Adjustments
and Year-End
Procedures
Chapter 10
Objectives
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Set up and track 1099 vendors
Print 1099s and 1096
Edit, void, and delete transactions
Enter adjusting general journal entries
Track fixed assets
Memorize and schedule transactions to be automatic
Close the year and enter special transactions for sole
proprietorships and partnerships
• Set the closing date to lock the company file
• Import and Export lists, form templates, and
memorized reports from QuickBooks
PAGE REF # 359
CHAPTER 10: Adjustments and Year-End Procedures
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 10: Adjustments and Year-End Procedures
SLIDE # 3
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
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CHAPTER 10: Adjustments and Year-End Procedures
SLIDE # 4
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
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CHAPTER 10: Adjustments and Year-End Procedures
SLIDE # 5
Paying Bills for 1099 Vendor
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Select the Vendors menu and then select Pay Bills.
Select the vendor bill and enter date in the Payment
Date field
Click Pay & Close to record the Bill Payment
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CHAPTER 10: Adjustments and Year-End Procedures
SLIDE # 6
Printing 1099s and 1096 Forms
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•
Select the File menu, then select Print Forms, and
then select 1099s/1096
Alternatively, click Print 1099s on the Vendor Navigator
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CHAPTER 10: Adjustments and Year-End Procedures
SLIDE # 7
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 10: Adjustments and Year-End Procedures
SLIDE # 8
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 noncash expenses, such as depreciation
– Close the Owner’s Drawing account into the Owner’s
Equity account
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CHAPTER 10: Adjustments and Year-End Procedures
SLIDE # 9
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 10: Adjustments and Year-End Procedures
SLIDE # 10
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 10: Adjustments and Year-End Procedures
SLIDE # 11
Recording and Making
Adjustments for Prepaid Expenses
• When you prepay for goods or services, post the
prepayment to an account called “Prepaid Expenses” of
type Other Current Asset
• Then, use monthly Journal Entries to allocate onetwelfth of the pre-payment amount to each month of the
year
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CHAPTER 10: Adjustments and Year-End Procedures
SLIDE # 12
Tracking Fixed Assets
• You can track detailed information about your company’s
Fixed Assets if you have QuickBooks Pro or Premier
• To track your asset values, create three accounts in the
Chart of Accounts: A control (or master) account and two
subaccounts
• You may want to set up Fixed Asset account types by
category, such as Furniture and Fixtures, Machinery and
Equipment, Buildings
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CHAPTER 10: Adjustments and Year-End Procedures
SLIDE # 13
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 10: Adjustments and Year-End Procedures
SLIDE # 14
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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CHAPTER 10: Adjustments and Year-End Procedures
SLIDE # 15
Rescheduling or Renaming
Memorized Transactions
• Select the Lists menu and then select
Memorized Transaction List, or press
CTRL+T
• Select the 2000 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 10: Adjustments and Year-End Procedures
SLIDE # 16
Editing Memorized Transactions
• To edit the 2000 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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CHAPTER 10: Adjustments and Year-End Procedures
SLIDE # 17
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
PAGE REF # 384
CHAPTER 10: Adjustments and Year-End Procedures
SLIDE # 18
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
PAGE REF # 384
CHAPTER 10: Adjustments and Year-End Procedures
SLIDE # 19
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
PAGE REF # 385
CHAPTER 10: Adjustments and Year-End Procedures
SLIDE # 20
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
PAGE REF # 388
CHAPTER 10: Adjustments and Year-End Procedures
SLIDE # 21
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
PAGE REF # 389
CHAPTER 10: Adjustments and Year-End Procedures
SLIDE # 22
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
PAGE REF # 389
CHAPTER 10: Adjustments and Year-End Procedures
SLIDE # 23
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
PAGE REF # 390
CHAPTER 10: Adjustments and Year-End Procedures
SLIDE # 24
Importing and Exporting from
QuickBooks
• You can import and export templates
• You can export reports to spreadsheets for further
analysis
• You can export your lists (Chart of Accounts, Customers,
Vendors, etc.) to a file
• You can import data into another application such as
Word or Excel using files with exported lists
• You can import data into another QuickBooks data file
using files with exported lists
PAGE REF # 392
CHAPTER 10: Adjustments and Year-End Procedures
SLIDE # 25
Exporting Lists
• QuickBooks saves exported
lists with an .IIF extension
• To export a list:
– Select the File menu
– Select Export
– Select Lists to IIF Files
– Click the boxes next to
lists to be exported and
click OK
– Select the file name for
IIF file and click Save
PAGE REF # 392
CHAPTER 10: Adjustments and Year-End Procedures
SLIDE # 26
Exporting Lists to Other
Programs
• To export any of your address lists to another program
such as a database or word processor create a tabdelimited .TXT file:
– Select the File menu
– Select Export
– Select Addresses to Text File
– QuickBooks may display an instructional message,
click OK
– QuickBooks displays the Select Names for Export
Addresses window
– Select names from drop-down list and click OK to
create an export file (.txt file)
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CHAPTER 10: Adjustments and Year-End Procedures
SLIDE # 27
Exporting Templates
• You can export your custom templates (i.e., Forms) for
Invoices, Sales Orders, Estimates, Credit Memos, Sales
Receipts, Purchase Orders, and Statements to a special
file with .DES extension
• To explore templates:
– Select Lists and then select Templates
– Click the template to export to select it
– Select Templates at the bottom of the Templates list,
and then select Export
– Enter the file and click Save
QuickBooks saves exported templates in a special file
format with a .DES extension
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CHAPTER 10: Adjustments and Year-End Procedures
SLIDE # 28
Exporting Reports (Premier Only)
• QuickBooks Premier allows you to transfer
memorized reports from one QuickBooks file to
another using a special file with .QBR extension
• To export memorized reports:
– Select Memorized Reports from the Reports menu
– Select Memorized Report to be exported
– Click the Memorized Report button at the bottom of
the Memorized Report List window
– Select Export Template
– QuickBooks automatically creates the filename with a
QBR extension
– Browse to proper Files folder and click Save
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CHAPTER 10: Adjustments and Year-End Procedures
SLIDE # 29
Importing .IIF files to
QuickBooks
• Select the File menu, then select
Import, and then select IIF Files
• Browse to the folder where IIF file is
stored and select the .IIF file
• Click Open
• QuickBooks will display a window that
says, “Your data has been imported.”
• Click OK
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CHAPTER 10: Adjustments and Year-End Procedures
SLIDE # 30
Importing .DES Files to
QuickBooks
• Select Lists and then select Templates
• Click Templates button at the bottom of the
Templates list
• Select Import
• Browse to the folder where .DES file is
stored and select the file Click Open
• The imported template will show in your
templates list
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CHAPTER 10: Adjustments and Year-End Procedures
SLIDE # 31
Importing Report Templates to
QuickBooks
• Select the Reports menu, then select Memorized
Reports
• Select Memorized Report List
• Select the Memorized Report button at the bottom
• Select Import Template
• Browse to the folder where .QBR file is stored and select
the file Click Open
• In the Memorize Report window, enter the report name
and group (if used), Click OK to import the report into the
specified group of the Memorized Report list
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CHAPTER 10: Adjustments and Year-End Procedures
SLIDE # 32
Importing Excel Files to
QuickBooks
• QuickBooks can import list data from an Excel
spreadsheet file by mapping the columns to
fields in the QuickBooks lists and then importing
the data
• Select the File menu, then select Import, and
then select Excel Files
• In the Import A File window, click on Browse and
select the folder where excel file is stored
• Click on the excel file and click Open
• Choose a mapping and click Import
PAGE REF # 403
CHAPTER 10: Adjustments and Year-End Procedures
SLIDE # 33
Chapter Review
•
•
•
•
•
•
•
Set up and track 1099 vendors
Print 1099s and 1096
Edit, void, and delete transactions
Enter adjusting general journal entries
Track fixed assets
Memorize and schedule transactions to be automatic
Close the year and enter special transactions for sole
proprietorships and partnerships
• Set the closing date to lock the company file
• Import and Export lists, form templates, and
memorized reports from QuickBooks
PAGE REF # 410
CHAPTER 10: Adjustments and Year-End Procedures
SLIDE # 34