 QuickBooks Online 2024, Rental Income Estimate and Customer Deposit. Get ready and some coffee because the accounting team is on hand with QuickBooks Online 2024. Here we are in our Get Great Guitars 2024 QuickBooks Online sample company file we set up in a prior presentation, opening up the major financial statement reports the way we do every time reports on the left. In the Favorites, we're going to be right clicking on that balance sheet so we can open it in a new tab. Right click the profit and loss, the P&L open link in a new tab. Same with the trustee trial balance. Let's go to those tabs up top and let's close the hamburger. Change the range. We're going for 01, 01, 2, 4, 02, 28, 2, 4. First two months of 2024, dropping it down so we can do a month-by-month side-by-side run that report. Next, tapping to the right same process. Hamburger, close it, change range. First, a word from our sponsor. 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If you would like a commercial free experience, consider subscribing to our website at accountinginstruction.com or accountinginstruction.thinkific.com. 010124Tab, 022824Tab, dropping down so we can go month-by-month side-by-side, run it to refresh it, tap it to the right, close that third hamburger. It's a hamburger hat trick. Scroll it up. We're going to arrange change going from 010124Tab, 022824Tab, and then we're going to select the drop-downs say month-by-month side-by-side, run it once again. Let's go back to the balance sheet discussing our process here. We started a new revenue source of income in the business. We originally were selling guitars and then we added the guitar lessons to what we're going to do as well. But then the neighborhood went to crap and we had to put stuff on the doors so people don't break in and steal our stuff and bars and everything. And our beautiful shop got kind of unglified so people don't come in as much and they don't look like the guitar lessons possibly as much. But we still have all these guitars. So then we're like, maybe we'll do rental guitars. We'll just rent out the guitars and we can have another revenue stream that way as well. And this will be similar to possibly other rental activities such as like renting property, for example, in which case you might collect a security deposit upfront. So now we are once again going to get paid before we actually do the work. So you will recall I won't go through the whole thing again, but quick look at the flow chart. This is a desktop flow chart even though we're in the online system because we're just looking at the flow of the forms. And normally in the revenue cycle, we would expect at some point usually at the end of the process to have money come in for goods and services that we provide. The flow usually goes this way with the arrows. But sometimes it might go the other way such as our case here where we're going to say when someone calls in, we will make an estimate. And then we want to collect money upfront before the actual rental property takes place so that we can lock them in to actually commit to renting the stuff. Otherwise we'll rent it to someone else or possibly sell it if we can in the meantime. And then when they come in, we will finish the transaction and record the sale. And at that time, you'd probably still want a security deposit as well until they return the merchandise. But we're just going to go with the scenario we have now with the estimate. So we've set up the items. We've already set up the items to do this because we're imagining someone's going to call in and they're going to request band equipment so they can piss off their neighbors. So they want like a whole band set so they can be really loud and piss off. And we're like, that's what we do here. And so we're going to make an estimate. But we want the guy that's working in the shop who basically sleeps under the counter until, you know, someone calls. It's like that, you know, so any case we're going to have. And so when they call, we want that person to be able to fill out the estimate as easily as possible. So we set up our items. It's similar to someone was going to bring him the guitars in the shop, right? The person at the front of the register doesn't know much about the accounting behind the scenes. But they can ring up the product pretty good. Even you can ring up the product these days, right? And the self-checkouts and anything. And I ring up stuff at the grocery stores. I don't know what's going on. I just scan the thing and then I scan my card and then I leave. And that's any case. So if we go to the first tab and we go, what we did is we set up in the sales area and the products and the services. I closed the hamburger. We set up our rental items and we put them in their custom category here. And we said that this is what we tell our person that works at the shop. We've got the new revenue stream. And if they want to rent something, they have to rent the entire band set. They can't rent like one guitar because that's not worth our time. It'll still cost them for the entire band set. And then if they want to add to it, they can add other rental items on top of that if they want to up the quality of their rental. So we have this baseline amount and then they can add more. And the guy that sleeps under the counter and occasionally rings stuff up is like, okay, I totally got that. It's easy. That's easy. I can do that. And so we're like, okay. So then we're going to we're going to imagine someone calls in. So we're going to hit the drop down. Someone calls in and they want rental property. The guy wakes up from under the counter and is like, oh, dude, are we being shot again? Is someone looting my store again in California? I'd call the cops, but they don't care. But whatever. I'll just know it's someone wants banned equipment. So we're like, okay, let's go to the estimate over here and we're going to say that it's going to be a new customer. And so then we're going to say, we're just going to make a generic customer number five, adding a new customer. We're just going to say this is going to be customer number five. Once again, with the genericness. And we're going to go, okay. And then this happens on oh, two, let's say 2724 and expiration date. I'm not going to put one tags. We don't have any tags. And then they're like, what do you want, man? And he's like, wait, you have to have wait before you start. You want a couple, but you have to have the basic band set. So let me tell you what that has. And we can go from there. So the basic band set has two guitars, a drum set and a base and an amp. And it's $2,000, we're going to say for the weekend or anything. And there's no sales tax on it because it's a service item. Is that what you want? And they're like, yeah, but we want to really piss off the neighbors. So we want an extra, an extra guitar or a couple extra guitars. So we'll say more guitars. Oh dude, I totally get it. The guy says from behind the counters, like I will, we have added guitars, but they cost more. So we're going to put on two of these guitars. That's another $50, dude. And then, and then they also want an added amplifier. Oh, totally. I would have put that in the base package if it was for me, but they don't listen to me here. I just sleep under the counter. So we're going to say, okay, add an amplifier. That's totally worth it, man. Four amplifiers. Yeah. Yeah. Can I come to the party? That sounds good. All right. So here's going to be our estimate. Now we're at 2002 60. So, so now when we record the estimate, it's not going to record anything. That's going to be an internal document, but we can use the estimate to then try to calculate how much of a down payment we want, which we might have a general system of saying, well, you got to get a 10% down payment or a 20% down payment or something like that. So the dude, the guy on the phone is like, it costs 2002 60. And you're going to come in next Saturday. But just to make sure that like you do come in because we have other people that totally want our rental stuff too. We would like a down payment. And then we can give them the down payment amount. So let's go ahead and save this. If we were going to send it, we could send it here, but I'm just going to save and close it. So that hasn't recorded anything. Thus far, if I go into the sales area and the all sales, we can look at the estimates now. So I can look at the estimate. And so there's our customer five estimate. And then if I go into the customer information, we can also look at the estimates here and we see customer five has our estimate. So the estimate is up and running. It's currently in the status of pending. So now we're going to, we're going to say that they accept it. So we're going to change it from pending now, which we can do by selecting it. And then I'm going to say the more actions drop down. And I'm going to say that now it has been accepted. So we're going to mark it as accepted. And so we could put by and the date, but I'm just going to keep it at that. We're going to say, okay. And the next thing we could do then is convert it to an invoice. We'll do that not yet though, because we're going to do that once the, once the actual transaction takes place. So now we're going to be saying that we need a down payment. So we're going to imagine the down payment. Here's where we get paid before we do the work because we haven't actually provided the rental yet. Therefore, if I hit the drop down, we can't really enter an invoice because that would record revenue and we haven't gotten the revenue yet. And we can't record the normal sales receipt because again, that would be recording revenue. So the method that we're going to use is, and we did these two methods for a prepayment in a prior presentation. And I've made the argument from an internal standpoint. I think QuickBooks works quite well with the receive payment method, which will usually decrease and it will decrease accounts receivable, but it's usually tied to an invoice. Now we have no invoice to tie it to, which means it'll create a negative receivable or credit balance for this customer, which isn't exactly right from a financial statement perspective, but it works quite well from an internal bookkeeping perspective and we can do adjusting entries at the end of the period to properly adjust it if we need to for external reporting purposes, although we might not need to if we're just doing a sole proprietor tax return because the income statement will be properly recorded. All right, so let's go to the receive payment and say, okay, we got to get a down payment. So now we're going to say this is going to be for customer number five. And we're going to say it says, customer five's payment doesn't have an open invoice. There's no invoice to tie to down here. So we'll save this payment as a credit to your customer since you don't have any open invoices. If you want to record this payment without an invoice, use the sales receipt. So that's perfect. That's what we wanted to do. We wanted to make a credit for us that we can then apply to. So I'm going to say this is as of 022827, let's say 24 payment method. I'm just going to say cash. And we're going to put it once again into the payment to deposit instead of into the checking account directly. And I'm going to say it's for $200. That's just our normal process. So now what's this going to do? It's a receipt payment form that decreases accounts receivable, usually decreases and ties out to a specific invoice this time. No, but still decreases accounts receivable resulting in a negative or credit balance for the sub ledger account by customer for customer number five. The other side's going to go into a cash account in our case, the payments to deposit. Let's save it and close it and check it out. So it says you didn't select an invoice. We'll save this payment as a credit. That's great. That's what we want you to do. QuickBooks do that. You do that. And so then if I go to the tab to the right and I run it. So now we're going to say that if I go into the deposit, we have our deposit there $200. And so there that is deposit made dishes are done, dude. What is what does that have to say? I don't know. That's from a movie. It just sounds cool. But I'm going to go dishes are done, dude. The transaction is okay. So we're going into the accounts receivable and here as well, there's our payment. So that looks good movie B to the end. Let's go back. We can also see the sub ledger. So if I go to the tab to the right, right click on it. And I'm going to duplicate of that tab so that we can see a sub ledger report, which we will create by going to the reports on the left, hamburger, close it, scrolling down. We see who owes you money. We want the classic sub ledger of customer balance detail. Opening that and range is good. So we have customer number five. There it is. Notice it has a negative balance in it. That's not exactly proper because that would mean that we owe them money, which we do, or we owe them the service, which we will do. And so it should be a positive liability, not a negative receivable. However, the sub ledger works great from an internal perspective because this sub ledger is tied to the customers. And so it worked good from a bookkeeping perspective. Again, if that was outstanding at the end of the year and I needed to adjust it, possibly not for taxes for a small Schedule C, but for external reporting, then we can simply do an adjusting entry at that time and fix it. So that's going to be the idea. Internally, by the way, the total AR then, 21, 9, 76, 50 is positive. If I go to the balance sheet, but the dates are wrong. Wait a second. What is happening? 21, 9, 76, 50 over here 21. Yeah, that's right. I don't know what I did. I got messed up. I'll go to the tab to the left. And then if we look at this internally, we can now see that we have the estimate is now in place. It's been accepted. So that is great. And if I click on it, we can see the process here. And then we also have the payment. So if it was another person that came in, we have two people that sleep under the counter and occasionally ring stuff up or watch people as they loot our store because they can't do anything because we don't want to get sued or anything. So if the other guy is in there, even he could look at this and be like, oh, dude, I see what my friend did the other day. So yeah, what he did is he made an estimate for this one. And then he took a deposit, a payment. And you currently have a credit balance, Mr. Customer 5. So that could be applied to the rental that you're going to have once you actually do the rental process. However, we will pick up that part of the story next time. For now, what we want to do is just make the deposit. So I'm going to go to the balance sheet. And recall that we have that $200 in payments to deposit. Let's say that's the only money we got by the end of the night. And so we're just going to transfer it from the payments to deposit into the checking account because we're taking that to the bank. We're getting our armed escort to go a block down, go a block away and then we're going to take that to the bank to safeguard it in the vault. So we're going to go, OK, let's go to the first tab and then hit the drop down on the plus button. And we're going to use the good old deposit form. And we're saying we're going to take our $200 to the bank and we're going to put it 227. So that looks good. And OK, and then here's the deposit. We don't have to combine it with anything else. But of course, if we had other sales at that same time, then we would want to combine the sales with the other cash sales so that we deposit them at one time so that we can make the bank reconciliation as easy as possible. And that's the process. If it was a credit card, you would do the same thing. We would group the cash together, deposit it together, and then group the credit card payments according to the different financial institutions and the way they expect to put it into our bank account, which might include us having to make bank service fees that would reduce the amount possibly like say $5 because maybe they're going to take $5 out for the fee and it's going to actually hit our bank account at $195 instead of $200. So if that was the case in the case of a credit card, you have to figure out how you're going to do that. Otherwise, you're going to end up with a mess as the bank feeds come in and you can't tie it out to the deposits because you put the deposits in a different order and didn't record the fees because the credit card company is doing something crazy and you've got to work what we've got to do that. So what's this going to do? It's going to increase the checking account. The other side is going to be decreasing the undeposited funds. Let's save it. Let's close it and let's check it out. Let's go to that balance sheet and we're going to go into run it. Fairly impressive. It's been working on as balance sheet skills. So we're going to say that wait, not in accounts receivable. We know that the checking account then went up. So $200 on the checking account. The other side in the payments to deposit back down to zero. So we see it going in and out. That looks good. Let's go to our trustee trial balance now and just see where we stand and we'll continue the story next time. So we're going to run the trustee TB and this is where we are at. If you're following along, if your numbers tie out, great. If not, try changing the date range. Let's see if it's a date issue. We got the balance sheet on top of the income statement starting with the assets. These are all assets. Checking account accounts receivable inventory investments payment to deposit prepaid insurance accumulated depreciation contra asset tied intimately part of was broken out from the furniture and equipment or property planting equipment. That's what the company owns in dollars, not units. And the flip side of that coin is who has claimed to those assets or at least the value of those assets. Third party liabilities including accounts payable, the Visa company, the bank in other words, the government for sales tax, the bank because we took out a loan from them, the government for payroll taxes, unearned revenue if we had any unearned revenue that we haven't earned yet. And then we have our claim to our assets of the business in the owner investments similar to the corporate stock if it was a corporation and owner's equity similar to retained earnings if a corporation and then the entire income statement part of equity, which are credit, which are sales or revenue minus the debits, which are expenses, which would result in a net credit balance if we had income and not a loss, which is part of in essence equity and would roll into therefore the owner's equity or the retained earnings if was a corporation and we can see that by just bringing it up one year, QuickBooks does it automatically, 010125, 010125 on a year by year, not a month by month basis and you can see it rolls it right into that equity similar to retained earnings. That amount there, owner's equity like retained earnings representing the income over the life of the business, which has not yet been distributed out in the form of draws if it was a partnership or the form of dividends if it were a corporation.