Using QuickBooks to
Manage Your Dairy Farm

Table of Contents

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CHAPTER 1 INTRODUCTION	1
THE MARKETPLACE HAS CHANGED WHY KEEP FINANCIAL RECORDS? MANAGEMENT VS. TAX RECORDS ECONOMICS OF MILK PRODUCTION ADVANCED BUSINESS MANAGEMENT THE NEED FOR PLANNING WHY USE QUICKBOOKS? TIPS FOR GOOD BUSINESS PRACTICES	1 1 2 2 3 6 6 7

CHAPTER 2 UNDERSTANDING FINANCIAL STATEMENT	8
PROFIT AND LOSS STATEMENT Cash-based Statements Accrual-based Statements Balance Sheet INTERRELATION BETWEEN PROFIT AND LOSS AND BALANCE SHEET UNDERSTANDING EQUITY Sole Proprietorship Partnerships Corporations CASH FLOW STATEMENT DAIRY ENTERPRISE EARNINGS STATEMENT KEY FINANCIAL RATIOS	8 10 10 11 12 13 13 14 14 15 15 17

CHAPTER 3 SETTING UP QUICKBOOKS FOR YOUR FARM	22
ORGANIZING YOUR CHART OF ACCOUNTS INSTALL QUICKBOOKS ON YOUR COMPUTER SET UP A NEW COMPANY GATHER INFORMATION EASY STEP INTERVIEW SET UP PAYROLL INFORMATION EDIT CHART OF ACCOUNTS USING OPENING BALANCE EQUITY ACCOUNTS SETTING UP EQUITY ACCOUNTS EDIT ITEMS LIST CREATE CLASSES	23 28 28 28 30 34 37 38 40 41 42

CHAPTER 4 QUICKBOOKS BASICS	44
DEPOSITING THE MILK CHECK Partial Milk Check Full Month Milk Check RECEIVING BILLS PAYING BILLS WRITING CHECKS RECONCILING YOUR BANK STATEMENT	44 44 46 49 52 54 55

CHAPTER 5 USING PAYROLL IN QUICKBOOKS	56
GETTING YOUR PAPERWORK IN ORDER SETTING UP YOUR EMPLOYEES COMPUTING PAYROLL MANAGING PAYROLL LIABILITIES PAYROLL LIABILITY PAYMENTS FILING REQUIREMENTS Form 943 Forms W-2 and W-3 Annual State Forms	56 57 60 63 64 65 66 66 67

CHAPTER 6 OTHER RECURRING ISSUES

68

LIVESTOCK DEPRECIATION Creating Asset Accounts Entering a Depreciation Transaction Recording the Sale of a Fixed Asset CAPITAL RETAINS AND REVOLVEMENTS PATRONAGE DIVIDENDS MANAGING FEED COSTS IN QUICKBOOKS How It's Really Done How It Should Be Done How To Do It With QuickBooks How to Track Monthly Feed Costs FARM-RAISED FEEDSTUFFS In Theory In QuickBooks FARM LOANS Add a Loan to Your Chart of Accounts Recording Cash From a Loan Receiving a Loan for an Asset Tracking Loan Payments Using the Milk Check for Loan Payments SEPARATING FARM AND FAMILY EXPENSES Family Draws Reimbursing Farm Expenses Using QuickBooks to Track Family Living Expenses

68 70 73 74 76 78 79 80 80 81 85 90 90 91 94 94 95 96 98 99 102 102 104 104

CHAPTER 7 ENTERPRISE ACCOUNTING IN QUICKBOOKS	106
WHAT IS ENTERPRISE ACCOUNTING? ENTERPRISE ACCOUNTING IN QUICKBOOKS USING A SPREADSHEET TO COMPUTE MILK COSTS	106 108 112

CHAPTER 8 GENERATING CHARTS AND REPORTS	115
PROFIT AND LOSS BALANCE SHEET PAYROLL REPORTS OTHER REPORTS Accounts Payable Income Tax Summary Custom Reports Memorize Reports Using QuickZoom for Report Details GRAPHS	116 117 117 118 118 118 118 118 119 119

CHAPTER 9 USING BUDGETS TO BETTER MANAGE YOUR FARM	120
CREATING AN ANNUAL DAIRY ENTERPRISE BUDGET Projecting Milk Production Projecting Feed Needs Other Income and Expenses Financing USING BUDGETS IN QUICKBOOKS Setting Up a Budget in QuickBooks Tracking Actual vs. Predict	121 121 122 125 126 126 126 127

BIBLIOGRAPHY

129

APPENDIX	130
WORKING WITH YOUR ACCOUNTANT UNDERSTANDING THE MYSTERIES OF DUAL ENTRY ACCOUNTING THE OLD DUSTY LEDGER Financial Transactions Accounting Equations Accounts Debit/Credit Recording Debits/Credits	130 131 132 132 133 134 134 135

The objective of the Commercial Agriculture Program is to use a focus-team approach that centers on profitability. Team members work with those farms where a substantial part of the family income is from farming.

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