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I. Title: Project 1: Small Business Accounting using QuickBooks Online II. Introduction: Your good friend Kobe has always expressed interest in opening his own art studio. He has been painting and selling his artwork for years and already has a good customer base. In January of this year he started the process of formally setting up a business named Kobe’s Krafts; he filed for an Employee Identification Number (EIN) in February. Kobe found and rented an art studio on March 1st, and has been cleaning, painting, and setting up the space ever since. The grand opening was April 1, 2020. Kobe’s Krafts sells Kobe’s original artwork and prints of his original artwork that he purchases from a print shop. The original artwork and prints are inventory items. Kobe also accepts custom orders from customers, which are considered commissioned sales. Commissioned artwork is artwork that is created for a particular customer based on their specification. Kobe agreed to allow a few artist friends display and sell their artwork on consignment. Artwork on consignment is owned by the artist who created it and therefore is not recorded as inventory on the accounting records of Kobe’s Krafts. However, when a consignment artwork is sold, Kobe’s Krafts keeps a percentage of the sale as consignment income. Kobe knows you are going to school for your master’s degree in accounting and has asked for your help setting up and using QuickBooks Online (QBO). You agree to help set up the QBO business account and complete the first month of transactions. You are not familiar with QBO, but you know it will be beneficial to your accounting career to learn QBO because it is the most widely used financial accounting platform for small business in the United States. To feel more confident with QBO, you decide to seek guidance and collaborate with some of your classmates in your MS degree program at UMGC. You recall a few mentioned working as an accountant for small business clients. Kobe has is interested in using the following QBO features:

▪ Sales Receipts/Invoices ▪ Purchase Orders/Inventory tracking ▪ Bills and Bill Pay

Eager to get started, you carefully read the Steps to Completion and review all QBO learning resources before beginning.

Competencies assessed by this project: Note: graduate accounting program competencies are tightly coupled with the AICPA pre-certification core competencies framework. 1) Measurement, analysis, and interpretation: Identify and apply appropriate, reliable and verifiable measurements to analyze data for a given purpose and intended use. 2) Reporting: Identify the appropriate content and communicate clearly and objectively to the intended audience the work performed and the results as governed by professional standards, required by law or dictated by the business environment. 3) Technology and Tools: Identify and utilize relevant technology and tools to analyze data, efficiently and effectively perform assigned tasks as well as support other competencies.

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III. Steps to Completion: For most of the steps below, you will have the option of viewing a short video or referring to the Intuit Education PPT, all page references given below.

Step 1 – Begin communicating with your study group members, which is a requirement of this project. You will discuss the project together, but will submit individual files. Step 2 – Set up your QBO account. Go to http://www.intuiteducation.com/ and follow the instructions for student registration for QuickBooks online. Step 3 - Download Intuit Education PPT

▪ Skim over the first part of the PPT to learn about navigating QBO (the dashboard) (Pages 17- 23).

Step 4 – Set up the account and settings ▪ View the Video:

o “How to Navigate in QuickBooks” - https://www.youtube.com/watch?v=vNdZmf_nLZs

▪ Review: Account and Setting, Intuit Education PPT, Pages 27 – 44. NOTE: the important information is how to get to account and settings, which can be found on page 28. Appendix A covers all the settings that you need to adjust for Kobe’s Krafts. The purpose of the project is for you to become comfortable with the program, not to become a QBO expert. However, if you want to read all the details, feel free, but it is not required for the purposes of this project.

▪ Using the information found in Appendix A, set up Kobe’s Krafts account in QBO. Step 5 – Set up and edit the Chart of Accounts (COA)

▪ View the Video: o “How to Edit your Chart of Accounts in QuickBooks” -

https://www.youtube.com/watch?v=xp-rcPZtUc0 ▪ Review: Chart of Accounts, Intuit Education PPT, Pages 51 – 56, 59 (subaccounts) ▪ See Appendix B.

Step 6 – Set up sales tax

▪ View the Video: o “How to Set Up Sales Tax: Settings, Sales & More”

https://www.youtube.com/watch?v=CiIfTi0tSk0 ▪ Review: Sales Tax Center, Intuit Education PPT, Pages 60 – 61. ▪ See Appendix C.

Step 7 – Set up product items and contributed inventory –

4) Professional behavior/Collaboration: Study and practice in a manner that is consistent with the character and high standards set by the AICPA and other professional accounting organizations, the accounting profession, and graduate accounting degree programs. Demonstrate a work ethic that includes timeliness, active participation and collaboration in study groups, respect for diversity, and a commitment to continuously acquire new personal and professional skills and knowledge.

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▪ View the Video: o “Add Product Information” https://quickbooks.intuit.com/tutorials/lessons/add-

products-information/ ▪ Review: Products and Services, Intuit Education PPT, Pages 62 – 69 ▪ See Appendix D.

Step 8 – Create journal entries for all other (non-inventory) owner contributions

▪ View the Video: o “Journal Entries in QuickBooks Online”

https://www.youtube.com/watch?v=Ud0de5gGJL8 ▪ See Appendix E

Step 9 - Add customers and vendors

▪ View the Video: o “How to Add Customers and Vendors into QuickBooks”

https://www.youtube.com/watch?v=MJK63XmrJ1E ▪ Review: Customer Center and Vendor Center, Intuit Education PPT, Pages 95 – 99

(customers), Pages 121 - 124 (vendors) ▪ See Appendix F

Step 10 – Add invoices*, purchase orders (POs) and bills.

▪ View the Video: o “How to Create A Purchase Order”

https://www.youtube.com/watch?v=lGGUSmFPJok - (IMPORTANT NOTE: Create the bill directly from the PO. Notice in the video where the presenter is showing the PO summary screen, to the right of the PO there is a button to “Create bill.” Click the Create bill button to create the bill for the vendor.

▪ View the Video: o “How to Enter Bills, Track Expenses, & Record What You Owe”

https://www.youtube.com/watch?v=PGbS7GpdNTo ▪ Review: Create Invoices and Create Bills, Intuit Education PPT, Page 103 (create

invoices), Page 127 (creating bills) - NOTE: Do not spend time creating fancy invoices. Use the basic form unless you want to play around with this feature.

▪ See Appendix G Step 11 – Enter all transactions for the month of April

▪ View the Video: o “Create Sales Receipts in QuickBooks”

https://quickbooks.intuit.com/tutorials/lessons/sales-receipts/ ▪ Review: Create Sales Receipt, Intuit Education PPT, page 102

▪ View the Video:

o “Receive Payments in QuickBooks” https://quickbooks.intuit.com/tutorials/lessons/receive-customer-payments/

▪ Review: Receive Payments, Intuit Education PPT, pages 104, 106 -NOTE: make sure you are receiving the payment to Kobe’s Bank account, not undeposited funds

▪ View the Video: o “How to Record & Print Checks”

https://www.youtube.com/watch?v=eNSPai2twcM

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▪ Review: Create Check, Intuit Education PPT, page 126 (& debit charges) –NOTE: Be sure to change the check number to Debit or EFT or something else. QBO will accept duplicate words so pick one and stick with it for consistency. However, make sure that checks are numbered correctly.

▪ View the Video: o “How to Record Bill Payments” https://www.youtube.com/watch?v=zan6MC0zSYY

▪ Review: Create Check, Intuit Education PPT, page 128 – NOTE: Make sure you document the check number used to pay the bill.

▪ See Appendix H Step 12 – Reconcile April Bank Statement –

▪ View the Video: o “Reconcile your accounts”

https://quickbooks.intuit.com/tutorials/lessons/reconcile-accounts/ ▪ Review: Intuit Education PPT, pages 142 – 144. ▪ See Appendix I ▪ Perform a bank reconciliation in Quickbooks

Step 13 – Review and Revise Financial Statements

▪ View the videos: o “Understanding Profit & Loss Statement: Income, Cost of Goods”

https://www.youtube.com/watch?v=nSGeKUO4HHE o “How to Customize Reports: Basics, Sorting & Date Ranges

https://www.youtube.com/watch?v=Hy5MQAPDa-U ▪ Intuit Education PPT, page 77 – 84. ▪ See Appendix J

Step 14 – Print Reports

▪ P&L and Balance Sheet for the current month. Make sure the report basis is Accrual. ▪ Print the General Ledger for “all time” ▪ Review: Intuit Education PPT, pages 77 – 84

Step 15 – Create a Book to Bank Reconciliation in Excel

▪ Using MS Excel, create a bank reconciliation that explains each uncleared item between the bank and book cash account balances. Use formulas in all cells with calculations and provide written explanations for each line item.

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IV. Deliverables

1. Submit 1 PDF file by combining the following pdf files generated from QuickBooks:

a) Profit & Loss, accrual basis for report period “All dates” b) Balance Sheet, accrual basis report period “All dates” and c) General Ledger accrual basis for report period “All dates”

2. Submit 1 Excel file that contains the following:

• The April bank reconciliation with formulas embedded into all cells that require calculations.

V. Hints and Tips: General Hints and Tips:

▪ Active participation in the study group is a requirement, but more importantly, helping one

another has been shown to improve all students’ grades. ▪ Read the entire Project before beginning the project; make notes as you read ▪ Read the Rubric before beginning the project ▪ In QBO:

1. Do NOT track Classes 2. Do NOT track Locations

▪ The beginning balance in the Equity account is $0 because the business was just opened.

▪ Submit the Project deliverables on or before the due date. 1. Review the Late Policy in advance of the due date; your professor is required to

enforce the late policy. ▪ Ask your supervisor (professor) questions as needed.

Inventory Hints and Tips:

▪ When first setting up the inventory account, associate each inventory item with the correct Sales account.

▪ The Inventory account includes two types of inventory: o Original artwork created by Kobe o Prints of Kobe’s original artwork

▪ When inputting the print inventory items, record the costs incurred to pay the print shop to make the prints

Non-Inventory Hints and Tips: ▪ Kobe’s commissioned (custom) artwork does not pass through the inventory account

because these paintings are from custom orders. ▪ Kobe’s Krafts also sells artwork created by other artists. The items belong to the other

artists and therefore do not pass through the inventory account of Kobe Krafts. Chart of Accounts:

▪ Do not create account numbers for the accounts VI. Rubric:

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You will find the rubric in LEO under Contents>Course Resources>Projects & Rubrics

Competencies Assessed by Project: Communication: Learners demonstrate capability to communicate clearly both orally and in writing.

Measurement, analysis, and interpretation: Identify and apply appropriate, reliable, and verifiable measurements to analyze data for a given purpose and intended use.

Reporting: Identify the appropriate content and communicate clearly and objectively to the intended audience the work performed and the results as governed by professional standards, required by law or dictated by the business environment.

Technology and Tools: Identify and utilize relevant technology and tools to analyze data, efficiently and effectively perform assigned tasks as well as support other competencies.

Decision making/Critical thinking: Objectively identify, critically assess issues, and use professional judgment to develop appropriate decision models, identify and analyze the costs and benefits of alternative courses of action and recommend optimal solutions.

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Appendices

▪ Appendix A: QBO – Account and Settings Appendix B: Chart of Account Changes

▪ Appendix C: Overview of Sales Tax

▪ Appendix D: Overview of Inventory

▪ Appendix E: Owner Contributions

▪ Appendix F: Customers and Vendors

▪ Appendix G: Invoices, POs, and Bills

▪ Appendix H: April Transactions

▪ Appendix I: Bank Statement

▪ Appendix J: Financial Statement Review

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Appendix A: QBO – Account and Settings

Remember - “QuickBooks is a very forgiving program. Most mistakes can be fixed as you have the ability to go back and make historical changes, however a correct setup will prevent the need in most cases.” (Intuit Education PPT). The following are the important pieces of information you need to set up Kobe’s Krafts in QBO. Each of the Bolded items are Categories in the Account and Settings page. COMPANY:

• Company Name: Kobe’s Krafts_YOUR name

• Your name must be part of the Company name o There are no exceptions

• Example: Kobe’s Krafts_Sharon Levin

• Email: Enter your UMGC email address that appears in our classroom

• Telephone: Enter your phone number associated with your UMGC profile

• EIN: - LEAVE BLANK. EIN not received yet

• Company Type: Sole proprietor

• Address: 500 Grand Blvd. Miramar Beach, FL 32550

• Website: Enter UMGC.edu

• Tax form: Sole Proprietor (Form 1040)

• Method of Accounting: Accrual

• Kobe’s Krafts will not be using track classes or track locations. SALES:

• Kobe’s Krafts sales terms are Net 30, unless otherwise stated

• Shipping is available for a fee

• Discounts are offered occasionally

• Kobe’s Krafts requires a 50% deposit on all commissioned artwork / custom orders

• Track the quantity and price/rate for all sales

• Track inventory quantity on hand for the art prints. EXPENSES:

• Kobe’s Krafts wants to use purchase orders, so make sure you check the box.

• All other default settings are fine. PAYMENTS:

• This setting is used to allow clients to pay an invoice through their system. Although Kobe’s Krafts is possibly be interested in this feature in the future, he has no current interest. ADVANCED:

• Kobe’s Krafts is a calendar year taxpayer, but he hasn’t received an EIN yet. o (The first month of the fiscal year is January).

• Use the tax form: Sole proprietorship Form 1040

• Do not use account numbers

• Do not track classes or track locations.

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Appendix B: Chart of Account Changes

Add: Name: Account Type Detail Type Subaccount of:

Kobe's Krafts Bank Bank Checking

Refundable Deposits

Other Current Assets Other Current Assets

Art Displays Fixed Assets Furniture & Fixtures

Consignments Payable

Other Current Liabilities Other Current Liabilities

Art Sales Income Sale of Product Income

Original Artwork Sales Income Sale of Product Income Art Sales

Print Sales Income Sale of Product Income Art Sales

Commission Sales Income Sale of Product Income Art Sales

Consignment Income Income Service/Fee Income

Discounts Given Income Discounts/Refunds Given

Group Art Classes Income Service/Fee Income

Print Expense Cost of Goods Sold Supplies & Materials –

COGS

Art Supplies Expense Expenses Supplies & Materials

Shipping Expense Expenses Shipping, Freight & Delivery

Gain on Sale of PP&E Other Income Other Miscellaneous Income

Loss on Sale of

PP&E Other Income Other Miscellaneous Income

Edits:

Change from: Change to:

Owner's Pay & Personal Expenses Owner Distributions Equity Owner's Equity

Opening Balance Equity

Opening Balance Equity Equity Opening Balance Equity

NOTE: Opening Balance Equity = $0

Rent & Lease Rent Expense Expense Rent or Lease of Building

Office Supplies & Software Office Supplies Expense

Office/General Administrative Expense

Delete:

Job Supplies

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Appendix C: Overview of Sales Tax

NOTE: Sales Tax must be set up in the “TAXES” area in QBO. Proceed with this section carefully. QBO is very user friendly for the most part; however, there are areas that are hard to fix should you set it up incorrectly and Sales Tax is one of those areas so do not rush here. Read all the way through this appendix, watch the how to videos and then proceed with caution. Kobe’s new art studio is located in Miramar Beach, Florida, 32550. He is required to pay 7% in sales tax to the State of Florida. Of that 7% state tax, the state of Florida disburses 1% to Walton County. The State of Florida requires most taxpayers to file monthly sales tax returns, Kobe’s Krafts falls into this category. As of April 1st, Kobe’s Krafts must start collecting taxes and the first return is due no later than May 20th (QBO knows when it is due) for the reporting period of April 1 – April 30. Kobe’s Krafts needs to make sure he charges customers and remits sales tax for everything he sells except for the group art classes. Florida does not collect taxes on the sale of services. Address: 500 Grand Blvd. Miramar Beach, FL 32550 Go to the “TAXES” area and set up sales tax for the state of Florida. If you entered the business address when you were setting up the account, QBO should suggest the correct tax agency(s). If not, it should ask you for an address here. Make sure you select Florida Department of Revenue from the dropdown list. Again, make sure you find the taxing agency in the dropdown list to select. Do NOT manually add any taxing body. QBO already has all the information it needs to correctly tax products and it will automatically update taxes should laws change but only if it is set up correctly from the beginning. back

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Appendix D: Overview of Inventory

The setup of Inventory will be done in the “INVOICING/SALES” area of QBO. Once in SALES, go to the Products and Services tab. Then click “New” in the upper, right corner. Next click “Inventory” and fill in the name, category, and:

• Fill in the name of the first inventory item.

• Select the category. The first time you will have to add a new category. o You will be adding these categories: Kobe’s Originals, Prints, and Non-inventory

items

• The “initial quantity on hand” will be the owner contributed inventory, see the table below.

• As of date will be 4/1/2020.

• Do not enter a quantity in the “Reorder Point” field for any items.

• The Inventory asset account is “Inventory asset”

• Do not use product codes aka SKU numbers.

• For all items that have a fixed sales price associated with it, enter the Sales price for each item

• Also, make sure you associate the correct Income Account with the correct product. o i.e. All sales of original artwork should be recorded to Income account: Art Sales:

Original Artwork Sales

• Enter the costs to have the prints made.

• Remember, all sales are taxable EXCEPT FOR Group Art Classes. o Be sure to select “Taxable Standard” under “Sales tax category” for all sales other

than group art classes, which will be “Nontaxable.” Kobe’s Krafts primarily sells 3 types of original artwork and prints - Large, Medium, and Small.

Pricing and Cost of Original Artwork:

Pricing: Standard pricing for Kobe’s original artwork:

Size of Artwork Sales Price Number of Pieces Contributed

Total Value

Large $1,700 5 $8,500

Medium $600 12 $7,200

Small $100 32 $3,200

Sales of Kobe’s original artwork should set the product Income account to: Art Sales: Original Artwork Sales. Cost:

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Kobe was instructed years ago by his tax accountant that his original artwork inventory should not have a COGS associated with it because it is impossible to accurately determine the costs associated with his original artwork, some of which he painted decades ago. Instead he needs to expense all of his art supplies purchases. However, the prints in inventory are classified as inventory until sold and then those costs will be classified as COGS. So, although the original artwork inventory will have zero costs associated with it, you will enter the sales price of the inventory Kobe transfers in to the business.

Cost and Pricing of Prints:

He transfers all his print inventory (reproductions of original artwork) to the business April 1st, as follows:

Size of Prints QTY Cost per Unit Sales Price per Unit

24 x 36 Print 10 $80 $210

11 x 14 Print 50 $25 $75

5 x 7 Print 110 $4.50 $12

All of the prints in the table above should have the following setting: 1. Income account to: Art Sales: Print Sales 2. Expense account to: Print Expense, which is a COGS account In addition to original artwork and prints, Kobe has several non-inventory items that you need to add.

Description Sales Price per Unit (student)

Income Account

Service (non-taxable) Group Art Classes* $35 Group Art Classes

Non-Inventory Sale Commission Work (i.e. custom orders) N/A Art Sales: Original Artwork Sales

Non-Inventory Sale Consignment Artwork** N/A Consignment Income

Non-Inventory Sale Unusual Sales PP&E*** N/A Gain on sale of PP&E

For all commission artwork, Kobe’s Krafts requires a 50% deposit at time of order and the balance when the buyer picks up the artwork. * Remember, this is the only non-taxable item. ** Kobe also displays and sells consignment pieces. He earns a 25% commission on each piece sold. The consignee sets the price, so Kobe keeps those records on an Excel spreadsheet and does not enter the prices in QBO until he sells the pieces. In other words, the consignment inventory is not an inventory item, but you need to set up a product item to handle the transaction. However, make note of all consignment sales because in order to complete the

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sales transaction, you need to make a journal entry (JE) to move 75% of the sale from the P&L to the balance sheet as Consignments Payable. *** Sales of PP&E will also require a JE to remove the item from the balance sheet and reduce the gain (or increase the loss) on the sale. The transaction is not complete until this JE is made. back

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Appendix E: Owner Contributions / Investments

To enter all owner contributions, you may create one or multiple JEs. Determine the correct account to debit from the list below and credit: Owner’s Investments. Remember all of the items below were paid by Kobe from his personal bank account. Also remember to put the description of each item in the JEs.

Date Description Account Amount

3/1 *Rental Deposit (Refundable) Refundable deposits $2,500

3/1 *1st month rent - March (prior to opening)

Rent expense 2,000

3/1 *Electricity Deposit (refundable) Refundable deposits 800

3/5 *Phone Company Deposit (nonrefundable)

Utilities 200

3/10 *Gallery set up supplies – paint for walls, cleaning supplies, lumber for building shelves/racks

Office Supplies 450

3/15 *Miscellaneous art supplies for classes

Art Supplies expense

749.99

3/25 4 large Art displays (fair market value at time of contribution = $450 each)

Art Displays 1,800

3/31 Owner’s deposit to open a business bank account

Kobe’s Krafts Bank 10,000

Total $18,499.99

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Appendix F: Customers and Vendors

Enter all customers in the “SALES” area and all Vendors in the “EXPENSES” area.

Customers:

Name Phone Number

Email Address

Candy Thomas 898-474-1111 [email protected]

Kids Love Art 898-474-1111 [email protected] 1173 Front Beach Rd Miramar Beach, FL 32550

Shawn Baylor 898-747-5200 [email protected]

LeBron Barry 897-872-2152 [email protected]

Kareem Bird 899-421-1478 [email protected]

Customers Kobe uses this “Customer” account to record sales to non-recurring customers and Daily Sales Receipts

Vendors:

Name of company/account

managers

Phone Number

Email Address

Ace Real Estate – Laurie is manager

850-393-5555 [email protected] om

3630 Bay Avenue Miramar Beach, FL 32550

Salem Prints Sasha Levin

850-981-0000 [email protected]

Dish Network Ron Primo

850-424-7900 [email protected] 78-541 Wildcat Drive Dade City, FL 33624

Kobe

USA Art Supply Jenny

813-771-3161 [email protected] m

714 Rose Lane Brandon, FL 33617

Consignment Vendors:

Name Phone Number

Email Address

JoAnne Lopez Original artwork

904-546-7300 [email protected] 415 Orange Avenue Tampa, FL 33616

Michael Koltes 850-778-2211 [email protected] 857 Rose Lane Marco Island, FL 34145

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Appendix G: Invoices, POs, and Bills

INVOICES – Purchases from Customer

Date Customer Terms Discount* Product Purchased

QTY Amount

1-Apr Kids Love Art Net 30 10% Art Classes 10 $315

2-Apr LeBron Barry Due on receipt

Commission Work 1 $4,500

+ tax

30-Apr Kids Love Art Net 30 10% Art Classes 45 $1,417.50

*Kids Love Art is the only customer that receives a discount because they buy individual art classes in bulk and pay within 15 day.

PURCHASE ORDERS – Orders to Vendor

Purchases: Description QTY Each Price Totals

Salem Prints* order 4/1/2020 24 x 36 prints 5 $80 $400

11 x 14 prints 10 $25 $250

5 x 7 prints 20 $4.50 $90

Shipping expense $20

Tax (non-taxable online purchase) $0

Total Order $760

* NOTE: Make sure you create the bill for the Purchase Order from the Purchase Order. It is very easy make sure the dates are correct, see table below.

BILLS – Payable to Vendors

Received Due To For Amount

1-Apr 1-Apr Ace Real Estate April Rent $2,000

1-Apr 16-Apr Dish Network Utilities: Telephone and

internet bill $285.64

4-Apr 19-Apr Salem Prints Print order 4/1 $760

24-Apr 9-May USA Art Supply Purchased large glass art display $4,001.99

30-Apr 30-Apr Ace Real Estate May Rent $2,000

* Make sure you create the bill from the P.O. $9,047.63

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Appendix H: April Transactions

Make sure you pay all bills through the EXPENSES area and receive all invoice payments in the SALES area. Make sure you pay the sales tax through the TAXES area. If your sales taxes due for the period of April is different than the transaction amount below, there is a problem with your sales tax somewhere along the way. All receipts that were not invoice payments will require a Sales Receipt. You will create Sales Receipts in the SALES area. All sales should be considered cash sales. Just make sure the dates are correct and the account the money is deposited to is Kobe’s bank account. Unless Kobe does recurring business with a customer, or it is a special sale, all Sales receipt transactions will be from customer “Customers."

Write checks for all expenses that are not bill payments. However, if there is no check number associated with the transaction, that means it is a debit card transaction so change the check number to EFT in place of the check number. Small inexpensive purchases, under $500, should be expensed. Make sure you select the appropriate account for each transaction. Do not add any more accounts as you enter these transactions. Think macro instead of micro. For example, paying for a PO Box or purchasing small, inexpensive items, such as a lamp, should be considered an Office Expense. QBO is limited in what you can record in a single transaction. This is where journal entries (JEs) will be necessary. Hint: transactions where JEs will be necessary include sale of fixed assets and sale of consignment artwork. I suggest you make the JEs as you go to complete the transactions.

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Date Description Expenses Deposits Method of Entry into

QBO

1-Apr Owner deposit to open bank account (this was already done in Appendix E as

long as your debit entry was to Kobe’s Krafts Bank)

10,000.00 J/E

1-Apr Paid April rent (bill) check #1001 (2,000.00)

Bill Payment

1-Apr Sold one 11 x 14 print

80.25 Sales Receipt

1-Apr Coffee and fingers foods for grand opening – Kroger Grocery Store using a debit card (Add Kroger payee while writing check) use Office

Supplies account

(180.54)

Check

2-Apr Sold medium original artwork

642.00 Sales Receipt

2-Apr Deposit to complete a commissioned piece – LeBron Barry (Paid ½ of Invoice. Receive partial

payment)

$2,407.50 Receive

Invoice payment

4-Apr Sold 4 24 x 36, 2 11 x 14 and 9 5 x 7 prints at art fair

1,174.86 Sales Receipt

5-Apr USA Art supplies (art supplies) DEBIT (187.21)

Check

5-Apr Paid phone bill received 4/1 check# 1002 (285.64)

Bill Payment

12-Apr Sold 4 5 x 7 art prints

51.36 Sales Receipt

12-Apr Paid for Post Office box through 4/11/2021 (1 year) using

debit card (Add USPS as a vendor and use Office Supplies account)

(80.00)

Check

13-Apr Sold a consignment piece for Lopez $1000 to Shawn Baylor

1,070.00 Sales

Receipt

14-Apr Received payment from Kids Love Art for invoiced amount

315.00 Receive

Invoice payment

14-Apr Paid Lopez for consignment sale to Shawn Baylor check # 1003 (to account Consignment Income)

(750.00)*

Check

14-Apr Sold 1 large original artwork

1819.00 Sales Receipt

15-Apr Purchased shelving from IKEA using a debit card record to office supplies and add IKEA vendor)

(285.24)

Check

19-Apr Withdrew cash for personal use using a debit card (This is an Owner Distribution transaction)

(1,500.00)

Check

19-Apr Paid bill for prints to Salem Prints 4/4 bill check # 1004

(760.00)

Bill Payment

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21-Apr Commission piece completed and picked up for LeBron Barry – (Receive the remaining invoice

amount)

2,407.50 Receive

Invoice payment

24-Apr Sold 1 24 x 36, 5 11 x 14 and 10 5 x 7 prints

754.35 Sales Receipt

25-Apr Sold 1 large (owner contributed) art displays for $1000

1,070.00 Sales

Receipt

30-Apr Bank Fees (12.50)

Check

30-Apr Paid Sales Tax to Fl Dept of Revenue Online-DEBIT (Pay through TAXES area)

(750.82)

Through Taxes Tab

30-Apr Paid rent May rent check # 1005 (2,000.00)

Bill Payment

30-Apr Paid Bill for art display on 04/25 check #1006 (4,001.99)

Bill Payment Subtotals: (12,793.94) $21,791.82

Total: $10,997.88

* Note, this transaction is instructing you to code an expense item to an income account because the original transaction records the full sales price to consignment income. Check #1003 is removing the consignee’s portion of the consignment sale income. The amount that will remain in the Consignment Income account will be Kobe’s Krafts’ consignment income, which equals 25% of the sale. QBO offers multiple ways to properly record the revenue; this method is one way. An alternative method would create a J/E to move 75% of the consignment sale to a payable account at the time of sale is recorded and then record the check against that payable. back

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Appendix I: Bank Statement

Business Checking Statement: Kobe's Krafts

Account number: 1247588

Statement Period: April 1, 2020 to April 30, 2020

Account summary

Beginning Balance on March 31, 2020 $0.00

Deposits and other additions 21,791.82

Withdrawals and other subtractions -2,232.99

Checks -3,795.64

Service fees -12.5

Ending Balance on April 30, 2020 $15,750.69

Deposits and other additions

Date Description Amount

1-Apr Counter Deposit $ 10,000.00

1-Apr Counter Deposit 80.25

2-Apr Counter Deposit 642.00

2-Apr Counter Deposit 2,407.50

4-Apr Counter Deposit 1,174.86

12-Apr Counter Deposit 51.36

13-Apr Counter Deposit 1,070.00

14-Apr Counter Deposit 315.00

14-Apr Counter Deposit 1,819.00

21-Apr Counter Deposit 2,407.50

24-Apr Counter Deposit 754.35

25-Apr Counter Deposit 1,070.00

Total deposits and other additions $ 21,791.82

Withdrawals and other subtractions

Date Description Amount

1-Apr Kroger $ (180.54)

5-Apr USA Art Supplies -187.21

12-Apr U.S. Post Office -80.00

15-Apr IKEA -285.24

19-Apr Counter: Withdrawal -1,500.00

Total withdrawals and other subtractions $ (2,232.99)

Bank statement continued on next page.

Page 22 of 23

Checks

Date Description Amount

1-Apr #1001 $ (2,000.00)

5-Apr #1002 -285.64

14-Apr #1003 -750.00

19-Apr #1004 -760.00

Total checks $ (3,795.64)

Total # of checks 4

Page 23 of 23

Appendix J: Financial Statement Review and Check Figures (JEs)

Review Accounts: Balance Sheet ACCRUAL BASIS Check Figures

Report period: ALL DATES

Bank Statement Book to Bank

Reconciliation Required

Accrual

A/R $1,417.50

Inventory Asset $2,581.50

Refundable Deposits $3,300.00

Fixed Assets $5,351.99

Total Assets $21,648.87

All Payables $0.00

Owner Distributions - $1,500

Net Income $2,103.88

Opening Balance Equity $0.00

Note, make sure the basis for the financial statement is in the correct basis for your comparison. The best practice is to review in both basis to ensure you do not have errors in the statements. Other than the accounts listed above, make sure you scan and make sure all balances make sense. For example, the only negative numbers in the financials should be the Owner Distributions and Discounts given. You may notice a balance in the Opening Balance Equity account (QBO “junk” account). QBO made this entry against the owner contributed inventory when you created the product inventory. If there is a balance, you need to create a J/E to move the balance from Opening Balance Equity to Owner Contribution: Debit: Opening Balance Equity to Credit: Owner Investment. If your fixed asset account is incorrect, another J/E will be required is to remove the art display PP&E that was sold from the books because it hasn’t been done yet: Debit: Gain on Sale of PPE and Credit: Art Displays. back