Adjustments and
Year-End
Procedures
Chapter 9
Objectives
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Process 1099 forms for vendors
Print 1099s and 1096 forms
Edit, void, and delete transactions
Enter general journal entries
Track fixed assets
Memorize and schedule transactions to be
automatically entered
• Close the year and enter special transactions
for sole proprietorships and partnerships
• Set the closing date to lock the company file
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CHAPTER 9: Adjustments/Year-End
SLIDE # 2
Processing Form 1099
• At the end of each year, you must prepare and
send an IRS Form 1099 to each of your eligible
vendors and to the IRS
• 1099 forms must be sent to your vendors by the
last day of January following the applicable year
• If the vendor is a corporation or if total annual
payments to the vendor are less than $600, you
are not required to prepare Form 1099-MISC
• When set up properly, QuickBooks automatically
tracks the details of your payments to 1099
vendors
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CHAPTER 9: Adjustments/Year-End
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The 1099 Wizard
• The 1099 and 1096 Wizard will allow
users to go through four steps to process
the 1099 and 1096 forms.
– Review and edit 1099 Vendors
– Setup account mapping preferences for
1099s
– Run a summary report to review 1099 data
– Print 1099 and 1096 forms
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CHAPTER 9: Adjustments/Year-End
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Editing Vendors for 1099 Setup
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Fill out the name and address fields so that the 1099
will print all the information correctly on the form
Record the taxpayer ID for each 1099 vendor in
addition to selecting that the vendor is eligible for 1099
Make sure to fill out the name
fields so that the 1099 will
print the information correctly
on the form.
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CHAPTER 9: Adjustments/Year-End
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Setting Up 1099 Preferences
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Select the Edit menu and then select Preferences
Scroll down and click Tax:1099
Click the Company Preferences tab
Drop down Account listing
to choose the Rent
expense to link to Box 1.
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CHAPTER 9: Adjustments/Year-End
SLIDE # 6
1099 Summary Report
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CHAPTER 9: Adjustments/Year-End
SLIDE # 7
Printing 1099s and 1096 Forms
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Select Print 1099s button from the 1099 and 1096
Wizard
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CHAPTER 9: Adjustments/Year-End
SLIDE # 8
Editing, Voiding, and Deleting
Transactions
• Unlike many other accounting programs,
QuickBooks allows you to change any
transaction at any time
• Editing Transactions:
– To edit (or modify) a transaction in QuickBooks,
change the data directly on the form
• Voiding and Deleting Transactions:
– Voiding and deleting transactions both have the same
effect on the General Ledger — zero out the debits
and the credits specified by the transaction
– Voiding a transaction keeps a record of the date,
number, and detail of the transaction; deleting a
transaction removes it completely from your file
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CHAPTER 9: Adjustments/Year-End
SLIDE # 9
Recording Adjustments and
General Journal Entries
• Adjusting entries are transactions that adjust the
balance of one or more accounts
• A few examples of adjusting entries in
QuickBooks:
– Recategorize a transaction from one class to another
– Recategorize a transaction from one account to
another
– Allocate prepaid expenses to each month throughout
the year
– Record non-cash expenses, such as depreciation
– Close the Owner’s Drawing account into the Owner’s
Equity account
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CHAPTER 9: Adjustments/Year-End
SLIDE # 10
Creating A General Journal Entry
• Depending on your QuickBooks user settings, you
may need permission from the file Administrator to
create General Journal Entries
• Select the Banking menu and then select Make
Journal Entry
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CHAPTER 9: Adjustments/Year-End
SLIDE # 11
Creating A General Journal Entry
• Expert Tip:
– Set up a bank account called Journal Entries
– Use this account (Journal Entries) on the top line of
each General Journal Entry
– QuickBooks tracks all the General Journal Entries
in a separate register on the Chart of Accounts
which allows you to quickly look up and view all
your General Journal Entries
– Though you use this account in every General
Journal Entry, you will never debit or credit the
account and therefore it will never have a balance
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CHAPTER 9: Adjustments/Year-End
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Adjusting Expense Accounts
Associated with Items
• If you use Items to track the details of your
expenses, you may need to enter adjustments to
the Items as well as the Accounts to which the
Items are assigned.
• However, the Journal Entry window in
QuickBooks has no provision for entering Items
as part of the Journal Entry.
• To solve the problem, use a “Zero-Dollar Check”
in that it will have an equal amount of debits and
credits in the splits area of the transaction.
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CHAPTER 9: Adjustments/Year-End
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Tracking Fixed Assets
• To track your asset values, create a separate
fixed asset account for each grouping of assets
you want to track on the Balance Sheet.
– For example, you could set up accounts
called Furniture and Fixtures, Buildings, or
Vehicles.
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CHAPTER 9: Adjustments/Year-End
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Calculating and Recording
Depreciation
• Select the Company menu, select Planning &
Budgeting, select Decision Tools, and then
select Depreciate Your Assets
• Select the Banking menu and then select Make
General Journal Entries
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CHAPTER 9: Adjustments/Year-End
SLIDE # 15
Memorizing Journal Entries
• Before saving the General Journal Entry:
– Select the Edit menu
– Select Memorize General Journal (or press CTRL+M)
• Enter a name in the Name field so that you’ll recognize
and easily find this transaction in the Memorized
Transaction list
• Set the fields in Memorize Transaction window to
indicate when and how often you want the transaction
entered and then click OK
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Deleting, Rescheduling and
Editing Memorized Transactions
• Select the Lists menu and then select
Memorized Transaction List, or press
CTRL+T
• Select the 2004 Truck Depreciation
transaction in the Memorized Transaction list
Then select the Edit menu and select Edit
Memorized Transaction, or press CTRL+E:
– This allows you to reschedule or rename the
transaction, but it does not allow you to edit the actual
transaction
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CHAPTER 9: Adjustments/Year-End
SLIDE # 17
Editing Memorized Transactions
• To edit the 2004 Truck Depreciation
memorized transaction, double-click it in the
Memorized Transaction List:
– This displays a new transaction with the contents of
the memorized transaction. You can change anything
on the transaction and then rememorize it
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Deleting Memorized Transactions
• Select the Lists menu and then select
Memorized Transaction List, or press
CTRL+T
• Select the Memorized Transaction in
the list that you want to delete
• Select the Edit menu and then select
Delete Memorized Transaction, or
press CTRL+D
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CHAPTER 9: Adjustments/Year-End
SLIDE # 19
Closing the Year
• Closing entry is an adjusting entry made at the end of
each year, to transfer net income or loss into the
Retained Earnings (or Owner’s Equity) account
• In QuickBooks you do not need to make this entry, when
you create a Balance Sheet, QuickBooks automatically
calculates the balance in Retained Earnings by adding
together the total net income for all prior years
• At the end of your company’s fiscal year, QuickBooks
automatically transfers the net income into Retained
Earnings for you
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CHAPTER 9: Adjustments/Year-End
SLIDE # 20
Closing the Accounting Period
• Run reports for the year and verify their accuracy
• Enter adjusting entries as necessary and rerun the
reports
• Print and file the following reports as of your closing
date: General Ledger, Balance Sheet Standard,
Statement of Cash Flows, Trial Balance, Inventory
Valuation Summary, and Profit & Loss Standard for the
year
• Back up your data file
• Set the closing date to the last day of the period you are
closing
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CHAPTER 9: Adjustments/Year-End
SLIDE # 21
Closing Sole Proprietorship
Drawing Accounts
• For Sole Proprietorships, the Retained Earnings account
should be renamed to Owner’s Equity so that the net
income (or loss) will automatically transfer into this
account
• At the end of each year, create a General Journal Entry
to zero out the Owner’s Drawing account and close it
into Owner’s Equity
• It is best to let the balance in the Owner’s Investments
account continue to accumulate over time, so that, the
Balance Sheet will always show the total investments
made by the owner
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CHAPTER 9: Adjustments/Year-End
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Closing Partnership Drawing
Accounts
• Use a General Journal Entry to close
the Partner’s Drawing accounts into
each Partner’s Profits account
• To find the amounts for the General
Journal Entry, use the year-end Trial
Balance
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CHAPTER 9: Adjustments/Year-End
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Distributing Net Income to
Partners
• With partnerships, you need to use a
General Journal Entry to distribute the
profits of the company into each of the
partner’s profit accounts
• After making all adjusting entries, create a
Profit & Loss report for the year and use
the Net Income figure at the bottom of the
Profit & Loss report to create the General
Journal Entry
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CHAPTER 9: Adjustments/Year-End
SLIDE # 24
Setting the Closing Date to
“Lock” Transactions
• QuickBooks allows the Administrator to set a closing
date that effectively locks the file so that no one can
make changes to the file on or after a specified date
• For further protection, all users, including the
Administrator, can be required to enter a password
before they can add, change or delete transactions
dated on or before the closing date
• To set the closing date:
– Select Edit menu and then select Preferences
– Select Accounting Company Preferences to enter the
Closing date/ Password
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CHAPTER 9: Adjustments/Year-End
SLIDE # 25
Chapter Review
•
•
•
•
•
•
Process 1099 forms for vendors
Print 1099s and 1096 forms
Edit, void, and delete transactions
Enter general journal entries
Track fixed assets
Memorize and schedule transactions to be
automatically entered
• Close the year and enter special transactions for
sole proprietorships and partnerships
• Set the closing date to lock the company file
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33
CHAPTER 9: Adjustments/Year-End
SLIDE # 26