Quicken 2005 Deluxe for Windows

QuickenFor Farm/Ranch Financial Records

QUICKEN COMPUTER WORKSHOP EVALUATION Please evaluate this workshop by filling in the appropriate number for each pair of phrases. What is your overall evaluation of this workshop? (Fill in appropriate number.)

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Comments helpful to instructors and conference planners: Would you be interested in participating in an advanced Quicken workshop? Potential topics of interest (fill in all that apply):

Developing budgets Livestock inventory options More on reports and graphs Financial calculator features (refinancing, college savings, retirement planning) Investment Accounts Other

Table of Contents Evaluation Form................................................................................ Green sheet inside front cover Using Quicken for Farm/Ranch Financial Records ........................................................... White (1) Introduction to Text Conventions, Keyboard Shortcuts and Desktop Setup .......................2 Quicken Guided Setup and Setting Up a File ......................................................................5 Setting Up Accounts ..........................................................................................................11 Importing a Farm Income and Expense Category List ......................................................19 Setting Up New Categories and Deleting Unnecessary Ones ...........................................21 Setting Up Subcategories for Reporting Purposes.............................................................23 Setting Up Classes So Enterprise Reports Can Be Generated...........................................24 Entering Transactions Data Using The Categories, Subcategories, and Classes Specified.............25 Recording Loan Payments .................................................................................................30 Creating Reports To Summarize the Data You Have Entered ..........................................31 Viewing a Graph Of Your Income and Expenses..............................................................36 Backing Up Your Data.......................................................................................................38 Category Lists .............................................................................................................Lavender (41) Standard .............................................................................................................................41 Married...............................................................................................................................42 Children .............................................................................................................................42 Homeowner .......................................................................................................................43 Rents and Royalty ..............................................................................................................43 Business .............................................................................................................................44 Farm ...................................................................................................................................46 Reports ...............................................................................................................................Gold (49) Transaction Report (Checking)..........................................................................................49 Cash Flow ..........................................................................................................................50 London Monthly Cash Flow ..............................................................................................52 Cash Flow by Enterprise....................................................................................................54 Deere Transaction’s Summary...........................................................................................55 Tax Schedule, All Transactions .........................................................................................56 Tax Schedule, Totals Only.................................................................................................59 Reconciling the Bank Statement........................................................................................ Pink (61) Bank Statement ..................................................................................................................62 Using the Budget Features in Quicken ............................................................................ Green (67) London Monthly Budget....................................................................................................72

Using Quicken for Financial Planning........................................................................... Yellow (75) Retirement Calculator ........................................................................................................75 College Calculator .............................................................................................................77 Refinance Calculator..........................................................................................................78 Investment Savings Calculator ..........................................................................................78 Loan Calculator..................................................................................................................79 Various Topics .................................................................................................................. Ivory (81) Line of Credit/Credit Card Accounts and Alerts ...............................................................81 Saving and Locating Information for 1099s ......................................................................84 Recording Futures Market Transactions............................................................................87 Scheduled Transactions .....................................................................................................88 Writing Checks with Quicken............................................................................................90 Year End Copy: Start New Year and Archive ...................................................................92 Category Clean-up .............................................................................................................94 Retrieving a Deleted Quicken File.....................................................................................97 Backing Up to Compact Disc (CD) ...................................................................................98 Restoring a Backup From a CD-R or CD-RW Drive ........................................................99 Backup Trouble................................................................................................................100 Building a Farm/Ranch Balance Sheet in Quicken Deluxe 2005 .................................... Blue (101) Develop a Complete Inventory of Farm/Ranch Assets and Liabilities, Documenting Market Value of the Assets at a Point in Time ..........................................................102 Import Asset Accounts.....................................................................................................102 Enter Beginning Balances in Asset Accounts..................................................................103 Recording the Purchase of an Asset.................................................................................106 Recording Additions to Capital Assets ............................................................................111 Recording the Sale of an Asset ........................................................................................111 Recording Changes in Inventory .....................................................................................113 Recording Changes in Values of Assets ..........................................................................114 Estimating and Recording Accrued Expenses .................................................................114 Recording a Loan Payment..............................................................................................115 Generating a Balance Sheet Report .................................................................................116 Backing Up Your Data.....................................................................................................117 Account List.....................................................................................................................118 Glossary .......................................................................................................................................119 Please visit our website, http://www.agecon.okstate.edu/quicken/, to access additional topics and instructions including the Quick Tips newsletter, password security, recording paycheck information, and investments.

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Using Quicken for Farm/Ranch Financial Records (Quicken Deluxe 2005)

Damona Doye, Extension Economist1

October 2004

This tutorial demonstrates a “hands-on” session to develop a simple set of financial records and reports for a case farm with a cow/calf herd and wheat for grain and pasture. Although our case farm is a simple one, you will be able to practice many of the steps that you might use in adapting Quicken2 Deluxe to keep records on your farm or ranch. This tutorial is intended to be a step-by-step reference that can be used when working on computerized personal records at home or to supplement instructions in a workshop setting. An overview of what we do in an introductory workshop follows:

1. Introduce text conventions in the manual, keyboard shortcuts, and desktop setup. 2. Quicken Guided Setup and setting up a file. 3. Create accounts (checking, savings, and liability) to be used in the file. 4. Import a farm income and expense category list (categories to match Schedule F)

into the file. 5. Set up new categories needed and delete unnecessary ones. 6. Set up subcategories for reporting purposes. 7. Set up classes so that enterprise reports can be developed. 8. Enter transaction data using the categories and classes specified. 9. Record a loan payment. 10. Create reports to summarize the data entered. 11. View a graph of income and expenses. 12. Back up data.

Specific instructions for accomplishing each of these steps are included in this tutorial. Additional instructions for common or farm related procedures are behind the basic instructions. A glossary of financial and Quicken terms are at the end. If you are using this tutorial at home, the new user setup in Quicken will prompt you to set up a file and your accounts, as we will do in the first three sections of the tutorial.

1 Additional assistance from Lori J. Shipman, Extension Paraprofessional, and Lana Frazier, Senior Secretary. 2 Quicken Deluxe 2005 is a registered trademark and will be written as Quicken or Quicken 2005 throughout the rest of this tutorial.

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1. Introduction to text conventions, keyboard shortcuts and desktop setup Text Conventions

Throughout this tutorial, you will notice some text is printed differently than the surrounding text. This text requires special attention as it generally signifies an action to be performed. If, for instance, we want you to type the words “My programs”, you will see this:

Type My programs.

Buttons that you need to click, selections that you need to make, or text that is referenced in a document on screen appear in bold text:

Click the Customize button.

Select Expense.

File and folder names are referenced in italics and use the case conventions for the operating system in which you are working. For example, a computer file name might appear like this:

Document1

Keyboard and keyboard combinations that you may need to apply appear like this:

Press [ENTER].

Press [CTRL+A].

A keyboard/mouse combination such as [CTRL+A] means to press and hold down the first key while pressing the second key, then release.

Any text that appears within parentheses refers to steps that may be necessary depending on your computer’s settings or an alternate approach. Parenthetical steps appear like this:

(Click the Close button.)

Titles of screens, programs, etc. will be underlined such as the name of the following Quicken screen:

Create Quicken File

Notes and helpful hints are in italics and sometimes enclosed in parentheses, for example:

Note: The note may appear such as this.

(The note may appear such as this.) Keyboard Shortcuts and Desktop Setup You may select an item from Quicken in one of four ways:

a. Simultaneously press [Alt] and the letter key underlined in the word or phrase. b. Using the mouse, left-click (click using the left button of your mouse) on specialized

“buttons” in the toolbar. c. Using the mouse, move the cursor to the appropriate line in a drop-down menu and

left-click. d. Use a shortcut key by simultaneously pressing [Ctrl] and the designated letter. For

example, [Ctrl + S] takes you to the split transaction screen.

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Desktop navigation options are as follows:

1. Drop-Down Menu Bar. Using the mouse, move the cursor to the appropriate item in the

Drop-Down Menu Bar (also called Main Menu) and left-click. Drag the mouse to select the menu option.

2. Toolbar. Toolbar buttons provide quick access to options such as returning to the previous screen (Back button), accessing the Internet for stock quotes and news or the Quicken website.

3. Account Bar. The Account Bar allows easy access to accounts by center. The “centers” display account summary information in one easy-to-read place. You can customize what appears on the centers by deleting, rearranging, or adding new components. You can also create different views of the center. When an account is opened, the account register occupies the desktop.

4. Services Bar. Quicktabs to online updates and financial information.

When you become more familiar with Quicken 2005, you may want to try using the shortcut features. We will typically use the Drop-Down Menu Bar for navigation. Press [Tab] to move forward to the next field in Quicken. Press [Shift+Tab] to move backwards one field. The step-by-step instructions that follow will not note every [Tab] needed to move through screens.

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Later in this tutorial, we will use the sample files provided on the Quicken Sample Files diskette to review some of Quicken’s features. For these files to run efficiently, copy them to the hard drive of your computer. Place the disk labeled Quicken Sample Files into the appropriate computer drive. Open the Windows Explorer program by clicking Start Programs (You may need to click Accessories.) Windows Explorer From the options on the left, double-click

My Computer 3 ½ Floppy (A:)

File names Asset Account, Farm Categories, and LOND05 (with several file extensions) should be displayed on the right. From the taskbar at the top of the program, click Edit Select All (The shortcut for Edit, Select All is to press [Ctrl+A]). Then, click Edit Copy

Note: The shortcut for Edit, Copy is to press [Ctrl+C]. You will not be able to use this particular command for copying within the Quicken program, as it is the shortcut for opening the Categories List within Quicken.

Now, click Local Disk (C:) (from the menu on the left) From the Drop-Down Menu Bar, click File New Folder To name the folder, type workshop files. Press [Enter]. Open workshop files folder by double-clicking it. Then click Edit Paste (The shortcut for Edit, Paste is to press [Ctrl+V]).

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Click X in the top right corner to close the window. You have completed the task of copying the Quicken Sample Files to your computer. 2. Quicken guided setup and setting up a file

Note: If you have not yet installed the Quicken 2005 program on your computer, you must do so before you proceed. Follow the installation instruction prompted after inserting your program CD or downloading Quicken from the Intuit website.

To open the Quicken 2005 program, click Start Programs Quicken Quicken 2005 (A shortcut to opening the Quicken 2005 program

is to double-click the Quicken icon located on your desktop.)

Getting Everyone on the Same Page One of the most difficult parts of writing this tutorial is anticipating where Quicken starts you within the program as it depends on whether or not Quicken has ever been installed on your computer and whether Quicken 2005 has been used. You may not see all of the screens in this section; however, when you see matching screens during this tutorial, please make the selections that we have suggested. It would be a good idea to quickly read through this section before you begin.

Note: If you get a message about product registration, you may click Cancel and do it at your convenience later.

If you see the following screen, (for simplicity) please select I am new to Quicken even if you are already a Quicken user.

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Then click Next. If you see the following screen, select Start over and create a new data file.

Then click on Next. If you see the following screen, select I want to choose a different file name and location.

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Then click Next. If you see a screen similar to this:

Click File New

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If you see this screen, select New Quicken File

OK When you see a Create Quicken File screen, we have been successful in “getting everyone on the same page”, and we are ready to set up our sample file. Setting up a file Just as a file cabinet can contain both family and farm financial information, one Quicken computer file can contain information about both the farm and family finances with income and expenses recorded in different accounts (checking, credit card, etc.). Reports can be developed for all accounts, by individual account, or by class if you specify classes when you enter transactions. We will use classes to represent the different enterprises of our farm (for example, Wheat, Stockers, Overhead, Family Living). This tutorial will familiarize you with the basic functions you may use in Quicken.

Note: Quicken by default saves your data in a file named Qdata in the Quicken folder. However, you can create a unique folder and file name that you choose.

To select the directory in which you want to save the new file, click the small down arrow near the top center of the Create Quicken File screen. You will see a drop-down list of folders that are stored on your computer.

We will use the hard drive to create and store our new file. From the drop-down list of folders, click

Local Disk (C:)

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Locate (within the large white area of the window) and double-click on the folder workshop files to open it.

Type your name where “yourname” is shown in the box above, next to File name:. Click OK. You have completed setting up your storage file. Quicken Guided Setup Again, we need to make sure everyone is on the same page. If a screen entitled Quicken Guided Setup did not open, click on Tools Quicken Guided Setup Now everyone needs to click Next Step (in the lower right corner). You should be at the Tell us about yourself screen. (If you are on a different screen, click on 2. About You on the left sidebar.)

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Then complete the information as shown (or use your own information):

Answering these questions will help Quicken develop the default categories to be included in your category list. Some of these include standard categories, categories for married people, categories for those with children, categories for homeowners, categories for rentals and royalties, and categories for use with a small business. The lists selected are merged. Examples of the category lists are in the lavender section of this tutorial. When completed, click Next Step. Set Your Goals You will now be able to choose what you want Quicken to do for you. Mark those items that you would like Quicken to help you track. To get the most out of using Quicken, you may choose to select all options. This is recommended for farm users.

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Once you have selected the appropriate options, click Next Step.

You will now be able to set up accounts for this file. This would be a good time to sketch out a list of the accounts you might want to set up for your farm and home. Types of accounts include checking, savings, investment, credit card, brokerage, IRA or Keogh, 401(k) or 403(b), individual mutual fund, house, vehicle, other asset, and liability accounts. 3. Setting up accounts (checking, savings, cash, and liabilities) Cash Flow

Cash Flow account choices include checking, savings, credit card, and cash accounts. A description of each account type is detailed on the screen.

Note: Adding accounts later is easily done by clicking on Tools, Quicken Guided Setup and clicking on the center (Cash Flow, Investments, etc) under 4. Add Accounts for which you want to create a new account.

We will first add a checking account. Click Add Account next to Checking. We will later use this checking account to practice entering transactions (cash payments and deposits) for the farm.

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In the Quicken Account Setup screen, verify that This account is held at the following institution: is selected.

Type 1st National Bank (Quicken will use Quickfill as you type. Delete any letters that appear after 1st National Bank by highlighting them and pressing [Delete] twice). Click Next. In this screen, select None of these. Use the following name: to add your financial institution. Verify that the name shown is 1st National Bank.

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Click Next. In the next Quicken Account Setup screen, type Checking if it doesn’t already appear in the box to the right of Name this account. Click Next.

Note: Later when you do your personal account setup, it is best to use a bank statement to establish a beginning balance as it will give you an accurate start and make reconciliation easier.

Next to Statement Date, type 1/3/05; and next to Ending Balance, type 1241.35. (Remember to use [Tab] to move between fields.) Click Done. You will notice that your new checking account now appears in the Spending and Savings Accounts list at the bottom of the Cash Flow center. (You may need to scroll down to see the list.) Let’s continue setting up accounts. Click the Add Account button next to Savings.

Type 1st National Bank as you did before. Click Next. Select None of these. Use the following name: 1st National Bank. Click Next. Type Savings. Click Next.

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Enter the ending statement date as 1/7/05. Enter the ending balance as 5218.43. Click Done. Now, add a cash account to the Spending and Savings Account list by clicking the Add Account button next to Cash. Type Cash Account. Click Next. Enter the statement date as 1/1/05. Enter the ending balance as 200 Click Done.

You should now see a list of spending and savings accounts and their respective balances.

Click Next Step. Investments We will bypass the Investments section for now. If you would like more information on how to setup and manage your investment accounts, please refer to the investments instructions by clicking Help and then Contents on the Quicken drop-down menu bar; then click Investing on the Quicken Help screen. But for now, click Next Step.

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Property and Debt We will record only liability accounts in this section as the balance sheet features in Quicken are not very sophisticated. However, users may want to evaluate for themselves Quicken’s features for tracking net worth (see Balance Sheet instructions on page 101 for more information). Even if you do not use Quicken for maintaining a balance sheet, you may still want to amortize and/or record loans using the liability account features. If you do use Quicken for maintaining a balance sheet, use the appropriate asset/debt accounts and be sure to update asset values periodically. If tracking assets at cost basis, use purchase price minus adjustments for depreciation as the beginning balance. The Londons have two loans outstanding on January 1, 2005: a pickup loan for $1,455 and a land loan for $73,126.04. The pickup loan will be paid off this year so we will not amortize it. The land note at origination was for $94,936 to be repaid over 15 years at 10.5% interest with annual payments (9 years of payments remain). To set up a liability account, click the Add Account button next to Liability. Type Pickup Note. Click Next.

Enter 1/1/05 as the date with which you want to start. (Date to begin tracking account in Quicken.)

Enter 1455.00 as the amount you owe as of 1/1/05.

Note: Enter Optional Tax Information is for tax deferred accounts, such as IRAs, 401ks and Keogh Plans that need to have transfers in and transfers out recorded to different tax lines.

Click Done. A screen entitled Quicken 2005 for Windows will pop up asking if you would like to set up an amortized loan to be associated with this account. Click No. (We will not amortize this loan since it will be paid off within the year.) We will now set up the land loan. From the Property and Debt screen, click the Add Account button next to Liability. Type Land Note. Click Next. Enter 1/1/05 as the start date. Enter 73126.04 as the amount you owe as of 1/1/05. Click Done.

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The Quicken 2005 for Windows screen will pop up to ask if you would like to set up an amortized loan to be associated with this account. Click Yes. Click the Summary tab (at the top of the window to the right of Easy Step) and enter the information in the following three screens if not already there:

Click Next.

Click Next.

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Click Done.

Click OK. Note that a payment amount has been calculated and now appears in the Loan Setup window. Click Done again to accept the estimate. A Set Up Loan Payment screen appears to prompt you to specify details about the payment. Enter the additional information, and make sure that the Category for Interest box is blank as the default interest expense category is not tied to the farm tax Schedule F. After we import a farm category list, you will be instructed to choose the appropriate category when a loan payment is being made. Click on Payment Method button to verify that the transaction is being saved as a scheduled transaction.

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Click OK. If you see a prompt to use categories, click No. We will use a category; however, it is part of the farm category list that we will import later in the tutorial. A message may appear:

Click No.

Note: If you want to create a balance sheet in Quicken and have an asset account for each piece of property, you would respond Yes. If you choose No, you can always add the information later. See the balance sheet instructions for more information.

Click OK The loan payment is now a scheduled transaction. This means that the information for the check register and loan register can be recalled when the payment comes due. The loan payment requires a split transaction; that is, the principal paid is applied to the loan balance in the appropriate loan liability account (Land Note), while interest paid is recorded in the checking register as an interest expense (Interest Expense:Farm Interest Mortgage). We will demonstrate a payment transaction later.

Note: Line of credit notes are best handled as a credit card account in Quicken. See the line of credit account instructions for more details.

Once you have added all needed accounts, click Next Step in the bottom right of the Property and Debt screen. Paychecks Paycheck earnings and deductions can be tracked using Quicken 2005. Although we will not set it up now, you can use our Set up paycheck instructions to do so later. Click Next Step.

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Bills You can enter recurring bills and payments for scheduled transactions. We will discuss this later. You will see the next payment for the Federal Land Bank listed under Bills and Scheduled Transactions. Click Next Step. Setup Summary This screen allows you to look over all things you have added to Quicken. Please take a few moments and review the data to make sure it is correct. (Even if you find errors later on, it can be corrected.)

Note: If a transaction is post-dated, the amount will not affect the current balance until that date arrives.

Click Done when you are ready to proceed. You will be directed to the Quicken Home page.

Note: A screen saying You are now ready to use Quicken 2005 may pop up letting you know that Quicken Guided Setup is accessible should you need to add accounts or adjust your goals. Click OK to continue.

4. Importing a farm income and expense category list Spend some time thinking about the kinds of income and expenses that you want to track. In the beginning, you may want to start with categories needed for tax reports or match an existing chart of accounts or record system. Start simple and add new levels of detail as needed for management purposes. A printed list of Quicken categories and descriptions built to match income tax Schedule F is included in your handouts (Farm Categories). This list can be imported into your Quicken file from a file named Farm Categories on the diskette or CD-ROM that you received with this tutorial. We will now import the farm income and expense categories to our current file to facilitate farm financial record keeping and tax reporting. The resulting category list will be a merger of the farm income and expense categories and the Quicken default category list(s) selected as you completed the Guided Setup questions. The Farm Categories file is located in the C:\workshop files folder. From the main menu, click

File Import QIF File

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Complete the import screen as follows:

You may click Browse to locate the Farm Categories file in the C:\workshop files folder. Use the mouse or space bar to select Category List and deselect the other items. Click Next. Wait while categories are imported. A message stating items have been successfully imported appears. Click Done. Click Tools in the drop-down menu line at the top of the Quicken window and select Category List to verify that your category list now contains CCC Loans Forfeited, CCC Received, Co-op Distributions, and other farm categories in addition to the original default list. Scroll through the list to become familiar with the names and descriptions of the categories. Click in the box to the left of Display tax information to reveal the tax information for the categories. When creating categories, it is necessary to designate items that are tax-related and if possible, select the correct tax form and line.

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Note: Previous Quicken users will see that Quicken 2005 has changed the view and options for the Category List. Transactions using a particular category are listed in the box at the right.

Close the category list by clicking X in the upper right corner of the Category List window. 5. Setting up new categories and deleting unnecessary ones The category list is shared (accessible) across all accounts within your Quicken file. The farm income and expense category list (Farm Categories) provided to you is by no means sacred. It is intended to serve as a beginning point for your own personalized list. You may add, delete, or modify the list to make it useful for you. As an example of how to add a category, let's add a category for expenses associated with subscribing to an Internet service provider for checking the markets. Access the category list by clicking Tools Category List Click New. (bottom left corner of the Category List window) Let’s assume that this is a legitimate farm expense category, that is, something we will want to associate to a Schedule F tax line item. For schedule F categories, it is best to complete this screen in the following order:

1. Enter the name, AOL. 2. Select Expense.

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3. Select the Tax-related box. (This allows transactions associated with this category to appear in tax schedule and tax summary reports.)

4. Select Extended Line Item List (Schedule F line items will now be made available in the Tax Line Item box.)

5. Select Schedule F: Other farm expenses from the Tax Line Item: drop-down menu. (You will have to scroll through a long list. Schedule F items are listed income items first, followed by expense items.)

Click OK.

The category has now been added as you can see if you scroll down to the expenses in the category list on your screen. Don't stress about making mistakes in setting up categories—you may rename or edit categories as needed. If you need to make corrections, highlight the category name and click Edit. Changes made to an existing category are immediately reflected in previously recorded transactions. You can easily remove categories that aren’t needed. Move the cursor to the Bonus (Bonus income) category. With the category name highlighted, you can delete by clicking the Delete button in the bottom of the Category List window. A Delete Category screen will appear warning you that you are about to delete a category.

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Note: Previous users of Quicken will notice that you can now simultaneously delete a category and all associated subcategories.

Click OK

6. Setting up subcategories for reporting purposes Setting up subcategories is similar to setting up categories; however, it adds a second level of detail. Our fertilizer purchase records, for example, can track 18-46-0 and lime individually rather than as one lump sum in the Fertilizer & Lime category.

Note: Subcategories should only be used for detailed information that is needed for financial reporting or management decisions. Otherwise, use the memo field or notes for recording data needed as a note or reminder.

In the category list window, click New (bottom left).

Note: If a subcategory has different tax attributes from the main category, select the correct tax line item. For example, if mortgage interest is the category, subcategories for farm mortgages and personal mortgages would be attached to different tax schedules, Schedule F and Schedule A, respectively.

Click OK.

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Repeating the same procedure as above, add another subcategory, Lime.

OK Close the category list by clicking the X in the upper right corner of the Category List window. 7. Setting up classes so enterprise reports can be generated By using classes, you can add an important dimension to filter reports. We highly recommend using classes as a means to sort income and expenses by farm enterprise. Then you will be able to print reports summarizing income and expenses for specific components of the farm operation, for example, the cow/calf, wheat, or alfalfa enterprise. When you imported the farm income and expense categories, several classes – Cow/Calf, Family Living, Hay, Milo, Oats, Overhead, Stocker, and Wheat – were also imported. Let’s add an alfalfa class. From the main menu, click Tools Class List (or press Ctrl+L) New (located in the upper-left of the Class List window)

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Note: A description may be added. Copy Number (Optional): is used if you are filing multiple copies of a particular tax form.

Click OK.

Add any other classes needed. Recording a class along with a category for a transaction more fully documents how the income was earned or how the expense item was used. Close the Class List window by clicking the X in the upper right corner. 8. Entering transactions data using the categories, subcategories, and classes specified

Payments, transfers, and deposits are generally referred to as transactions in Quicken. We will begin by entering payments and deposits in the checking account. Click Checking under Cash Flow Center (on the left). The checking register will appear. Each field in the register is described below:

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1. The name of the account register that is currently open is displayed here. In this case, we are viewing the Checking account register.

2. The Date appears in the first column of the register. The Quicken default is the current date. Simply type the date, click on the calendar icon and highlight the correct date, or press the [+] or [-] keys to select the correct date.

3. The check Number (if applicable) may be typed in the second column. If the checks are in consecutive order, you may simply press the [+] or [-] key on your keyboard to increase or decrease the check number by one, respectively. Entering DEP for a deposit moves the cursor to the Deposit column when entering the amount.

4. The name of the Payee (for payments) and the payer (for receipts/deposits) goes on the top line of the third column.

5. A payment made to someone else is recorded in the Payment column. If a payee name has been used previously Quicken will recall the previous transaction amount. To enter the correct amount highlight and type in the numbers. Credits or deposits to the account are recorded in the Deposit column.

6. The name of the category, subcategory, and/or class goes on the line below the name of the payee. To sort reports by category and class, you must specify the category and class for each transaction. The format for labeling a transaction is Category:Subcategory/Class. The " : " after the category name signals that a subcategory will follow. The “ / ”after a category or subcategory signals that a class name will follow. Thus, at the Category prompt for a transaction involving the purchase of lime for the wheat enterprise, you could type Fertilizer & Lime:Lime/Wheat where Fertilizer & Lime is the category, Lime is a subcategory, and Wheat is the class name. Here, the class is used to denote an enterprise for which cost and return information is of interest.

7. The Split button allows you to divide payments and deposits among more than one category. An example is demonstrated later in the instructions.

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8. If you wish to add further details about the transaction, you may enter it in the Memo field. 9. Click this button if you wish to shrink the reminder/online banking section of the window.

To enter transactions, you will need the transaction date, check number (if applicable), payee, payment/deposit amount, and category/class. You may also record a memo regarding the transaction. Memos are useful for recording quantities, signaling the potential need for a 1099, and noting more detail about the transaction that might be beneficial for filtering reports. Remember to use the [Tab] key to move from one field to another. Practice a sample entry:

Date: 1/4/05 Num: 1001 Payee: Yukon John Deere Payment: 20 Category: Repairs and Maintenance/CowCalf Memo: Winch on pickup

Once you type in a letter, Quicken will complete the word (Quickfill) by recalling from an

internal list. Once enough distinguishing letters are typed to get the correct category name, you can type a “ / “ (slash) and enter the first letter of the class name. Again, once enough distinguishing letters are typed to get the correct word, press [Tab] to move to the next field.

When you have finished typing in the information, click the Enter button on the screen or press [Enter] on your keyboard. [Tab] is the default used to move between fields. If you see a pop-up window asking if you want to use the [Enter], you can decide which is most comfortable. If you choose to use [Enter], you will have to use [Ctrl + Enter] or use your mouse to click the Enter button on the screen to accept data. Often a transaction with a particular company or payee will include items that should be allocated to different categories and classes. In this case, you will split the transaction as needed. For instance, the co-op bill might include fuel used in the Wheat enterprise as well as feed used in the Cow/Calf enterprise. First, enter the total amount of the check:

Date: 1/4/05 Num: 1002 Payee: Klondike Co-op Payment: 421

Now, click Split (at the right of the screen, or press [Ctrl+S]). Type in the following responses:

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Click OK after entering split information; then press [Enter] to record the transaction. If you are writing a check to a business or individual for whom an earlier check was a split transaction, Quicken assumes that you want to use the same format as before. Let’s say that you now want to enter a check to the Klondike Co-op, which is for fertilizer only. Let’s practice this:

Date: 1/5/05 Num: 1003 Payee: Klondike Co-op Payment: 355

Click the red X near the middle of the screen (to the right of the word --Split-- in the category cell).

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Click Yes. Enter in the category field, Fertilizer & Lime:18-46-0/Wheat. Press [Enter]. (You may need to press [Enter] a second time.) Periodically review your split transactions, particularly those where the amount allocated to different categories varies each time. Deposits, as well as checks written to places like WalMart or the co-op, are good candidates for mistakes. If you don’t clear all previous amounts and categories when you enter a new transaction, you can end up with unintended amounts in categories. To eliminate the need to clear split lines for payees that have varying payment/deposit amounts and attached categories, you can create a memorized payee without any other information. For example, enter only:

Date: 1/5/05 Payee: WalMart

Press [Enter] to record. Automatically, Quicken will save this in the memorized payee list for Quickfill purposes. To have this as the default Quickfill transaction, go to: Tools Memorized Payee List [Ctrl + T] Highlight the Walmart transaction and, if necessary, edit the listing to indicate the default type for WalMart is a payment, PMT. Then click the space in the Lock column. A padlock icon will appear. This signals Quicken to use the locked transaction for Quickfill instead of the most current transaction. Close the Memorized Payee List. You can delete the blank transaction in the Checking register. Now, to record a deposit.... Let’s say that our farmer had some hay in storage and recently sold some to a neighbor, Paul Bunyan. Go to a blank line and enter

Date: 1/11/05 Num: DEP (This will help ensure that your entry is made in the deposit column after you enter the payee name and [Tab]) Payee: Paul Bunyan Deposit: 800 (If you didn’t enter DEP in the Num column, be sure to [Tab] over so the cursor is in the Deposit column!) Category: Raised Sales:OtherProducts/Alfalfa Memo: 8 tons hay

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Press [Enter]. Now begin entering the transactions for our farmer using the printed transaction register (gold sheet on page 49) from the checking account. Begin at the top of the sheet and practice recording transactions until you feel comfortable with the process. 9. Recording Loan Payments Let's assume it is now August 2005 and time to record a payment on the amortized land loan. Click Property & Debt (from the drop-down menu at top) Loans [Ctrl+H] If the Land Note is not the loan in view, click Choose Loan and select it. Click the Make Payment button. You are questioned, “Is this your regularly scheduled payment or an extra payment to this loan?” Click Regular.

Type the check number, 1202. We need to designate the category to record the interest. Click Split. On the second line, type: Interest Expense:Farm Interest Mortgage/Overhead.

Click OK.

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Once data is verified and modified as needed, click OK. Click the X in the View Loans: Land Note window to close it. You can view the amounts applied to principal and interest by returning to the land note payment line in the checking register and looking at the splits. Click Checking (at the left). Highlight the Federal Land Bank transaction by clicking anywhere within the transaction. Click Split (or press [Ctrl+S]) to open the Split Transaction window, or you may simply hover the cursor over - -Split- -, which will show a pop up window with the split information. You will see that Quicken has recorded the appropriate amounts to principal ($5,159.39 to the Land Note) and interest ($7,879.79 to Interest Expense:Farm Interest Mortgage). If you opened the Split Transaction window, click OK to leave the split.

To switch from the Checking account to the Land Note account and view the principal

payment applied to the outstanding loan balance. With the Federal Land Bank transaction highlighted, right-click (click the right side of your mouse), select Go to matching transfer, and click to switch to the Land Note account. You will see a Balance Adjustment entry was made for earlier principal payments. The principal portion of the current payment from the checking account has been applied to the loan balance. (If you get a message that the transaction is not a transfer, you didn't click Enter after recording your payment earlier.) Right-click the Federal Land Bank transaction and select Go to matching transfer to return to the Checking account. Click OK if the Split Transaction window appears. 10. Creating reports to summarize the data you have entered.

Let’s look at some sample reports that you might want to use in monitoring your financial performance:

• Cash flow summaries, including one by class/enterprise (which also gives the overall total)

• A summary of payments made to a payee • A tax schedule report

Because you may have entered only a few transactions in this file, we will close the file with your name and open the sample file, LOND05. Click File Open Click the small arrow next to the Look in: box to reveal the drop-down list. Click Local Disk (C:). Double click workshop files.

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Click LOND05. Click OK.

Click Reports (from the drop-down menu bar) Cash Flow Cash Flow

Note: You may receive a message that data is not available. Click Yes to change dates.

Select Last Year as the date range and Don’t Subtotal in the column field. (The fields are circled in the screen above.)

Note: This tutorial is written for 2005; however, if it is 2004, select Custom Date instead of Last Year and enter the dates as follows for reports:

OK Scroll through the report to view individual inflow and outflow items as well as totals using the arrow keys and [Page Up] or [Page Down] keys on your keyboard. A copy of the report is included in this tutorial on page 50. The annual cash flow statement provides a summary of cash income and expenses for the last year using the categories associated with

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individual transactions. The cash flow report documents sources and uses of funds and can be useful in developing budgets for future years. Your lender requires a monthly cash flow report. Click the Customize button to make the Title: London Monthly Cash Flow and Column: Month.

OK If you think you might want to use this same report again, you can memorize its features by clicking the Save Report button. Type Monthly Cash Flow and select Cash Flow Center.

Click OK.

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Now, let's develop a cash flow report by class (farm enterprise). You may want to change the title of the report. Click Customize at right. Type the Title, Cash Flow by Enterprise and select Class for the Column. Click OK. A report showing a summary of cash inflows and outflows by class (farm enterprise) for last year appears. Review it to see the cash generated and used by the cow-calf enterprise relative to the wheat enterprise and to note totals by category for family living expenses (copy on page 54). You may memorize this report for future use by clicking Save Report. Type Cash Flow by Class and select Cash Flow Center.

Click OK. What if you want a summary of payments made to the Yukon John Deere dealer during the year? Click the Customize button. Type the title, Deere Transactions Summary. Click the Categories tab.

In the Matching column at right, Payee Contains should read Yukon John Deere. (The spelling must be the same in all transactions or some transactions will not be found. You can select from the payee list by clicking the arrow at the right.) Click OK.

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You will now have a summary of expenses at the Yukon John Deere dealership by category and enterprise (copy on bottom of page 55). Click the X to close the window (or press [Esc]) to leave the Deere Transactions Summary. All of the previous reports have been examples of cash flow reports. We will now switch to a different kind of report, the tax schedule report. When you begin gathering information to take to the tax preparer, remember the differences between the tax schedule and tax summary reports. Tax schedule reports list all transactions (or splits of a transaction) assigned to a category that is attached to a specific tax form or schedule. Tax summary reports will include transactions with categories that have been noted as tax-related, whether or not a specific tax schedule has been assigned. Click Reports Tax Tax Schedule Select Last Year as the date range. (Or, select Custom date from 1/1/04 to 12/31/04.)

This report lists every transaction assigned to a category attached to a tax schedule. To prepare a report showing totals only (not individual transactions), click Customize. In the Show section (as circled in the center of the Customize Tax Schedule Report screen below), select Totals Only.

Click OK. You now have a summary of the information needed for tax reporting purposes by schedule. In our example, the report begins with Schedule A (deductions including charitable contributions), Schedule B (interest income), and continues to Schedule F (farm income and expense items) and ends with a W-2 (wages and salary) summary.

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11. Viewing a graph of your income and expenses It's said that a picture is worth a thousand words. Quicken makes it easy for you to get a quick picture of income relative to expenses, as well as income and expense composition. Click the X in the report window to leave the report. Click Reports Cash Flow Income/Expense Then click the Graph tab at right Select the date range, Last Year (or select Custom Date from 1/1/04 to 12/31/04 if creating in 2004) and Month for the interval.

You will see a bar chart showing monthly income and expenses. Click X to close the Income/Expense window. To view a pie chart showing how money has been spent, click Reports Cash Flow Spending Click the Graph tab.

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Select the date range, Last Year.

Hovering the cursor over a slice of the pie gives a view of the amount spent for a category. Note that the top 10 categories contributing the most to total expenses are charted with additional categories lumped into Other in the graph. Double-clicking Other in the legend will bring up a table with the categories included and their amount and percent of total expenses.

Click the X to close the Comparison Balance as of 12/31/04 window. As with the reports, you may memorize useful graphs. Click Save Report (located in the upper right hand corner of window.) Type Expense Graph as the report name and select Cash Flow Center. Click OK.

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Click the X to close the Spending window. To view your saved reports and graphs, click Reports Saved Reports and Graphs Click the report that you want to view. 12. Backing up your data Quicken automatically saves the data that you have entered in the file on which you have been working as you enter transactions. However, you will want to regularly save a backup copy on a floppy disk, zip disk, or compact disc (CD), in the event of hardware problems. Instructions for backing up your data on a CD are given on pages 98. Since we copied the LOND05 file to the C: drive earlier and have been working from that file, we will back up our data on the 3 ½ Floppy A: drive. To back up your data, be sure your floppy disk is in drive A: (use a new formatted disk—not the disk that came with this tutorial) and complete the information as indicated on the following screen. You can utilize the browse buttons to select both the file you want to back up and the backup location. Select File Backup (or press Ctrl+B)

Note: New for Quicken 2005 is the ability to automatically place the date on the backup file name by checking the box.

Click OK.

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You should receive a message that the file has been backed up successfully. Click OK Now, click File Exit (This closes the Quicken program.)

Note: It would be wise to back up your information on multiple sets of disks and back up often. Alternate the disks that you use so that you minimize the potential loss of information due to faulty disks

CONGRATULATIONS! You have now completed the basic Quicken workshop for farm financial records! Hopefully, you will want to apply your newly learned skills to your own farming operation. Refer to this tutorial and the Quicken manual for assistance in setting up your own record keeping system.

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Standard Categories

Category Hide Description Tax Tax Line Item Income H Bonus Bonus Income T W-2:Salary or wages, self Div Income Dividend Income T Schedule B:Dividend income Gift Received Gift Received Interest Inc Interest Income T Schedule B:Interest income Invest Inc Investment Income Other Inc Other Income T Form 1040:Other income, misc. Salary Salary Income T W-2:Salary or wages, self Tax Refund State/Local Tax Refund T 1099-G:State and local tax refunds Unemployment Inc Unemployment Compensation T 1099-G:Unemployment compensation Expense H Auto Automobile Expenses Fuel Auto Fuel Insurance Auto Insurance Loan Auto Loan Registration Auto Registration T Schedule A:Personal property taxes Service Auto Service Bank Charge Bank Charge Cash Misc Cash Charity Charitable Donations - Cash T Schedule A:Cash charity contributions Charity-Non Cash Charitable Donations - Non

Cash T Schedule A:Non-cash charity

contributions Clothing Clothing Computer Computer Dining Dining Out Education Education Entertainment Entertainment Gifts Given Gift Expenses Groceries Groceries Home Repair Home Repair & Maint. Household Household Misc. Exp Insurance Insurance Disability Insurance Disability Insurance Home Insurance Home Insurance Life Insurance Life Insurance Interest Exp Interest Expense IRA Contrib IRA Contribution T Form 1040:IRA contribution, self Medical Medical Expense T Schedule A:Medicine and drugs Doctor Doctors, Dentists, & Hospitals T Schedule A:Doctors, dentists, hospitalsMedicine Prescriptions T Schedule A:Medicine and drugs Misc Miscellaneous Personal Care Personal Care Recreation Recreation Expense Rent Housing Rent Subscriptions Subscriptions

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Standard Categories Continued Tax Taxes Fed Federal Tax T W-2:Federal tax withheld, self Medicare Medicare Tax T W-2:Medicare tax withheld, self Other Misc. Taxes SDI State Disability Insurance T W-2:Local tax withheld, self Soc Sec Soc Sec Tax T W-2:Soc. Sec. tax withheld, self State State Tax T W-2:State tax withheld, self Utilities Water, Gas, Electric Cable TV Cable TV Garbage & Recycling Garbage and Recycling Gas & Electric Gas and Electricity Internet Internet Telephone Telephone Expense Water Water Vacation Vacation Expenses Lodging Motel/Hotel Costs Travel Transportation Expenses

Married Categories Category Hide Description Tax Tax Line Item Income H T Salary Spouse Spouse's Salary Income T W-2:Salary or wages, spouse Expense H T IRA Contrib Spouse Spouse's IRA Contribution T Form 1040:IRA contribution, spouse Tax Spouse Spouse's Taxes T Fed Federal Tax T W-2:Federal tax withheld, spouse Medicare Medicare Tax T W-2:Medicare tax withheld, spouse Other Misc. Taxes SDI State Disability Insurance T W-2:Local tax withheld, spouse Soc Sec Soc Sec Tax T W-2:Soc. Sec. tax withheld, spouse State State Tax T W-2:State tax withheld, spouse

Children Category Category Hide Description Tax Tax Line Item Expense H T Childcare Childcare Expense T Form 2441:Qualifying childcare

expenses

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Homeowner Categories Category Hide Description Tax Tax Line Item Expense H T Homeowner's Fees Homeowner's Fees Housing Housing Mortgage Int Mortgage Interest T Bank Mortgage Interest - Bank T Schedule A:Home mortgage interest

(1098) Individual Mortgage Interest - Individual T Schedule A:Home mortgage int. (no

1098)

Rents and Royalty Categories Category Hide Description Tax Tax Line Item Income H T Rents Received Rents Received T Schedule E:Rents received Royalties Received Royalties Received T Schedule E:Royalties received Expense H T Rental Expenses Rental Expenses Advertising Rental Advertising T Schedule E:Advertising Association Dues Homeowners Association Dues T Schedule E:Other expenses Auto and Travel Auto and Travel T Schedule E:Auto and travel Cleaning and Maintenance

Cleaning and Maintenance T Schedule E:Cleaning and maintenance

Commissions Rental Commissions T Schedule E:Commissions Insurance Rental Insurance T Schedule E:Insurance Legal-Prof. Fees Legal & Prof. Fees T Schedule E:Legal and professional

fees Management Fees Management Fees T Schedule E:Management fees Mortgage Interest Expense

Mortgage Interest Expense T Schedule E:Mortgage interest expense

Other Expenses Other Expenses T Schedule E:Other expenses Other Interest Expense

Other Interest Expense T Schedule E:Other interest expense

Repairs Rental Repairs T Schedule E:Repairs Supplies Rental Supplies T Schedule E:Supplies Taxes Rental Taxes T Schedule E:Taxes Utilities Water, Gas, Electric T Schedule E:Utilities

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Business Categories Category Hide Description Tax Tax Line Item Income H Consulting Consulting Income T Schedule C:Gross receipts or sales Finance Charge Finance Charge Income T Schedule C:Other business income Gr Sales Gross Sales T Schedule C:Gross receipts or sales Other Inc, Bus Other Business Income T Schedule C:Other business income Services Service Income T Schedule C:Gross receipts or sales Expense H Ads Advertising T Schedule C:Advertising Bad Debt Bad Debt Expense T Schedule C:Bad debts from

sales/services Car Car & Truck T Schedule C:Car and truck expenses Commission Commissions T Schedule C:Commissions and fees Discounts Discount Expense T Schedule C:Returns and allowances Dues and Subscriptions

Dues and Subscription Expense T Schedule C:Other business expenses

Employee Benefit, Business

Employee Benefit Programs T Schedule C:Employee benefit programs

Insurance, Bus Insurance (not health) T Schedule C:Insurance, other than health

Int Paid Interest Paid T Schedule C:Interest expense, other Late Fees Late Payment Fees T Schedule C:Other business expensesLegal-Prof Fees Legal & Prof. Fees T Schedule C:Legal and professional

fees Licenses and Permits

License and Permits Expense T Schedule C:Taxes and licenses

Meals & Entertn Meals & Entertainment T Schedule C:Meals and entertainment Miscellaneous, Bus Misc. Business Expense T Schedule C:Other business expensesMortgage Interest, Business

Mortgage Interest Paid T Schedule C:Interest expense, mortgage

Office Office Expenses T Schedule C:Office expenses Pension and Profit-Sharing, Business

Pension and Profit-Sharing Plans T Schedule C:Pension/profit sharing plans

Postage and Delivery

Postage and Delivery Expense T Schedule C:Other business expenses

Printing and Reproduction

Printing and Repro. Expense T Schedule C:Other business expenses

Rent on Equip Rent-Vehicle,mach,equip T Schedule C:Rent/lease vehicles, equip.

Rent Paid Rent Paid T Schedule C:Rent/lease other bus. prop.

Repairs Repairs T Schedule C:Repairs and maintenanceReturns Returns & Allowances T Schedule C:Returns and allowances Supplies, Bus Supplies T Schedule C:Supplies (not from

COGS) Tax, Business Taxes & Licenses T Schedule C:Taxes and licenses Fed Federal Tax T Schedule C:Taxes and licenses Local Local Tax T Schedule C:Taxes and licenses Property Property Tax T Schedule C:Taxes and licenses State State Tax T Schedule C:Taxes and licenses Travel, Bus Business Travel Expense T Schedule C:Travel

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Business Categories Continued Utilities, Bus Water, Gas, Electric T Schedule C:Utilities Telephone, Bus Telephone Expense T Schedule C:Utilities Wages Wages & Job Credits T Schedule C:Wages paid

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Farm Categories

Category Hide Type Description Tax Tax Line Item Income H Capital Sales Income Capital Sales T CCC Loans Forfeited Income CCC Loans

forft/repaid T Schedule F:CCC loans forfeited

or repaid CCC Received Income CCC loans received T Schedule F:CCC loans

reported/election Co-op Distributions Income Co-op Distributions T Schedule F:Total co-op.

distributions Crop Insurance Benefits Income Crop insur

benefits,recd T Schedule F:Crop ins. proceeds

received Crop Insurance Deferred Proceeds

Income Crop ins. proceeds-defrd

T Schedule F:Crop ins. proceeds deferred

Custom Income Income Custom Hire Income

T Schedule F:Custom hire income

Government Payments Income Govt. program payments

T Schedule F:Agricultural program payments

Livestock Resale Income Resales of purch lvstk

T Schedule F:Resales of livestock/items

Stocker Steers Sub Stocker steers T Schedule F:Resales of livestock/items

Margin Income Income Margin Income T Schedule F:Other farm income Marketing Income Income Marketing Income T Schedule F:Other farm income Other Farm Income Income Other farm income T Schedule F:Other farm income Raised Sales Income T Schedule F:Sales

livestock/product raised Grain Sub Sale of raised grain T Schedule F:Sales

livestock/product raised Livestock Sub Sale of raised lvstk T Schedule F:Sales

livestock/product raised Other Products Sub Sale of Other

Raised Prod T Schedule F:Sales

livestock/product raised Expense H T Auto Expense Automobile

Expenses T

Farm Auto Sub Farm car & truck T Schedule F:Car and truck expenses

Capital Purchases Expense Capital Purchases T Chemicals Expense Ag Chemicals T Schedule F:Chemicals Conservation Expense Conservation

Expense T Schedule F:Conservation

expenses Consultants Expense Consulting expense T Schedule F:Other farm expenses Custom Hire Expense Custom Hire

Expense T Schedule F:Custom hire

expenses Dues Expense Dues T Farm Dues Sub Farm Dues T Schedule F:Other farm expenses Employee Benefits Expense Employee Benefits T Schedule F:Employee benefit

programs Feed Purchased Expense Feed purchased T Schedule F:Feed purchased Fertilizer & Lime Expense Fertilizer and lime T Schedule F:Fertilizers and lime Freight and Trucking Expense Freight T Schedule F:Freight and trucking

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Farm Categories Continued Gas, Fuel, & Oil Expense Gas, fuel, oil T Schedule F:Gasoline, fuel, and oilInsurance Expense Insurance T Farm Insurance Sub Insurance (not

health) T Schedule F:Insurance, other than

health Interest Expense Expense Interest Expense T Farm Interest Mortgage Sub Farm Mortgage

Interest T Schedule F:Interest expense,

mortgage Farm Interest Other Sub Farm interest (not

mort.) T Schedule F:Interest expense,

other Labor Hired Expense Labor hired T Schedule F:Labor hired Livestock Basis Expense Basis lvstk for

resale T Schedule F:Cost of resale

livestock/items Margin Expense Expense Margin Expense T Schedule F:Other farm expenses Marketing Expense Expense Marketing Expense T Schedule F:Other farm expenses Mortgage Interest Expense Mortgage Interest

Exp T Schedule A:Home mortgage

interest (1098) Office Expense Office Expenses T Schedule C:Office expenses Farm Office Sub Farm office

expense T Schedule F:Other farm expenses

Other Expenses Expense Other Expenses T Farm Expenses Other Sub Other farm

expenses T Schedule F:Other farm expenses

Rent Expense Farm Rent T Land Sub Land rental

expenses T Schedule F:Rent/lease land,

animals Livestock Sub Rent animals, misc. T Schedule F:Rent/lease land,

animals Vehicles, Machinery, Equipment

Sub Rent vehic, mach, equip

T Schedule F:Rent/lease vehicles, equip.

Repairs and Maintenance Expense Repairs T Schedule F:Repairs and maintenance

Seed and Plants Expense Seeds and plants purch

T Schedule F:Seeds and plants purchased

Semen Expense Semen & certificates

T Schedule F:Vet, breeding, and medicine

Storage and Warehousing Expense Storage & warehousing

T Schedule F:Storage and warehousing

Subscriptions Expense Subscriptions T Farm Subscriptions Sub Farm subscriptions T Schedule F:Other farm expenses Supplies Expense Supplies T Schedule F:Supplies purchased Taxes Expense Taxes T Schedule C:Taxes and licenses Farm Property Taxes Sub Farm property taxes T Schedule F:Taxes Farm Taxes Other Sub Other farm taxes T Schedule F:Taxes Utilities Expense Water, Gas, Electric T Farm Utilities Sub Farm utilities T Schedule F:Utilities Veterinary Expense Veterinary fees &

med T Schedule F:Vet, breeding, and

medicine Breeding Fees Sub T Schedule F:Vet, breeding, and

medicine Medicine Sub Livestock Medicine T Schedule F:Vet, breeding, and

medicine

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Transaction Report

Split Total Date Account Num Description Memo Category Clr Amount Amount

1/4/2005 Checking 1000 Southwestern Bell phone Telephone/Family Living R -76.10 1/4/2005 Checking 999 REC electric Utilities/Family Living R -88.11 1/5/2005 Checking DEP Julie London Salary Spouse/Family Living R 923.07 739.61

Tax Spouse:Fed/Family Living R -87.00 Tax Spouse:Soc Sec/Family Living R -57.23 Tax Spouse:State/Family Living R -25.85 Tax Spouse:Medicare/Family Living R -13.38

1/5/2005 Checking 1001 James Herriot Veterinary/CowCalf R -480.00 1/5/2005 Checking Manulife Insurance/Family Living R -32.59 1/7/2005 Checking 1002 Yukon John Deere Tractor overhaul Repairs and Maintenance/Wheat R -7,670.63

1/10/2005 Checking 1004 Alan's Pharmacy Medical/Family Living R -135.00 1/10/2005 Checking 1003 Care Clinic Medical/Family Living R -26.00 1/15/2005 Checking 1006 St. Andrew Church Charity/Family Living R -30.00 1/15/2005 Checking 1005 Mastercard [Mastercard] R -495.56 1/19/2005 Checking DEP Julie London Salary Spouse/Family Living R 923.07 739.61

Tax Spouse:Fed/Family Living R -87.00 Tax Spouse:Soc Sec/Family Living R -57.23 Tax Spouse:State/Family Living R -25.85 Tax Spouse:Medicare/Family Living R -13.38 1/22/2005 Checking 1007 Hometown Homeland Groceries Groceries/Family Living R -44.12 1/31/2005 Checking DEP Bill's Service Salary Salary R 500.00 391.25

Federal Tax Tax:Fed R -52.00 State Tax Tax:State R -18.50 Social Security (FICA) Tax:Soc Sec R -31.00 Medicare Tax Tax:Medicare R -7.25

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Cash Flow

Category Description 1/1/2004- 12/31/2004 INFLOWS Uncategorized 0 Capital Sales 10,000.00 Co-op Distributions 27.67 Government Payments 3,112.00 Int Inc 92.73 Raised Sales Grain 42,169.64 Livestock 38,010.00 TOTAL Raised Sales 80,179.64 Salary 500.00 Salary Spouse 18,461.40 TOTAL INFLOWS 112,373.44 OUTFLOWS Auto 262.88 Service 182.58 TOTAL Auto 445.46 Bank Chrg 14.80 Charity 1,215.00 Christmas 778.54 Clothing 998.27 Consultants 150.00 Dining 414.36 Dues Farm Dues 24.00 TOTAL Dues 24.00 Entertain 281.02 Feed Purchased 1,730.00 Fertilizer & Lime 10,526.73 Freight and Trucking 186.20 Gas, Fuel, & Oil 6,743.00 Gifts 426.66 Groceries 2,661.85 Home Rpair 1,620.74 Household 157.64 Insurance 2,621.45 Interest Expense Farm Interest Mortgage 8,109.00 Farm Interest Other 603.61 TOTAL Interest Expense 8,712.61 Labor Hired 4,010.00 Medical 533.79 Misc 10,043.52 Other Expenses 0

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Cash Flow Continued Farm Expenses Other 559.00 TOTAL Other Expenses 559.00 Recreation 3,000.00 Rent Land 8,055.00 TOTAL Rent 8,055.00 Repairs and Maintenance 8,196.50 Subscriptions 60.00 Supplies 67.56 Tax Fed 52.00 Medicare 7.25 SDI 0 Soc Sec 31.00 State 18.50 TOTAL Tax 108.75 Tax Spouse Fed 1,740.00 Medicare 267.60 Soc Sec 1,144.60 State 872.00 TOTAL Tax Spouse 4,024.20 Taxes Farm Property Taxes 6,153.33 TOTAL Taxes 6,153.33 Telephone 684.40 Utilities 1,311.16 Veterinary 1,756.50 TOTAL OUTFLOWS 88,272.04 OVERALL TOTAL 24,101.40

London Monthly Cash Flow - Last Yr

1/1/2004 Through 12/31/2004 Category Description 1/1/2004-

1/31/2004 2/1/2004- 2/29/2004

3/1/2004- 3/31/2004

4/1/2004- 4/30/2004

5/1/2004- 5/31/2004

6/1/2004- 6/30/2004

7/1/2004- 7/31/2004

8/1/2004- 8/31/2004

9/1/2004- 9/30/2004

10/1/2004- 10/31/2004

11/1/2004- 11/30/2004

12/1/2004- 12/31/2004

OVERALL TOTAL

INFLOWS Capital Sales 10,000.00 0 0 0 0 0 0 0 0 0 0 0 10,000.00 Co-op Distributions 0 0 0 0 0 0 0 0 0 27.67 0 0 27.67 Government Payments

0 0 3,112.00 0 0 0 0 0 0 0 0 0 3,112.00

Int Inc 0 4.12 4.72 6.31 7.18 5.08 7.38 5.31 8.42 3.45 4.19 36.57 92.73 Grain 0 0 0 0 0 0 42,169.64 0 0 0 0 0 42,169.64 Livestock 0 0 38,010.00 0 0 0 0 0 0 0 0 0 38,010.00 TOTAL Raised Sales 0 0 38,010.00 0 0 0 42,169.64 0 0 0 0 0 80,179.64 Salary 500.00 0 0 0 0 0 0 0 0 0 0 0 500.00 Salary Spouse 923.07 0 0 1,846.14 1,846.14 1,846.14 1,846.14 1,846.14 2,769.21 1,846.14 1,846.14 1,846.14 18,461.40 TOTAL INFLOWS 11,423.07 4.12 41,126.72 1,852.45 1,853.32 1,851.22 44,023.16 1,851.45 2,777.63 1,877.26 1,850.33 1,882.71 112,373.44 OUTFLOWS Auto 0 0 0 0 0 0 0 262.88 0 0 0 0 262.88 Service 0 0 0 0 15.00 7.00 62.41 98.17 0 0 0 0 182.58 TOTAL Auto 0 0 0 0 15.00 7.00 62.41 361.05 0 0 0 0 445.46 Bank Chrg 0 1.00 1.00 1.00 1.00 1.00 1.00 4.80 0 2.00 2.00 0 14.80 Charity 165.00 90.00 90.00 90.00 120.00 90.00 30.00 120.00 90.00 120.00 120.00 90.00 1,215.00 Christmas 0 0 0 0 0 0 0 285.44 0 0 269.67 223.43 778.54 Clothing 27.80 51.87 40.00 0 0 25.80 175.46 434.46 10.00 16.75 165.25 50.88 998.27 Consultants 0 0 0 150.00 0 0 0 0 0 0 0 0 150.00 Dining 15.00 15.00 0 64.75 45.00 60.00 0 30 60.00 53.00 15.00 56.61 414.36 Farm Dues 0 0 0 0 0 0 0 0 24.00 0 0 0 24.00 TOTAL Dues 0 0 0 0 0 0 0 0 24.00 0 0 0 24.00 Entertain 18.29 18.30 18.30 9.51 18.30 18.30 49.56 19.96 54.26 36.42 0 19.82 281.02 Feed Purchased 897.00 95.00 0 0 0 0 0 0 0 369.00 369.00 0 1,730.00 Fertilizer & Lime 0 6,181.73 0 0 0 0 0 0 4,345.00 0 0 0 10,526.73 Freight and Trucking 0 0 186.20 0 0 0 0 0 0 0 0 0 186.20 Gas, Fuel, & Oil 108.50 108.50 108.50 102.00 48.50 2,905.00 1,978.00 487.00 793.00 52.00 52.00 0 6,743.00 Gifts 0 0 0 103.44 87.22 45.22 0 55.44 0 0 85.34 50.00. 426.66 Groceries 361.00 133.88 248.26 181.93 185.64 354.45 34.44 415.97 303.46 8.36 287.00 147.46 2,661.85

London Monthly Cash Flow Continued Home Rpair 0 0 645.74 0 0 0 975.00 0 0 0 0 0 1,620.74 Farm Interest Mortgage

0 0 0 0 0 0 0 8,109.00 0 0 0 0 8,109.00

Farm Interest Other 0 0 0 603.61 0 0 0 0 0 0 0 0 603.61 TOTAL Interest Expense

0 0 0 603.61 0 0 0 8,109.00 0 0 0 0 8,712.61

Farm Expenses Other

0 0 0 0 0 0 0 228.00 0 0 331.00 0 559.00

TOTAL Other Expenses

0 0 0 0 0 0 0 228.00 0 0 331.00 0 559.00

Recreation 0 0 0 0 0 0 0 3,000.00 0 0 0 0 3,000.00 Land 0 0 0 0 0 0 0 1,575.00 6,480.00 0 0 0 8,055.00 TOTAL Rent 0 0 0 0 0 0 0 1,575.00 6,480.00 0 0 0 8,055.00 Repairs and Maintenance

66.00 20.00 20.00 20.00 306.50 1,449.00 4,872.00 542.00 861.00 20.00 20.00 0 8,196.50

Subscriptions 0 0 45.00 0 0 0 0 0 0 15.00 0 0 60.00 Supplies 0 67.56 0 0 0 0 0 0 0 0 0 0 67.56 Tax Fed 52.00 0 0 0 0 0 0 0 0 0 0 0 52.00 Medicare 7.25 0 0 0 0 0 0 0 0 0 0 0 7.25 Soc Sec 31.00 0 0 0 0 0 0 0 0 0 0 0 31.00 State 18.50 0 0 0 0 0 0 0 0 0 0 0 18.50 TOTAL Tax 108.75 0 0 0 0 0 0 0 0 0 0 0 108.75 Tax Spouse Fed 87.00 0 0 174.00 174.00 174.00 174.00 174.00 261.00 174.00 174.00 174.00 1,740.00 Medicare 13.38 0 0 26.76 26.76 26.76 26.76 26.76 40.14 26.76 26.76 26.76 267.60 Soc Sec 57.23 0 0 114.46 114.46 114.46 114.46 114.46 171.69 114.46 114.46 114.46 1,144.60 State 25.85 0 0 406.70 51.70 51.70 51.70 51.70 77.55 51.70 51.70 51.70 872.00 TOTAL Tax Spouse 183.46 0 0 721.92 366.92 366.92 366.92 366.92 550.38 366.92 366.92 366.92 4,024.20 Taxes Farm Property Taxes 0 0 0 0 0 0 0 0 0 0 0 6,153.33 6,153.33 TOTAL Taxes 0 0 0 0 0 0 0 0 0 0 0 6,153.33 6,153.33 Telephone 0 96.25 218.76 0 62.34 59.07 66.98 56.00 0 0 0 125.00 684.40 Utilities 61.66 124.25 95.61 64.23 76.72 30.47 82.60 342.41 145.20 89.56 112.49 85.96 1,311.16 Veterinary 0 508.00 283.00 0 613.5 0 0 0 0 352.00 0 0 1,756.50 TOTAL OUTFLOWS 2,082.46 7,511.34 2,363.45 2,216.85 2,013.85 6,935.23 10,708.37 18,209.33 14,832.20 1,631.29 12,189.07 7,578.60 88,272.04 OVERALL TOTAL 9,340.61 -7,507.22 38,763.27 -364.40 -160.53 -5,084.01 33,314.79 -16,357.88 -12,054.57 245.97 -10,338.74 -5,695.89 24,101.40

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Cash Flow by Enterprise - Last Yr 1/1/2004 Through 12/31/2004 Category Description Unclassified OVERALL Transactions CowCalf Family Living Overhead Wheat TOTAL

INFLOWS Uncategorized 0 0 0 0 0 0

Capital Sales 10,000.00 0 0 0 0 10,000.00Co-op Distributions 0 0 0 27.67 0 27.67

Government Payments

0 0 0 0 3,112.00 3,112.00

Int Inc 0 0 92.73 0 0 92.73Raised Sales

Grain 0 0 0 0 42,169.64 42,169.64Livestock 0 38,010.00 0 0 0 38,010.00

TOTAL Raised Sales 0 38,010.00 0 0 42,169.64 80,179.64Salary 500.00 0 0 0 0 500.00

Salary Spouse 0 0 18,461.40 0 0 18,461.40TOTAL INFLOWS 10,500.00 38,010.00 18,554.13 27.67 45,281.64 112,373.44

OUTFLOWS Auto 0 0 262.88 0 0 262.88

Service 0 0 182.58 0 0 182.58TOTAL Auto 0 0 445.46 0 0 445.46

Bank Chrg 0 0 14.80 0 0 14.80Charity 0 0 1,215.00 0 0 1,215.00

Christmas 0 0 778.54 0 0 778.54Clothing 0 0 998.27 0 0 998.27

Consultants 0 0 150.00 0 0 150.00Dining 0 0 414.36 0 0 414.36Dues

Farm Dues 0 0 0 24.00 0 24.00TOTAL Dues 0 0 0 24.00 0 24.00

Entertain 0 0 281.02 0 0 281.02Feed Purchased 0 1,730.00 0 0 0 1,730.00Fertilizer & Lime 0 0 0 0 10,526.73 10,526.73

Freight and Trucking 0 186.20 0 0 0 186.20Gas, Fuel, & Oil 0 801.00 0 0 5,942.00 6,743.00

Gifts 0 0 426.66 0 0 426.66Groceries 0 0 2,661.85 0 0 2,661.85

Home Rpair 0 0 1,620.74 0 0 1,620.74Household 0 0 157.64 0 0 157.64Insurance 0 0 2,621.45 0 0 2,621.45

Interest Expense Farm Interest

Mortgage 0 0 0 8,109.00 0 8,109.00

Farm Interest Other 0 0 0 603.61 0 603.61TOTAL Interest

Expense 0 0 0 8,712.61 0 8,712.61

Labor Hired 0 0 0 0 4,010.00 4,010.00Medical 0 0 533.79 0 0 533.79

Misc 9,750.00 62.01 231.51 0 0 10,043.52Other Expenses

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Cash Flow by Enterprise Continued Farm Expenses

Other 0 331 0 0 228 559

TOTAL Other Expenses

0 331 0 0 228 559

Recreation 0 0 3,000.00 0 0 3,000.00Rent Land 0 1,575.00 0 0 6,480.00 8,055.00

TOTAL Rent 0 1,575.00 0 0 6,480.00 8,055.00Repairs and

Maintenance 0 696.00 15.00 0 7,485.50 8,196.50

Subscriptions 0 0 60.00 0 0 60.00Supplies 0 67.56 0 0 0 67.56

Tax Fed 52.00 0 0 0 0 52.00

Medicare 7.25 0 0 0 0 7.25SDI 0 0 0 0 0 0

Soc Sec 31.00 0 0 0 0 31.00State 18.50 0 0 0 0 18.50

TOTAL Tax 108.75 0 0 0 0 108.75Tax Spouse

Fed 0 0 1,740.00 0 0 1,740.00Medicare 0 0 267.60 0 0 267.60Soc Sec 0 0 1,144.60 0 0 1,144.60

State 0 0 872.00 0 0 872.00TOTAL Tax Spouse 0 0 4,024.20 0 0 4,024.20

Taxes Farm Property Taxes 0 0 0 6,153.33 0 6,153.33

TOTAL Taxes 0 0 0 6,153.33 0 6,153.33Telephone 0 0 684.40 0 0 684.40

Utilities 0 0 1,311.16 0 0 1,311.16Veterinary 0 1,756.50 0 0 0 1,756.50

TOTAL OUTFLOWS 9,858.75 7,205.27 21,645.85 14,889.94 34,672.23 88,272.04OVERALL TOTAL 641.25 30,804.73 -3,091.72 -14,862.27 10,609.41 24,101.40

Deere Transaction’s Summary - Last Yr 1/1/2004 Through 12/31/2004

Category Description CowCalf Wheat OVERALL TOTALOUTFLOWS Repairs and Maintenance 660.00 4926.00 5586.00TOTAL OUTFLOWS 660.00 4926.00 5586.00 OVERALL TOTAL -660.00 -4926.00 -5586.00

Tax Schedule - Last Yr 1/1/2004 Through 12/31/2004

Date Account Num Description Memo Category Clr Amount

Schedule A Medicine and drugs

1/29/2004 Checking 727 Dan Dentist Medical/Family Living R -70.00 4/12/2004 Checking 781 Mytown Medical Center Medical/Family Living R -20.00 8/12/2004 Checking 878 Albertson's Medical/Family Living R -6.59 8/16/2004 Checking 881 Care Clinic Medical/Family Living R -26.00 8/18/2004 Checking 888 Don Dentist, DDS Exam & X-rays Medical/Family Living R -225.00 8/19/2004 Checking 890 Care Clinic Medical/Family Living R -6.50 9/17/2004 Checking 921 Care Clinic Medical/Family Living R -30.00 9/30/2004 Checking 933 Care Clinic Medical/Family Living R -13.00 10/9/2004 Checking 940 Alan's Pharmacy Medical/Family Living R -14.89

12/10/2004 Checking 948 Care Clinic Medical/Family Living R -13.00 TOTAL Medicine and drugs Checking 960 Tiger Drug Medical/Family Living R -28.19 Cash charity contributions Checking 969 Care Clinic Medical/Family Living R -13.00

1/15/2004 Checking 972 Tiger Drug Medical/Family Living R -10.82 1/15/2004 Checking 985 Mytown Medical Center Medical Medical/Family Living R -56.80 2/18/2004 Checking 723 4-H Scholarship Fund Charity/Family Living R -30.00 2/19/2004 Checking 726 St. Andrew Church Charity/Family Living R -25.00 3/18/2004 Checking 729 OSU Alumni Chapter Charity/Family Living R -30.00

12/17/2004 Checking 964 St. Andrew Church Charity/Family Living R -30.00 TOTAL Cash charity contributions

Checking 967 St. Andrew Church Charity/Family Living R -30.00

Schedule B Checking 978 St. Andrew Church Charity/Family Living R -30.00 Interest income Checking 986 St. Andrew Church Charity/Family Living R -30.00

2/16/2004 Checking 995 St. Andrew Church Charity/Family Living R -30.00 3/16/2004 Charity/Family Living R -30.00 4/18/2004 -1215.00 5/16/2004

12/29/2004 Checking DEP Interest Earned Int Inc/Family Living R 5.31 TOTAL Interest income Checking DEP Interest Earned Int Inc/Family Living R 8.42 Schedule F Checking DEP Interest Earned Int Inc/Family Living R 3.45

Tax Schedule Continued Sales livestock/product raised

Checking DEP Interest Earned Int Inc/Family Living R 4.19

3/8/2004 Checking DEP Interest from savings Int Inc/Family Living R 3.23 3/8/2004 interest Int Inc/Family Living R 33.34 7/5/2004 92.73

7/15/2004 TOTAL Sales livestock/product raised

Checking Steer Sales

Total co-op. distributions Checking Heifer Sales 28 hd @ 7.0 cwt. for 87.5/cwt.

Raised Sales:Livestock/CowCalf R 18375.00

10/2/2004 Checking Wheat sales 34 hd @ 7.0 cwt for 82.5/cwt

Raised Sales:Livestock/CowCalf R 19635.00

Gasoline, fuel, and oil Fertilizer & Lime/Wheat R -4345.00 1/16/2004 -10526.73 1/31/2004 Checking 757 Rafter H Trucking 2/21/2004 98 miles @1.90/mile Freight and Trucking/CowCalf R -186.20 2/28/2004 -186.20

11/30/2004 Gas, Fuel, & Oil/Wheat R -461.00 TOTAL Gasoline, fuel, and oil Checking 932 Klondike Co-op Gas, Fuel, & Oil/CowCalf R -26.00 Interest expense, mortgage Gas, Fuel, & Oil/Wheat R -752.00

8/15/2004 Checking 955 J & M Farm Store Gas, Fuel, & Oil/CowCalf R -41.00 TOTAL Interest expense, mortgage

Checking 974 M & W Feed Gas, Fuel, & Oil/CowCalf R -52.00

Interest expense, other Gas, Fuel, & Oil/CowCalf R -52.00 4/28/2004 -6743.00

TOTAL Interest expense, other

Checking 880 FLB

Labor hired Interest Expense:Farm Interest Mortgage/Overhead

R -8109.00

6/30/2004 -8109.00 7/30/2004 Checking 789 1st Nat'l Bank 8/14/2004 Interest Expense:Farm Interest

Other/Overhead R -603.61

9/15/2004 -603.61 TOTAL Labor hired Checking 841 Whitey Fang Rent/lease land, animals Checking 860 Whitey Fang Labor Hired/Wheat R -1523.00

Tax Schedule Continued 8/30/2004 Checking 879 Whitey Fang Labor Hired/Wheat R -963.00 9/30/2004 Checking 920 Whitey Fang Labor Hired/Wheat R -782.00

TOTAL Rent/lease land, animals

Labor Hired/Wheat R -742.00

Repairs and maintenance -4010.00 1/11/2004 Checking 904 Iona Section 8/30/2004 Repairs and Maintenance/Wheat R -1600.00

Checking 856 Heppler's Machine Shop Repairs and Maintenance/CowCalf R -42.00 W-2 Checking 774 Annie Accountant Salary or wages, spouse Checking 891 KleenSeed Consultants/Family Living R -150.00

1/19/2004 Checking 912 OK Farm Bureau Other Expenses:Farm Expenses Other/Wheat

R -228.00

4/14/2004 Checking 974 M & W Feed Dues:Farm Dues/Overhead R -24.00 4/28/2004 Other Expenses:Farm Expenses

Other/CowCalf R -331.00

5/12/2004 5/26/2004

TOTAL Federal tax withheld, spouse

Checking DEP Julie London Tax Spouse:Fed/Family Living R -87.00

Soc. Sec. tax withheld, self[1] Checking DEP Julie London Tax Spouse:Fed/Family Living R -87.00 1/31/2004 Checking DEP Julie London Tax Spouse:Fed/Family Living R -87.00

TOTAL Soc. Sec. tax withheld, self[1]

Checking DEP Julie London Tax Spouse:Fed/Family Living R -87.00

Soc. Sec. tax withheld, spouse

Checking DEP Julie London Tax Spouse:Fed/Family Living R -87.00

1/19/2004 Tax Spouse:Fed/Family Living R -87.00 4/14/2004 4/28/2004 Checking DEP Bill's Service 5/12/2004 Social Security

(FICA) Tax:Soc Sec R -31.00

5/26/2004

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Tax Schedule - Totals Only - Last Yr 1/1/2004 Through 12/31/2004

Amount Schedule A Medicine and drugs -533.79 Cash charity contributions -1,215.00 Schedule B Interest income 92.73 Schedule F Sales livestock/product raised 80,179.64 Total co-op. distributions 27.67 Agricultural program payments 3,112.00 Feed purchased -1,730.00 Fertilizers and lime -10,526.73 Freight and trucking -186.20 Gasoline, fuel, and oil -6,743.00 Interest expense, mortgage -8,109.00 Interest expense, other -603.61 Labor hired -4,010.00 Rent/lease land, animals -8,055.00 Repairs and maintenance -8,196.50 Supplies purchased -67.56 Taxes -6,153.33 Vet, breeding, and medicine -1,756.50 Other farm expenses -733.00 W-2 Salary or wages, spouse 18,461.40 Federal tax withheld, self[1] -52.00 Federal tax withheld, spouse -1,740.00 Soc. Sec. tax withheld, self[1] -31.00 Soc. Sec. tax withheld, spouse -1,144.60 Medicare tax withheld, self[1] -7.25 Medicare tax withheld, spouse -267.60 State tax withheld, self[1] -18.50 State tax withheld, spouse -872.00 Local tax withheld, self[1] 0

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Reconciling the Bank Statement in Quicken 2005

Reconciling your Quicken account with your bank statement serves as a good “check” on the completeness and accuracy of your data entry for bank accounts. The reconciliation process includes

• Entering information from your bank statement. • Marking cleared transactions in the Reconcile window. You may add missing

transactions or edit existing transactions as you go. • Comparing the cleared balance with your bank ending balance to see whether a

difference exists. You may create and print a reconciliation report, but you are not required to do so. If you are not currently reconciling your bank statements in Quicken, you should be! This is why: 1. Banks can make mistakes. 2. It is possible to type numbers incorrectly, duplicate transactions, or forget to record a

transaction. 3. Identity theft is on the rise. Reconciling your account may help you to catch irregular

activity on your account (for example, transaction(s) you did not make, misuse of ATM card, or incorrect electronic transfers).

4. Transactions must be reconciled for the “Year-End Copy” feature in Quicken to work properly.

Using the Lond05 file with the Checking register open, click Reconcile at the top left of the

check register screen (or click Cash Flow, Reconcile, and select Checking). Using the bank statement on the next page, enter the requested information on the screen:

Click OK.

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N 1st NATIONAL BANK AND TRUST COMPANY

Sixth and Main Streets • P.O. Box 2157 • Nowater, Oklahoma 74076 • (555) 397-2157 Offices in Nowater, Tulsa, Oklahoma City, and Chickasha • Member F.D.I.C.

STATEMENT Jack and Julie London Account No. Rt. 1, Box 23 1-101-816 Nowater, OK 74076 Statement Date 07/05/05

Services Available. Call for details. Checking Statement Summary Previous Statement 7/5/05, Balance of ....................................................................................$9,511.42 3 Deposits or other credits totaling...........................................................................................784.94 18 checks or other debits totaling..........................................................................................1,662.13 Current Balance as of 7/05/05.....................................................................................................8,634.23 Deposits and other credits……………………………………………………………………………………... Date Cleared

Amount Transaction Description

6/6 391.25 Personal Deposit 5/31 391.25 Direct Deposit 7/5 2.44 Interest earned

Miscellaneous Debits……………………………………………………………………………………………. Date Cleared

Amount Transaction Description

7/5 1.00 Service fee

Checks

Date Cleared

Check No. Amount Date Check No. Amount

06/11 1022 20.00 06/27 1031 15.00 06/15 1023 30.00 06/27 1032 30.00 06/16 1024 584.50 06/29 1034* 127.05 06/21 1025 189.83 06/30 1035 20.00 06/21 1026 27.80 06/27 1036 20.00 06/21 1027 61.66 06/27 1037 421.00 06/21 1028 30.00 06/27 1038 18.29 06/21 1029 25.00 07/01 1039 15.00 06/24 1030 26.00

*Indicates skip or change in numerical order

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Entries for service charges and interest earned are recorded as transactions and checked as

cleared in the reconciliation screen that follows. Payments and Checks are listed at left and Deposits at right:

A check mark is placed by transactions to be cleared by using the space bar or clicking with the mouse. You may add missing transactions, delete duplicate transactions or edit entries with mistakes as you go. Use the attached bank statement to identify and mark cleared transactions. It may help to change the view to Sort by Check Number or Sort by Date. To do this, click View at the top right of the window and select the appropriate option.

If you find that you forgot to enter a transaction, click New (top left of the Statement Summary window); to be taken to the Checking register. Record the transaction and click Enter. You can get back to reconcile by clicking Return to Reconcile at the right of the screen or by clicking Reconcile in the checking register window menu line.

Note: If you begin to reconcile the bank statement but are unable to complete it at the time, you can always click Finish Later. Your work will be saved and you can finish reconcile at your convenience.

Continue verifying entries with the 1st National Bank Statement. If you’ve managed to enter a transaction twice (you may want to view the entries in the checking register to determine the appropriate one to delete), highlight one of the entries and click Delete. Confirm that you want to delete the current transaction by clicking Yes. Have you ever transposed a number in your entry or recorded the wrong amount? With the transaction highlighted, click Edit in the reconcile window menu. You are taken to the original entry in the checking register and can make the necessary changes in the register and record the

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entry. Again, click Return to Reconcile, which will return you to the Statement Summary screen. Once you have marked all cleared payments, checks, and deposits, the difference listed in the bottom right corner should be 0.00 (see below). If it is correct, congratulations!

Click Finished.

If the Difference amount is not zero, recheck your marked Quicken transactions with your bank statement. Click Back to Statement Summary (middle of screen menu bar) to check the information you entered from the bank statement. As a last resort, if you are unable to find the difference, click Finished; and Quicken will enter a balance adjustment in your register. Select an Adjustment Date when prompted, and then click Adjust).

You will be asked if you want to create a reconciliation report. Select Yes

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Print OK

Note: One of the unique features of Quicken is the ability to change transactions. However, be advised that changing a reconciled transaction (date, amount, or reconciled clear status) can cause problems with the reconciliation feature. Quicken 2005 handles changed reconciled transactions differently from the past. The starting balance will reflect the changed transaction. To correct an error caused by a changed transaction may require the user to mark the previous statement transactions as not cleared and reconcile that statement again before proceeding. It is also important to note that the reconciliation in Quicken 2005 has an option to do online reconciliation in conjunction with online downloading or manual reconciliation. Choose one reconciliation method and stick with it as the beginning statement balance will be different if you switch back and forth.

Reconciling Other Types of Accounts The process for reconciling savings accounts is the same as for checking. Credit card

accounts have a different opening screen (as shown below), but the rest of the process is similar to the other cash flow center accounts.

OK and complete the reconciliation. Cash accounts do not have a reconcile process. However, if you happen to forget to record

transactions, the balance can be updated. Click Update Balance. Enter the amount you want in the account, and an adjusting entry will be made.

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OK

67

Using the Budget Features in Quicken 2005

Quicken budgets can be used to summarize expected income and expenses for planning purposes. The budget can later be used in comparisons to actual income and expenses to determine whether expectations are being met. If expenses are "over budget", measures can be taken to rein in costs before financial problems are out of control. In this "hands on" session we will use a previously developed file of records for the London farm to practice generating budgets. You will be able to practice many of the steps that you might use in summarizing your own records. Using these instructions, you will

• Develop a whole farm budget for 2005 based on 2004 transactions • Compare actual records to the budgeted amounts Click File Open Double-click

C:\workshop files LOND05

Click OK.

To access the budget features in the file, click

Planning Budget

Note: If you don’t get the following screen, click on the Setup tab at the upper left corner of the Budget screen.

Select Automatic.

Click Create Budget.

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Note: If this is the first time a budget has been created in the file, the default name is “My Budget”. You will need to select the categories and accounts to be included in the Income and Expense section. Check on Clear 0 amounts to exclude unused categories, but include all categories that have an amount recorded.

Complete the screen:

This will base the budget for the coming year on the transactions entered for the most recent full year of data, 2004, maintaining the same monthly pattern for income and expenses. Since the amounts are not likely to be exactly the same, we chose to round the values to the nearest $10 for planning purposes. Click OK.

Note: You will not get this pop up message if it is your first budget.

Click OK.

A budget screen will be opened that contains a summary budget by category on the left side and a

window to allow you to change the monthly amounts for each category at the right. (If the Show category groups box is checked at the bottom left corner of the screen, deselect it to eliminate the discretionary/non-discretionary labels and sorting.) To view the annual total rather than the monthly or quarterly total, select Yearly from the Totals drop-down menu at the bottom of the screen.

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At the right of the screen, you can change the monthly amount for the item that is selected at the left (here, Government Payments):

Let's say that the Londons expect a few items to be significantly different this year and want

to edit those amounts:

1. Government payments are currently budgeted for March. The London’s plan is to split government payments between March and December, so they want to budget government payments for $1,100 in March and $2,000 in December. Click Government Payments, click the box next to the appropriate month, enter the new numbers, and click Apply (button at top right of column). Note that the totals are automatically updated.

2. Jack has taken a part-time job and expects to earn $1000 each month. Move the cursor to the Salary row at the bottom of the Income section, then update the amount to 1,000 in each month and click Apply. In the Salary Spouse row, enter 1850 in each month and click Apply.

Note: Don’t try to use [CTRL+C] to copy as you might in other software. You will be taken to the Category List.

Now, click on the Expenses tab at the top left of the screen.

3. Jack and Julie underestimated fuel expenses last year, so they want to budget even more for fuel expenses in the coming year. Click on the Gas, Fuel, & Oil line. For January and February, the amount should be $130. Other fuel expense entries should be: March, 210; April, 120; May, 60; June, 3350; July, 2280; August, 560; September, 910; October, 60; November, 60 and December, 100. Enter these numbers in the appropriate cells and click Apply.

Continue to edit items in the budget to reflect your planning assumptions for the year. Make the changes to each category line, clicking Apply after the monthly detail is updated.

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Click the Summary tab at the top left of the Budget window to view your information. You will now see a summary of your anticipated income and expenses for the coming year by month.

The note at the top alerts us that we may have to use savings or draw on a line of credit to cover expenses in some months this coming year.

Note: If you have a printer, you can print the budget by clicking Print at the top left of the budget window.

Once you have created and saved a customized monthly budget, actual year-to-date income

and expenses can be compared with the budget.

Note: If you closed the Budget window, click Planning, Budget to open it.) Click Reports Monthly Budget Report (Or from the main menu line, click Reports, Cash Flow, Monthly Budget.) Click Customize.

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Select Date Range: Custom Date and type the starting date as 1/01/05 and the ending date as 2/28/05. Type the Title: London Monthly Budget and select the Budget: London Budget. Click OK.

This report can be used to see whether expected income and expenses are being realized.

Scroll through the report to compare actual income (inflows) and expenses (outflows) to budgeted amounts by studying the Difference column. If income is below budget or expenses are above budget, changes in management may be needed to avoid financial problems. To save this report for future use, click on Save Report at the top right.

To look at a graphical presentation of budget variances, click on the Graph tab at the top

right of the report. The blue bars above the zero line show favorable variances (net income is higher than expected, because cash inflows are above budgeted amounts or cash expenses are below budgeted amounts). Point at one of the bars and you’ll see that a magnifying glass appears, meaning you can zoom in on the transactions that support the graph. Double click on the bar and you’ll get a report listing the transactions for the month. To return to the original graph, click on the Back button. Click on the X in the upper right corner to exit. If you get a prompt, click on Don’t Save.

London Monthly Budget 1/1/2005 Through 2/28/2005 Using London Budget

1/1/2005 1/31/2005 2/1/2005 2/28/2005 1/1/2005 2/28/2005

Category Description Actual Budget Difference Actual Budget Difference Actual Budget Difference INFLOWS Capital Sales 0.00 10000.00 -10000.00 0.00 0.00 0.00 0.00 10000.00 -10000.00 Co-op Distributions 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Government Payments 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Int Inc 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Raised Sales 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Grain 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Livestock 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 TOTAL Raised Sales 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Salary 500.00 1000.00 -500.00 1000.00 1000.00 0.00 1500.00 2000.00 -500.00 Salary Spouse 1846.14 1850.00 -3.86 2769.21 1850.00 919.21 4615.35 3700.00 915.35 TOTAL INFLOWS 2346.14 12850.00 -10503.86 3769.21 2850.00 919.21 6115.35 15700.00 -9584.65 OUTFLOWS Auto 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Service 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 TOTAL Auto 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Bank Chrg 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Charity 30.00 170.00 140.00 0.00 90.00 90.00 30.00 260.00 230.00 Clothing 0.00 30.00 30.00 0.00 50.00 50.00 0.00 80.00 80.00 Dining 0.00 20.00 20.00 0.00 20.00 20.00 0.00 40.00 40.00 Dues 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Farm Dues 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 TOTAL Dues 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Entertain 0.00 20.00 20.00 0.00 20.00 20.00 0.00 40.00 40.00 Feed Purchased 0.00 900.00 900.00 0.00 100.00 100.00 0.00 1000.00 1000.00 Fertilizer & Lime 0.00 0.00 0.00 0.00 6180.00 6180.00 0.00 6180.00 6180.00 Freight and Trucking 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Gas, Fuel, & Oil 0.00 130.00 130.00 0.00 130.00 130.00 0.00 260.00 260.00 Groceries 44.12 360.00 315.88 0.00 130.00 130.00 44.12 490.00 445.88 Household 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Insurance 32.59 0.00 -32.59 32.59 0.00 -32.59 65.18 0.00 -65.18 Interest Expense 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Farm Interest Mortgage 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Farm Interest Other 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

London Monthly Budget Continued 1/1/2005 1/31/2005 2/1/2005 2/28/2005 1/1/2005 2/28/2005

Category Description Actual Budget Difference Actual Budget Difference Actual Budget Difference TOTAL Interest Expense 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Labor Hired 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Medical 161.00 70.00 -91.00 0.00 0.00 0.00 161.00 70.00 -91.00 Farm Expenses Other 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 TOTAL Other Expenses 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Recreation 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Rent 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Land 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 TOTAL Rent 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Repairs and Maintenance 7670.63 70.00 -7600.63 0.00 20.00 20.00 7670.63 90.00 -7580.63 Supplies 0.00 0.00 0.00 0.00 70.00 70.00 0.00 70.00 70.00 Tax 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Fed 52.00 50.00 -2.00 104.00 0.00 -104.00 156.00 50.00 -106.00 Medicare 7.25 10.00 2.75 14.50 0.00 -14.50 21.75 10.00 -11.75 Soc Sec 31.00 30.00 -1.00 62.00 0.00 -62.00 93.00 30.00 -63.00 State 18.50 20.00 1.50 37.00 0.00 -37.00 55.50 20.00 -35.50 TOTAL Tax 108.75 110.00 1.25 217.50 0.00 -217.50 326.25 110.00 -216.25 Tax Spouse 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Fed 174.00 90.00 -84.00 261.00 0.00 -261.00 435.00 90.00 -345.00 Medicare 26.76 10.00 -16.76 40.14 0.00 -40.14 66.90 10.00 -56.90 Soc Sec 114.46 60.00 -54.46 171.69 0.00 -171.69 286.15 60.00 -226.15 State 51.70 30.00 -21.70 77.55 0.00 -77.55 129.25 30.00 -99.25 TOTAL Tax Spouse 366.92 190.00 -176.92 550.38 0.00 -550.38 917.30 190.00 -727.30 Taxes 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Farm Property Taxes 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 TOTAL Taxes 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Telephone 76.10 0.00 -76.10 155.77 100.00 -55.77 231.87 100.00 -131.87 Utilities 88.11 60.00 -28.11 125.00 120.00 -5.00 213.11 180.00 -33.11 Veterinary 480.00 0.00 -480.00 0.00 510.00 510.00 480.00 510.00 30.00 TOTAL OUTFLOWS 9058.22 2130.00 -6928.22 1081.24 7540.00 6458.76 10139.46 9670.00 -469.46

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Using Quicken for Financial Planning

Quicken Deluxe has a number of handy features that facilitate financial planning. From the menu line at the top of the screen, click

Planning Financial Calculators

You will see the following calculators listed: Retirement, College, Refinance, Savings, and Loan. Click Retirement Calculator to view an example. 1. Retirement Calculator In the Retirement Calculator, you choose between calculating for: • Current savings needed to have a certain level of income at retirement • Annual contribution to savings needed to achieve a certain level of income • Expected Annual retirement income given current savings and expected annual contributions

Information that is required includes the annual yield on savings, current age of the candidate for retirement, retirement age, age at which withdrawals will stop, other income (social security, etc.), whether the investment is tax-sheltered, current and retirement tax rates, and inflation rates.

Julie London is 45 and her husband, Jack, is 48. Their children are now (mostly) self-supporting. Julie and Jack have started to wonder whether they are adequately preparing for retirement. Julie is a teacher and Jack manages their family farm. They have $16,000 in a savings account and expect to be able to add $4,000 to their savings each year. Their non-tax sheltered investments yield an average of 8% per year and economists expect inflation to continue at a modest 3% annually.

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Let’s calculate Julie’s expected retirement income. Select Annual Retirement Income. Enter the information as shown on the following screen.

Click Calculate. Expected annual income after taxes in this scenario is a meager $5,785.21. What if they are able to double their annual contribution to $8,000 ($4,000 each)? What does that mean for annual income after retirement? It increases to $9,991.91 each, still not a very comfortable level of support. The moral of the story is save early and save often! In the above analysis we focused solely on the cash savings. If the family farm is paid for and is sold at retirement (not given to children), some portion of the value could be included in savings. Let’s assume that Julie’s half of the owned farm assets are expected to generate $200,000 when sold after taxes are paid. This time we will focus solely on Julie’s earnings from the farm assets at retirement. Again, select Annual Retirement Income at the bottom left of the screen. Enter the following information:

Click Calculate.

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Thus, Jill’s portion of the farm assets if sold at retirement and invested in an alternative earning 8% annually will generate about $12,586.58 in annual income. Click Done. 2. College Calculator

Jamie is 13 and plans to attend college (OSU, of course) where tuition currently averages $2,000 per semester. She will study hard and graduate in 4 years. Since she's a smart girl, she knows that she should start saving money now for her college expenses. She wants to know how much she and her parents need to save each year.

Click Planning Financial Calculator

College Calculator

In the College Calculator window, select the calculation that you want to make at the bottom right of the screen. In this case, it is the Annual Contribution. Enter

Click Calculate. It appears that Jamie and her family will need to save $2,078.88 annually if they want to pay the tuition for Jamie to attend college. Click Schedule to see the deposit schedule. Click Close to return to the College Calculator. Click Done to leave the College Calculator.

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3. Refinance Calculator Interest rates moved lower in recent months and Jack and Julie are wondering whether they should refinance the house they bought 5 years ago.

Click Planning

Financial Calculators Refinance Calculators

Click Calculate.

The refinance analysis indicates that approximately 21 months are needed to recoup the refinancing costs and break even. Monthly principal and interest payments are $355.07, and total closing costs are $4,200. If the family plans to remain in the house at least this long, then refinancing looks like a good deal. Click Done to leave the Refinance Calculator.

4. Investment Savings Calculator

Your family wants to be able to pay $100,000 cash for another combine in 6 years. You currently have $4,000 in savings. How much do you need to save each year to meet this goal if savings are earning 5% interest? Click Planning

Financial Calculators Savings Calculator

Calculate For:

Regular Contribution

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Then enter

Click Calculate. The Quicken calculator indicates that $16,766.58 per year must be saved to meet this goal. Click Schedule to see the deposit schedule. Click Close to return to the Investment Savings Calculator. Click Done to leave the Savings Calculator. 5. Loan Calculator

The loan calculator allows you to estimate either a loan amount (given an interest rate, number of years, periods per year, compounding periods, and payments per period) or payment per period (given a loan amount, interest rate, number of years, compounding periods, and periods per year). Click Planning

Financial Calculators Loan Calculator

Look at the bottom of the Loan Calculator screen. When Payment Per Period is selected, Quicken calculates the regular payments for a loan of a given amount based on your entries for the principal amount, annual interest rate, number of years the loan will be repaid, compounding periods, and the number of payments per year. For instance, let's say that you are considering purchasing a new truck. The truck that you have chosen, a new four-wheel drive, has a sticker price of $35,000, but you talk the salesman down to $33,000. You have saved $4,000 to be used for a down payment so you need to borrow $29,000. The loan will be for 5 years at 4.8% interest with monthly payments. Enter the following information:

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The anticipated Payment Per Period is $544.61 monthly. You can see how much of your total payment is principal and how much is interest in a given year by clicking Schedule to display the payment schedule. To leave the schedule, click Close. A different question that can also be answered with Quicken's loan calculator is "How much can you afford to pay for a new truck?" If you know how much you have available for regular payments, the loan calculator can also be used to solve for the amount you could afford. Let's say that you have around $350 per month to apply toward the purchase of a new truck. The expected interest rate is 6.0%. On the Loan Calculator screen, you will want to calculate the loan amount instead of the payment, so select Loan Amount, and enter the following information:

Click Calculate. The maximum principal amount that can be borrowed with these repayment terms is approximately $18,103.95. To leave the loan calculator, click Done.

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Line of Credit/Credit Card Accounts and Alerts

A line of credit or short-term operating note is often best tracked using a credit card account. Money can be transferred into checking and payments made as money becomes available. You can also set alerts to warn you when you are approaching the account limit. To set up a line of credit note, click

Tools Account List Add Account (top center of Account List window). In the Quicken Account Setup window, select

This account held at the following institution 1st National Bank

Click Next.

Select

None of these. Use the following name: 1st National Bank

Click Next. Choose Credit Card as the type of account to add. Click Next. Type Line of Credit to name this account.

Click Next. Enter 7/1/05 as the ending date and 75,632.24 as the ending balance from your statement. Click Next. It is optional to enter the credit limit for this account; however, we will type in 100,000. Click Done. To have Quicken warn when you are approaching your credit limit, click

Tools Set Up Alerts

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Click the Setup tab. Then click the plus sign to the left of Cash Flow to expand the list of options. Then click Credit Card Limits. To the right, enter the Remind me at value as 90,000.

Click OK. If you exceed your alert limit or account limit, a pop up alert will appear.

Click OK. To record the transfer of funds into the Checking account from the Line of Credit, open the Line of Credit account, if not already open, and click Transfer (see following screen).

Click OK.

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This account can be reconciled with a loan statement just as the credit card account can be reconciled with the credit card statement. Information that will be needed from the loan statement includes charges and cash advances, payments and credits to the account and the ending balance.

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Saving and Locating Information for 1099s

One means of noting that a transaction may contribute to the need for a tax form 1099 is to type 1099 on the memo line in appropriate transactions in the check register. You can then generate reports that list or summarize all transactions with this note in the memo line. For instance, let's say that you write check number 3267 on June 12 for $628.13 to Joe Bob Baling for custom baling of your alfalfa hay. Click Tools Account List Checking Type the following information into the checking register:

Date: 06/12/05 Num: 3267 Payee: Joe Bob Baling Payment: 628.13 Category: Custom Hire/Alfalfa Memo: 1099

Click Enter.

Future payments should follow the same format with the payee spelled exactly the same and 1099 entered in the memo line. This allows Quicken to recognize transactions as a match when filtered reports are developed. At the end of the year when you want to know how much you've spent with a specific payee where 1099 is in the memo field, you simply develop a filtered cash flow report summarized by payee to show the amount. Let’s look at last year’s information. To generate the report, click

Reports

Cash Flow Cash Flow

Click the Customize button (top right of screen), Date: should be set from 1/1/04 to 12/31/04, change the title of the report to 1099 Report, and select Payee for the Row heading.

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Click the Categories tab. In the Matching column at the right, type 1099 in the Memo Contains field.

The report will pick up any memo notations that include 1099, so thoroughly check the report. Our sample report demonstrates the importance of being consistent in how names are entered as Hepplers and Heppler’s Machine Shop are viewed as different vendors. (Note: The transactions can be edited to match by choosing Edit, Find and Replace, Find/Replace. See xxx) Click OK.

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To memorize the report, click Save Report in the top right hand corner. Name the report and indicate the center in which the report should be stored.

Click OK. You can then re-create the report easily by clicking Reports, Saved Reports and Graphs, 1099 Report.

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Recording Futures Market Transactions Options

An option allows a producer to pay a premium for a type of commodity price “insurance”. Many producers use “put” options to provide a floor price for their stocker cattle. For example, let’s say you have 75 head of stocker steers anticipated to weigh approximately 650 pounds in May and want to insure a $70 floor price for their May sale. A feeder cattle contract is 50,000 pounds or 500 cwt, so one contract could protect the price for your 75 steers. You call a broker and purchase a $70 May feeder cattle put option for $1.20/cwt premium. The cost of the option purchase would be $600 ($1.20 x 500 cwt) plus a commission of $75.

To record the purchase of the “put” using funds from the checking account, go to the

Checking register and enter Date: 1/7/05 Num: 3456 Payee: ABC Brokerage Payment: 675 Category: Marketing Expense/Stocker Memo: $70 Put @ $1.20 for 500 cwt & $75 commission

Click Enter.

Often your option will expire without any value. However, if you realize any income from the option, you would record it as Marketing Income. This income will be tax-related and should be linked to the tax form and line, Schedule F: Other Farm Income.

You would then make the appropriate deposit entry. For example, in May, feeder cattle are trading at $68 and your $70 put is now worth $2/cwt or $1,000. You would sell your put and enter the deposit in the Marketing Income category.

Date: 5/6/05 Num: DEP Payee: ABC Brokerage Deposit: 1000 (be sure to erase the automatic value of $675.00) Cat: Marketing Income/Stocker Memo: Settlement of put option

Click Enter. Hedges Hedges can be a bit more complicated to record because daily changes in market prices may also affect the margin money required for the trade. Enter your realized gain or loss after you have offset your hedged position in Margin Income or Margin Expense categories as appropriate.

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Scheduled Transactions In this section, we will use the LOND05 file. Click File

Open (or press [Ctrl+O]) C:\workshop files\LOND05.QDF Click OK.

If you want to be reminded of due dates for monthly bills, you can set up one or more scheduled transactions. For example, each month you get utility and cable television bills which are due on the first of the month. There are several ways that you can set up a scheduled transaction for a payment that has not been previously entered in the register.

Click Cash Flow Scheduled Transaction List (or press [Ctrl+J]) Create New Scheduled Transactions

Click on the Options button if you want to specify to Count Business Days for reminders and whether to list this in the Bills and Scheduled Transactions snapshot.

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Click OK to close Create Scheduled Transaction Options window. Click OK to record the scheduled transaction.

Repeat the process for other scheduled transactions. If you turn on the computer any time within three days of the date on which the bills are due, you will be reminded that you have bills to pay. Close the Scheduled Transaction List by clicking on the X in the upper right corner.

Another way to set up a scheduled transaction is to click Cash Flow Center (on left sidebar). In the Bills and Scheduled Transactions window at bottom, click Options, Set up a bill or Scheduled Transaction. Enter the information and click OK.

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Writing Checks with Quicken

Quicken acts as a register for transactions, and also allows you to write and print checks from the computer (with the appropriate paper form). The check-writing feature allows you to “write” the check as well as complete the memo, category, and class. Click Cash Flow Write Checks (or [CTRL+W])

Enter the date, payee, and dollar amount (written amount fills in automatically); address and memo are optional. The category is entered below the check and, as in the register entry, clicking the Split button or pressing [Ctrl+S] will allow you to enter information for a split transaction. Click the button Record Check to enter the transaction in the register. The checks are listed with Print in the NUM field until they are printed. Before you print out checks, choose the appropriate printer settings. Close the Write Checks window. Click File Printer Setup For Printing Checks

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Select the appropriate page and printing style for the type of checks you will use. OK To print the checks that are prepared, click on Write Checks [Ctrl+W] (left of center in the check register window), click Print. Or, click File, Print Checks from the Quicken drop-down menu.

Note: If you are not actually printing checks using Quicken, but use this view to enter data, you can later enter the check number in the register. Entering the check number moves the entry from the checks to be printed list.

Click Cancel since we do not actually wish to print these two checks.

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Year End Copy: Start New Year and Archive

Note: These Quicken features have been modified somewhat from earlier versions. At the beginning of the year or when files start getting big, people wonder whether they should reduce the size of their files or remove some data. Now that large files can be backed up on CD-ROM this is a less frequent concern. We prefer to maintain several years of data in the current file so that comparison reports showing performance by year can be easily created. However, if you feel the need, the Year-End Copy feature allows you to reduce the size of your working file and archive older information. Let’s say that you’ve been entering financial records in Quicken since 1996 in a file called FARM. Now you want to modify the current file to include only data beyond January 1, 2000. Click File

File Operations Year-End Copy

Click OK. If you choose Do nothing, your current file will remain the same, and you will only copy your data to a backup archive file. To modify the current data file, click on “ I only want transactions…” as in the screen above and indicate the January 1, 2000 cut-off date. The current file will be reduced to transactions for the date selected and forward (uncleared transactions and all investment transactions will remain in the current file--a good reason to reconcile your accounts). An archive file will automatically be created at the same time.

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When the current data file has been updated (if selected) and the archive file has been created, you will choose which file to work with.

OK Again, we recommend you keep several years of data in a file for comparison purposes, but when files are hard to back up or information becomes dated, this is a good way to handle the situation. You choose the dates for retaining information in the New Year file and archive.

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Category Clean Up

Have you checked your category list lately? You may need to “clean it up” by eliminating unused categories and removing duplication so that your reports will be clear and meaningful. One way to determine the categories used is to print a cash flow statement with the categories as rows. Click Reports Cash Flow Spending Customize the Date Range: Include all dates. Print the report and have it at hand while you view the category list on screen. Click Tools, Category List (or press [Ctrl+C]). Delete unused categories Delete any categories in the list that do not appear in the printed Cash Flow report. Highlight the category and then click the Delete button.

Click OK. Merge categories If you have created two or more categories that really should be under one title, you can merge the duplicate category titles and transactions into one category. Assume you have recorded transactions using both Home Repair and Home Rpair. Select Home Rpair in the category list. You will see the Transaction Usage in the column on the right. Click the Merge button. Select Home Repair and check Delete the category Home Rpair.

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OK Recategorize This option works well if you have a few transactions that need to be recategorized, but others belong in the original category. In the Category List window, click on Go to Recategorize (upper left). In Search Category: type or choose Entertain. We had used this category for our cable TV bills, but have decided we would rather have these transactions attached to the category Utilities:Cable TV/Family Living. Click on Find All.

Check the Cablevision transactions. Enter Replace With: Utilities:Cable TV/Family Living Click the Replace button. You will get a message about how many transactions are to be replaced, OK, OK.

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Checking your category list is like spring-cleaning. It’s not something you enjoy doing, but it does provide benefits in the long run. If your category list is in order, you will have fewer corrections and changes to make when you want to print a report for the accountant, create a cash flow statement for a lender, or work on a budget for the coming year.

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Retrieving a Deleted Quicken File

Oops! If a Quicken data file is accidentally deleted and you haven’t made a backup file on floppy disk or CD, a copy may be restored from the QUICKENW\BACKUP directory. Quicken automatically saves a backup copy of your working data file on a regular basis (a good reason for recording data on a consistent weekly basis.) To retrieve the automatic backup file, in Quicken click File, Open, and select the QUICKENW folder (directory) or the folder where your file is saved. In the list will be the subdirectory or folder named BACKUP. Double click on BACKUP and then choose the data file name with a 1 (for example, FARM1.QDF). It is the most current of the five backup copies that Quicken retains. Click OK to complete the retrieval. It is important to note that this is not a reliable backup method. This type of backup will be useless if the computer hardware is damaged. This type of backup is random. The best backup method is to back up to a diskette or CD-ROM and store at least one copy off-site.

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Backing Up to Compact Disc (CD)

Quicken files may be backed up onto compact disks (CDs). CDs are a longer lasting source of data storage when handled properly. They also can be a bit more complicated to use, but don’t let this scare you away from storing data on CDs. For newer computers and large files, this may be the best option. Windows XP is able to create CDs without third-party software, but earlier Windows versions will require third-party software (such as Easy CD Creator). The software needs to be compatible with your CD burner hardware. Format the CD for data using the CD software. The procedure may vary upon your software. Then go to the Quicken drop-down menu and click File, Backup. Select the file you wish to backup. For backup location, select the location of the writable CD or DVD drive.

Note: Windows XP users will select Use Windows CD Writing Wizard. Click OK when the message that the file was saved to a temporary backup appears.

Click OK. When you receive the message File backed up successfully, click OK and remove the CD. At this point, your CD burner software may ask how to handle the closing of the CD. Generally, you will want to be able to open the files with any CD player, but keep the CD “open” to allow additional files to be written to the CD.

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Restoring a Backup From a CD-R or CD-RW Drive

If you find it necessary to use a manual backup copy of a Quicken file, use these instructions.

To restore the file, go to the Quicken drop-down menu and click File Restore Backup File

Note: If you do not wish to overwrite the original file on the hard drive, you will need to cancel and rename either the backup files or the files on the hard drive.

Note: We had selected to include the date in the file name. As you can see in the screen above, 20040929 stand for YYYYMMDD.

Click OK.

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Backup Trouble A pat on the back to those who back up Quicken data on a regular basis…. It is important to ensure those backup files will be valid and not corrupted if you do need them in the event of hardware failure. Quicken offers some suggestions for ensuring backup files will be there when you need them. Backing Up Files to Diskettes It is essential that the diskettes you use for backups are free from damage. Even if you have purchased diskettes that are formatted, it is a good idea to manually format them to check for bad sectors. In Windows, click Start Help Index tab Type floppy disks. Double-click formatting to view the instructions. Follow the instructions to fully format the diskettes before first use. Remember that formatting deletes any information previously saved on a diskette. Do NOT format your hard drive. If your Quicken file is getting large, it may take more than one diskette to make a backup. Be sure to carefully label diskettes in the order they were made (for example, one to five) so that they can be restored in the proper order. Proper care of the diskettes while storing them is also important. The following are damaging to diskettes:

• Extreme heat or cold. Keep diskettes out of direct sunlight and cold air. • Dust. Keep diskettes in covers or storage boxes that are closed and sealed. • Magnetism. Contact with magnets erases or damages data. Do not use a magnet

near a diskette. Do not place diskettes near vacuums, phones, speakers, etc. Remember to have more than one set of backup diskettes. After several uses, discard or recycle diskettes for another use. General shelf life of a diskette is five years. Backing up to CDs CDs can store more information, so if your file is large, this may be the media to make backups assuming your computer is capable of writing to CDs. CDs need to be handled properly as well. The following are damaging to CDs:

• Dust. Dust on the CD can cause scratching, so keep in a jewel case or CD jacket. • Flexing. Store CDs in a case and store vertically to minimize bending/flexing of the

CD. • Fingerprints. Fingerprints or smudges can throw the laser off. Handle CDs from the

edges and wipe off smudges.

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Building A Farm/Ranch Balance Sheet in Quicken Deluxe 2005

To develop a fairly complete picture of an individual business' financial situation, a cash flow statement, an income statement and two balance sheets (beginning and ending) are needed for an accounting period. The balance sheet shows what is owned and what is owed at a point in time. Since Quicken is a cash accounting program and not intended for accrual accounting, some effort is required to record capital sales and purchases, change in values of assets owned or liabilities owed, and change in inventory, all of which are essential to generate an accurate balance sheet. And, because Quicken is designed to record financial data and not physical data (e.g. number of head or bushels, weight and price per cwt of livestock sold), it may be more difficult to record and summarize unit information in a Quicken balance sheet than it would be in a spreadsheet or hand record system.1

The instructions that follow suggest one way of developing a balance sheet using market

values for assets within Quicken.2 You should • Inventory assets and liabilities • Establish asset and liability accounts in Quicken with accurate beginning balances • Adjust asset accounts to reflect

- Asset purchases and additions to assets - Asset sales - Changes in inventories - Changes in asset values

• Adjust liability accounts to reflect - Repayment of liabilities - Accrued expenses

Step-by-step instructions follow for entering data and making adjustments during or at the

end of the year.

1Integrated Farm Financial Statements (IFFS), an Excel spreadsheet created at Oklahoma State University, is an alternative for creating balance sheets and other financial statements. IFFS is designed specifically for farm financial planning. It has better features for maintaining and updating balance sheets and whole farm financial statements. Cash flow information from Quicken records can be imported into IFFS. For more information go to: http://www.agecon.okstate.edu/iffs/ 2The Farm Financial Standards Council (http://www.ffsc.org/) recommends that both cost and market value of some assets should be documented in the balance sheet. In Quicken, you cannot record both cost and market values for an individual item in the same account (the investment accounts are an exception). Two separate asset account series would need to be developed to record both cost and market values.

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1. Develop a complete inventory of farm/ranch assets and liabilities, documenting market value of the assets at a point in time OSU Fact Sheet F-752 explains the development of a balance sheet and contains a worksheet

which will help you develop an inventory list. Be sure your list of assets owned and liabilities owed is complete and as accurate as possible. Document sources for prices of assets (for example, local auction or trade magazine ad) and balances of liabilities (for example, loan statement from a lender). Click File

Open (or [Ctrl+O])

Select C:\workshop files\LOND05 2. Import asset accounts

To develop a balance sheet, you will first establish a variety of asset and liability accounts.

The types of accounts in Quicken include • checking • savings • credit card • cash • brokerage • IRA, SEP, Keogh • 401(k), 403(b) • single mutual fund • house (with or without mortgage) • vehicle (with or without loan) • asset • liability Several accounts of one type can be developed, for instance, one liability account for each

outstanding debt. A sample Quicken farm account list is included (page xxx) and includes such things as accounts receivable, buildings and improvements, capital leases, purchased feed, market livestock and so on. In our sample list, the accounts are labeled with letters so that they are listed from most to least liquid, that is, accounts with items most easily converted to cash are listed first, the traditional order for balance sheet items.

Note: Current assets are assets expected to be used up or sold in one year and are listed

first. Examples include marketable securities, market livestock, and inventory. Non-current assets are ones that are used for longer periods of time in the farm operation. Examples include breeding livestock, machinery and equipment, vehicles, land, buildings and improvements. These designations were developed by the Farm Financial Standards Council. The account, h Other Farm Current Assets, is for farm current assets not included in other labeled lines. The account, r Other Farm Noncurrent Assets is for non-current

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(both intermediate and fixed) farm assets. For additional information on the London farm, see OSU Facts F-751, “Developing a Cash Flow Plan”; F-752, “Developing a Balance Sheet”; F-753, “Developing an Income Statement”; F-791, “Schedule of Assets”; and F-792, “Liabilities Schedule.” These can be found at www.osuextra.com.

Click File Import QIF file Complete the information as shown on the following screen:

Click Next Quicken will give you a message verifying that items have been successfully imported. Click Done.

Click Tools, Account List (or press [Ctrl+A]) and scroll through the asset account list to

verify that it contains the accounts a Marketable Securities, b Raised Market Livestock, etc. The accounts will be listed in the Property and Debt Center as well.

The account list can be modified easily. Let's say that you don't expect to use the Capital Leases account and want to delete that account from the list. In the Account List click the account, n Capital Leases.; click Delete; type Yes to confirm; and click OK. 3. Enter beginning balances in asset accounts

The beginning balance in an asset account may be the sum of the market values of all assets

in that group or an entry may be made for the beginning balance of each individual asset. The latter form ensures that you have a record of the values assigned to each item. Then, if an asset (for example, a disk harrow) is sold during the year, the harrow's market value is subtracted from the asset account so that the end-of-year balance sheet will be accurate.

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Begin updating the beginning balances in the London's individual asset accounts. Double click on b Raised Market Livestock. On a blank transaction line, enter the value of raised market livestock on hand January 1:

Date: 1/1/05 Ref: Payee: Mixed stockers Increase: 18900 (Be sure to [Tab] over to the Increase column.) Category: (make sure to remove the category if one appears) Memo: 45 hd @ 6 cwt @ $70/cwt

Press Enter.

Note: If you want to change the order so that the memo appears before the category in the register, click Edit, Preferences, Quicken Program, Register, Show Memo before Category, OK.

You may get a message asking if you want to select a category. Select Don’t show this message again at the bottom of the screen, and click No.

Now choose c Purchased Market Livestock from the account list at left. On a blank transaction line, enter the value of purchased market livestock on hand:

Date: 1/1/05 Ref: Payee: Stocker Steers Increase: 54880 (Be sure to [Tab] over to the Increase column.) Memo: 112 hd @ 7 cwt @ $70/cwt Category:

Note: If you want to later create a report listing number of head of livestock, you must be consistent in the use of labels in the memo field. For instance, you must always use head (or hd) for a filtered report to include this information.

Press Enter.

If you purchase more than one lot of stockers, you may want to give different names to the lots in the Payee line. When you are finished entering values for purchased market livestock, choose d Inventory from the account bar. In this account, you will enter the value of stored crops, feed and supplies. For example, on a blank transaction line, enter

Date: 1/1/05 Ref: Payee: Stored Wheat Increase: 3177.50 (Be sure to [Tab] over to the Increase column.) Memo: 1025 bu @ $3.10/bu Category:

Press Enter.

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Values for growing crops should include expenses incurred to date in the production of the crop. Choose g Growing Crops from the account bar. On a blank transaction line, enter

Date: 1/1/05 Ref: Payee: Wheat Increase: 18000 Memo: 450 acres @ $40/a Category:

Press Enter.

As with the market livestock accounts, two accounts are included for breeding livestock, one

account used for raised and one for purchased. Here the market value of raised breeding livestock―cows, sows, replacement heifers or gilts, boars and bulls―is recorded. For example, select j Raised Breeding Livestock from the account list. Enter

Date: 1/1/05 Ref: Payee: 5-Year-Old Cows

Increase: 7500 Memo: 15 @ $500 ea Category:

Press Enter.

Note: You may add additional accounts if you have several livestock enterprises and want to maintain separate accounts for different species. Select k Purchased Breeding Livestock from the account list. Enter the values of

purchased breeding livestock--purchased cows or sows, replacement heifers or gilts, herd bulls or boars. For example, on a blank transaction line, enter

Date: 1/1/05 Ref: Payee: OBI Herd Bull Increase: 2500 Memo: 3 year old @ $2500 Category:

Press Enter.

Select l Machinery-Equipment from the account list. Enter market values for each piece of

owned machinery and equipment.

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Date: 1/1/05 Ref: Payee: 1993 Allis Tractor Increase: 65000 Memo: Category:

Press Enter.

Date: 1/1/05 Ref: Payee: 1992 Disk Increase: 500 Memo: Category:

Press Enter.

Select p Land from the account list. Record market values for each piece of land owned. Date: 1/1/05 Ref: Payee: Smith Place Increase: 72000 Memo: 80 a. cropland @ $900/a. Category:

Press Enter.

Select q Buildings-Improvements from the account list. On a blank transaction line, enter

Date: 1/1/05 Ref: Payee: Barns Increase: 47000 Memo: Home place Category:

Press Enter. Continue until all assets owned are listed in the appropriate accounts.

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4. Recording the purchase of an asset. Cash purchase

Paying cash for the full purchase price of an asset results in the conversion of one asset, cash from either a cash account or bank account, into another. For example, let's say the Londons purchase a new pickup on January 12 from My Town Motors using money in their checking account.

Select the Checking account from the account list (or press [Ctrl+A], highlight the checking

account name and press [Enter]). In the check register, type

Date: 1/12/05 Num: 3414 Payee: My Town Motors Payment: 16000 Category: [m Vehicles] (or press [Ctrl+C] for the category list, scroll to the bottom and click m

Vehicles) Memo: 2001 Ford Ranger Note: The brackets around the "category" name indicate that an account, m Vehicles, is involved in the transaction as a transfer of funds.

Click Enter.

To verify that the purchase price has been listed as an increase in value in the m Vehicles

asset account, right-click the transaction and left-click Go to Matching Transfer to switch to the asset account (or press [Ctrl+x]). Right-click on this entry and left-click Go to Matching Transfer again to return to the checking account.

Credit purchase

When credit rather than cash is used to purchase an asset, the purchase will result in an increase in a liability account equal to the increase in an asset account. If the Londons purchase a chisel with financing from Yukon John Deere, a new liability account must be established and an increase in an existing equipment asset account (in our list, l Machinery-Equipment) must be recorded.

Setting up a loan is an activity facilitated by Quicken. Information is entered about the

amount borrowed, payment period, interest rate, etc. Loan payments are then recorded using a split transaction with one line for principal and another for interest. The principal payment amount is automatically applied to the loan balance when the appropriate loan liability account is listed as the category for the principal payment.

Let's practice recording a credit purchase for the Londons. The Londons are buying a new

John Deere chisel for $11,000 and repaying the loan over 3 years with semi-annual payments at 9.75% interest. Begin by setting up the liability account. From the main menu, click

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Property & Debt Loans (or press [Ctrl+H]) New (located in upper left hand corner of View Loans window) If you have not been through the Loan Setup series before, you may want to go through step-

by-step using EasyStep. A shortcut is to begin with the summary screen, which is what we will do. Click the Summary tab and enter the appropriate responses:

Click Next.

Next

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Click Done. You will get a message that Quicken has estimated the amount of the next payment for this

loan.

Click OK. Payment amount is $2,158.54. Click Done.

Now that the loan repayment terms have been specified, you need to indicate how the

payments will be made. Type in the payee and add the category for interest.

Once the data entry is complete, click OK.

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A screen will appear asking if you would like to create an asset account to go along with this

loan. If you want to include the value of this asset with other machinery and equipment in an existing asset account, choose No (that’s what we will do).

Note: If you click on Yes in response to the question about creating an asset account, you will add a separate new asset account for this item. Now a loan summary screen appears. Click on Payment Schedule to view the schedule of

principal and interest payments as well as the balance remaining. Click Payment Graph to see another view of the repayment plan:

Click X at the top right of the View Loans window to leave the loan setup process.

Now, since the Londons own more assets (title has changed hands even though the

equipment has been purchased with credit), the balance in the machinery and equipment account needs to be updated. Click l Machinery-Equipment (press [Ctrl+A] if necessary to get the account list) and enter

Date: 9/13/05 Ref: Payee: John Deere Chisel Increase: 11000 Memo: Category:

Press Enter.

If an asset is purchased partly with cash and partly with credit, entries similar to both of the

previous sections are required. You will a. Record the cash portion as a down payment with the asset account as the category b. Set up a loan for the remaining balance c. Record the loan amount as an increase in the asset account value

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5. Recording additions to capital assets Improvements on capital assets such as terracing or major renovations or repairs to buildings

would be handled in the same way as the purchase of an asset. What about additions to capital assets? Let's say that the Londons build an addition onto an existing barn. Cash expenses are recorded in the cash or checking account as appropriate.

Click Checking in the account list. On a blank transaction line, enter

Date: 9/15/05 Num: 3598 Payee: Nutherlands Payment: 984.33 Memo: Barn addition materials

Category: [q Buildings-Improvements] (The brackets around the name indicate a transfer to an account.)

Press Enter. 6. Recording the sale of an asset

Cash received for the sale of an asset is recorded in the check or cash account register as

appropriate. A second entry should be made to remove the value of the asset sold from the appropriate asset account. Procedures for recording sales of capital assets will differ slightly from those of current assets such as market livestock.

For example, on March 21, 108 of the 112 purchased stocker steers were sold and the cash

deposited in the checking account (four head died―we'll deal with them later). On a blank transaction line in the checking account register, enter

Date: 3/21/05 Num: Payee: Fred Feedlot Deposit: 55080 Memo: 108 hd @ 8.5 cwt @ $60/cwt Category: Livestock Resale:Stocker Steers/Stockers

Press Enter.

Choose the c Purchased Market Livestock account from the list and record the decrease in assets on hand. Subtract the per head market value used at the beginning of the year times the number of live head. (Do not use the amount of cash deposited after the sale).

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Date: 3/21/05 Ref: Payee: Stocker Steers Decrease: 52920 Memo: 108 hd @ 7 cwt @ $70/cwt Category:

Press Enter.

We will use a separate income category for proceeds from sales of capital assets (it can be set

up “on the fly” if necessary). This is important so that the total amount is in a separate line in the cash flow statement and can be analyzed separately for tax purposes. Remember that not all income from the sale of capital assets is taxable (check with a tax consultant for details).

Note: No tax schedule is selected since only capital gains or losses are reported for tax purposes. The total sales value will be used to calculate the gains or losses to be reported on Schedule D. However, the Tax-related box should be selected on the Capital Sales category so that transactions with this category will appear in a tax summary report. Now, let's say that a used tandem disk was sold for cash on July 31. Two entries would be

made, one to record the deposit in the checking account with the proceeds assigned to the capital sales category and a second to reflect the decrease in the value of assets owned.

Click Checking on the account list. On a blank transaction line, enter

Date: 7/31/05 Num: Payee: Tom Jones Deposit: 600 Memo: 1992 disk Category: Capital Sales/Overhead

Press Enter.

Now choose l Machinery-Equipment from the account list. On a blank transaction line,

enter Date: 7/31/05 Ref: Payee: 1992 Disk Decrease: 500 (This is the value entered at the beginning of the year, not the amount for

which the asset was sold.) Memo: Category:

Press Enter.

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7. Recording changes in inventory

To generate an accurate balance sheet on a specific date, each asset account must be updated to reflect changes in inventory including both physical quantities and changes in values of the existing quantities. Let's say the Londons used 500 bushels of their stored wheat for feed. It is now the end of the year and they want to update the balance in the d Inventory account.

Click d Inventory in the account list.

Date: 12/31/05 Ref: Payee: Stored wheat Decrease: 1550 Memo: 500 bu @ $3.10/bu used for feed (Use the price at which the inventory was valued in the beginning inventory, not the current market price.) Category:

Press Enter.

What about those four purchased stockers that died before being sold? Click c Purchased

Market Livestock in the account list.

Date: 3/1/05 Ref: Payee: Stocker Steers Decrease: 1960 Memo: Died: 4 hd @ 7 cwt @ $70/cwt (Again, note that we used the per head value used in the beginning balance, not the current market weight or price.) Category:

Press Enter.

Aunt Minnie purchased and gifted the Londons two bred heifers for Jack’s birthday on

October 24. From the account list, click k Purchased Breeding Livestock.3 Date: 10/24/05 Ref: Payee: Bred heifers Increase: 1000 Memo: 2 hd @ $500/hd, Aunt Minnie Category:

Press Enter.

3Remember that these instructions are designed for a market-value balance sheet. Records for tax purposes are kept separately. For more information on estimating taxes, see OSU CR-954.

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8. Recording changes in values of assets At the end of an accounting period, the balance sheet may need to be updated to reflect

changes in market values. For instance, if land values increased 3% during the year, an entry reflecting the inflation in value should be recorded. One transaction for price adjustments could be entered that reflects the total increase in value for all land or an adjustment could be entered for each piece of property:

Click p Land in the account list.

Date: 12/31/05 Ref: Payee: Smith Place Increase: 2160 Memo: 3% increase in land values Category:

Press Enter.

Repeat the process as necessary so that the total values reflect market conditions on the date

that the balance sheet will be generated. The same process would be followed if the market price of an asset were to decrease during the year, only the dollar amount of change would be entered in the decrease rather than increase column.

9. Estimating and recording accrued expenses

For the liability section of the balance sheet to accurately portray the financial position of the business, expenses that have been incurred but not yet paid are included. The biggest potential liabilities are interest on loans (lines of credit, operating notes, real estate notes) and taxes (ad valorem, income tax, and payroll). Here we will focus on the accrued interest liability using the London's chisel loan as an example. The Londons plan to generate a balance sheet at the end of the year and want to know what amount they should include for accrued interest on the chisel loan. Recall that $11,000 was borrowed on September 30 at 9.75% interest and that the first semi-annual payment was made on March 30. The principal portion of that payment was $1,622.29 reducing the balance of the loan to $9,377.71. The formula for calculating interest accrued is

Loan Balance x Fraction of year for which

the balance is outstanding xAnnual interest

rate = Accrued

interest Thus, the accrued interest on December 31 for the London chisel loan is approximately

3 months $9,377.71 x 12 months x 9.75% = $228.58

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To record the accrued interest for non-real estate in Quicken, choose cc Accrued Interest-Nonreal Estate from the account list. On a blank transaction line, enter the accrued amount:

Date: 12/31/05 Ref: Payee: Accrued interest-JD Chisel Increase: 266.68 Memo: Category:

Press Enter.

Similar calculations and entries should be made for each outstanding loan. 10. Recording a loan payment

Let's assume it is time to record a payment to Yukon John Deere for the chisel purchased.

Click Property & Debt Loans Choose Loan [x] JD Chisel (if you have more than one loan) Make Payment Regular Enter the check number and any other information not already on screen.

Click OK. Close the View Loans screen by clicking on the X in the upper right corner of that window. In the checking account register, click the loan transaction you just recorded. You can view

the amounts applied to principal and interest by clicking Split (or press [Ctrl+S]).

You will see that Quicken has allocated the appropriate amounts of the fixed total payment to principal in the liability account ($1,622.29) and interest ($536.25).

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To verify that the principal payment has been subtracted from the outstanding balance of the John Deere Chisel note, highlight [JD Chisel] and press [Ctrl+X].

Note: If you get a message that the transaction is not a transfer, then you have not yet recorded the payment to Yukon John Deere in the checking account. Return to the transaction in the checking register and click Enter (or press [Ctrl+Enter]), then right-click and select Go to Matching Transfer again.

Note the account name, Liability: JD Chisel, across the top of the window. The principal

portion of the payment from the checking account has automatically been applied to the loan balance using the category information. Thus, the remaining balance has been reduced from the opening amount to reflect the principal payment. With the cursor on the Yukon John Deere transaction, right-click and select Go to Matching Transfer to return to the checking account transactions journal. Click OK to leave the split.

Note: You can check your loan balances at any time by looking at the account list (choose Tools, Account List from the main menu), or by choosing Reports, Net Worth & Balances, Account Balances.

11. Generating a balance sheet report Once all assets and liabilities are recorded, generate a balance sheet by clicking

Reports Net Worth and Balances Net Worth Change the date range to Custom Date and the dates to 1/1/05 and 12/31/05. Click OK.

If you like the format of this report and think that you might want to reuse it later, you may

want to memorize it. Click Save Report. Name it London Balance Sheet, and select Net Worth Center.

Click OK.

Click the X in the Balance Sheet window to close it.

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12. Backing up your data Quicken automatically saves data that you have entered in the file on which you have been working when you exit the program. However, you will want to regularly save a backup copy on a floppy disk or CD, as well. See the back up instructions at the beginning of this manual if you need assistance.

CONGRATULATIONS! You've completed the introduction to building a balance sheet.

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Accounts List

Asset Accounts a Marketable Securities Marketable securities b Raised Market Livestock Raised market livestock c Purchased Market Livestock Purchased market livestock d Inventory Stored crops, feed, supplies e Accounts Receivable Accounts receivable f Prepaid Expense Prepaid expenses - insurance g Growing Crops Cash invested in growing crops h Other Farm Current Assets Other farm current assets i Notes Receivable Notes receivable j Raised Breeding Livestock Raised breeding livestock k Purchased Breeding Livestock Purchased breeding livestock l Machinery-Equipment Machinery & equipment m Vehicles Vehicles o Investment in Coops Investment in coops p Land Land q Buildings-Improvements Buildings & improvements r Other Farm Noncurrent Assets Other farm noncurrent assets Liability Accounts aa Accounts Payable Accounts payable bb Accrued Interest - Operating Accrued Interest - operating note cc Accrued Interest - Nonreal Estate Accrued Interest - nonreal estate dd Accrued Interest-Real Estate Accrued Interest-real estate ee Ad Valorem Tax Payable Ad valorem tax payable ff Income Tax Payable Income tax payable gg Payroll Taxes Payable Payroll taxes payable hh Accrued Expenses Accrued expenses

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Glossary of Quicken and Financial Terms

Account: Several types of accounts can be contained in a given file: checking, savings, credit card, cash, investment, asset (items you own and their value) and liability (the amounts owed). Accounts are a way to track your transactions as you do with checking account statements and credit card statements. Amortize: (Amortization Schedule) An amortization schedule shows the split for interest and principal paid in regular payments over the life of the loan. Interest is paid along with the principal, with the interest being paid more rapidly at the beginning of the repayment of the loan. As the principal balance decreases, more of the payment goes toward principal and less toward interest. Category: Categories allow you to set up a system much like a chart of accounts in accounting. Using categories is a way to separate income and expenses so that you can track how your money is being made and spent. Examples of categories are Salary, Interest earned, Feed and Clothing. Class: For farmers/ranchers, using classes allows tracking of income and expenses by enterprise (crops and livestock). For example, you may use classes to differentiate between income and costs for Wheat, Cow-calf, Stockers, and Alfalfa. Classes may also be used to record partnership shares or field/farm level detail. Cleared transaction: Transactions that have been processed (posted) by the financial institution are cleared. Your statement from the bank or financial institution lists the cleared transactions. In Quicken, cleared transactions are marked in the register under the Clr column with a “c”. Credit: Credit is a means of purchasing now and repaying in installments. In addition to repaying the money borrowed, you may pay interest as well as fees for establishing a loan. Examples of credit are credit cards, personal loans, home mortgages, etc. Compounding interest: This is the process by which the interest earnings on an investment are combined with the deposited money for future interest income calculations. Thus, money is accumulated faster due to compounding. Likewise, compounded interest on credit increases the balance owed because interest is charged on the balance and unpaid interest. Deposit: A transaction for which money is placed into an account. Deposits add to your account balance. Expense: Expenses are those transactions where money passes from you to another person, business or organization. Expenses reduce your account balance. Keeping track of expenses will help you to evaluate where your money goes. File: In Quicken, the computer file holds all of the transactions and information from multiple accounts in one collection. The file acts like a file cabinet for the entered financial information. Information is saved to the Quicken file instantly when you record transactions. Make a backup of your file often to help insure that information is not lost due to computer failure.

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Income: Income is money you collect from someone else. Income increases the amount of money available to you. Income can be earned (for example, wages) or unearned (for example, gifts or interest income). Inflation: Inflation is the rise in the price of products and services over time. Inflation occurs when the supplies decrease and demand increases. Inflation is anticipated with economic growth. In general, the amount of money it takes today to buy products will not be enough to buy the same products in the next few years. You must plan for inflation (historically about 3%) to meet or exceed future costs. Interest: Interest is a fee that you pay for borrowing money on credit. The interest rate (percentage) is determined when the loan is made. Some interest rates are “fixed” which means one rate is charged for the length of the loan. “Variable rate” loans have an interest rate that changes on a periodic basis to reflect changes in the interest base rates. Interest is paid along with the principal, in repaying loans. Memo: The memo field in the check register is a place to record information that is important about the transaction. This is an area to record invoice numbers or a description of the purchase or income. For your records, you may wish to record quantity of products, invoice numbers, etc. Payee: The person, organization, or business that is to receive payment is the payee. When you write a check to a store, write the name of the store in the payee blank. The payee field for a deposit can list the source of the money. Principal: The amount of money borrowed for a purchase or improvement is the principal. Additional fees or interest are based on the principal amount loaned. Reconcile: This is the process of matching your records against the statement that you receive from a financial institution or service, and making them come into agreement. Quicken includes features that make reconciling your account easier. In the register, a reconciled transaction is identified by an “R” in the Clr column. Reports: Reports are a way to organize information to show how your money is being spent and earned. A cash flow report shows the inflows and outflows of cash as a total, on a monthly, or quarterly basis. A transaction report shows the transactions that have occurred. Tax-related categories: For people who earn enough income to file a tax return, this is a way to help summarize information using income and expense categories that are related to tax reporting. You can select the appropriate tax form or schedule (such as Schedule F for farm income and expenses or Schedule C for business) so that a report can be generated that lists transactions by schedule or form. Transaction: A transaction is the record for a change in the value of an account. Examples are a purchase using a check, the transfer of money from checking to savings, or a deposit of cash into savings. Transfer: A transfer occurs when money is moved from one account to another. If you move money from a checking account to a savings account, you have made a transfer.

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Uncleared (outstanding) transactions: Uncleared is the term used in Quicken for outstanding checks or deposits. Uncleared transactions are those that have been conducted (check written or deposit made), but they have not been processed and cleared through your account at the financial institution.