SIMPLY ACCOUNTING PREMIUM BY SAGE STUDENT VERSION ACCOUNTING SOFTWARE SUPPLEMENT FOR CHAPTER 4

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1 THE KNOWLEDGE BUREAU 2011 SIMPLY ACCOUNTING PREMIUM BY SAGE STUDENT VERSION ACCOUNTING SOFTWARE SUPPLEMENT FOR CHAPTER 4 BUILDERS OUR PRACTICAL GOAL: Here is what we are going to cover: How to set up accounts for a builder using Simply Accounting s templates. How to create a project. How to set up general ledger accounts for allocation. How to establish project budgets. How to allocate revenues and expenses from the General, Sales, Purchase and Payroll Journals to specific projects. Setting up the chart of accounts for a builder Simply Accounting contains a number of pre-figured profiles which can simplify the process of setting up a chart of accounts. One series of these standard profiles relates to retailers. When you choose to have Simply Accounting create a list of accounts based on your business type, the following screen appears: 1

2 THE KNOWLEDGE BUREAU 2011 Select the appropriate Ownership Structure and choose Construction. Review the chart of accounts in the Construction file you created. The biggest difference from other non-construction companies is in the income statement accounts. Pay particular attention to the Revenue section and the Cost of Goods Sold section. Notice there is now a line for Subcontracts. Using projects in Simply Accounting As noted in the Knowledge Journal, most contractors engaged in the building trades must keep track of revenues and expenses by job or project. By using the Project module in Simply Accounting, a contractor can track all revenue and expenses by project and use the Reports function in the Project module to provide information about the profitability of the projects. In addition, a contractor is able to compare budgeted project amounts to the actual project amounts. The Project module is used to list the names and the start dates of projects. When using the other modules to enter day-to-day transactions, the amounts are allocated to the projects through the related transaction window. The Project module does not have its own transaction window but serves only to accumulate information entered through the other modules for reporting purposes. 2

3 THE KNOWLEDGE BUREAU 2011 Simply Accounting allows allocations of any account to a project but usually only revenue and expenses accounts are allocated. To allow allocation of an account, the Allow Project Allocations box must be checked in the account ledger record. Once the box is checked the allocation option is available for that particular account when entering transactions in any journal. If an account is not set up for allocation you can change its status by using the Modify Accounts wizard. In the example below we have set up Interest Revenue so that it can be allocated to projects. Preliminary steps Go to your Simply Accounting Student Version Sample Company (Universal Construction). Open it using the Accrual Basis. Save the company under a different name: From the Home screen, click on File Click on Save As Browse to a folder where you will save it (My Documents for example) Give the file the name Universal Test Company Click on Save 3

4 THE KNOWLEDGE BUREAU 2011 Change Universal Test Company to use Accounting terms: From the Home screen, click on the Setup menu Click on User Preferences In the tree view on the left side, click on Options At the top on the right under Terminology, select Use Accounting Terms Click OK. Setting up a project The home page shows Job Site instead of Projects. To change the name, select Setup / Settings / Job Site / Names. Change the Project Title field to read Projects. Clicking on the Job Site link will lead you to a list of pre-existing projects that have been set up in Universal Sample Company. Add a Project called Recreation Room by using the File/Create command. In Job Site Records window, beside Job Site type in Recreation Room The start date automatically appears and the end date is left open, but they can be edited. In this case, accept the default start date and leave the end date blank. If there are amounts generated by the project before the records were set up, the historical information can be entered into the Revenue and Expense fields. In this case leave them 0.00 and click on Save and Close. 4

5 THE KNOWLEDGE BUREAU 2011 Setting up allocation methods Allocations of expenditures processed through the payroll journal can be based on dollar amounts, percentages or hours. Allocations of revenues and expenses processed through other journals can be allocated either by dollar amount or percentage. To set up default allocation methods: From the Home screen, click on the Setup menu Click on Settings 5

6 THE KNOWLEDGE BUREAU 2011 In the tree view on the left side, click on the plus sign beside Job Site if it has not already been expanded On the left side under Job Site, click on Allocation. Change the Allocate Payroll Transactions by to Percent (if not already selected) Change the Allocate Other Transactions by to Amount (if not already selected) Check the Warn if allocation is not complete button (if not already selected) Check the Allow access to Allocate field using Tab key button (if not already selected) Click OK If allocating by amount the exact dollar must be entered for each project. It s a good idea to check the box Warn if allocation is not complete. This will provide a warning if 100% of the costs were not allocated. Setting up budgets When using budgeted revenue and expenses for projects, the program will calculate the budgeted profit amount as the difference. To set up budgets and to assign a budgeting frequency: From the Home screen, click on the Setup menu Click on Settings 6

7 THE KNOWLEDGE BUREAU 2011 In the tree view on the left side, click on the plus sign beside Job Site, if it has not already been expanded. Click on Budget Ensure Budget Job Site is checked Change the Budget period frequency to Quarterly and accept all changes As a result of setting up the budgeting frequency in this manner, the Budget tab associated with each project now has a table in which you can enter the budget for each project, by budgeting period. If you wish, using the Details button you can add budgeting details by specific account, the totals of which will carry up to the budget tab. 7

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9 THE KNOWLEDGE BUREAU 2011 Exercise Processing a purchase transaction In the following exercise, we will process an invoice from Blackwell Rentals Inc. Universal Sample Company rented a power nailer from Blackwell for $150, plus GST. 60% of the cost of the rental is to be allocated to one project and 40% to another. From the Home screen open Purchases Select Blackwell Rentals Inc. in the Purchased From Enter an invoice number (your choice) Accept the default date In the Description, type in Power Nailer Rental Amount = $150 Tax should be GST only If account does not come up as the default account, navigate to it and select it Double click in the Allo column on that line Click on the magnifying glass and allocate $60 to the Recreation Room project and $90 to another project of your choice 9

10 THE KNOWLEDGE BUREAU 2011 Click OK and click on Post If you click the box Apply this allocation to entire transaction then the allocation you enter will be applied to every line item that appears in the transaction you are processing. If you do not click the box, you can allocate each line item individually. The allocation process is similar for the Sales and Payroll Modules. You may wish to process some test transactions through these modules to become familiar with them. Reports View the income summary report for the project to which you posted the $90 rental charge. View the Income Job Site Report for the project: From the Home screen, click on the Reports menu Click on Job Site Click on Income Select Summary for the Report Type Accept the default dates Select the project you posted in the previous exercise Select all accounts 10

11 THE KNOWLEDGE BUREAU 2011 Click on OK You will see that the charge that was posted is now allocated to this project. Now go through the reports for Allocation, Unallocated Amounts and Budget: From the Home screen, select the Reports menu Click on Job Site Select Allocation and go through the different reports Select Unallocated and go through the different reports Select Budget and go through the different reports Note the differences and dates between all of the various reports. It is possible to drill down to the Job Site Detail Report from the Job Site Summary Report by double clicking. You can drill down to the Job Site Ledger, Journal Report, General Ledger, Invoice Lookup, Customer or Vendor Aged or Employee Report from the Job Site Detail Report. 11