1.6 Computer Practice Assignment: How to Set Up a New Company: A Service Business

Problem 1-1

To set-up a new service-business company, follow these steps:

  1. On File - Create a new company – or on - Let's get your business set up quickly!

  2. Click – Detailed Setup

(Students are requested to use their own names as the doctor-owner for the business name. This will assist the professor in identifying the results of the progress in the Practice Set.)

  1. Company Name – Enter: Your Name, M.D.

  2. Legal Name – Enter: Your Name, M.D.

  3. Tax ID – Enter 88-6005797

  4. Street Address – Enter - 3200 E. Cheyenne Avenue

  5. City - North Las Vegas; State - Nevada; Zip - 89030 – Click – Next>

  6. Select an industry from the list – Highlight – Medical, Dental, or Health Service

  7. Click – Next >

  8. How is your company organized? – Click – Sole Proprietorship – Click - Next>

  9. Select the first month of your fiscal year – My first year starts in – January – Click – Next >

  10. Set up your administration password (optional) Leave blank. (Note: Please do not set up a password for school practice purposes because students tend to forget the password created and both students and professors are having a difficult time retrieving them. So leave them blank.)

  11. Click – Next>

  12. Create your company file – Click – Next>

  13. On File Name for New Company screen – "Your Name, M.D..QBW" will appear – Click – Save (This will save the file name in the QuickBooks Pro program in the computer's C drive.) Click – Save

  14. Creating new company file. Please wait… Click – Next >

  15. Customize QuickBooks for your business – Next >

  16. What do you sell? – Click – Services only – Click – Next>

  17. Do you charge sales tax? – No – Click – Next>

  18. Do you want to create estimates in QuickBooks? – No – Click – Next>

  19. Using sales receipts in QuickBooks: Do you want to use sales receipts in QuickBooks? – No – Click – Next>

  20. Using statements in QuickBooks…Do you want to use billing statements in QuickBooks? – Yes – Click – Next>

  21. Using invoices in QuickBooks…Do you want to use invoices in QuickBooks? – No – Click – Next>

  22. Tracking time in QuickBooks…Do you want to track time in QuickBooks? – No – Click – Next>

  23. Do you have employees? Click – Yes – Check the box - We have W-2 employees – Click – Next>

  24. Using accounts in QuickBooks – Click – Next>

  25. Select a date to start tracking your finances… Click – Use today's date or the first day of the quarter or month.

  26. Enter – January 1, prior year. (Note to QB users: It is suggested that for practice QB users should enter the prior year as the start date to experience the closing process at December 31. Because QB defaults at today's date, the closing process at December 31 will not work for a future date. QB users are also reminded to apply consistency in the use of the year for practice purposes.) – Click – Next>

  27. Review income and expense accounts… Note: QB has checked recommended accounts for Income and Expense for the industry created. It is suggested that users of this Practice Set will create the Chart of Accounts provided in Chapter 1 to enhance the ability on correctly classifying the different accounts that will be use in this fictitious medical practice.) Uncheck all the recommended accounts – Click – Next >

  28. Congratulations! You've completed the EasyStep Interview – Click – Go to set up – click - Ready to start working (Close QuickBooks Learning Center screen. These are only reminders for online products and services which are offered by Intuit for a fee. Users can click "Mark as Done" to eliminate future prompt.) Close – QuickBooks Coach.

Your service company, "Your Name, M.D." is now open.

Close QuickBooks Setup screen.

Problem 1-2

To create your own Chart of Accounts (Refer to the Chart of Accounts in Chapter 1), follow these steps:

  1. On Lists – Click – Chart of Accounts. (QuickBooks have some accounts that are automatically set-up in spite of unchecking the recommended income and expense accounts. These are the common Fixed Assets, Payroll Liabilities, Retained Earnings and Payroll Expenses account names set up automatically because users marked the use of the Payroll features. Practice Set users can edit these names to set-up some of the accounts below.)

  2. On the lower left of the Chart of Accounts frame, on Account – Click drop-down arrow – New. Users must be careful in selecting the account type for the Account Names that are being set-up. Click – Bank – Click - Continue - On Account Name – Type in – 1001 - Cash. Click – Save & New (or Save & Close) for the last transaction.

  3. Repeat step no. 2 above for the rest of the account names as shown below. Be sure to classify the accounts properly according to QB Type.

Note: Since there is a limited number of characters allowed for the Account Names, QB users can abbreviate long account names to fit in. The use of account numbers is also optional.

YOUR NAME, M.D.
ACCOUNT LISTING
Year
ASSETS    
Account No. Account Names Type (Quickbooks)
1001 Cash Bank
1005 Petty Cash Bank
1010 Accounts Receivable Accounts Receivable
1015 Medical Supplies Other Current Assets
1020 Office Supplies Other Current Assets
1030 Prepaid Insurance Other Current Assets
1030.5 Accumulated Depreciation, Med. Eqpt. Fixed Assets
1035 Office Equipment Fixed Assets
1035.5 Accumulated Depreciation, Off. Eqpt. Fixed Assets
1040 Furniture & Fixtures Fixed Assets
1040.5 Accumulated Depreciation, Furn. & Fixt. Fixed Assets
     
LIABILITIES    
2001 Accounts Payable Accounts Payable
2005 Wages Payable Other Current Liabilities
2010 Unearned Revenue Other Current Liabilities
2013 Interest Payable Other Current Liabilities
2015 Payroll Liabilities (Already set up by QB. Do not set up again. Just edit later to enter the account number.) Other Current Liabilities
2020 Notes Payable Long-Term Liabilities
     
OWNER’S EQUITY    
3001 Your Name, Capital Equity
3002 Your Name, Draw (QB has set up Owner’s Draw. Do not set up again. Just edit the account name later.) Equity
  Opening Bal. Equity (Already set up by QB.) Equity
  Owner’s Equity (QB has already set up Owner’s Equity. Do not set up again. Edit the name and call it Retained Earnings.) Equity
     
REVENUE OR INCOME    
4001 Professional Fees Income
4005 Interest Income Other Income
     
EXPENSES    
5001 Advertising Expense Expense
5005 Automobile Expense Expense
5010 Bank Service Charges Expenses Expense
5015 Depreciation Expense, Med. Eqpt. Expense
5016 Depreciation Expense, Off. Eqpt. Expense
5017 Depreciation Expense, Furn. & Fixt. Expense
5020 Equipment Rental Expense Expense
5025 Insurance Expense* Expense
5030 Licenses & Permits Expense Expense
5040 Postage & Delivery Expense Expense
5045 Rent Expense Expense
5050 Repairs Expense Expense
5055 Supplies Expense—Medical Expense
5060 Supplies Expense—Office Expense
5065 Telephone Expense Expense
5070 Utilities Expense Expense
5075 Payroll Expenses (Already set up by QB. Do not set up again. Just edit to insert the account number.) Expense
5080 Interest Expense Other Expense

Problem 1-3

Print a copy of your Chart of Accounts.

  1. On Reports – Click – Lists - Account Listing

  2. Click – Customize Report tab - (top left) – click-Header/Footer

  3. Enter the correct period ending Dec. 31 (prior year)

  4. Print. Look at the Chart of Accounts you just printed. Make sure the Account and Type match the Account Listing as given on Chapter 1. (The Income Tax Line was set up by QuickBooks to help in the preparation of the Income Tax Return. Since this course will not discuss the implications of income tax, we will ignore the Income Tax Line category of QuickBooks.)

Online Students: You do NOT need to print any report.) For submissions: Bring the report on your screen – Then, On File (top left) – click - Save as pdf– Label "Chapter 1" to your Documents for submission to the online class.

Assignment 1 Submission:

Submit the Chart of Accounts or the Account Listing as of Dec. 31, (prior year) as shown below.

Your Name, M.D.
Account Listing
December 31, (yr)
Account Type Balance Total
1001 - Cash Bank 0.00
1005 - Petty Cash Bank 0.00
1010 - Accounts Receivable Accounts Receivable 0.00
1015 - Medical Supplies Other Current Asset 0.00
1020 - Office Supplies Other Current Asset 0.00
1025 - Prepaid Insurance Other Current Asset 0.00
1030 - Medical Equipment Fixed Asset 0.00
1030.5 - Accum. Depr., M.E. Fixed Asset 0.00
1035 - Office Equipment Fixed Asset 0.00
1035.5 - Accum. Depr., O.E. Fixed Asset 0.00
1040 - Furniture & Fixture Fixed Asset 0.00
1040.5 - Accum. Depr., Furniture Fixed Asset 0.00
2001 - Accounts Payable Accounts Payable 0.00
2005 - Wages Payable Other Current Liability 0.00
2010 - Unearned Revenue Other Current Liability 0.00
2013 - Interest Payable Other Current Liability 0.00
2015 - Payroll Liabilities Other Current Liability 0.00
2020 - Notes Payable Long-Term Liability 0.00
3001 - Your Name, Capital Equity  
3002 - Your Name, Draw Equity 0.00
Opening Balance Equity Equity 0.00
Retained Earnings Equity  
4001 - Professional Fees Income  
5001 - Advertising Expenses Expense  
5005 - Automobile Expense Expense  
5010 - Bank Service Charges Exp Expense  
5015 - Depreciation Exp., M.E. Expense  
5016 - Depreciation Exp., Furn. Expense  
5017 - Depreciation Exp., M.E. Expense  
5020 - Equipment Rental Expense Expense  
5025 - Insurance Expense Expense  
5030 - Licenses & Permits Exp. Expense  
5040 - Postage & Delivery Exp. Expense  
5045 - Rent Expense Expense  
5050 - Repairs Expense Expense  
5055 - Supplies Exp - Medical Expense  
5060 - Supplies Exp - Office Expense  
5065 - Telephone Expense Expense  
5070 - Utilities Expense Expense  
5075 - Payroll Expense Expense  
4005 - Interest Income Expense  
5080 - Interest Expense Expense  

Problem 1-4

To back-up your files, follow these steps:

  1. On File – Click – Back Up Company …

  2. Click - Create Local Backup

  3. On Create Backup screen – Click – Local backup – Click - Next

  4. On Backup Options screen – Click – Browse…

  5. On Browse for Folder screen - Look for the drive that you want to save your files to… (D, E, F, G, or H drive) – Click – OK

  6. Click – Save it now – Click – Next

  7. Save Backup Copy – Below on File name: Your Name, M.D. (Backup date)QBB – Click and enter Chapter 1 (or succeeding chapters as you complete them)

  8. Click – Save – (Computer is working… Backup is in progress…)

  9. QuickBooks Information: QuickBooks has saved a backup of the company file for Your Name, M.D. to the drive you selected.

  10. Click - OK

  11. (Note: CSN students can do remote back up to your CSN account, but memory may be limited. To do so, select your name from the down drop arrow instead of the USB drive following the above procedures.)

*Note: These will be your back-up procedures guidelines as you work your succeeding chapters. The only change you will make is the Chapter number that you are backing-up. The correct Chapter number will help you restore the correct files you will need for the next chapters. Students can also back-up after each problem on every chapter.

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