I run a small sound company (think service company with rental equipment) How would I go about accounting for the purchases of the equipment to be rented? There will be multiple of some items. They will not be for sale just for rent. Most equipment will have a life of 5 years or more. Even after upgradeing the equipment the older items can still be used.
Also we have disposable items such as batteries that won't be sold but are an expence of doing business. How are these entered? Thanks.
Chuck
Enter it as you would any other asset that is capitalized and depreciated. You generally need two accounts, one a fixed asset account, the other, also a fixed asset account to record the accumulated depreciation. The way I do it is to actually use 3 accounts where the 2 accounts just described are sub-accounts of the main fixed asset account. This way, the top level fixed asset account always shows the net remaining book value of the asset(s). You chart of accounts would look something like this:
Acct Num Acct Name
1500 Fixed assets 1501 Rental Equipment 1502 Accum Depr - Rental EquipOf course, account names can be anything you want and numbers are optional. Accounts 1501 and 1502 are sub-accounts of 1500. The original cost of the asset is recorded in 1501, the accumulated depreciation is recorded in 1502 (debit depreciation expense, credit account 1502)
Ok im using Quickbooks premire 2004. Trying to figure out how to do this. I tried doing it as a fixed asset and the sub account of that. The only problem I have is some items there will be multiple of the same type of item and maybe even at different prices. What would be the best way to do this. These are not for sale items. Some items range in the $10-$1000 range in actual price. The only way i see to do it would be to enter each item as a new item line so that things will reflect the right price. Some of these I will have in the multiples of at least 50 or more and this seems like a waste. Any ideas?
Thank you.
Chuck, consult a competent professional accountant, preferably (but not necessarily) with QB experience.
"Chuck" wrote ...
range in
Nope. Just the one G/L account for *ALL* your rental equipment. No need to keep separate line items. I believe that you can set up a Fixed Asset in QB, there is a dialog box/wizard that opens when you enter the first Bill for a FA that you purchase. Enter the details, making sure that if you pay a VAT or GST which offers an input tax credit (eg in Canada) that you BREAK OUT the GST. You don't account for that in your Fixed Asset value.
Eg. You rent sound equipment. YOu purchased an amplifier, a mixing board and a set of speakers, which you would normally rent together. Amp cost is $2,500, mixer is $2,000, total cost of set of speakers $4,000. Separate invoices for each:
DR Rental Equipment 2,500.00 CR Accounts Payable 2,500.00
DR Rental Equipment 2,000.00 CR Accounts Payable 2,000.00
DR Rental Equipment 4,000.00 CR Accounts Payable 4,000.00
If you paid by cash or cheque, then substitute Cash or Bank for Accounts Payable.
If you don't want to play with the Fixed Assets function of QB, then make a spreadsheet of *each individual* piece of equipment and cost (less any GST or VAT). This will make calculating the depreciation a little easier.
Check with your accountant for what rates to journalize your depreciations at. In Canada the CRA has specified rates at which fixed assets can be depreciated and I find it easier to book my depreciation per tax rather than any other method.
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