Homework You Downloaded GNUCASH correct? Name your file YourName - - PowerPoint PPT Presentation

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Homework You Downloaded GNUCASH correct? Name your file YourName - - PowerPoint PPT Presentation

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Homework You Downloaded GNUCASH correct? Name your file YourName MBUS3000. Create a special Folder for this file on your desktop or someplace convenient. The program will generate lots of automatic backup files so it creates a lof of debris.

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Homework You Downloaded GNUCASH correct? Name your file YourNameMBUS3000. Create a special Folder for this file on your desktop or someplace convenient. The program will generate lots of automatic backup files so it creates a lof of debris. Your are going to be creating a chart of accounts for my two son’s band

  • dEaDbUg. Their names are Robert and Frank. Their drummer is named Max.

from here on out when i’m referring to these names i am talking about the members of dEaDbUg.

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Assets = Liabilities + Equity.

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GNUCASH You are going to set up the Capital Accounts for each of the members of the band dEaDbUg Caplital accounts or Equity accounts (same thing) represent the owners financial interest in the business In particular this is where you record the owners money into and out of the business. Capital contributions and capital distributions. dEaDbUg has 3 owners. Robert, Frank and Max. when they formed the band they each contributed $100 dollars each. They deposited this money into their Athens First Bank account. You must first create 3 sub- accounts under equity. these will also have subaccounts under them. So be sure to checkt he “placeholder box.” Robert Capital Account Frank Capital Account Max Capital Account Under each of these accounts create 3 more accounts EG under Robert Capital Account create these three subaccounts Robert Capital Robert Contributions Robert Distributions. Do this for each to the partners see slides.

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Repeat this for each of the partners

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Now record each members contribution Assets = Liabilities + Equity Frank contributes $100 double click on frank contributions 100 dollars into the checking account (assets). The “transfer” account is Assets:Current Assets: Checking Account Assets (+100 in checking) = Liabilities ($0) + Equity( +100 in Frank Contributions) Do the same for Robert and Max. see slides.

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Oh and while we are at it change the description of th bank account to it’s proper name Athens First Bank and Trust. Click once on the checking account so it’s highlighted. then clicke the edit button on bar above.

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Gnucash. The band dEaDbUg borrows $10,000 from athens first to buy van right now they just deposit in checking. due 2/5

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Gnucash new accounts 2004 E-150 Van-Asset/Fixed Asset/Vehicles Petty Cash-Asset/Current Assets/Petty Cash Buy Van from athens Ford $9,000 from checking Take $100 from checking and put in petty cash

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now create some income and expense accounts

Performance Fees : Income/Performance fees Merchandise Sales- Retail: Placeholder account Income/Merchandise Sales- Retail Music CDs Vinyl Downloads: Income/Merchandise Sales-Retail/ Music CDs... Softgoods: Income/Merchandise Sales-Retail/ Softgoods expenses Touring/Performance Costs: Placeholder Expense/Touring Performance Costs ALL UNDER TOURING AND PERFORMANCE COSTS Fuel: Expense/Touring Performance Costs/Fuel Tolls and Parking: Expense/Touring Performance Costs/Toll and Parking Vehicle Repair and Maintenance: (you get the idea) Travel and Lodging: Per Diems: Supplies-Tour/Performance:

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First you need to add the following accounts

Expense: Commission - Management Expense: Commission- Agent Expenses: Touring Performance costs: Van Depreciation

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dEaDbUg goes on tour

The band goes to on tour. They play three shows feb 16 at the covered dish in gainesville florida, feb 17 at the Jinx in Savannah Georgia and feb 18th at Sky City in Augusta GA. Here are there expenses. All of these need to be in the petty cash ledger.

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Checking Ledger

Agent and Manager must be paid. The tour grossed $1500 The manager Red Light Management gets 15% or $225 The Agency High Road Touring gets 10% or $150 write checks for them

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Fixed Asset 2004 Van Ledger

But now we have to make an adjustment for depreciation. That is we “used up” some of the vans available life. For now don’t worry about how I calculated this.. but for this trip it’s $116.40

This is not the “correct” way to record this. But i do something very similar to keep track of our true touring profit. This is the way the band keeps track of money. The accountant has a different more professional and “correct” set of books. Two sets of books? isn’t that illegal? Well yes if you’re trying to cheat someone. But no. Most business small business operators are not accountants yet they have to do the day to day accounting. Oftentimes the accountant creates a simpler system for the business operators to

  • use. Then on a regular basis, weekly, monthly or at the end of each tour, the accountant takes the business operators books and translates it

into their more professional form that will satisfy other accountants, lawyers and especially the tax authorities. What good is accounting if the business operators don’t understand? Can’t make rational decisions about their company?

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What are the hidden costs? how often can you drive the van this far?

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Create these new accounts. Assets: Current Assets: Agency Escrow Account Liabilities:Current Liabilities: Credit Cards:Chase Visa Credit Card Liabilities:Current Liabilities: Unearned Revenue: Unearned Perf Fees

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Create these new accounts. Assets: Current Assets: Agency Escrow Account Liabilities:Current Liabilities: Credit Cards:Chase Visa Credit Card Liabilities:Current Liabilities: Unearned Revenue: Unearned Perf Fees

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Principal reduces liability Interest is an expense.

In order to do this problem you must compute loan amortization schedule just as I’ve been showing New expense account Expenses: Interest expense Add a loan payment to checking account $327.39 (hint loan amout) “Split” between long term liabilities vehicle loan and Expense: Interest Expense

Homework

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Gnucash more touring turning unearned income into “real” income using the agency escrow account due march 6

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The band tours to Birmingham alabama then Atlanta feb 24-26 From Petty Cash 2/24 per diems of $25 frank suttree and robert 2/24 $250 cash from bottle tree 2/25 per diems of $25 frank suttree and robert 2/25 $250 cash from the earl

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Credit card expenses

2/24 Fuel Cheveron Birmingham AL $65 2/24 Courtyard Marriot Birmingham AL $84.10 2/26 Quik Stop Duluth GA $75

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Convert Unearned Income Liability to income. Open unearned per fees ledger

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2/26 Pay manager 15% checking account 15% of $1000 why aren’t we paying agent?

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2/27 High Road (agent) emails escrow statement wires $400 to check account

2/22 The Bottle Tree deposit received $250 2/22 The Earl deposit recieved $250 2/24 The Bottle Tree commission -$50 2/25 The Earl commision -$50 2/27 Net to artist $400

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Finally record the van depreciation approx 438 miles $65

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Gnucash Inventory really requires a separate inventory program

  • r sub module.

however we are only gonna have a small amount of inventory and separate items.

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dEaDbUg orders 50 t- shirts from satisfactory

  • merchandise. the total is $300 dollars.

paid with check 1004. Shipping from UPS is 25 dollars paid with check 1005 Need to keep track of the fact these shirts cost $325/50 or $6.5 each Cost of Goods Sold Things you buy to sale later have to be carried as asset until sold. you expense them when it’s sold.

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Now dEaDbUg plays house party in Athens They sell 15 shirts at $15 dollars each

  • r $225 cash.

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Now we have to account for the decrease in value of inventory of t-shirts We also need to account for the cost of those 15 shirts. 15 shirts cost of goods was $6.5 x 15 = $97.5 Why do we do it this way? for tax purposes and other reasons you can not expense the cost of the shirts until they are sold.

  • pen inventory soft good ledger

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