Quicken 2011 - New Balance Sheet by Class Report - Part 2

Quicken 2011 offers a new advanced Balance Sheet by Class Report that differs from other Quicken reports because it gives users the option of selecting "Classes" (fund, location, profit center, or other category) as their column grouping. This will enable Quicken users to perform divisional accounting with Quicken, which was previously impossible or required significant duplication of effort.

While this report has been one that has been requested by many Quicken users and the accounting professionals who support them, it is not without limitations and drawbacks, making this a report that will be able to be used by some companies and in some instances but not all.

In our previous article, Quicken 2011 - New Balance Sheet by Class Report - Part 1, we touched briefly on the fact that transactions will have to be entered in a very specific manner and there are many data entry transactions that are not supported by the Balance Sheet by Class Report.

The first limitation that we will discuss is Journal entries with "unbalanced" classes. This limitation will affect CPA's and other accounting professionals; and will require that they change the manner in which they create journal entries in client files - if they or their client chooses to use the Balance Sheet by Class Report.

An "unbalanced" journal entry occurs when you as the CPA or other accounting professional creates a journal entry that changes ONLY one side of the balance sheet for a specific class. This creates an "unbalanced" balance sheet for the class.

For example, your company purchased some computers, and you want to create a journal entry moving $500.00 worth of the computers from Class 2 to Class 1. You would normally create a journal entry as follows:

Account

Debit

Credit

Class

Computer & Office Equipment

500.00

Class 1

Computer & Office Equipment

500.00

x

While the overall entry balances - meaning debits equals credits - from the "class" perspective the entry is NOT in balance because it increases assets in Class 1 while decreasing assets in Class 2. When using classes in Journal entries Debits MUST equal credits for EACH class.

Procedure to "balance" the journal entry

You will need to make a journal entry where debits equal credits for each class. This procedure will require accountants to perform additional data entry and change their journal entry procedures.

To do this, in your chart of accounts create an Other Expense type account called Other Expenses Clearing Account. Once you have created the account you will then use it to balance the classes in the journal entry, like this:

Account

Debit

Credit

Class

Computer & Office Equipment

500.00

Class 1

Other Expenses Clearing Account

500.00

Class 1

Computer & Office Equipment

500.00

Class 2

Other Expenses Clearing Account

500.00

Class 2

Just remember, that the balance in the Other Expenses Clearing Account should ALWAYS be zero - debits and credits (or money in & money out amounts) are equal.

Our next article will discuss how to handle paychecks that are allocated to multiple classes.

NOTE: Most of the information contained in this article has been based on information found in the Quicken In-program help. Intuit has done a very good job documenting the required procedures to successfully implement the Balance Sheet by Class Report.

Nancy Smyth is a Certified Quicken ProAdvisor and Intuit Gold Developer specializing in offering Quicken users an easy and efficient means of complying with Federal and State Prevailing Wage Laws and generate certified payroll reports from Quicken data. For additional information on Certified Payroll Solution - which integrates with Quicken, 

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