Re: General Questions

[Steve D. <sd...@sw...>]

Hi Jeff.

Jeff Strope wrote:

> Hello all,
>
> First, I'd like to say thanks to everyone involved with this project. We're
> a company just beginning operations, and SQL-Ledger has given us a fantastic
> product for our initial accounting needs at an equally fantastic price.
> After my experiences with Oracle Fin. & Great Plains, I'm still a little
> confused on how we got this system built, deployed, and integrated with our
> on-line application in less than 3 weeks.

Something to do with having the source code, perhaps?

> Secondly, I do have a couple of questions that were given to me by a
> third-party who did a brief audit of the system, mostly non-technical. My
> knowledge of accounting best practices is minimal at best, so I would
> appreciate it if any of you would send along your experiences, fixes, or
> work-arounds for the following items. Thanks in advance for your advice.
>
> Here are a few of the questions he sent me:
>
> Is there functionality for write offs/bad debts?

Edit the acct. "bad debt exp." and check the deposit button under receivables.
Then if a customer sends you 9,000 for a 10,000 dollar invoice and tells you
that's it, they are bankrupt, you can apply the 1,000 left on their invoice to
bad debt expense and close the invoice.

That's the direct write-off method.

If you need to follow U.S. GAAP, you need to use the allowance method which
would go like this.

DON'T mark bad debt exp. as a deposit item (the default).  Add an acct. called
"Bad Debt Reserve" or "Allowance for bad debt".  Check it as a liability and
check it's deposit button under receivables.  Number it right after the AR
acct. number so it shows as a contra asset.

Say you figure 5% of your AR will be uncollectible.  Go into GL->Add
Transaction and book the following:
Debit - 5620 - Bad Debt Exp.    (5% of AR)
Credit - 1255 - Bad Debt reserve Seattle            (5% of AR)

Then when you have actual write-offs, you apply the amount to Bad debt reserve
like a payment.

I did an example of this on the Seattle demo (http://www.sql-ledger.com).

Look at the trial balance. See acct. 1255 for the 5% accrual and then see my
10,000 dollar write-off for customer Albatross's inv. # 324412

> Where will you track the customer's check numbers?  Source?

I believe that's the intent of the field as far as AR goes.

> How do you void checks?

Delete the AP transaction.

> How do you reissue checks?

Generate another AP transaction.

> How will you do a bank reconciliation?  Where do you mark that a check has
> cleared the bank?

On a spreadsheet.  Just put the bank statement balance at the top, the G/L cash
acct. balance at the bottom with a list of uncleared checks in between.  You
don't need to mark them cleared in the G/L because basically you pretend
they've cleared by reducing the cash acct. when they are issued.  It's just
like your personal checkbook, where you remove them from your balance when you
write them.  Untill the bank actually clears it, it's a rec item.

> Where are the check numbers in the system?  Are they the Source?
>
> That's it. Thanks so much for your help!

Good luck w/ everything.
Steve

>
>
> -Jeff Strope