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In QuickBooks Pro 2010 Essential Training, author Bonnie Biafore shows how to most efficiently use this popular business accounting software to manage business finances. The course covers core QuickBooks features that business owners need to know, from recording typical bookkeeping transactions like bills and invoices, to reconciling accounts and managing company files. Exercise files accompany the course.
A couple of QuickBooks item types help you add charges or deduct discounts by a dollar amount or a percentage. You can use a discount item to deduct 20% off a price for your monthly special or you can create a discount item that subtracts $50 to thank a customer for a referral. The other charge item works almost like a discount except that you use it to add charges to invoices such as shipping charges or finance charges. To create a discount item, start in the Item List window. Click Item > New.
Choose Discount on the dropdown list. In the Item Name/Number box, type a name for the discount. If you want to make an item a sub- item for example, to organize all your discounts under one parent, turn on the Subitem of checkbox. Then choose the parent item from the dropdown list. In the Description box, type the description that you want to appear on invoices. In the Amount or % box, type the discount to use. If you type a number like 50, the discount item deducts $50 from an invoice.
If you type a percentage, say 20%, the discount item calculates 20% of the previous line on an invoice and puts the value in the invoice as a negative number. In the Account dropdown list, choose the account for tracking the discount. If you choose an Income account, the discounts appear as negative numbers to reduce the income you earned. If you choose an expense account, the discount is a positive number. Either way, your net profit, that's income minus expense, is the same.
If you charge sales tax, choose Tax if you want the discount applied before sales tax. That makes sense if you're discounting a product. You want the discount to apply to the product price only. To save the item and close the dialog box. Click OK. The Other Charge item works almost exactly the same way. I'll edit the Shipping Other Charge to show how this works. The item name, the Subitem of checkbox, the description and the Amount or % box are identical.
If you use the Other Charge for something you sell, you might choose Tax for the Tax Code. For shipping charges or finance charges, choose Non. In the Account dropdown list, choose the Account for tracking the charge, in this case, Miscellaneous Income. If you want to set up the Other Charge item for reimbursable costs turn on the This is used in assemblies or is a reimbursable charge checkbox.
Then you can set information for what you pay for the charge and what you charge to the customer. As you do for services and inventory items, you can fill in the Description, Cost, and Account for the purchase transaction like a purchase order or a bill, and the Description, Sales Price, and Account for the sales transaction, when you add the item to an invoice for a customer. In this case shipping isn't a reimbursable charge, so I'll turn the checkbox back off.
Now that I'm ready to save the item, I'll click OK. When you apply a percentage discount or Other Charge item to an invoice, QuickBooks multiplies the value on the previous line by the percentage to calculate the discount or charge. If you use a dollar amount, it simply subtracts or adds that dollar amount to your invoice.
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