 In this presentation, we will record transactions related to donations of property, plant and equipment and related to the purchase of property, plant and equipment. In other words, we're going to put long term assets on the books that being furniture and equipment. We'll show the comparison of what those transactions would look like if you were to purchase the furniture from the organization and if that furniture was then donated by somebody to the organization. Let's get into it with Intuit's QuickBooks Online. Here we are in our not-for-profit company or organization dashboard. We're going to start off by going to our Excel file to see what our objective will be. We're going to be on number five. We are on the tab, tab number seven. We're working here on tab number seven. If I scroll back down, we're going to be looking at number five here. Number five and tab number seven, which says purchase office equipment. We're going to be comparing and contrasting the purchase of an office equipment with the donation of an office equipment. So we have the donation of equipment and then the purchase of equipment. Now we do have to deal with the useful life and whatnot when we think about the depreciation of it. Right now we're just thinking about, in essence, the purchase of the equipment or the putting of the equipment on the books. Let's first start with the purchase. What if the organization itself was purchasing property, plant and equipment? Transactions is going to be similar to a for-profit organization. However, it is different than normal type of transactions because when we purchase equipment, it's not like we normally purchase items where we just expense the item that we are purchasing but have to put it on the books as an asset and therefore capitalize the item. So we're going to put it on the books as an asset. That's going to be the new thing. It's going to be this journal entry. Let's go ahead and make it green because that's like the one we're working on right now. Or make it yellow. Now I like it green. I'm going to make it green. Green is better. So that's going to be that one. And then if we go up top, we're going to say what's going to happen. The equipment is going to go up by that amount. This is combining the two transactions, but the equipment is going to be going up. And then we're going to depreciate it over time. And at the end of the time period, we can record an adjusting entry, which will depreciate it, crediting the allowance and debiting the depreciation expense. The other side is going to be coming out of cash, decreasing the cash. So the thing that's different here is that we're putting it on the books as an asset as opposed to expensing it. Okay. So let's do that. We're going to go back on over to QuickBooks and do that one first. We'll do this with just a simple form. We could use a check form if we're going to be paying for it with a check. It's going to be under the vendor section. If it's some kind of electronic transfer that we're paying with, then we could put it into an expense type of form. Let's go into the expense type of form here and use that one. So here we go. We're going to say that we're going to buy it from. We're just going to say office depot. So we're saying it's office depot. And this is going to be a vendor standard vendor setup. We don't have the vendor in the system yet. So we're going to set it up. We don't need any special details with it. I'm just going to keep it as office depot. It's going to be coming out of the checking account. So we'll just keep it going directly out of the checking account. Let's make this as of the date of the 8th. So January 8th, 2020 payment type. We're going to say it's not going to be a check. So I just choose the cash as the payments type here. We're imagining electronic transfer. And then we're going to go on down and go to the category. So notice down here, you have categories and then you have items. If you were thinking about items with this little dropdown, those would be like inventory items typically. So usually on the expense side, we'll be working with the category areas. Now on the category, we're choosing the account. We need a not an expense account. That's the point. We need to be putting it into an assets type of account. Let's look at our chart of accounts. I'm looking at the right where it says expense side expense accounts. I'm looking for fixed asset type of accounts here. So do we have any asset type of accounts? Does not I do not see one. So we're going to have to set one up. So that's fine. I'm going to go back up top and we're going to say we need a new account. We need a new account here. And I'm going to say this is not going to be an expense. We're going to say that this is going to be an asset. And more particularly, it's going to be a fixed asset type of account. So we want a fixed asset type of account. It's going to be equipment. So we want fixed asset computers, let's say furniture, fixed asset furniture. Again, this category doesn't matter too much. What we really care about is the name over here. And let's call it's equipment and furniture. And when I say this category doesn't matter too much, I don't think it really matters at all. I don't think it affects really honestly anything, a sorting field or so in any case, we want the equipment. This is what's going to show up on the on the GL on this side. So that's what we what we want. We're going to say save and close. Let's go ahead and save and close that. And there we have it purchase of equipment. We're going to say the amount. Let's check out what that amount was once again, 13,000 it looks like. Let's go down here, pick it up from our journal entry. The green journal entry that makes it so I don't mess up so much because it's green. And that's the one I'm on 13,000 13,000 the amount don't need a billable. We don't need the customer section. And we don't really even need a class because this is going to an asset type of account, not an expense or income statement. Therefore it's not going to show up on like, like the income statement by class of the PNL by class. So there is that now note that if you were to finance part of this item, like if you purchased a large piece of equipment and we're financing part of it, then you may have say a cash transaction here and part of the transaction may be something such as a loan payable that you'd have to set up as well. If that were the case, like for example, let's say the equipment was 13,000 and you put 10,000, let's say you put 3,000 down and then you're going to pay the rest with a loan payable. You'd still put the equipment on the books at the 13,000. Then you'd set up a liability account. And the liability account you put down here would be a negative and you'd have to put the negative and it would be the negative in that case 10,000. And in the difference, the 3,000 would be the amount of cash that you would pay the cash up here. So note also that these transactions are going to be items you want to track because you're probably going to need to provide them to your tax preparer because on the tax return, they're going to have to run the depreciation schedules and the depreciation schedules are often done on the tax side of things because you have to run the depreciation schedules anyways and then the adjusting entries can be gotten from oftentimes the tax software. So just a couple of things to keep in mind on this. So what's this going to do when we record it? It's going to decrease the checking account by that 13,000. The other side go into an asset account, 13,000 fixed asset under the equipment and furniture. No effect on the P&L, no effect on the profit and loss and therefore no effect on the income statement. So let's go ahead and say save and close and check it out. No class has been assigned. That's okay. Thanks for letting us know. QuickBooks because it's a balance sheet account. So we're okay with that. We thought about it. We're going to go down here to the reports. We're going to go then to the balance sheet. Let's open up the old balance sheet report and check it out. I'm going to go to the top here and I'm going to right click on this report and duplicate it and just open our two reports up while I'm in the like opening report mode. Going back to the tab to the left, we're going to go back down to the report on the left hand side in like the hamburger section area. And then we want to go to that P&L. I'm just going to open the standard P&L and then do our adjustments from there. Then I'm going to go back up top. Let's go back to the balance sheet. Let's close up the old hamburger. Let's hold down control and scroll up to like 125. That's where I like to be like at that 125. So the checking account is going down. It's negative right now, but that's okay. Don't worry about it. It's because we didn't increase the undeposited funds or didn't roll them over into the checking account. So I know you're worried that we don't have money, but the organization is okay. We're okay. And so we will not close the doors. So we're going to open that up and then we're going to see that we have this transaction for the furniture and equipment. There it is. There's the transaction here. Going back to the tab to the left, scrolling back up. And if we go back to our report, the other side then is on the, or in the fixed assets. So new section down here, fixed assets, type of asset accounts on the balance sheet, not on the income statement. There's the 13,000 going into that 13,000. There's going to be our transaction. So that looks good, scrolling back up, going back to our report and that looks good. Nothing's on the P&L. So if I go into the P&L, no change has happened here. If I scroll back up, dates are okay. I'm in January or January is included and there's been no change. So I won't do any adjustments thus far here. I'm going to right click on the P&L and duplicate that tab, go back to the first tab. So we got our balance sheet open, our P&L open, and then the first tab is where we can do stuff. I'm going to open up the hamburgers to help us do stuff. I'm going to hold down control, bring this back on down to 100%. That's where you want to be like to be working so that QuickBooks doesn't do anything funny. We're on the second transaction now. Now we're going to imagine someone donated furniture and equipment. So now they gave us furniture and equipment that we're going to use in the organization. So I'm going to highlight this one now. This one's on the bottom so I probably don't need to make it green. It's kind of an overkill, but I'll do it anyways. So that means that furniture and equipment is going to go up again. We're still going to increase it but the other side isn't cash going down. It's going to be a kind of contribution. So it's going to be a contribution that we have received. So the journal entry here is going to be equipment still going up. So if we were to post this, it's same item on this side, equipment goes up but the other side then going to the contributions. It's going to be a contribution without restriction. Now you might say, hey, it's a couch. How can it not be restricted? You can't do much with it. You know, they could have given you cash. You could have done a lot more with it. Well, that's not the restriction we're talking about. They didn't give us a restriction on how we could use the couch, right? So that's not restricted. It's not the form of the thing that they gave us that we're talking about with the restriction. So we're going to put it into this item without restrictions. Now note that this one's a little bit more of a challenge to record in our system because one, we're going to have to value the equipment. Now, well, how do I know how much the couch is worth? We're going to have to use some fair market value in order to know what it's worth so that we can record this transaction. Two, what kind of form do we want? We want to make a form that we can put into the system and not only record the transaction but also be able to provide the donor with the information to show that they gave this donation to us. So we want to be able to generate a form that can be given to someone and we want to be able to assign the proper class as unclassified to do that. So what I'm going to do is we can't just do a journal entry to work this. We want our standard donation form. So let's take a look at how we're going to do this over here. We're going to use that two-step process again. I'm going to go into the plus button up top and I'm going to use the donation form which is a sales receipt. We want the sales receipt which is going to be donation form that we can provide to somebody to show that they gave the donation. So we want to use this form but this form is usually used when there's a cash transaction. So how are we going to do that? We're going to say, okay, let's say this is donor three. This is the third, this is just the donor here and I'm going to say just save that detail and we're going to say if we have the email address we can give them the email address here. We're going to say this happened on the ninth. So I'll put the ninth and then we're going to go then down to the method. There was no, you know, we didn't have a payment. So the method's not going to be here. We're just using this form to record the transaction. So reference number and then the key here we don't want it going into undeposited funds really. I'd like it to go into the clearing account because what we're going to do is we're going to say I'm going to put it into this clearing account which I'm then going to take directly out of that clearing account and record where we want it to go. So I cannot put this form directly to any other thing account than a cash account. So I want to put it into the cash clearing and then take it right back out again. Then we're going to record down here the date which is going to be, what was the date again? It was the ninth, 010920. And the product is going to be a donation. So we're going to say it's going to be a donation. So donation and that account, this donation item is the same one we use. It's going to drive to the income account which will be unrestricted, unrestricted donation. That's what the income statement account's going to be for the amount of the 11,500 I think it was. Let's double check. Double check, checking twice, doubling up on the checking, scrolling back down. Yeah, 11,500, that looks good. And so that is good. Now, we don't really need a class again because, well actually we do need a class. So the class is going to be the unrestricted. So I'm going to say unrestricted and I'm putting everything into the fundraising. So I'm going to say unrestricted on the fundraising for the revenue side. Okay, so here it is. What's this going to do when we record it? It's going to increase the clearing account which is a cash account which we're going to have to take out and put into the proper account after that which is going to be the fixed asset account. And then the other side is going to be going to the revenue account unrestricted account under the fundraising. So let's record it and take a look. I'm going to say save and close, save and close. And then we're going to go back over to the first tab where our balance sheet is. Let's go to the balance sheet. Let's hold down control, scroll back up. So we get to that 125. I like to be at that 125 area. That's the nice place to be. And then we're going to, let's scroll up top and then we're going to run that report to make sure we have a fresh report. We want to be running a fresh report. And then in the cash clearing account we have that 11,500. Now note it's a clearing account. Therefore it should be going back down to zero once we're done. We're going to have to move it out of that account, move it into where we want it to be which will be in the fixed assets type of account. The other side of the transaction then going to the P and L if we go into the profit and loss then close up the old hamburger. Make sure we run the report. So the report is fresh. So we're working with fresh materials here. And then we're going to go back down and say that it should be included in the unrestricted area. So the 237,000 included in here. So we're going to say this was donor. The third donor item there it is for the 11,500. You may not have these other two items. Don't worry about those 11,500. That's the one. So I'm going to go back up top and we're going to go back on over. And so there we have that. Now we could break this out by class to see the classes. But again, it's in the account of the unrestricted. You can see unrestricted in this format and you can see it in the class format side by side. But we've seen that before. I'm going to keep that here for now. What I want to do is go back to the balance sheet now concentrate on the second component. Meaning we need to take this amount out of the cash clearing account and move it down to the furniture and fixture. We could do that with a journal entry. I think the easiest thing to do is actually use the register for this cash clearing account because it's kind of like a checking account format. The register is kind of the easiest thing to see in my opinion. So I'm going to go to the first tab to do this. We're then going to cool down control scroll down a bit bring it back on down to 100%. Then we want to go to the accounting tab down below into the chart of accounts. We're going to go on into that chart of accounts. And then we're going to go into the cash. So we want to go into the cash account which is going to be the clearing account. I want to look at the register. So I'm going to open up the register and then I'm going to close the hamburger up top. We don't need that hamburger open bothering us. And then we're going to go into the expenses because we need this to decrease. So we're going to we want to add and we're going to make it an expense type of form. So we're going to add an expense type of form and we're going to keep this on the same date. Oh, 1092010920. I'm going to go straight on to the payment. The payment is going to be for the 11500. It's going to be 11500. Don't really need a class because it's not going to be an income statement account. It's going to go to the fixed assets type of account. So I don't really need a class here. And so I'm just going to go down to the account. The account we want it to be going to is going to be the fixed asset. Now the expenses are on top. So I'm looking for the fixed asset type of account. Here it is, the equipment and furniture. So that's the one we want. What's going to happen when we record this? This is good. And you may want to put a memo. A memo would be good, by the way, but I'm not going to record one here. And then we're going to say that, what's this going to do? Well, it's going to decrease the clearing account back down to zero where it should be and increase the equipment account. So let's go ahead and save that. Then I'm going to say, yes, that's okay. I hope that was okay. I didn't read that one, but I'm assuming they're asking about the classes. But that brought us back down to zero. So that looks good here. So then let's go back up to our balance sheet report, back to the balance sheet report up top, hold down control, scroll back up to that one, two, five. That's where we like to view the reports at and that zoomed area. You can see that the clearing account then, if I refresh the report, run the report, make sure we're working with fresh reports, the clearing account now back down to zero. So that's the point. Clearing account goes back down to zero. So that looks good. So that looks good. It went in and out of the clearing account. That's what you would expect to see. It increases and then decreases. And then we're going to say that the other side went into the equipment account. So the equipment is at the 24, 500. That's what we want to see here. So that looks good, 24,500 scrolling back up. And then we also note that if you wanted to give this information to somebody else, we have the donation form and you can also see the donation in our accounts over here. In other words, if I go back to the first tab, open up the old hamburger, hold down control, get it back down to the 100%. So if QuickBooks doesn't do anything funny while I'm navigating like the forms and stuff. And then we go into the sales and we go into the customers. Then if we scroll down to the customer that just gave us money, the donor three, we could see the detail for this activity. So we could see the detail, we could see that donation that was made in this format. Whereas if we entered a journal entry, we may not have that information as easily. And if we go to the reports, we can run reports about the donations closing up the hamburger up top, scrolling down to the sales reports. And what I'd like to see is a sales by customer. Let's go sales by customer detailed reports and then open this item up. And this will show us basically the donations that went into that we recorded to the sales account. So 010120, 013120, gonna go ahead and run that report. So then if we scroll down to donor three, there's gonna be our transaction. So we could see that the actual donations made in this format as well. Also note that if you wanted to run this report and take a look at the cash donations, you can go from accrual to cash now and then run that report. And so note that the ones, if they didn't give us cash and they gave us something like the equipment, donor three transaction is still there, for example, that wasn't cash. But what is happening here and why isn't it cash? Cause we use, it's running, this report in essence is running based on when the cash was received. In the case of a sales receipt, the assumption is that the cash was received. This is that run as when the donation happened, as opposed to, and it'll be taking off the people then that have receivable. So you may need to run a report in this format for the donations that actually have been received as opposed to running it on an accrual basis. If you go to the accrual basis, then you're basically saying, hey, these are the donations that have been both received and pledged to be given in the future. So that's the general rule with those two reports. So that's gonna be it for now. Let's get out of here.