Lesson 38-- More Bank Transactions

This lesson shows how to use Goldenseal construction accounting software to handle bank payments, interest, bank service charges, and transfers between bank accounts.

It also explains how to reconcile your bank records, and how Goldenseal 'posts' financial information after you complete a bank transaction.

Other Bank Transactions

The six other classes of bank transactions are very similar to checking transactions. For each of them you will set up accounts, and then enter bank transactions when you move money in and out of the accounts.

You can use any of the following bank transactions:

  • Cash-- for petty cash, cash registers or cash drawers, cash stuffed into mattresses, or any other cash in your possession.
  • Checking-- for checking accounts (using sequential checks).
  • Investment-- for CD's, IRA's, stocks, bonds, precious metals and other investments. This is a catch-all class that you can use for any business asset that doesn't fit into one of the other asset classes.
  • Savings-- for bank accounts that don't use sequential checks
  • Credit Cards-- for credit cards that you pay via a monthly statement. NOTE: You do not need a Credit Card account for debit cards (where the money is withdrawn from your bank account). Instead, enter a payment transaction for the bank account from which funds are taken. You also don't need Credit Card accounts for vendor accounts, even if you have a plastic card. Just handle it through the regular Accounts Payable (see Lessons 33 and 36).
  • Loans-- for notes, lines of credit, installment loans, and any other debts.
  • Escrows-- for bank accounts that you manage on behalf of others. Escrow accounts do not show up on your balance sheet at all.

You access all bank transactions through menu commands in the Bank menu, similar to the way you handle checking transactions.

EXAMPLES: To move money into or out of a Cash account, choose Cash Transactions from the Bank menu. To move money into or out of a Credit Card account, choose Credit Card Transactions from the Bank menu.

Bank Payments

Bank payments are very similar to bank checks-- the only difference is that they don't have sequential check numbers.

Use bank payments for any of the following:

  • Electronic payments, wire transfers and 'e-checks'
  • Automatic transfers
  • Credit card and debit card purchases
  • Cash payments

Goldenseal creates most bank payments automatically when you make an instant purchase and pay by cash, credit card or checking debit. It also creates bank payments if you use the Pay Bills command and pay by something other than a check.

To enter a payment from a cash account, follow these steps:

  1. Choose Cash Transactions from the Bank menu.
  2. Click the New button.
  3. Enter a Payee Type, and the account to whom you're making the payment.
  4. Enter other details for the payment. You can make the same types of payments as for checking transactions (see Lesson 37).

 

Bank Service Charges

Use a Transfer Out to enter check printing charges, monthly account fees, over-limit fees, charges for returned deposits, and any other charges or fees that you pay directly to the bank.

To enter a service charge for a Checking account, follow these steps:

  1. Choose Checkbook Transactions from the Bank menu, then choose the account to which the charge applies.
  2. Click the New button.
  3. Enter Transfer Out into the Type field at the top of the window.
  4. Enter Other Charge in the Transfer To field.
  5. Press the Tab key, and enter the amount of the charge.
  6. Press the Tab key again, and enter any comments about the transfer.
  7. Enter the form of transfer into the Conditions field.
  8. Enter job cost information into the Job Class, Job and Category fields. You probably will assign the cost to an Overhead account, but you can also assign it to a specific customer, project or other job account.

Interest Charges

When you pay interest on a loan or credit card account, enter it exactly the same as a service charge, but enter Interest Paid into the Transfer To popup field.

Earned Interest

Use a Transfer In to enter interest that you earn on any type of bank account.

To enter interest earned from an Investment account, follow these steps:

  1. Choose Investment Transactions from the Bank menu, then choose the account into which the interest is credited.
  2. Click the New button.
  3. Enter Transfer In into the Type field at the top of the window.
  4. Enter Interest Received in the Transfer To field.
  5. Press the Tab key, and enter the amount of interest earned.
  6. Enter job cost information into the Job Class, Job and Category fields. You probably will assign the interest income to an Overhead account, but you can also assign it to a specific customer, project or other job account.

Other Credits

When you receive a miscellaneous non-interest credit directly from a bank account, enter it exactly the same as earned interest, but enter Other Credit into the Transfer From popup field.

Transfers Between Accounts

Use bank transfers to shift money from one bank account to another. For example, to transfer funds from an investment account to a checking account, follow these steps:

  1. Choose Checking Transactions from the Bank menu, then choose the account into which funds will be deposited.
  2. Click the New button.
  3. Enter Transfer In into the Type field at the top of the window.
  4. Enter Investment Account in the Transfer From field.
  5. Enter the account that is the source of funds into the Account field.
  6. Enter the amount of the transfer.
  7. Press the Enter key to complete the transaction.

Follow the same steps to handle other transfers such as an ATM withdrawal that you put into a Cash account, a transfer from savings to checking, or an automatic bank payment to a loan account.

NOTE: If you write a check to transfer funds, enter a Check transaction instead of a transfer.

When you enter a Transfer In, Goldenseal automatically creates a Transfer Out in the other bank account. To see the offsetting transaction, double-click in the Transaction Ref field at lower right.

NOTE: If you are viewing transactions for just one account and you've made a transfer to another account of the same type, Goldenseal won't be able to display it.

One-Time Payments

If you need to make a payment to someone and don't want to set up an account for them, follow these steps:

  1. Set up a cost account for 'one time' payees, and turn on the Allow One-Time Names checkbox.
  2. Enter a check or bank payment to that account.
  3. Turn on the One-Time checkbox, and type in a payee name.

Tax Class Field

Every bank transaction includes a Tax Class field, which classifies your cash income and expenses for income tax reporting.

Goldenseal automatically enters a basic tax class for each transaction, based on the transaction type and the main account class.

To assign a different tax class to an account, follow these steps:

  1. Choose Material Suppliers from the Accounts menu.
  2. Find the account you'd like to change.
  3. Enter a cost category into the Income Tax Class field.
  4. Goldenseal will automatically use the new tax category for all payments to that supplier.

Bank Transaction Posting

Every bank transaction must be 'accounted for'. You must apply it to an expense or income transaction, apply it to multiple items with a break—down, or use it as a payment 'on account' so it covers future transactions.

Goldenseal automatically 'posts' each bank transaction. It will either mark another transaction as paid, or it will change the 'on account' balance in the account that made or received the payment.

Bank Checks and Bank Payments

If a bank check or bank payment has no breakdown, use the Payment Type field to determine how to apply the payment.

  • If you apply the payment to a specific expense transaction, Goldenseal changes the status of that transaction to Paid.
  • If you pay on account, Goldenseal adds a vendor credit that applies to future transactions.

If the transaction has a Category or Item breakdown, Goldenseal considers it to be an expense transaction. Job cost reports will include the transaction, the same as a regular material purchase (or other expense transaction).

NOTE: Category and Item breakdowns are not available if the Allow Direct Bank Purchases checkbox is turned off in the Expense Preferences window.

If the transaction uses a Purchase breakdown, Goldenseal applies the payment to the listed purchases.

Deposits

If a deposit has no breakdown, use the Payment Type field to determine how to apply the deposit.

  • If you apply the payment to a specific income transaction, Goldenseal will change the status of that transaction to Paid.
  • If you enter it as a payment received on account, the customer gets a credit that will apply to future transactions.

HINT: To view the 'on account' balance for an account, open the browser window for that account and check the calculated values at the bottom right corner of the window.

If the deposit uses a Payment breakdown, Goldenseal applies the deposit to the listed items.

NOTE: For more about Deposits, see Lesson 44.

Transfers In and Out

If you enter a Transfer In or a Transfer Out for another bank account, Goldenseal considers the transaction to be a simple transfer between accounts. The two account balances are changed, but no other posting is done.

If a Transfer In is for Interest Received or Other Credit, you can assign the income to any job account. Usually you will add it to an Overhead account, but you can also assign it to another type of account. Goldenseal posts the job costs, but doesn't post to any accounts.

If a Transfer Out is for Interest Paid or Other Charge, you can assign the cost to any job account. Usually you will add it to an Overhead account, but you can also assign it to another type of account. Goldenseal posts the job costs, but doesn't post to any accounts.

Reconciling

Goldenseal makes it easy to reconcile your computer records against bank statements, so you'll catch any mistakes that you or the bank made.

Creating Reconcile Periods

To enter reconcile periods that you can use to mark off bank transactions that have cleared, follow these steps:

  1. Choose Other Lists from the Options menu, then choose Reconcile Periods from the submenu.
  2. Click the New button.
  3. Type in a name for the period. You can use the name of the month and year, or any other text that makes sense to you.

Marking Cleared Transactions

When you receive a bank statement for one of your checking accounts, follow these steps:

  1. Choose Checkbook Transactions from the Accounts menu, then choose the checking account name from the submenu.
  2. Browse through the bank records. If the statement shows that a particular transaction has cleared, enter the current reconcile period into the Reconcile field.
  3. Repeat step 2 for each transaction that has cleared.

HINT: Use the Find command to locate specific transactions.

Reconciling against the Statement

After you have marked all cleared transactions in the Statement field, you can reconcile your bank transactions against the bank statement. To do so, follow these steps:

  1. Choose Reconcile from the Accounts menu.
  2. Enter the reconcile period that you used for this period.
  3. Check the computer balances against the bank statement.
  4. If the balance does not match the bank statement balance, check for errors, and repeat the reconcile process until it matches.

Reconciling Multiple Periods

If you need to reconcile several month's worth of bank statements, you'll need to do them in proper sequence. Follow these steps:

  1. Start with the oldest statement.
  2. Go through the reconciling process described in the previous section. If necessary, adjust the account's starting balance so Goldenseal's reconcile balance is exactly the same as the bank statement balance.
  3. Move to the next oldest statement.
  4. Reconcile that statement so it matches exactly.
  5. Repeat steps 3 and 4 until you have finished all bank statements.

Cash Accounting

Cash accounting is based on when money changes hands. You can get that information from your bank transactions, since all cash income is deposited to a bank account, and all cash expenses are paid out of a bank account.

HINT: In this case, cash accounting covers income and expenses in cash, checking, credit card, investment, loan and savings transactions.

To see all of your bank transactions in one place, follow these steps:

  1. Choose Banking from the Reports menu, and choose All Bank Transactions from the submenu.
  2. Enter a date range.
  3. Click the Update button. You'll see a simple list of all cash transactions during the time period.

To see a breakdown of cash income that you can use for income taxes or detailed income statements, follow these steps:

  1. Choose Taxes from the Reports menu, and choose Income Tax Report from the submenu.
  2. Enter a date range.
  3. Click the Update button. You'll see a list of all cash transactions during the time period, broken down by tax classes.

Accrual Accounting

Accrual accounting is based on when expenses and income are actually in place-- usually when goods or services are delivered or installed.

You can get accrual information from your expense transactions-- equipment hours, labor hours, inventory used, material purchases, subcontractor costs and other costs.

To see a report of accrued expenses, follow these steps:

  1. Choose Expenses from the Reports menu, and choose All Expenses from the submenu.
  2. Enter a date range.
  3. Click the Update button. You'll see a simple list of all accrued expense transactions during the time period.

Get accrued income figures from your sales transactions and project Billing Records.

Finishing Up

In this lesson you've learned how to make bank transfers to handle interest, service charges and transfers between accounts. You might want to take a break now, and fix some dinner.

Remember, a crisp dollar bill is a welcome addition to any salad. It has zero calories and it's jam-packed with fiber.

HINT: Smart chefs 'de-vein' currency by removing the colored plastic strip from the left side of the bill. Use a freshly honed filleting knife, and save the strips to make an attractive garnish.