 QuickBooks Desktop 2023, finance charges. Let's do it within two-its, QuickBooks Desktop 2023. 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. Here we are in QuickBooks Desktop Sample Rock Castle construction practice file provided by QuickBooks going through the setup process we do every time, maximizing the homepage, going to the view dropdown, open windows list on the left-hand side, reports dropdown for the major financial statements, company and financial, first that being the P&L, profit loss, income statement, range change from 010124 to 123124 and we'll customize it so we can go to the fonts and numbers and change the font to 12. Okay, yes please, okay. One more time on the reports up top, company and financial, bring it on down to the balance sheet. Date 123124, let's say, let's customize the report up top and go to the fonts and numbers to change the font up to 12. Okay, yes please, okay. That's what we do every time. Going back to the homepage in prior presentations, we've been focusing in on the customer cycle, which also can be called the sales cycle, the revenue cycle, the accounts receivable cycle, hopefully that cycle ending with an increase to the check-in account for money we're gonna receive for goods and services we provided to the customers. Now we've looked at these items up top, the normal kind of flow, we've been considering these items down below less used kind of items down below. We're focusing this time on the finance charges, meaning for example, if you have outstanding items, outstanding accounts receivables, at some point in time are you gonna be charging basically interest for those receivables. Now typically, when you've got outstanding accounts receivables, you're not typically charging finance charges because it's not generally going to be a loan, but you might say, well if they've gone past the due date, then maybe after that point in time you start to enter or have the finance charges. In other words, let's just take a look at this in terms of the balance sheet. Usually when we create an invoice, the invoice is gonna be increasing the accounts receivable account. The accounts receivable account is kind of similar to us basically loaning people money, we didn't really loan them money, we sold them goods and services for which they're gonna be paying us in the future, but it's usually gonna be a short-term time period, meaning usually like 30 days or something like that in which we expect to have payment and therefore due to the short-term time period and because it's part of our normal business process depending on the industry we are in, like a bookkeeper or a landscaper or a lawyer will typically bill someone and expect to be paid sometime after the bill has been sent within like 30 days, then we don't charge like interest on it. But of course, if we were simply to loan people money then we'd have an outstanding loan to someone and we would basically possibly be charging interest in that kind of scenario. So most businesses aren't in the business of loaning people money, but they are in the business possibly of having to track basically the accounts receivable items. Now one way you can determine if there's outstanding balances is you could go to the customer center, customer center up top, customer center and we could hit the dropdown here and say we wanna look at customers with open balances and so there's a quick list we can get to there. We might look at the customers that have overdue invoices. So we could say overdue amounts, there are none here. That's one way you can kind of go through that process. I'm gonna then the other way you could do it is by going to the reports up top and look at the customers and receivables and this aging summary is a good way you could look at the summary or detail. I'll just take a look at the summary and it's gonna break things out by current items, one to 30 days and it gives you a quick look at those that might have these outstanding balances. Most everything in this company file is basically current and so you would expect you wouldn't be charging any sales charges on the current items. But if they were not current then you might charge the sales, you might have finance fees which could incentivize people possibly to pay you before the due date hopefully. So we're gonna close this back out and close this back out. So if you were gonna have the finance items back to the homepage, this item here you gotta turn them on in the preferences, clearly in the sample file they're already on but if they were not, you could go to the edit dropdown, preferences down at the bottom. We're looking at finance charges on the left hand side. We're going to the company preferences up top and then you can set your preferences. So it's got the annual interest rate currently at the 10%. This is what has been entered in the default sample file. They've got the minimum finance charge of $5. So in other words, if it was a little bit late or something like that and there was a charge that is being charged that's less than $5 it's not gonna charge them for that unless it clears the minimum of $5. And then you've got the grace period. So you might say normally we're gonna say after the due date, so let's say we create an invoice they have 30 days to pay the invoice. After the 30 days, you might say that you still want a grace period before you actually kick in the finance charges possibly. That's the way that you can have a date that's not exactly the due date or the invoice date. You could try to say what I'm gonna take it from the due date usually is what you would normally do because you're usually gonna give them up until the due date without charging them finance charges that's normal business practice. And then past that date, then the question is do you want to extend it out past that date at all before you start acquiring the finance charges? So we're gonna keep it at zero here, finance account. So we're gonna call it other income meaning if you charge finance charges then we're gonna be expecting to get paid on the finance charges and that's gonna be increasing hopefully at some point the accounts receivable that they're gonna pay us on go into cash at some point. The other side is gonna be some kind of income account. We have it go into other income here. We're not in the business of finance charges. So notice we're not putting it into like a normal income account up top we're gonna put it on the bottom because this isn't financing charges isn't part of our normal kind of operations because we're not a bank but we have to charge them hopefully to try to incentivize people to pay us assess finance charges on overdue finance charges and then the calculation charges based on the due date that's what you would typically expect because you give them that 30 days and they don't pay you in that timeframe that's when you would apply them or the invoice bill date that would be a little bit unusual but you could use that and then use your grace period up here to kind of work from there mark finance charges invoices to be printed. So I'm gonna keep that undone as the default. So I'm gonna say okay or just close this out has already been set up for us. Now if you go into the finance charges so it's got as of this date finance charges there's nobody down here because we didn't have anybody that had any outstanding items. So let's go ahead and make one up let's go ahead and add a customer with an outstanding charge. Let's create an invoice and let's just call it customer number one which I set up in a prior presentation we'll just call it customer number one and let's say they had an invoice that was out there as of let's say 090524. So I believe as of the date of this sample file it's running as of December. So that means it should be past due because we're gonna give them the 30 let's say the terms are gonna be 30 days. So it should have been due on 10-5 and now this software the current date according to the practice file is December I believe December 15th. So it's past due. So we're gonna say the item let's just make up an item item I got item one here at 5,000 let's just keep that we'll keep that on the item. So we're charging them 5,000 what would this invoice do? It's gonna well let's let's just make I think that item is just let's just keep that item this invoice would increase the accounts receivable by 5,000 the other side would go to some kind of income account being driven by the item. So that's be a normal kind of invoice I'm gonna save it and close it. You've changed terms for this I'm gonna say yeah we'll keep the terms let's go to the customer center which you could go to here or up top drop down customer center there and there's customer number one so there's the $5,000 accounts receivable. So now let's go back to the finance charges gonna go to the homepage and I'm gonna go into the second tab the finance charges and the customers area and now we've got that customer being pulled up to be applying out the finance charges which is coming out to the 9726. Now note you could change this amount if you so choose you could say well maybe I'll lower it for this one time or something like that but if you do so notice that next time if they still do not pay it then it might take into consideration the prior finance charges that were not paid and then add on the next amount to it so just realize how it's gonna basically work if you adjust this item for the first time. You can mark one or unmark one, mark all there's only one that we have here so mark the invoice to be printed so we could mark it to be printed for an invoice and then you've got your settings down below here and that'll pull you basically up to the same settings we looked at in the edit area if you go here so you can take you to the same area that we saw in the settings up top this will be a report that will be generated that you could see from the report field as well. So if we assess the charges let's go ahead and assess them what would we expect to be happening? We're gonna be increasing the receivable now for this particular customer they're gonna owe us another 9726 and the other side's gonna go to that income account that we designated so I'm gonna say assess the charges finance charges have already been assessed today do you want to continue? Yes I do wanna continue I wanna charge this person driving me crazy you owe me $5,000 dang it so if I go down to the customer center again for customer number one there's the 97 that has been charged if I double click on it you could see the finance charge activity that has now been charged on the account the 97 I'm gonna close this back out and notice that you could inform you could run statements which we'll talk about later to kind of combine the balance due by running statements to provide outstanding invoices kind of grouped together that you can then give to the customer so you might be saying well how you know if I'm gonna inform the customer of this now one way to do that is to look at the statements which we'll take a look at in a future presentation which can combine some of those outstanding balances if I go then to the balance sheet in the income statement on the balance sheet we see in the accounts receivable changing the date from 0101 to 4 to 1231 we had a finance charge that we put in here which is all the way at the bottom here the invoice on 1215 there it is the 9726 I could double click and drill back down closing this back out closing this back out the other side went to the income account and remember we designated it not as income up top but as an income account down here so it's still income but it's down below in other income because this isn't part of our normal operations so if I double click on this in that we don't make all of our money through finance charges that's not what we do as a business we're not a bank right so this is something that shouldn't be repetitive it just happens to be the case that we had to put the finance charges in case and this instance would be the idea of why you put it down here and not part of our normal operating income from the income sources that we generally do and want to do to make our income in the future so that's the general idea of the finance charges