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  #1  
Old 08-12-2017, 09:27 PM
Habaneros Habaneros is offline
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Help with Negative Cash amount in Daily Sales (Restaurant)

Hi,

I am a new restaurant owner and am struggling with Quickbooks (which I have never used before). I have setup a Chart of Accounts, vendors, etc., following helpful textbooks and google seraches. I hope I can describe this problem correctly. I have spend days in google searches and have not found the solution. This forum seemed the friendliest out there so I registerd and here I am.

Where I am running into trouble is entering my Daily Sales Receipt. I setup the form myself and memorized the transaction. The restaurant POS is about 10 years old and does not integrate with our credit card terminals. In the Daily Sales Receipt, I put in the POS system daily sales (Food, wine, beer, pop, etc) from the POS and it goes in as positive numbers. I also put in the Tax (+) and discounts (as a negative). Then I input the method of payment and payment amounts from our our credit card terminals. The money collected from the credit card terminals deposits into my bank account every night.

We do not have a cash register, each server has their own float to make change. People paying in cash pay the server. At the end of shift, the servers take their credit card tips out of the cash they collected. It is a regular thing where I still owe them money at the end of the night since they did not collect enough cash to pay back all of their credit card tips, meaning I owe them cash for those tips. So when I input debits from my credit card machine, I enter Visa, MC, etc and QuickBooks automatically makes it a negative number. However I cannot enter the cash line as QuickBook keeps changing my Cash line to a negative number just like it does for Visa and MC. I really want to enter the Cash as a positive number (meaning I owe Cash). Can someone please help me figure out how to enter Cash as Cash I owe to my servers? My numbers (credits and debits) do balance if Quickbooks would not keep switching the sign for Cash.

Here are actual numbers for a day that I am trying to input

Credits
5,611.55 Food Sales
2,291.75 Drink Sales
-85.71 Discounts
391.04 Tax Collected
8,208.63 --Total Credits--

Debits
-2,931.77 Visa
-5,447.37 MC
170.51 Cash (I need this to go in Daily Recipt as a positive, but QB forces it negative)
-8,208.63 --Total Debits--

Please help!! I still have not completted July's month end due to this hang-up.

Cheers and thank-you all in advance,
Don
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  #2  
Old 08-12-2017, 10:35 PM
Lorin Browning Lorin Browning is offline
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Don,

Before I attempt an answer, please verify that your sales tax rate is 4.95%.

It will be very helpful to look at your chart of accounts. Since you seem to be using debits and credits in something other than an accounting sense, could you print your chart of accounts as a pdf file and attach the pdf file to your response. (Use the paper clip symbol on the top row to attach a file). If you don't want to include account balances, you may want to export to Excel and hide or delete the balance column.

Here is a rough Income Statement and Balance Sheet using only the information you gave. Notice that it is out of balance and is out of balance by the amount of sales tax collected.

INCOME STATEMENT


Income
Food $5,611.55
Drink 2,291.75
Discounts (85.71)
Total Income $7,817.59

Expenses

Income less Expenses $7,817.59



BALANCE SHEET


Assets
Cash $170.51
Credit Cards Receivable 8,379.14
Total Assets $8,549.65

Liabilities
Sales Tax Payable $391.04
Total Liabilities 391.04
Equity
Current Income 7,817.59
Liabilities plus Equity $8,208.63

Is there any chance that your reported sales include the sales tax in the gross sales?
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lorin@lorinbrowning.com

Last edited by Lorin Browning; 08-12-2017 at 11:02 PM.
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  #3  
Old 08-12-2017, 11:19 PM
Habaneros Habaneros is offline
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Thank-you for your reply Lorin. I apologize for my incorrect accounting terms. I am learning and it is a struggle. I do appreciate the help.

I attached my Chart of Accounts. It is quite complex as it is from a book. I was planning on making accounts inactive that I do not use to clean it up once I am running. The amounts in there reflect all of the expenses I have input (food costs, other vendors, SHL) for the month, but none of the income from sales as that is what I am struggling with (there are a few sales in there that was from me messing around with Daily Sales sheet).

My sales tax should be 5%. I don't know why it is off a bit when reported from the POS. Rounding error from 200 invoices per day?

I see in your Balance Sheet sample that you are adding the Cash to the Credit Cards Receivable. In this case I think the Cash should be a negative since it was cash I paid out to the servers to cover their tips, not cash I made. That is where I am having trouble entering it into the Daily Sales line for Cash. Also, the Food, drinks, discount number do not include tax.

Thanks again
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  #4  
Old 08-12-2017, 11:20 PM
Habaneros Habaneros is offline
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Sorry, here is the Chart of Accounts
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File Type: pdf ChartOfAccounts-20170812.pdf (218.4 KB, 5 views)
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  #5  
Old 08-13-2017, 03:48 AM
Lorin Browning Lorin Browning is offline
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Thanks for the chart of accounts. More on that later. More on your use of "cash" as paid out tips later also. Are tips included in the sales amounts?

You said: I see in your Balance Sheet sample that you are adding the Cash to the Credit Cards Receivable. In this case I think the Cash should be a negative since it was cash I paid out to the servers to cover their tips, not cash I made. That is where I am having trouble entering it into the Daily Sales line for Cash. Also, the Food, drinks, discount number do not include tax.


My immediate comment is to suggest that Cash is not a Sales. You are confusing a check sheet for reconciling the register to sales. That is not the same as entering into QuickBooks.

It's 4:32 in the morning here and I couldn't get to sleep thinking about your situation. I decided the most practical thing was to get up and try to put my thoughts to words. So here's what I wrote before I read your last post:

Don,

In accounting, there are two major financial reports: (1) Profit and Loss Statement (which is sometimes called Income Statement and other names) and (2) Balance Sheet.

A Profit and Loss Statement has three major sections: (a) Income (which is sometimes called Revenues) and (b) Expenses. When Expenses are subtracted from Income, one has (c) Profit or Loss.

A Balance Sheet has three major sections also: (d) Assets (which includes cash, receivables, inventory and other things of value) and (e) Liabilities (which includes what you owe). When one subtracts Liabilities from Assets, the difference is equal to (f) Equity. Equity is made up of many things, including owner’s contribution, profit and loss, and other things. If the sum of Liabilities and Equity does not equal to the total Assets, then the Balance Sheet is said to be out of balance.

Using the items in your example, those things in the left column are all assets. You are quite correct in thinking that cash should be a positive debit entry into QuickBooks. But so should the Visa and MasterCard charges. All are debit entries, but not debit entries to the Profit and Loss Statement. They are entries to the asset section of the balance sheet. (This is why I want to look at your chart of accounts.)

Those assets came into the business for some reason and part of the reason is contained in the Profit and Loss Statement. Food sales plus drink sales less discounts report income to the company. But Sales Tax Collected is not income. One simply collects that amount for the state taxing authority to which it must be remitted (perhaps less a commission for collections on your part). Sales tax collected is a liability – a debt owed by the company – on the Balance Sheet.

Basis accounting: Debit entries are used to record an increase in assets on the Balance Sheet and to record an increase in expenses on the Profit and Loss Statement. Credit entries are used to record an increase in liabilities on the Balance Sheet and an increase in Income on the Profit and Loss Statement.

Using your examples and following the accounting tradition of putting debit entries on the left, consider the following: NOTE THAT THIS IS SUPPOSED TO BE TWO COLUMNS, one headed by "DEBIT", the other by "CREDIT" but I haven't figured out how to get the formatting to hold in the limited HTML available for these responses.

DEBIT
CREDIT
Cash $ 170.51
Food sales $ 5,611.55
Visa charges 2,931.77
Drink sales 2,291.75
MasterCard charges 5,447.37
Less Discounts -85.71
Sales tax collected 391.04
TOTALS
$ 8,208.63
$ 8,208.63
I agree cash should be a debit entry (as you suggest) but so should your entries for the charges. None of these are Profit and Loss Entries. All are debit entries to Balance Sheet accounts, which show an increase in the company’s assets. If you have any of these classified as Income Statement accounts, you need to adjust your chart of accounts.

The amount of the sales tax collected should be included in the totals debits for cash and charge cards. What you have generated seems to be more like an check sheet to reconcile cash register contents with transactions for the period.

Your main problem, so far, consists of inputting debits as negative numbers. There are no negative numbers in accounting. I know that credits is listed above as a negative number. But this is simply a shorthand way of reminding the person entering what normally would be entered as a credit is to be entered as a debit.

A debit where a credit entry is appropriate is the approved way to decrease in an expense or an asset; a credit where a debit entry is appropriate in the approved way to record a decrease to a revenue or a decrease to a liability.

Where you need some tweaking is how you are entering from your Daily Sales Receipt into QuickBooks.

Of course, we still have the problem of how you seem to be treating sales tax collected.
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lorin@lorinbrowning.com

Last edited by Lorin Browning; 08-13-2017 at 04:03 AM.
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  #6  
Old 08-13-2017, 03:45 PM
Habaneros Habaneros is offline
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Thank-you for you thoughtful reply. I am working right now and have not truly absorbed everything you said above, but it generally makes sense and I will read and re-read it tonight.

You are correct, it seems what I have is more of a check sheet. I have attached the Daily Sales input sheet I created in QB, following a book, to input the data. I enter the sales data from the POS in the top lines (Food and Drink sales) and the actual income received in the bottom lines (Visa, MC, and cash).

When I input the visa and MC amounts, QuickBooks automatically switches the sign to be a negative number, to maintain the balanced input sheet. Whether I type in the number as a positive or a negative, QB forces these lines to be negative numbers. My first image is all of the data input in my Daily Sales sheet except for my Cash Payment line. Normally, I believe the Cash Payments line would be the same sign as Visa and MC (negative on this screen) since you would be making cash income from sales. However, the servers are taking their credit card tips out of the cash before it reaches me, so I was trying to input only the leftover cash I collect after the tips are already removed. Some days there would be actual cash in my hand after the cc tips were removed, so I could input that in my Sales form and it would show as a negative.

However, very few pay with cash anymore, so more common is the servers remove their tips and then I still owe them Cash at the end of the day. That is why I was trying to record that I'm paying out cash even though it is a 'Cash Payment Received' line. No matter how I input the number for Cash Received, QB will not let me put it in as the opposite sign of Visa payment received and MC received. It always puts the negative in front of my value. The second image shows where I input the Cash Payment line and QB forced the negative sign onto the number. If it would not do that my sheet would more or less balance.

You are right that tax is another issue that I can dive into in a bit. I see QB is calculating tax correctly at the bottom of the sheet for the 5% sales tax (see images), but it is slightly different than my POS tax amount. Not sure why.

So, how to I show that at the end of the day, I collected Visa and MC payments, but paid out some cash to my servers? Then I will tackle my other major issues.

Please accept my humble thanks. I am not used to being a newb at things, but I have switched industries after 25 years and am on a steep learning curve.
Attached Images
File Type: png QB-DailySales-01.PNG (32.2 KB, 5 views)
File Type: png QB-DailySales-02.PNG (25.2 KB, 4 views)
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  #7  
Old 08-13-2017, 06:20 PM
Habaneros Habaneros is offline
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Another image of what I am trying to do through the Daily Sales Receipt. You mentioned there are "no negative numbers in accounting", so instead of entering a negative Debit, would I enter it as a positive credit instead (the right column)? I am trying not to break fundamental accounting rules
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File Type: jpg debit-credit-01.jpg (47.0 KB, 3 views)

Last edited by Habaneros; 08-13-2017 at 06:32 PM.
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Old 08-13-2017, 08:23 PM
Lorin Browning Lorin Browning is offline
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Don,

I’ll try to be less wordy by taking one issue at a time. This is in reference to debit-credit-01.jpg – a screen shot from 08-13-2017 at 7:20 pm.

If we could move the -170.51 from the debit column to the credit column as a positive amount, then the transaction would be in balance. The total debits and the total credits will each equal 8,379.14.

I don’t think you considered where that 170.51 came from. There was not enough cash collected for the day to pay to the employees the total tip amounts for the day. So where did you get the cash?

There are only two sources that you theoretically could have used according to your chart of accounts:
1. Account 10810 – Cash on Hand (CC Tip Holding) which shows a balance of $142.28, which is treated as a Bank account type.
2. Account 10250 – Undeposited Funds which shows a balance of $11,917.98, which is being treated as Other Current Asset account type.
Let me suggest that the necessary funds came from account 10250. To record a transaction that results in a lessening of an asset account, a credit entry to required. (You could have taken the funds from account 10810 and the $142 balance in that account is what is left after the withdrawal.)

QuickBooks is correct. That amount should be a credit entry. You are just trying to enter the amount into the wrong QuickBooks account. Or, as I tried to suggest, you are using a daily register/cash and cash equivalents reconciliation as if the pluses and minuses have a one-to-one correlation with debits and credits.

This suggests multiple other issues that we need to address, but as I said above: one issue at a time.
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  #9  
Old 08-14-2017, 12:17 PM
Froid Froid is offline
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A tip for the tips

In my opinion, the server tips do not belong within gross revenue. To me, it represents a liability at time of booking the transaction. The amount is non-taxable and will otherwise distort sales tax reporting, while possibly inflate overall revenue on the P&L. Handling as a liability will require an extra step when you record the payout as a debit against the liability.

Maybe I missed it, but you made it sound like the servers snag their credit card tip money from the cash drawer. A better practice would be to keep tallies for each server (or the entire employee pool, if it gets settled that way). You could payout tip monies at the end of each shift, or some later agreed-upon date. Cash tips probably go into that server's pocket, unless they pool their tips. (Pocketed cash tips reinforces my advice to exclude from revenue.)

An aside: W-2 payroll wage reporting likely becomes an issue somewhere along the line. Unsure if that means specific employee identification or they automatically get a percentage tacked on - personal income taxing authorities want their cut! So keeping reasonably good subsidiary records for how much each person earned via tips could be an approach you wish to take.

Probably some restaurant users lurking out there who could chime in.
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Old 08-14-2017, 02:28 PM
Lorin Browning Lorin Browning is offline
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Don,

What Froid said was one of the other issues to be addressed later, but since the issue has been brought up, let start to consider it:

Several employer required reports and tax obligations as given in Canadian law depend upon whether the tips are controlled tips considered to have been paid by the employer, or direct tips considered to have been paid by the client or customer, or whether they are declared tips. The situation may be more complex than Froid envisions.

Controlled tips
are gratuities controlled by the employer and the employer is considered to have paid the tips. Marks of controlled tips are:
  • The employer adds a mandatory service charge to a client’s bill to cover tips.
  • The employer adds a percentage to a client’s bill to cover tips.
  • Tips are allocated to employees using a formula determined by the employer.
  • Tips that an employer includes in his business income, later expenses that amount, and redistributed to employees in the form of pay.
  • Tips that employees are required to turn over to the employer and are later distributed to the employees.
  • Cash tips that are deposited in the employer’s bank account and become property of the employer or are comingled with employer’s funds.
Direct tips are gratuities that are paid directly by the client or customer to the employee. Marks of direct tips are:
  • A client leaves money on the table at the end of the meal and the server keeps the whole amount.
  • Tips pooled and/or shared among employees in a manner determined by the employees (in contrast to being determined by the employer).
  • When paying by credit card or debit card, a client includes an amount for a tip on the credit card and the employer returns the tip amount in cash to the employee.
Note: If I had not noticed account 24955 QST Payable (Quebec), I would have stopped the concluded that you have direct tip procedures in place and we could discuss what bearing Froid’s comments have on your situation.
Declared tips are the amount of tips required by provincial law that requires an employee to declare to his or her employer along with his or her controlled tips. See http://www.revenuquebec.ca/en/salle-de-presse/nouvelles-fiscales/2013/2013-02-19.aspx source for reporting of tips In Quebec province.

Accounts in your chart of accounts suggest to me that your tips are subject to being treated as declared tips. See accounts13100 to 13400, but I am not positive.

Before we add any comments to this issue, we need to know (1) whether your company uses the controlled tips method, the direct tips methods, or the declared tips method and (2) whether your company is required to file TP-1086 (The Employer’s Statement of Tips and Tippable Sales).
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Last edited by Lorin Browning; 08-14-2017 at 02:36 PM.
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  #11  
Old 08-15-2017, 10:54 AM
Habaneros Habaneros is offline
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Thank-you again for your thoughtful replies.

I am dealing with Direct Tips, so that is why I am ending up with a cash shortfall on some days since I am paying the employees their credit card tips in cash. The Quebec QST account was put there by Quickbooks. I am in Canada but not in Quebec. QB would not let me remove it since it was a tax account, but perhaps I can make it inactive.

You are correct that the cash to pay tips to the employees has to come from somewhere. Currently, I would call it Cash on Hand I guess? I don't know if that is the correct QB name for it, but it literally is cash on hand. Some days I have cash left over, the next day I owe cash and it comes from this overage from the previous few days. That leads me to think the Undeposited Funds account may be the place to track this.

The Credit Card payments (including tips) go directly into my bank account each night, so I am confused whether I would setup QB to deposit credit card funds into Undeposited Funds account or directly to the Bank Account.

I have fundamental questions and your guidance has shown me I am probably in over my head. Each solution brings up 3 more questions. I have an appointment with the Quickbooks person at my accountant's office in a couple of days. Hopefully they can fix up my files and train me in how to input it all correctly. I will report back on their approach.

Thanks again. I appreciate the help. I thought I was just figuring out how to enter a negative number in the software but quickly learned it is much, much larger.

Don
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