 QuickBooks desktop 2023 short-term investment sales and gains recording Support accounting instruction by clicking the link below giving you a free month membership to all of the content on our website Broken out by category further broken out by course each course then organized in a logical Reasonable fashion making it much more easy to find what you need than can be done on a YouTube page We also include added resources such as excel practice problems PDF files and more like QuickBooks backup files when applicable So once again click the link below for a free month membership to our website and all the content on it Let's do it within to its QuickBooks desktop 2023 Here we are in QuickBooks desktop get great guitars practice fire. We started up in a prior presentation We're going through the setup process. We do every time maximizing the home page to the gray area view drop-down We got the hide icon bar open windows list checked off open windows open on the left-hand side Reports drop-down company and financial profit and loss P&L Let's change the range from 010123 to 1231 to 3 and then we'll customize the report Going to the fonts and the numbers to change the font bring it up to 14. Let's say and then we'll go Okay, yes, please and okay, and we'll go to the reports drop-down again company and financial balance sheet And then customize up top change the range 010123 to 1231 to 3 Fonts and the numbers to change those two to 14 Okay, yes, and okay. That's the setup process. We go through every time When we first set up our get great guitar company files some of the first Transactions we put in place our transactions common to a new business Related to the generation of capital the generation of cash Cash necessary to make the purchase of the items needed in order to help us generate revenue in the future The original cash the original capital being spent then typically on property plant and equipment and Inventory if we're in the type of business that's going to be selling inventory Which then can be used to generate revenue in the future Once we have our cash in the business if we get an excess of cash within the business Then we might want to put some of that cash into short term investments as we did in a prior Presentation setting up our short-term investment possibly investing in something like Stocks and bonds or something like that mutual funds and so on and so forth Now once we have investments on the books The next question is how are we going to account for those investments because if we're invested in stocks and bonds for example We could have dividend income from those investments interest income from those investments and the investment might go up or down in Value and the question there would be do I want to adjust my investment to the fair market value? Or do I want to keep it on the books basically at cost for example now before we dive into those questions? I just want to take a step back and think about how Investments might be related to a business a normal kind of business like for us when we sell actually guitars And we might have guitar lessons and that kind of stuff in other words most businesses are not in the business of Financial investment the primary tool for us to generate revenue in most businesses as in this example problem is not through investing and generating dividends interests and Capital gains revenue So the only reason we're putting money into the investments here is because we're putting it there temporarily as a holding place Until we're going to need the money to purchase the things needed to generate more revenue in the business Which will be the fixed assets typically for most businesses and the inventory So just realized that the idea of the business is not to really get an accumulated accumulation of cash Just a pile of cash in the company the goal of the business is to use the capital That's in the business in order to invest it for the goal of the business in this case that being The selling of the guitars So we would be purchasing the inventory and the fixed assets if we accumulate cash And don't need to put it back into the business for the goal the revenue generation Purpose of the business in our case selling guitars Then the thing that a business should typically do is give that money to the owners If it's a sole proprietor then we could give it to the owners And as a draw and then the owner could invest and we could invest personally into other things such as such as Investments stocks and bonds possibly then using tools such as IRAs and mutual funds So that's one thing to just to just keep in mind you want to keep those two things kind of separate now you also Could use QuickBooks for example for your personal investments tracking your personal bookkeeping And you can have a similar kind of problem in that case in that case You might have multiple investments that are tying out to your to your stock and bond Investments in QuickBooks and you would do a similar type of thing You would probably want to be periodically adjusting Your investments in QuickBooks to the fair market value and the reason we do that is because The stocks and bonds it can be easily seen what the fair market value is at any given time given the nature of that kind Of asset as opposed to something like a building or equipment Which we cannot tell exactly what the fair market value of it is after purchasing it Because they are unique in nature Whereas stocks and bonds are not unique in nature. That's the point of them They're all the same and so we can see how much they're trading for on the market and Determine what the current fair market value prices. So if you do personal investments Then you have a similar kind of situation of tracking your your investments and you might want to group your investments In such a way that you can easily tie them out to the to the statements that you might get from your financial Institutions so that you can periodically adjust them easily to the fair market value with adjusting type entries Periodically so you can represent the fair market value in QuickBooks QuickBooks is not a software that you're looking to track the day-to-day Activities of the stocks and bonds typically for that you might use the actual financial Institution software or other software just track the daily changes like you can chart it and excel or something like that QuickBooks is where you want to make periodic adjustments so that you can see where your portfolio stands You know in total periodically at the end of the month quarter year for example Okay, so let's say the short-term investment. We're gonna imagine. What if that investment basically Went up in value. So now we're saying if we invested in stocks, for example, the stock value went up Well, we might say okay, it would make sense for us maybe to Adjust our short-term investment to the new value. So if this went up to two hundred to twelve thousand two hundred and fifty That's the new market price according to the financial statements I would want to increase this to to twelve thousand two fifty or possibly make another account Representing the fluctuations Meaning I can put this in at at cost and make another account which would be a subsidiary account that shows the increases and decreases in the value unrealized gains and losses But either way the question then is where do you put the other side because if I didn't sell the stock then it would be Unrealized so if it's unrealized, there's a couple things you could do one you could say well since I didn't realize it I don't want to put it on the income statement So I might make an equity account down here representing the unrealized gains or losses and the other side would then be on the balance sheet and you'd never hit the income statement with it Until you actually sell the investment, but that that is usually going to be a little bit more complex I won't get into generally accepted accounting principles But but that's one kind of way you can think about doing it The other the easiest way you could do it most likely is to actually go to the profit and loss report and then record The gains and losses even though you haven't realized them by actually selling the stock now You probably do not want to put the unrealized gains and losses up here in income because it's not your principal income You're not in the business of selling the stock Therefore, I'm going to put it down here in other income to show that I would like to get a subtotal of what my income from ordinary income is and then have the income from you know other income and expenses down at the bottom So that's that's the strategy that we will use here And then obviously if you had dividends or interest from the stocks and bonds that would simply be Income that you can report once again, however, I wouldn't report those as Ordinary income because that's not our principal business income. I would report them as other income down below So just to get a feel for this we're gonna imagine that we are actually gonna sell this stock now So we're gonna say okay, we're gonna sell This short-term stock and it's currently valued at 12,250. So we're gonna sell it get 12,250 we're gonna have to take this off the books because it's currently on the books at 12,000 and then we're gonna have a gain that we'll be dealing with of 250 that will have to record now as we do that if I think about my forms if I go to my homepage There's no form. That's really here. That's related to the selling of an investment because that's not a normal Transaction in our normal cycle of our normal business. So then the next question is well Is cash affected because of cash is affected then oftentimes? I'll just use the register and cash is affected because we're imagining that cash would be going up by 12,250 once we sold the the stocks and bonds So I'm gonna go into the register and say and if you are using bank feeds by the way We have a whole another section or course on bank feeds But just to mention them as they might come up if you sold the stocks or bonds and waited till it cleared the bank feed Then we would see a deposit in the system of 12,250 Which we would have to account for which would be unusual in bank feeds And we'd have to you know add it in a similar way as we add the register here So I'm gonna make this as of 0 to 0 to 23 and it's not gonna I don't want to check number So I'm gonna call it a deposit because this is actually deposit I'm not gonna use the deposit form because I'm gonna enter it directly into the register here So I'm gonna say this comes from Vanguard because that's who we invested in and the deposit we got notice We got notice it's trying to memorize the transaction as a payment, but it's actually a deposit So I've got to be in the deposit side of things. It's gonna be for 12 250 that's how much we received now here because it only shows one Line and I need two lines because I have to have the short-term investment go down to zero And I need to gain so I'm gonna hit the splits down here And that gives me this little split so I can now have multiple accounts Entering them into the register still a pretty quick data input field a little bit easier possibly than opening up the deposit form So I've got the short-term investment But that's 12,000 that needs to go down because I can't bring it below zero the memo is gonna be the sale of short-term investment and Then we're gonna have a gain. So I'm gonna hit the drop-down and see do we have any like gain Account that they gave us doesn't look like it. So I'm gonna call this gains on Let's say sale of investment Sale of investment. So this is a realized gain. I'm gonna say tab I want to set it up set it up now I don't want to put it in as an expense It should be an income account so I'm gonna say but I'm not even gonna put it in the normal income I want to put it at other income Normal income would be at the top of the income statement other income will be at the bottom and that allows us to have a subtotal of Our income from normal operations and then have the other stuff which is unusual to our kind of business at the bottom So I'm gonna say save it I'm gonna copy my description up top and just put that here too and that looks good That should do it. So this is gonna D. This is gonna increase the checking account It's gonna take the short-term investment down to zero and record the gain on the income statement Let's record it and say let's go back to the balance sheet. And so now it's gone We can't see it there But I can go back up top customize Advanced and I'm gonna see I want to see all active stuff. So it shows me the zeros That had activity in it for those accounts Here's the short-term investment double clicking on it. So we took it back down to zero because we sold it and Then the other side went to the profit and loss. It's not up here in income It's down here in the the gains on sale. So it's in other income down below So we see the subtotals We've got our total income minus the cost of goods sold gets us to the pit stop along the way of 16,000 615 gross profit minus the ordinary income The ordinary expenses are total expenses that gives us our net ordinary income pit stop along the way And then we got the other stuff. It's not part of our normal business Income which I brings us to the net income total on down below So there we have that and then of course if I go to the balance sheet the checking account Double-clicking on the checking account. We've got the amount that was deposited right there the 12,000 to 50 So I'm gonna close this out. So just realize that if you're tracking, you know In more complex fashion your investments in it in your personal account Or if you have more investments in a business account You're gonna want to group them in such a way that makes sense that you can easily tie them out to the statement So you might want you might not want to have each Individual stock that you're invested in or each individual fund if you have multiple you might want to group them By the company you're invested in such as your bank or vanguard or e-trade or whatever Or you might try to break them out between the stuff you have more access to versus the stuff that is longer term asset like the the investments that are in an IRA or 401k You might put in as other current assets and then you might put everything else That's not under the umbrella of an IRA as the short term as a current asset because you have more capacity to access that cash Whereas the IRA you're gonna need to go through the retirement Get to retirement before you can access that and the goal in QuickBooks Is to try to make it in such a way That you can quickly do the data input and update your accounts according to the statements quickly And your goal is not to try to to try to have too much detail in QuickBooks because that'll make it tedious to update You want the detail most likely and other kinds of software to track the day-to-day activity to see What your best investment strategies Will be generally also just realize that you might use other softwares to kind of help you to to record Like your investments you can connect your investments to To a software like a personal capital has software for example That you can that you can have multiple different Companies that you're invested in that can basically create a balance sheet An ending balance sheet based on the information from the financial institutions And you could use that maybe to update your your QuickBooks Accounts as well That's not a full service bookkeeping system because it's only going to show you kind of like the ending balances But it can be a useful tool for planning and in in that kind of stuff So i'm going to go to the reports up top We're going to go to the accounting and taxes trial balance and let's do a range change 01012 3 to 12 31 2 3 Let's Customize it and go to the fonts and the numbers and bring it on up to 16 Just to check our numbers. Okay. Yes, please and okay And if anything doesn't tie out here, then you might want to change the date See if it's a date range issue drill down on it make any changes necessary We will be going through a transaction report at the end of the second month of operations Which helps us to drill down hone in on any problems