Using Zero Dollar Checks in QuickBooks

Transcription

1 Using Zero Dollar Checks in QuickBooks There may be occasions when recording or correcting certain types of transactions in QuickBooks can be done effectively using zero dollar checks. Correcting job cost reports that pull Item information is one of the most common uses for zero dollar checks; however, they can be utilized for other types of transactions as well. This article will explain the use of zero dollar checks in QuickBooks. ESTABLISH A SEPARATE ACCOUNT If you decide to use zero dollar checks, be sure to set up a separate bank account for tracking these checks (see Figure 1 below). This will keep the zero dollar checks out of your regular bank account activity and make it easy for you to monitor the account and ensure the balance remains zero. Figure 1 Set up a Bank type account to record zero dollar checks CORRECTING ITEM ENTRIES Items are used on sales transactions such as invoices, sales receipts, and credit memos. They re also very helpful for tracking the details of expenses on bills. Items are utilized differently in every organization. Contractors frequently use them to track types of work performed. A non profit may employ items to track fundraising event details. An association might use them to track membership details. If you find that a correcting entry is needed, your first instinct may be to create a journal entry. The problem with using journal entries for this type of adjustment is that the Journal Entry screen has no provision for adjusting Items. Many of the Job Cost reports in QuickBooks don t include journal entries, so it s important to use a correcting entry that will fix the Item transaction. Using a zero dollar check allows you to create an entry that corrects an Item transaction. The key is to use the Items tab, not the Expense tab. See Figure 2 below.

2 Figure 2 Use the Items tab on a zero dollar check ALLOCATING PAYROLL OR OWNER SALARIES WITH ITEMS If you use an outside payroll service to process your payroll or need to allocate owner salaries, using zero dollar checks is an easy way to get expenses included in Job Cost reports. The goal of the transaction is to ensure you don t double the expenses as you allocate a portion of the costs to the appropriate Items. The first step is to make sure the Purchase Order side of the Item(s) used for services is set up. Edit an existing Item you use for job costing services and make sure the checkbox This service is used in assemblies or is performed by a subcontractor or partner is checked. See Figure 3 below.

3 Figure 3 Use the purchase side of Items to job cost owner salaries Next, set up a second Item that goes to the same Expense account as the services, making the net effect in your account balance zero (See Figure 4 below).

4 Figure 4 Use the purchase side of Items to job cost owner salaries To allocate owner salaries, create a zero dollar check between the two items (see Figure 5 below). Figure 5 Record a zero dollar check that allocates owner salaries to Items RECORDING TRADES If your organization trades services or sales with another company, a zero dollar check is a quick way to record the transaction. Some organizations record trades by using a barter or trade account in their chart of accounts. They create a bill for the expense side and an invoice for the income side and then use the barter account to pay the bill and record a payment on the invoice. The barter account always has a zero balance. As shown in Figure 6 below, you could use a zero dollar check to record the income and expense in one transaction.

5 Figure 6 Zero dollar checks may work for recording trades The method you choose to record trades will depend on the desired result. If you use zero dollar checks to record trades and use the vendor name on the check, the check will not show up in the Customer Center or on customer reports. It will, however, be included in the Vendor Center. If you use a zero dollar check and use the customer name on the check, you will see the check in the Customer Center but not in the Vendor Center. Because you can t use journal entries to correct Item transactions in QuickBooks, zero dollar checks can be very useful. This article has suggested a few ways zero dollar checks can benefit your organization and make your job easier.