 In this presentation, we're going to be entering some adjusting entries into our accounting system for the not-for-profit organization. Get ready, because here we go with zero. Here we are in our not-for-profit organization dashboard. Let's go on over to Excel to see what our objective will be. So we're going to be over here in Excel, and we're going to have items eight and nine. We're on tab nine, by the way. We're on the tab nine within Excel. And then if I scroll down to number eight, it says the amount of pledges estimated to be un-collectible. So we're going to have un-collectible pledges, and then we also have the depreciation. These are going to be our two adjusting entries. These are going to be similar to adjusting entries in a for-profit type of organization. So let's consider what's going to happen up top. Let's go back up top. And what we're going to say is the accounts receivable here, we have to record the receivable that we have on the books that people have said that they're going to give us. These are pledges receivable, but we expect then, based on past experience, that some of those receivables were not actually going to be able to collect. So we need to put the full amount on here. We don't know which amounts aren't going to collect on them, but we need to reflect it on the financial statements to show people and say, hey, look, we expect, based on past experience, that we're not going to get this full amount. Otherwise, we would be overstating the balance sheet here. So we're going to tell you what the estimate is with this contra-asset account. So that means we would have to make the estimate in some way. We're not going to do that here. We have a course on how to make an estimate. This is called the allowance method, basically, what we're using here for uncollectible accounts. But in essence, we would have to come up with an estimate and then decrease the accounts receivable, not by decreasing it directly, but by making another account a contra-asset account for that decrease. And then the other side, note what happened here is you can consider or think about the fact that revenue, in our case with restrictions, you can think was overstated, because if we're not going to get the actual money, then basically we overstated revenue. We recorded revenue that we're not actually going to receive when we increase the receivable. So you would think then that you would decrease the revenue account. However, we don't typically decrease a revenue account. Instead, we make an expense account and the expense account is going to be called the provision for uncollectible pledges, which is equivalent in essence to bad debt expense for a for-profit type of organization. So that's going to be the transaction. We're going to be decreasing the accounts receivable by making a contra-asset account of the 21,000. The other side is going to go into an expense account for the 21,600. So let's do that. We'll do that just within a journal entry like we would typically do with adjusting entries for a for-profit organization. Within zero then we're going to look to enter our journal entry. So we're going to go to the accounting dropdown and we're going to go into the reports. Now we're not going to actually open a report here. We're looking for where to enter the debits and credits, where to enter a journal entry type transaction. It's going to be down here under the accounting. We're going to be opening up the general journal. So again, I know it looks like we're opening up a report here, but we're actually looking for the data input screen where we're going to enter the journal entries. Okay, so there we have this add new journal. That's what we want. We want to add the new journal. So this is going to be our debits and credits, our journal entry. We're going to enter this transaction as of the end of the month. That's going to be the typical kind of thing for an adjusting type journal entry. I would typically put here that this is going to be ADJ or something like that to indicate that it's an adjusting entry. So I'll say adjusting entry. You might want some more detail there for it on the type of adjusting entry, but that would be the minimum for it. And then if you have some separation between the adjusting department and the accounting department, that can be useful information. So then I'm going to go to this is going to be January 31st. Adjusting entries are typically going to be as of the cutoff date. Note that the description gets pulled down through the narration to every line on the journal entries. So that's great. I really like that. And then we're going to go back on over and say that we want a debit to the provision for uncollected pledges. So a debit to the provision for uncollected pledges. That's going to be this item down here. I'm going to copy it very unlikely that we actually have that account set up, right? That's I don't think we're going to have that one in zero yet. So if we go back on over to zero, we're going to add that I'm going to select the dropdown to see which accounts we have. And so what do we want to put that one? If I scroll down here, we've been adding in the expenses is going to be an expense type of account probably should be more at the bottom. So let's make it like 70607060. And then I'm going to add a new account. So we're going to say add a new account. And I'm going to keep the code is going to be 7060. And then the account type, let's make the account type be the expense type of account. So expense type of account. And then I'm going to paste that long name right here, that long name, which was the provision. And see if it lets me do the whole thing provision for uncollectible pledges. I think that's got it all in there. They allow us to have that long name. Also note that on the expenses, I think I picked up I was looking to pick up the category heading. That'll be within the heading and make sure you actually click on the expense, which has lower case letters in it, which is down here, as opposed to the category heading up top. So that's going to be it. We're going to have the expenses 7060 provision for uncollectible. So then we're going to say save. And that should pull that information over. I'm going to call it tax exempt here. So one of the tax exempt, I'm going to say zero on the tax exempt that I'm going to tab through this. And then we have the categorization. Now this is going to be, I'm not going to categorize it at this point. We're going to go through the categorizations in a future presentation. We'll do that basically all at one time for the expense accounts. And then I'm going to go back on over. We're going to pick the 216. So we want the amount of the 216. So 21600 and then tab, tab. And then the other side, the other side is going to be going to, if I select the drop or back to Excel, the allowance account. So the allowance account scrolling back up is going to be here. So we want this allowance account. I'm going to pick it up. That's a long account name. Let's see if it lets me put that entire account name in there. We're going to have to add another account again. So I'm going to select the dropdown. We're going to be adding another account. So I'm going to say that this is going to be the account type. It's going to be a current asset account. It's not going to be an accounts receivable account, but a current asset type of account. And then we're going to say that the code is going to be going to, let's make it 1240, 1240. So this is going to be up in the assets section for 1240. Then I'm going to put the name here. So we're going to say the name. I'm going to paste that name in that we had. So allowance, so the allowance account. And then it looks good here. Everything looks good. I'm going to go ahead and then say save. So there we have that. And once again, I'm not going to be categorizing this one. This one's a balance sheet account. So we don't really need the categorization. What's it's going to do? It's going to be increasing basically the expense account, kind of like the bad debt expense, decreasing net income. And then the allowance account, which is a contra asset accounts going to go up in a credit direction, bringing down the accounts receivable net value and the total asset value. So let's go ahead and then say post it and then see what happens. Let's open up our reports after this. So we'll then go over to the accounting dropdown and then let's go down to the old balance sheet, open up balance sheet report. There it is. I'm going to bring this out to 2020. Also just note that I jumped over here to Firefox. I'm in a different browser. I'm not in Google Chrome. So things look a little bit different than it's just another browser. You can use any browser pretty much that you want with zero and it seems to work well. So then I'm going to go back up top and we're going to duplicate the tab. So I'm going to go back up and duplicate it. And when I hit this dropdown, I'm right clicking on it. Same features because it's a, you know, it's a big, big name browser. So you got the duplicating tab option here as well, but it might look a little bit different in the formatting. We're going to go back to the, to the left then we're going to select the accounting dropdown. Let's then open up the standard income statement. We have that for 2020. So that looks good. Now let's go back up top, right click on that tab, duplicate that tab. Then we're going to go back to the tab. Next we're going to do this one more time. This is going to be for our income statement worksheet, collecting or selecting the accounting dropdown, going on down to that income statement worksheet. There we have it. I'm going to go back up top, right click on this tab and duplicate that tab. I'm going to right click and duplicate so that we have our balance sheet. We got our income statement, then our, we got our income statement worksheet. Let's go back to the, to the tab all the way to the right, which should be our balance sheet tab. I'm going to hold down control, scroll up just a bit, see if we can get it a bit larger here. So hold down control, scrolling up just a bit to that 120. So there's the 120%. Again, a little bit different format and how they show us that while we're in Firefox other than Chrome here, but it still functions much the same scrolling back down. Then we'll see in the accounts receivable area or next to the accounts receivable. We now have the allowance. So it's a contra asset account, meaning look, this is how much people actually owe us or how much people said they're going to give us for money. And then this is the amount that we think is going to be uncollectible. So the net of those two, then is the net amount of the net value of the receivable. That's why it's a contra asset and negative asset account. We also have the discount, which is basically a negative accounts receivable as well. When we discounted that one receivable, we don't expect to get or can't use until sometime in the future for a project. And then the other side of this thing is going to be going into the income statement. So let's go to the income statement tab and scroll on down. So we'll scroll on down to the income statement. We're in the expense area and we have this provision for uncollectible pledges. So there's the provision for uncollectible pledges. That's going to be the other side. It's increasing the expenses, which of course will decrease the net income. Then if we go to our net, our income statement worksheet tab, we scroll down and we can see that our uncollectible pledges, like all expenses have not yet been allocated. They're going to be in this tab going to the unrestricted category. Right now they're not in unrestricted. They're in unassigned. So they're unassigned. We're going to assign them later, just like with all our other expenses. We're going to do this at one time and we'll do that in a future presentation. All right. Now let's go back to the first tab where we're going to do stuff. We're going to enter our next journal entry. So I'm going to go back to Excel to consider our next journal entry. So we're going to scroll on down and I'm going to ungreen this one. So let's ungreen this one by selecting it, right clicking on it, and then ungreening it by making it hit the little bucket. And then I'm going to make it no fill. Actually, I don't want it no fill. I want it blue. So let's do that again. I'm going to right click on it. I'm going to hit the little bucket again and I want to say I want to make it blue. And then this one's on the bottom. So we don't really need to make it green. We're just doing the one on the bottom, which is our typical practice. So now we're going to say that we have the depreciation journal entry. Now this is going to be pretty much the same for the for profit, not for profit slightly different name or using here allowance for depreciation. But the same kind of the concept here. So we're going to have instead of accumulated depreciation. In case you're wondering, accumulated depreciation is the typical name. Most people are probably most familiar with. We're going to use the allowance. Now we're not going to get into depreciation methods here. So we do have a course on depreciation methods. Like talk about that. It gets a bit complex. Just realize that of course we're talking about depreciation on each individual piece of equipment. So we'd have to run each individual piece of equipment that depreciation on it and then decide the method, which could include straight line or double declining, whichever method that we're using. And of course the method we use for books might be different than tax method. And because we have to track this for taxes as well, the tax software is often a place where many businesses are not for profit organizations. Or organizations might actually track this information because it's going to be in the worksheet for the taxes most likely. So since it's already there, the tax software can often give you the transaction or journal entry for depreciation, both from a book and tax perspective, if necessary. So the imagination that we're having here that what we're saying is that we're going to give our tax professional all of our fixed asset type of equipment. And hopefully they can use their software to run the depreciation schedules and then give us the amount of depreciation that we need to record on a periodic basis at the end of the month, which we're going to say here is going to be that 4,400. So the concept then being that is that we put this on the books, the actual equipment on the books as an asset as opposed to expense in it at the point of purchase. Then we expense it in the form of depreciation. And when we do that, we're going to use not equipment expense, but just depreciation expense. That's going to be the bottom line, which is going to increase the expense down here. So expense goes up with depreciation expense. And then the other side goes not into a reduction of the equipment account, but to another contra asset account, which is going to be the allowance telling our reader, hey, look, this is what we bought it for. This is what we think it went down in value by with depreciation and what we have to expense over the life of this thing. The difference between the two is the book value. So once you know that the transactions pretty straightforward debit depreciation expense credit the allowance. All right, so then we're going to go back on over. We're going to say then let's do another journal entry. We'll go to the accounting drop down. I'm going to go on down to the reports. We're going to look for that journal entry again. So we're going into the report so that we can find that journal entry screen where we enter the journal entry. We're going to scroll on down, scroll on down to the journal, the journal report. So we will go into then the journal report. Then we will add a new journal. So we're going to add a new journal. This is going to be our journal entry, our debits and credits. So we're going to go in and add a new journal. And then within the narration you might want to put once again something like adjusting entry, adjusting entry. And then maybe depreciation something like that. The date's going to be the end of the month. So we're going to select the date drop down going to bring that on back to January, January 31st. So January 31st on the date. Then the description will pull down here which is great. And then we've got the debit which is going to be depreciation expense. So let's hit the drop down. Let's see if we have something like depreciation expense. If we scroll down through here, there we have it. Depreciation right there. So they gave us that one. We don't have to add the depreciation. That's great. So we'll select that one. And then I'm going to say tab, tab. Now we're not going to be assigning it to the unrestricted or restricted classes or categories. We will do that at a later point. The amount is going to be 4,400. So I'm going to go back into this. We're going to put in the debit 4400. So 4400. Then the other side description pulls down for us which is great. And then we're going to select the drop down. We're looking for not an expense now but the accumulated depreciation which is going to be in the assets area. So we have allowance for uncollectible. We've got the furniture and fixture. There we have and then the less accumulated depreciation computer and office accumulated depreciation for the vehicle. All right. So the names aren't perfect. That's because we had the furniture and fixture. We changed the name there from computer and office. So we could do the same thing here. I'll choose this account. And then if we want to change the name, I could just say less accumulated depreciation and change it to furniture and equipment or just keep accumulated depreciation. So let's choose that one for now. I'm going to pick that and then we have the credit 4400. So what's this going to do? Increase the expense of depreciation expense, decreasing net income, increasing the contra asset of the accumulated depreciation, which will decrease the net assets for both property planting equipment and total assets. So let's hit post and then check it out. So we're going to post this thing. Make sure it posts properly. That looks good. Now let's go on over to the balance sheet. So we're going to go back to the tab to the right. We're going to make sure that we update or refresh the balance sheet. We want to be working with fresh reports here. And then if we scroll back down, we should then see on the fixed assets. Now we have the less accumulated depreciation. So here we have the 4400. Now, if we want to change the name of that account, then I'm going to go back to the first tab to do this. This is the tab we go to do stuff. And then I'm going to go to the accounting drop down and I'm going to go to the chart of accounts. Let's go on into the chart of accounts and see if we can just make a slight alteration to the name. Now we could go into all accounts here. If we want to narrow it down, we could go to the assets tab because we are talking about an asset, although it's a strange asset. It's a it's a contra asset. So then we'll scroll down and we're looking for the property plant and equipment. So there we have it. So here it is. So we want to adjust this account. So I'm going to go into that account and it'll give us a detail. So now here it is. Now here's the accounts name. If we want to change the name, it's notice it's called accumulated depreciation and it's called here allowance for depreciation. So we might say, all right, we got to use the not for profit terminology and call it allowance. We want to make sure that we're different and we could confuse everyone with a whole different name. So there we have it. We're going to call it allowance for depreciation. Now you could put allowance for depreciation and then furniture and equipment, which is the category, but I don't really have one category. So I'm going to keep it as just that for now. All right. So we're going to say save. And that'll be that for the rest of the problem here. But just note that you could have, you know, multiple categories for different classes of property plants and equipment, or you can kind of group the depreciation of one category depending on how you want to report it on your financial statements. So let's go back to the balance sheet, see if that changes up. So we're going to go back up top. We will once again update the reports or refresh the report. Now let's see if this report has been freshened. And if we go back down, we then have the allowance and then the furniture and equipment. Now note the allowance now pulled it up up top because because of the order of the name. So it's in alphabetical order here. So it's under the fixed assets, but the allowance is now on top of the furniture and fixture. We can change that, however. So let's go to the, let's take a look at that. We can go to the edit the layouts tab over here and we can make the adjustment from the default setting. And then I'm going to scroll back down and I'm going to, I'm going to say, all right, the on these ones, I'd like to say that we have the furniture and equipment and then the allowance. Let's see. I'm just going to grab that and I want to pull it underneath the furniture and fixture. I'm just going to do a good old grab and drop, drag and drop. So now we've got the furniture and equipment and then the allowance. So then I'm going to go up top and I'm going to say done. So note again, that gives you a lot more flexibility to do that within, within zero than just having a couple other, a couple options. However, if you do that a lot, you could, you could kind of confuse things. So you want to make sure that when you save this report, we want to save it as a custom report. Because they're going to be like our custom report we're typically working with. And I would then keep the balance sheet, the original balance sheet that has the default settings separate. In other words, never overwrite the actual balance sheet. And then if you have any problems, you can always just start over and just take the balance sheet and make the adjustments again if you so choose. So then if we scroll down, now we have the furniture and fixture and the allowance. Now it's not going to show up every time unless I was to customize this report, which I'm not going to do. So just note that you can do that. And then again, I would be working with your custom reports that are formatted in the way that you want to make those your favorite type of reports. Now let's go to the income statement to see the other side or go to the income statement tab. Then we'll refresh this report. So we will refresh the income statement and then scroll back down and we should then see the depreciation. So here's a depreciation 4,400 increasing there, decreasing the net income. If we then go back to the first tab for the income statement worksheet, we can scroll up and freshen up this report. So I'm going to update this report and then scroll back down and we'll see that we have here the depreciation then not being categorized to a category yet. It's still uncategorized and will categorize all of the expenses at one time at a later point in a future presentation. So that's going to be it for now. Let's get out here.