and managers. The reports or statements are usually printed for each month, then at the end of the year. (GAAP: Time Period Principle) (GAAP: Consistency Principle) It is important that your financial reports are produced for the same period of time (monthly, quarterly, yearly) using the same criteria, printed and filed as part of the audit trail. (GAAP: Consistency Principle) At the right are the types of reports you can generate in Simply that are related to RECEIVABLES. Study the list in the RECEIVABLES Report Centre. Click to continue.

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