Help! Need to debit sales and credit expense

[DFStoneJr]

I've inherited a QuickBooks setup at a location 800 miles away, so I'm
dealing not only with software that I'm not intimately familiar with
yet, but also slow response times due to distance.

I have an invoice entered that includes a line containing a charge of
$554.08 for freight. I want that amount removed from sales and
credited to shipping expense. In a "real" G/L, I'd debit sales and
credit freight expense, but I can't figure out a way to do this, since
QuickBooks uses registers for some accounts in the chart of accounts
but only provides access to reports for other accounts.

We expect the customer to pay the freight, so I don't want to adjust
the amount off of the invoice.

How do I do what I want to do?

 

[Denise]

You don't mention which version of Quickbooks you have, but in the Pro
version, the banking pull down menu is where the journal entry item is
located. Hope that helps! Denise

 

[Tee]

(e-mail address removed)> wrote in message

I've inherited a QuickBooks setup at a location 800 miles away, so I'm
dealing not only with software that I'm not intimately familiar with
yet, but also slow response times due to distance.

I have an invoice entered that includes a line containing a charge of
$554.08 for freight. I want that amount removed from sales and
credited to shipping expense. In a "real" G/L, I'd debit sales and
credit freight expense, but I can't figure out a way to do this, since
QuickBooks uses registers for some accounts in the chart of accounts
but only provides access to reports for other accounts.

We expect the customer to pay the freight, so I don't want to adjust
the amount off of the invoice.

How do I do what I want to do?

Are you certain the applicable state doesn't require shipping/freight
charged to a customer to be reported as income? What about sales tax? Does
the applicable state require that shipping/freight charged to a customer be
taxable? If you don't have a legal requirement to show it as income then
you can alter the 'freight' item in the Item List and change the income
account listed to that of an expense account.

 

[Allan Martin]

(e-mail address removed)> wrote in message


Are you certain the applicable state doesn't require shipping/freight
charged to a customer to be reported as income? What about sales tax?
Does the applicable state require that shipping/freight charged to a
customer be taxable? If you don't have a legal requirement to show it as
income then you can alter the 'freight' item in the Item List and change
the income account listed to that of an expense account.

Tara,

Did you miss your morning coffee? What are you talking about?

 

[L]

Tara,

Did you miss your morning coffee? What are you talking about?

The OP had an invoice which included freight charges to the customer - and
evidentally, the freight charges item has the account 'sales'.
The OP wants to record these charges as an expense rather than as income.
Some states do not allow this.

 

[L]

I've inherited a QuickBooks setup at a location 800 miles away, so I'm
dealing not only with software that I'm not intimately familiar with
yet, but also slow response times due to distance.

I have an invoice entered that includes a line containing a charge of
$554.08 for freight. I want that amount removed from sales and
credited to shipping expense. In a "real" G/L, I'd debit sales and
credit freight expense, but I can't figure out a way to do this, since
QuickBooks uses registers for some accounts in the chart of accounts
but only provides access to reports for other accounts.

We expect the customer to pay the freight, so I don't want to adjust
the amount off of the invoice.

How do I do what I want to do?

There is a general ledger function in QuickBooks.

But are you sure that is what you want to do?

If the freight charges are passed on and reimbursed by the customer, how are
they expenses to your company?

Look up 'reimbursable' expenses in the helpfile.

Also, as Tee has pointed out, the state you live in may require sales tax on
the entire invoice (including pass-through charges). Certainly, your state
will not allow you to collect the fee from the customer AND deduct the
expense on your taxes.

 

[Allan Martin]

I've inherited a QuickBooks setup at a location 800 miles away, so I'm
dealing not only with software that I'm not intimately familiar with
yet, but also slow response times due to distance.

I have an invoice entered that includes a line containing a charge of
$554.08 for freight. I want that amount removed from sales and
credited to shipping expense. In a "real" G/L, I'd debit sales and
credit freight expense, but I can't figure out a way to do this, since
QuickBooks uses registers for some accounts in the chart of accounts
but only provides access to reports for other accounts.

I don't know what you mean by a real G/L. To me a real G/L was a binder with
green sheets of paper fastened between each cover. To tell you the truth I
think its been over 25 years (thank god) since I've actually worked with one
of these.

Any who, its the year 2005 and I believe one would be hard pressed (if not
impossible) to find any accounting package on the market today that doen't
have the abiltiy to post adjustments.

To even think that the leading accounting program in the world does not have
this feature tells me that you should not be involved in this engagement.

 

[Allan Martin]

The OP had an invoice which included freight charges to the customer - and
evidentally, the freight charges item has the account 'sales'.
The OP wants to record these charges as an expense rather than as income.
Some states do not allow this.

How the user wishes to classify freight charges on their financial
statements has nothing to do with any state law that I am aware of. If
freight is subject to sales tax then all that is required is that the
correct amount of sales tax be remitted. If the state gets their money then
they don't care if it shows up as freight sales of an offset to freight
expense on the books of the taxpayer.

 

[Allan Martin]

There is a general ledger function in QuickBooks.

But are you sure that is what you want to do?

If the freight charges are passed on and reimbursed by the customer, how
are they expenses to your company?

The OP wants to credit freight expense. A credit to any expense account
results in a reduction to the expense.

Look up 'reimbursable' expenses in the helpfile.

Also, as Tee has pointed out, the state you live in may require sales tax
on the entire invoice (including pass-through charges). Certainly, your
state will not allow you to collect the fee from the customer AND deduct
the expense on your taxes.

Tee took a simple question and turned it into something it was not, a sales
tax issue.


The OP does not want to take a freight expense, he wants to reduce a
freight expense.

 

[Tee]

The OP wants to credit freight expense. A credit to any expense account
results in a reduction to the expense.

So, why not leave it as income and let the income vs expense do the washing
out later? Its cleaner.

Tee took a simple question and turned it into something it was not, a
sales tax issue.

That loud KABOOM! was the sound of my irony meter blowing to smithereens
over your comments. You who rarely just answers a question and who almost
always makes a new issue out of a simple question is going to get his
knickers in a twist over me doing it?

There are two reasons I *asked* the OP to make sure he was required to
record his freight differently. Firstly, he may not even know that sales
tax could be an issue. Secondly, contrary to your expertise, some states
*do* require that you keep shipping charged to a customer as a clearly
identifiable line item and generally shown as income.

 

[Allan Martin]

So, why not leave it as income and let the income vs expense do the
washing out later? Its cleaner.


That loud KABOOM! was the sound of my irony meter blowing to smithereens
over your comments. You who rarely just answers a question and who almost
always makes a new issue out of a simple question is going to get his
knickers in a twist over me doing it?

There are two reasons I *asked* the OP to make sure he was required to
record his freight differently. Firstly, he may not even know that sales
tax could be an issue. Secondly, contrary to your expertise, some states
*do* require that you keep shipping charged to a customer as a clearly
identifiable line item and generally shown as income.

Name one state and give me a reference to the specifc law. Just because a
state may have a line item on their sales tax return for freight charges
this does not mean the taxpayer is prohibited from recording frieght charges
billed to their customers as an offset to freight expense.

The decision (which I assume is dicated to you by your clients' accountants)
to keep these as a separate line items for your customers is one based on
the accountants' personal preferences and not mandated by law as you
incorrecly stated.

 

[Tee]

Name one state and give me a reference to the specifc law. Just because a
state may have a line item on their sales tax return for freight charges
this does not mean the taxpayer is prohibited from recording frieght
charges billed to their customers as an offset to freight expense.

I can't cite it. I know from conversations with the DOR for my state,
having been told this directly, that the company or individual must record
sales tax charged as income and keep it separate.

The decision (which I assume is dicated to you by your clients'
accountants) to keep these as a separate line items for your customers is
one based on the accountants' personal preferences and not mandated by law
as you incorrecly stated.

Partly that, as they all want it that way, but also from direct
conversations with DOR employees. My use of the word "legal" was misleading
as I tend to use it in conjunction with state & fed gov't "requirements" but
I can't prove they're laws, no. Advising the OP to check first, before
making such a change, is no different than saying "check with your
accountant" over every little question IMO.

 

[DFStoneJr]

I thought that my original question was rather simple and had hoped for
a simple answer, so I did not go into the detail that follows.

My problem is I have a subsidiary ledger for sales that does not tie
back to my QuickBooks (Pro) sales report for the month. The reason is
that the automated system that records sales deals only with the
material being shipped. A freight charge added onto the invoice is
recorded in QuickBooks as a sale, so my QuickBooks sales exceed my
subsidiary ledge's sales by the amount of the freight charge added on
to one invoice.

As I said, I inherited this chart of accounts and way of doing
business. For now, there is no freight-income account. Maybe there
should be; that's a question I'll address after I get this month's
financials closed. There is, however, a freight-expense account. If I
had a freight-income account, on the financial reports that I prepare
for management, the amount therein would be combined with the amount in
the freight-expense account to show a net freight expense. So I think
that, for now, the best place to out that invoiced freight amount is in
the freight expense account.

So, to go back to my original post, all I want to do is debit sales by
$554.08 and credit freight expense for the same amount. And, yes, I'm
sure that that's what I want to do.

I really don't care how it's accomplished so long as my QuickBooks
sales and my production system sales tie out.

There are no sales-tax issues involved.

I need to chase someone out so I can go into single-user mode to check
out the item-list suggestion.

If anyone has any further advice, I'd be happy to hear it. Thanks for
what you have provided so far.

 

[!-!]

The answer, already provided, was "General Journal Entry" which can be
found in several menus including the "Banking" menu.

 

[Allan Martin]

The answer, already provided, was "General Journal Entry" which can be
found in several menus including the "Banking" menu.

See Tee

This is how one should answer the OP's question. Short, sweet, to the point,
and not confusing. Your posts mushed everything up and the OP didn't see the
real answer.