 QuickBooks Desktop 2023 Enter transaction for owner deposit or loan deposit using bank feeds. Let's do it within two weeks. 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 U2 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 on QuickBooks Desktop bank feed practice file We started up in a prior presentation going through the setup process we do every time view drop down we've got the hide icon bar open windows list checked off open windows are open on the left reports drop down company and financial let's open the profit and loss to P and L changing the range from 010122 to 123122 customize it I'm going to go to the fonts and numbers click up the font to 14 ok yes and ok then reports again company financial but this time the balance sheet standard customize it so we can then change the range from 010122 to 123122 and then the fonts the numbers need to change up to 14 ok yes and ok now let's open the bank feeds banking drop down bank feeds the bank feeds center would only be there if you got bank feeds turned on which we have done in a prior presentation I'm now going to go to the unrecognized items we're focusing in on the deposits and so we're looking in on them now we've been focusing in on going back to the homepage entering deposits in such a way in the kind of business where we can use the deposits bank feed to record transactions and record the income from there as opposed to a full service kind of system where we would use the sales receipts even on a cash based system or the invoices on an accrual based system to record the sales so we talked about the pros and cons of doing that kind of system and if we look at the income statement you can see here that now we've got our income items lined up and we notice we've got the name of who paid us which isn't not the norm in a full service assistant system but can work well if you're using the deposits and we don't have the capacity to get to those sub ledger reports that are going to break out by customer or item as easily because of the use of the deposit form as opposed to the sales forms and so now we got to think about well what if I have a deposit owner or coming from the bank for example with a loan I want to make sure that if I'm using the bank feeds to record revenue that I'm not recording those as income but rather or properly categorizing them as an owner investment or a loan which are balanced sheet items now if you have a system like this that we've been looking at usually it would be fairly straightforward if I went into the bank feeds and I said hey there's a deposit like a big deposit or something that went into the to the bank and I don't have the memo that said it came from like some other platform then I would probably pick it up and say oh that's me that put the money in and I would have to then say okay what's going to be the other account that I'm going to go to it shouldn't be an income account in that case it needs to be some kind of balance sheet account if it was a loan a payable if it was me an equity account however you can imagine some cash based systems where it can get a little bit more complex because you might for example have you might have a system where you're just going to say I'm just going to make sales and then I'm going to have cash as my as my revenue and I'm just going to deposit the cash into the bank wait till it clears the bank and then I'm just going to record my cash deposits as income in that case you're not going to have as much information in the bank feeds in terms of the detail here and the bank memo and so it'll be more difficult to distinguish the sales kind of deposits from another random deposit that might happen periodically from either you putting money into your own business or from a loan so you're more likely to mix those up and put the put that as income as opposed to as the proper account of a loan or the equity account so so those are things that you want to make sure that you have in mind if we're using the bank feeds to record all deposits as income then what if there's other deposits that aren't income that doesn't typically happen it usually happens when you start up the business the start up capital and it usually happens when you're expanding the business or having cash flow problems where you have to put money in or take out a loan what you do not want to do is add to income on the profit and loss because that'll make your income statement look artificially good which is good if you need a loan or something I mean it's not correct but it would it would look good but it would it would be bad for taxes you might be paying taxes on the money that you put into your own business if you recorded it as income or money on a loan you took out and that wouldn't be good okay so let's go back to the bank feeds and just say well how can we record that I'm actually going to go into a here because I just want to pick up one of these items that I can use and pretend it was a loan so I'm going to look at the deposits and I'm just going to use like the interest there was an interest one here let's just use that and pretend it was a loan where are they where's the interest so here they are now these are small dollar amounts but we'll just pretend that these are deposits from like a loan so I'm going to say okay so this one interest if it came from the bank you know it would be a loan from the bank and then the payment side and then the account side of things shouldn't be income if it was a loan if it was a deposit from from the bank because it was a loan that's going into our checking account it should then be going to a loan account so let's imagine this one was actually a loan so we're gonna have to set the account up let's go to add new account and this is going to be typically an other current liability account let's make it an other current liability account and I'm just going to call it loan payable loan payable and we will set that up that looks good I'm going to save it I'm not going to make a rule related to it because these are not transactions that would happen all the time you're not going to take loans out all the time so it would be a one once in a while type of transaction you got to make sure to pick up it will usually be for a large dollar amount and often an even dollar amount two things that can help you to distinguish and notice it to pick it up to the right location so I'm going to say add and then if I go to the balance sheet it will of course be a deposit in the checking account I won't spend a lot of time well there it is right there boom the loan and then I'm going to close this back out the other side though isn't going to the income statement it's going to the loan payable right here so you owe it back to the bank nothing on the profit and loss in that case it's not being recorded as income now we have a very small dollar amount but often times loans are significant in dollar amount and if you recorded a significant increase in income you could be paying a significant amount of taxes if you use that to make your taxes on a loan which you don't want to do so you want to make sure that you have that properly allocated if I go back up to the balance sheet here now there are several other issues with the loan just going forward with regards to bank feeds one is the fact that you might have well there's some are bank feed regarded and some are just reporting regards like one is the fact that you might have multiple loans so if you have multiple loans then you might want to make a parent account called a loan account and then have the multiple loans subsidiary to it and then put the last four digits of the loan number in each account to tie the loan balance out to the amortization table that's one issue another issue is that some loans are going to be longer than one year in duration many loans we think of are often installment loans we pay them off in equal installments monthly payments but they might last for more than a year so proper reporting would be that we would have a short term portion and a long term portion you don't typically want to break out a short term and long term portion every time you make a payment that becomes tedious if you need to break out the short and long term portion you might want to do it periodically at the end of the month or year so we have other courses on adjusting the adjusting process course or section on adjusting process that you can kind of dive into that in more detail the other thing you got to keep in mind is that you might need an amortization table to properly break out the interest and the actual payments for the loan then there's actually three accounts that will be affected meaning you're going to have to pay down the loan with the payment and you're going to have interest so you're going to have to check an account decreases you're going to have the loan goes down and interest expense and the allocation between interest and the loan will not be the same each time so when we go into our bank feeds for the payments you can automate the payments that but you can't make it perfect unless you use an adjusting entry kind of process because the breakout because there's three accounts instead of two accounts that will be affected and the accounts of interest and principal will differ so there's a couple kind of workarounds we might dive into in a little bit in the future on the payment side of things but just remember that that's another kind of added level of complexity the loan payments to get into we're looking at the deposit side more here okay the other deposit that we need to be able to catch would be if we the owner are putting money into the system into come out of our personal account into the business account so let's imagine this one was that so this might be the owner is putting the money in in this case we're going to imagine it would then not be going to income again it would not be going to a loan but it would be going to an equity account which is similar to a loan account for the business when you think about it as a separate entity because it owes the money back to you the owner so we can then put it into the equity which is kind of like the retained earnings account that it rolls into or we can make another account if we want to track the investments in the business in a separate account kind of like we do with draws draws represents money that we're taking out of the business that we're going to put into a separate account if we're putting money into the business we could make another account and do it in a similar fashion let's try that so I'm just going to call it owner owner owner investment tab and set up if I misspell anything I apologize the point is that it shouldn't be an income account or an expense account but rather it should be an equity type of account should be in the equity area so we'll save it and close it and then I'm not going to add any more detail to it we're not going to add a rule and say add there's not a transaction we hope that it's going to happen often and so it would be an increase once again to the checking account similar to what we saw last time and then the other side is going to go not to income not to a liability but be part of equity so you can see we put it in here into investment equity just note that you could have put it into the we could have put it into the owner's equity but then you've got it you've got a note that you put it into owner's equity if you're going to try to roll over your financial statements or if you have taxes that are more complex for like a corporation kind of tax or otherwise your retained earnings will not tie out from period to period so sometimes it's nice to kind of break out in a separate account but just realize that the net income here rolls into the equity accounts and and usually in accounting like in book accounting or in school when you learn accounting the closing process for draws and investments if you broke that out separately would also roll into equity periodically possibly at the end of the month or the end of the year quick books does not do that automatically with these two equity accounts so these two equity accounts will just keep on accumulating upwards unless you make a manual adjustment rolling them into equity this account will roll into equity automatically if I change the date for example up to the next day up now it's rolled into here we still have these two that are not in that equity account also just realize that if you were a partnership then you'd have to track basically these three count accounts you might call a capital account and you'd have to break out one for each partner and track their draws and their investments and their total equity separately because these represent in essence each partners claim to the net assets meaning assets minus liabilities right assets minus liabilities is the equity so so then then also just note that if you're a corporation then the investment in the company would be in the form of stocks you're selling stocks to the owners so when you break out capital stocks that's like the money that the owners put in to the company versus the retained earnings which represents the accumulation of earnings that have not been given out in the form of dividends which are kind of like draws for a corporation okay so that's the general idea so again we might dive into that loan payment thing that whole thing with the making payments of the loans and the bank feeds in a future presentation so let's that would be with this I'm going to maximize this one that's why I can't see it right there but we might talk about that in the outflows later right now we're just focusing in on making sure you catch those deposits which are not income related deposits you want to be able to find those usually you could do that even though they're not happening all the time by the fact that they're usually larger dollar amount items and often times they're round in nature meaning they're in thousands or something like that as opposed to sales which might have a lot of pennies on it and whatnot so you can kind of recognize those items even though they don't happen all the time and make sure that you're properly accounting for them on the balance sheet as loan payable or investment as opposed to accidentally pulling them over to the income statement as income in which case your income statement will be distorted and you might be paying taxes on a loan or an investment from the owner which would not typically be good let's go to the reports drop down and then accounting and taxes trial balance 0101 22 to 1231 22 and just take a look at that fonts and numbers bringing it on up let's go to 16 okay yes and okay just remembering that if we can see the the breakouts of the assets liabilities which we can see now here in the loan payable will have a credit balance and then the equity accounts and then the income accounts cost of goods sold which is a type of expense and expense accounts this is a great report to have open to jump back and forth from and to drill in on as it is the balance sheet on top of the income statement without all the subtotals therefore easier to find the accounts and not have to sort through so much and go to the opening balances or the open windows on the left to find stuff