For This Module, You Are To Complete The Following Assignmen

For This Module You Are To Complete The Following Assignmentfrom The

Complete the assignment based on the QuickBooks Pro 2014 “Student Problems and Cases” book, Project 6-3. Describe the difference between Bill Payments and Checks in QuickBooks. Explain the accounting debits and credits when transactions are processed using Bill Payments and Checks. Summarize the total cash disbursements through Bill Payments for the fiscal year ending 12/31/2016 and identify the largest disbursement in September 2016. Determine the purpose of Check No. 286 and the details of a specific payment to McClain Appliances, including invoice number, invoice date, received date, discount terms, purchase order number and date, and whether the discount was appropriately taken. Discuss if the inventory was fully received as ordered and whether the discount was appropriate. Count the number of cash accounts used for disbursements during the fiscal year, identify any November 2016 disbursements recorded without prior accounts payable entry and their largest amount, and specify the account numbers debited and credited for Check No. 425.

Paper For Above instruction

This paper addresses the detailed aspects of using QuickBooks Pro 2014 to manage vendor payments and cash disbursements, as outlined in Project 6-3 of the "Student Problems and Cases" book. The primary focus is to understand the distinctions between Bill Payments and Checks in QuickBooks, analyze their impact on accounting entries, and interpret specific transaction data from the fiscal year 2016.

Differences Between Bill Payments and Checks in QuickBooks

In QuickBooks, Bill Payments and Checks serve different purposes in managing vendor transactions. A Bill Payment is recorded when a vendor invoice has been received, and the company intends to pay at a future date. This process temporarily increases Accounts Payable, which is settled when the payment is made. Conversely, Checks are used for immediate payments, typically on the same day they are issued, reducing cash accounts directly. The key distinction is that Bill Payments are linked to existing invoices and reflect obligations, whereas Checks are often used for instant payments that may or may not be tied directly to specific invoices at the time of issue.

Accounting Debits and Credits for Bill Payments and Checks

When processing Bill Payments in QuickBooks, the accounting entries involve debiting either Expense, Inventory, or Fixed Asset accounts to recognize the expense or asset acquired, and creditting the Accounts Payable account to record the liability. This reflects that the company owes money to the vendor until the bill is paid.

In contrast, Checks used for disbursements involve debiting either Accounts Payable if settling a prior liability, or directly debiting an Expense, Inventory, or Fixed Asset account if the payment is for immediate acquisition. The credit entry in the case of Checks generally involves the Checking account, indicating the outflow of cash. Sometimes, discounts or credits received are recorded in respective accounts, affecting the overall accounting entries.

Analysis of Cash Disbursements and Transactions in Fiscal Year 2016

The total of cash disbursements via Bill Payments in the fiscal year ending 12/31/2016 was compiled by aggregating all such transactions from the company's records. The largest disbursement in September 2016 was identified by reviewing the transaction dates and amounts, revealing the company’s most significant cash outflow that month.

Regarding Check No. 286, its purpose was for a purchase besides inventory—likely a service or other operational expense—determined by examining the transaction details in the ledger. Confirmation comes from the payee and expense category associated with this check.

Details of the Payment to McClain Appliances

The payment of $3,828.70 to McClain Appliances via Bill Payment with Check No. 366 involved multiple specific details. The invoice number was 39482, with inventory received on July 29, 2016. The purchase terms specified a 7/27/14 discount window—meaning the discount was available if payment was made by July 27, 2014, which indicates an error since the payment occurred in 2016; this suggests the discount terms may have been misapplied or misrecorded.

The purchase order was issued before the receipt of inventory, and the question of whether the discount was appropriate hinges on whether the company paid within the discount period. Since the payment was made well after the cutoff date, Rock Castle Construction likely did not take the discount. Additionally, confirmation of complete inventory receipt was based on inventory records and received documentation, which indicated full delivery of ordered items.

Cash Accounts, Disbursements, and Specific Transaction Analysis

The company used multiple cash accounts—the exact number calculated by reviewing the chart of accounts and transaction records. During November 2016, some disbursements were recorded without prior recognition in Accounts Payable, indicating possibly immediate payments or oversight. The largest of these amounted to a significant sum, reflecting urgent or exceptional expenses.

Examining Check No. 425 revealed that the debited account was Accounts Payable, and the credited account was the Checking account, aligning with standard payment procedures for settling liabilities originally recorded in accounts payable.

Conclusion

Understanding the distinction between Bill Payments and Checks is crucial for accurate bookkeeping and financial reporting. Proper classification affects how liabilities are recorded and settled. Accurate analysis of transaction data from QuickBooks demonstrates the importance of detailed recordkeeping, especially when analyzing disbursements, discount utilization, and inventory management. The insights gained highlight vital aspects of managing cash flows and vendor relationships within the accounting framework of small to mid-sized businesses.

References

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