 QuickBooks Desktop 2024. Receive inventory bill, invoice customer, and receive payment. Get ready and some coffee because we're locking into some non-stop QuickBooks Desktop 2024. First, a word from our sponsor. Yeah, actually, we're sponsoring ourselves on this one because apparently the merchandisers, they don't want to be seen with us. But that's okay whatever because our merchandise is better than their stupid stuff anyways. Like our, trust me, I'm an accountant product line. Yeah, it's paramount that you let people know that you're an accountant because apparently we're among the only ones equipped with the number crunching skills to answer society's current deep complex and nuanced questions. If you would like a commercial free experience, consider subscribing to our website at accountinginstruction.com or accountinginstruction.thinkific.com. Here we are in our QuickBooks Desktop sample company file. We set up in a prior presentation using the enterprise version of QuickBooks Desktop so we can practice the new unearned revenue feature within it. For the settings under the view tab, we currently have the hide icon bars selected and the open windows open. Home page open within the open windows, which you can do by going to the company drop down selecting the home page. We're going to open our reports as we do every time going to the reports drop down company and financial. Let's take a look at that balance sheet reports to start out with changing the range from 1231 to 7. And then I'm going to increase the size of the font by customizing it fonts and numbers and then I'm going to change the font. I'll bring it up to 14 just so we could see it a little bit easier. OK, yes and OK. We do this every time. So I'm doing it fairly fast reports drop down company and financial. This time the P&L the profit and loss the income statement change in the range from 010127 to 123127 customizing the report fonts and the numbers. Change in the size of that font bringing it on up to 14. OK, yes and OK. Back to the home page. Now in prior presentations we discussed the issue with the unearned revenue where we basically get paid before we do the work to compare the new process to the older methods. We first want to look at the normal flow process, which is what we are doing at this point in time in the prior presentation. We entered an estimate and then we entered a sales order remembering that the estimate doesn't actually record anything. It's just basically saying to the customer this is what it would cost if we're going to pick up this job in our case. We were imagining that we're going to have a custom surfboard that we're going to order that has a crazy crazy psychedelic airbrush that they want or something. And then they had a sales order which kind of locks in the estimate, but we haven't completed it at that point. Then if we don't have the inventory on hand, then we might go to the purchase order, meaning we're going to go to our vendor to buy the custom surfboard that we're going to turn around and sell to the customer. And then we're going to have to enter the bill. And then also from the sales order, then we're going to create the invoice once we get the actual goods that we can sell, then we can receive the payment. Now we've been tracking this in terms of journal entries in our little worksheet over here as well. We did the estimate. We did the sales order. We did the purchase order. We had no journal entries related to them. Those are all internal documents. We can track those internal documents by going to the customer drop down and the customer center. And we set up our customer number one customer center. I have all my dates viewing over here, even though I'm working in the future and I could see my sales order and my estimate here for that customer. So they had an estimate and then the sales order under the vendor side vendor drop down vendor center. We had then our normal vendor over here. There's the purchase order. So now what we're going to do is we're going to do the next step. We're going to say, okay, purchase order happened. Now I'm going to pretend that we received the psychedelic surfboard. So we're going to hit the drop down over here and say we got a box with the board in it and it came with a bill. So the bill then if I enter the vendor, which was one normal and tab, it's going to say QuickBooks says open purchase order exists for this vendor. Do you want to receive against one or more of these orders? We're going to say, yes, we do. Thank you, QuickBooks. That's exactly what we want. And then I'll say this happens as of 01, let's say like 0527 because we're working in 2027. The amount is $100. That's the cost. That's not what we're going to sell them for. That doesn't include sales tax. It's just the cost side of stuff. So there we have it. And then down here, we can see that it populates on the items tab instead of the expenses tab because this is going to be an item that we purchased. There's the name looks good. There's the cost. Okay, what's this going to do when we record it? I can't quite see the buttons at the bottom. So I'm going to make this a little bit smaller so we could see that. When we record it, what will it do? It's going to record a bill. A bill is going to increase the accounts payable. So the AP is going to go up and then the other side is going to go to the inventory because we're purchasing inventory. Now I'm going to uncheck this billable item. I don't want to make it billable, meaning that would tie it out to the invoice because I could tie the invoice out to the sales order. And that's the process that I'm going to be using here. Otherwise, I'll have two things that I could make the invoice from. So I'm not going to use this billable component. I'll tie it out basically to the sales order. Now the other issue, of course, that we have is the sub ledgers and the sub ledger will be tracking by vendor, which will tie out to the accounts payable. We also have the sub ledger for inventory, which is going to track the fact that we have this one psychedelic surfboard, which we called the product number one on hand. So let's save it and close it and check that out. So we'll say save and close. And then I'm going to go into my balance sheet and I'm going to scroll down and say, okay, we should have an accounts payable down here somewhere in the liabilities. There's the accounts payable, double clicking on that, changing the range from 0101 to 7. There's our $100 bills. That makes sense. And then the other side of it should have going up to inventory. So if I go up to my inventory account, where is, there it is, inventory, double clicking on that, changing the first day, 0101 to 7. There's our bill increasing the inventory. I should have a sub ledger for inventory, reports, drop down, and then go into my inventory, inventory, inventory evaluation summary. Let's just do that. And this is going to be as of 1231 to 7. So there's our inventory that is on hand now. Here's our quantity and the total asset value is at 30,783.38. If I go to the balance sheet, we're at 30,783.38. Those sub ledgers are often the issues that get messed up. The sub ledgers for inventory, the sub ledgers for vendors are the things that we often forget about when we're thinking about it in terms of simply debits and credits, right? And then if I go back on over here and I track it from my vendor center, on the vendor center, now we have the purchase order. If I go into the purchase order, it has now received. We've received the purchase order. And then we have our bill. And of course we now need to pay the bill at some point. If I do that with debits and credits over here, let's just say this is going to be the bill for the inventory, what happened? Inventory is going to go up. I'm going to say equals the inventory from a debit and credit standpoint. And the other side is going to be going to accounts payable. And it was for $100, 100. I'm going to represent the credit with a negative 100. So debits are positive, credits are negative. If I record that over here, then we have inventory going up, inventory goes up, boom. And then accounts payable goes up in the credit direction. So that's what we have thus far. Debits and credits still in balance. And the next step would be we'd have to pay off the accounts payable with cash. We don't have any right now because I didn't put any on the books, but and this is just showing this one transaction doesn't have all the other detail that was in our balance sheet over here just to give an idea. So then if I go to the home page and we're going to say, so now I've got my inventory, I made my sales order. So now I want to, I have my psychedelic surfboard. I can create an invoice from it now. The way that would probably happen is we would go to the customer center and this person that ordered the crazy psychedelic surfboard would be like, I'm ready to get the surfboard. And so then we're going to go in here and go to the sales order. And I'll create now notice that you could create the invoice from either of these documents and estimate a sales order or even the bill if we custom ordered the bill that we created. That's why I made it unbillable. I'm going to make it here from the sales order, which might be a kind of normal type of process to complete the order from the sales order because maybe we don't have that inventory situation that we had to purchase the inventory for that customer. So I'm going to go here and say that we're going to create an invoice from it from the sales order. It says specify what includes on the sales order. We're going to order invoice for all the sales order. So everything on the sales order. So we'll say, okay, pulls it in. And so the date is once again going to be sometime in 01. Let's say 09 this time to seven. Boom, boom, boom, boom, boom. I should put terms of like net 30 or something. And then so there's our item pulls in and our detail down below. So what's this going to do? The invoice is actually fairly complex. And what it's actually recording here, we can see that it's got 1-888-58. That's the total amount that's going to be increasing the accounts receivable. And then the other side is going to go to sales, but the sales only going to be for the amount that we charged the 1-75, the 13-58 difference is going to be then the sales tax payable, which is a liability account. And we're going to have the cost of goods sold is going to go up an expense account as well as the inventory going down and the sub ledger for inventory is going to be going down and the sub ledger for the customers is going to go up is going to go up. So let's do that with a journal entry first. So let's say we have the invoice and voice. So what accounts are affected? Well, we know that accounts receivable is going to go up. The account receivable is going to go up for the amount plus the sales tax. Let's do that. I'll do that in a second. And then the sales or income is going to go up. Now the income we would know because we charged 1-75. So I'm going to say that's negative 1-75. It's a credit. Negative 1-75. And then we had sales tax payable. The government wants their piece, their protection money. Sales tax pay. You want to work around here? You want to be in business around here? Well, it's going to cost you. This is for your own good. So we'll say this is going to be equal to this times 0.75. Is that what they did? That times 0.075. So we come out to about 1356. Let's add some decimals here. Adding a couple decimals. We'll add some decimals now that they've made it complicated with decimals. Okay, you had to do that. And then the negative sum of this is the receivable amount. So that's one half of the journal entry. And then if we have inventory, we've got to deal with that whole thing, a whole nother thing to deal with. So now we're going to have the cost of good sold. Let's do it this way. Cost of good sold is going to go up. And then inventory is going to go down. And that was for $100, I believe, and a mountain that's not on this form. But we noted it was there and will be recorded on a perpetual basis because we turned on the inventory. So there's 100, negative 100. So let's record this now. Accounts receivable goes up. This equals that AR is going to go up. And then the income is going to go up. So on the income line, income equals that. It goes up in the credit direction. Sales tax payable, I have to add that. It's going to be a liability. I'll put it under the accounts payable. Select these. I'll just drag this down and say this is going to be formatted like that. And I'll call this sales tax payable. Starts with a zero copying down this formula. And that one is going to go up in the credit direction. And then we've got the that's done. And then the cost of good sold is going to go up down here. And inventory is going to go back down back down to zero on the inventory. Hopefully I got that that everything correct there. So so then I don't know why that one was showing as red. So I made it unread but this is so you if you can see now we now we have the accounts receivable that went up. Now the accounts receivable is part of the issue because I would also have to track this not just by debits and credits, but by the sub ledger who is those who owes us the money. The inventory also needed to be tracked up and down with sub ledgers as well as just these debits and credits. And and then we also have the net income down here. Income is a the credit is good minus the debits are the expenses. So the net of those is seventy five on the net income, which is of course the sales price that we sold the thing for less the cost that we that we spent for it. Right. So that's going to be the journal entry. Let's see if we can record that over here. So we'll save it and close it. You you've changed normal process terms. Yes, that's OK. And then we're going to go OK. So on the balance sheet, the accounts receivable should have gone up. So double click in the A.R. Change in the start date. Oh one oh one two seven to do to do. There it is one eight eight. Boom. Looks good. Mui B to the end being closing that out. Other sides on the income statement profit and loss P and L one seventy five. There's the one seventy five Mui B to the end. And then we said the sales tax balance sheet. There should be some kind of liability account might not be called sales tax. Payable. But something like that is something something like that. Yeah, sales tax payable is called that. Exactly. Oh one oh one two seven to do to do. And so that's going to be the 1356 1356 Mui B to the end. And then we've got the inventory should have gone down. Inventor E asset. Boom. Going in that from oh one oh one two seven to do to do. So it went up and then it went back down. So it's back down to zero or it's zero for us. It's back down to what it was for them. So it went back down back down to zero. Okay. And then we had the other side on the profit and loss. The P and L cost a good sold 100. And so there's the 100 net income 75 net income 75. Those are some cool beans. Cool beans. The beans are cool enough. You can take them out of the fridge now. Cool beans. Okay. So then of course the next step would be that we're going to receive a payment on it. So the next step would be and we probably would do that in the customer center. And we would say okay so there's the invoice now they're going to pay us. So so this is where we could we could go into the invoice here double click on it and say that I would like to get paid if if we would and we could go to the receive payment from here receive payment from this particular invoice normal process it automatically ticks it off here ties it out there to the invoice. This is the invoice. This is the payment. I'm going to imagine it's let's just say cash just for the sake of our practice problem from it's going to happen. Oh one let's say 1027 boom what's this going to do. It's going to then increase. It's going to go into unearned revenue. It's not going to get into the whole unearned revenue thing but basically a cash type of account. And then the other side is going to decrease the accounts receivable right. So if I did that with a journal entry over here we could say okay then this is the receive payment and what's going to happen. I'm just going to call it cash is going up even though it's going into unearned revenue because I'm just I'm not going to deal with that right now that's not where our point of focus is and then the other side is going to go and decrease the A to the R AR and so they and the amount is going to be equal to the amount from the invoice. And so now cash is going to go up. So we'll increase the cash boom and the A to the R I'm going to say F2 plus F2 A to the R R goes down the pirate goes down R. So then so that's the so that's going to be the normal process but again tracking this sub ledger for AR becomes the issue. It's easy with debits and credits because you don't have the sub ledger. So then let's go ahead and record this. So we'll just save it and close it. And then we can check it out. So if I go to it's back to the invoice I'll close the invoice to the invoice shows is paid now. But if I go back to the balance sheet then it didn't go into my checking account but it should have gone into undeposited funds. Again that's a whole nother issue in of itself 010127 that I'm not going to get into right now. But the point is it's kind of like a cash type of account went up for the 188 right 188 boom. And then the other side closing that out went to the P went not to the P to the L went to the A to the R A to the R R 010127. And so there's the payment. So it went up and then it went back down. And of course we can track that on the sub ledgers with reports. So if I go to the reports drop down and we go to the customer receivables. Let's go to the customer balance detail report. And so now you've got the normal balance. It's going up. It's going down. We can see all the activity. It's very clear. It's very nice. Very tidy. If I go to the customer center over here we can see in the normal process that the whole we can see the whole thing that happened right. We've got the estimate. We got the sales order and and we've got the the invoice and the payment. We can then we could select and sort these by just invoices for example if I wanted to sort by invoices we could do that. I have to change the year to the whole year again. So for the whole year and then we could sort by open invoices right. That would be a common thing. There are none. And then we could say overdue invoices are all invoices. Okay. We get the picture. So that's going to be. That's the normal process. So that's going to be the normal process. Now we'll throw the wrench into the process where we get the payment before we do the invoice and we'll start off with the with the old way we used to do it which still might be useful in some cases and some scenarios and some bookkeeping systems and look at the pros and cons to the new case and the problem is going to be when we have the sub ledgers for this accounts receivable account. How do we track that if I then include another account down here which is a liability account this this customer balance detail report which ties out to the accounts receivable is going to be what are you going to do with that right. It's going to be messy. So which means we're going to get another report and it gets a little bit more complicated but makes more sense from a financial reporting purpose situation. So we'll get into that in the future presentations.