 QuickBooks Online 2022, adjusting entry, accounts receivable, or sales. Get ready because it's go time with QuickBooks Online 2022. Here we are in our Get Great Guitars practice file. We set up with a 30-day free trial. Holding Control, scrolling up a bit to get to the 125% currently in the home page, otherwise known as the Get Things Done page. Accounting View, it's something you can do. By going to the cog up top, switch to the Accounting View down below, we will be toggling back and forth between the two views, either here or by jumping to the sample company file currently in the Accounting View. Back on over, we're going to open a few tabs up top to put reports in by right-clicking the tab up top, duplicating it back to the tab to the left, right-clicking again and duplicating again. Back to the tab to the left, right-clicking again and duplicating again. As that is thinking, let's jump on over to the sample company so we can locate where the reports are in the Accounting View, which is on the left-hand side under these five or six or seven letters, R-E-P-O-R-T-S reports. That's where they're at. If we go back to the Business View, they're going to be under the Business Overview. Those in the hamburger, we're going to open up the Balance Sheet Report. The Balance Sheet Range Change up top from 010122 to 022822, February 28th being our cutoff date. We're going to close off or run the report, running it, and then go to the tab to the right, Overview again reports, closing the hamburger. This time, we're going to open the Profit and Loss. The Profit and Loss, 010122 to 022822, February 28th, the cutoff date. We're going to change the Total Only to go to the Months so we can see the side-by-side and run it. Now we're going to go to the tab to the right again, back to the Business Overview reports, closing up the hamburger. We're going to be searching for the Trial Balance. The third report, we want to keep open as we do our Adjusting Entry. We'll range change it up top from 010122 to 022822, run it, and then let's go back to the Balance Sheet tab. Now we're going to be doing an Adjusting Entry related to, in essence, accounts receivable or sales. So the scenario we have here is we're imagining that an invoice is going to go into place that was actually recorded after the cutoff date but for which the work was done before the cutoff date. So in other words, if I go back to the first tab and if I'm on an accrual type of process, then typically I'm going to record the sale when the invoice is created. That's going to be a good system for the Accounting System for the QuickBooks software because the invoice is typically closest to the point in time on an accrual basis in which the work was done and that's usually when you want to record the revenue. But we can imagine a scenario, especially in a job cost system where, for example, if we're in like a CPA firm or a accounting firm or a law firm where you basically might have a month's worth of time or a week's worth of time or two weeks' worth of time that you need to put together in order to create the invoice and therefore the work may have been done in the past before the cutoff date before the cutoff date for us of February 28 and even though the invoice had been entered into the future and if that was the case to be on a proper accrual basis method we'd have to do our cutoff testing and we'd have to say, okay, I've got to pull that invoice back into the current time period. Now I think this is easiest to see when we're talking about a job cost system for a service type of business like this but we're going to add inventory to our example problem because that'll add the added complexity of tracking the inventory and the cost of goods sold. So first let's go ahead and enter the invoice. We're going to imagine this is the invoice that is going to go in place after the cutoff but for which the work was done before the cutoff. So let's put this in for Mr. Anderson again. Mr. Anderson once again and we'll tap through this thing. Let's tap through this thing and say that the date was on, let's say it was on 030522. So that's after our cutoff date but the actual transaction took place before the cutoff date and that's going to be the scenario. So down here we're going to say it was just an ELP that we sold. We're going to be selling something, a guitar, which typically when should the actual sale be made from a revenue standpoint with regards to revenue recognition accrual. It should be when basically the inventory trades hands. That's when we have finished the work. So when the ownership of the inventory goes to the client you would think. So that's going to be the idea but we're going to say that happened before the cutoff date and this invoice is going in after the cutoff date. I'm going to change the sales tax for the generic problem to the generic 5% as has been our custom. We will continue with the custom for the practice problem as it has been. And I'm going to say other and confirm and continue. Close it out and let it go. So we're going to go over and see what happens here with the invoice in the month of March and then we'll see how we can basically adjust for it. So I'm going to save it and close it. It's going to do the standard invoice type of transaction and check it out. If I go then to the balance sheet I'm going to bring the ending date up here. Let's actually go like this from 030122 to 033122 run it so this is after the cutoff date and if I go then into the accounts receivable we're going to then see our invoice. See it? It's right there. There it is. $1,525 for the amount including the sales tax then to the balance sheet. If I go to the profit and loss, the P and the L and let's change the date range here to take it to 033122 and run it because now it's on a month by month basis. So in March we've got the income of the $5,000. That's the sales price. The difference between the $5,500 sales price the difference between the two being back on the balance sheet it would be in the sales tax payable which they put in here at the California Department of Tax and Fees bureaucratic People Administration bureaucratic agency place. There it is and then we're going to go back on up top and back to then our report. We also know that inventory is going to go down so we have the inventory up top inventory asset. If I go into that we're going to say, okay inventory going into the inventory we had a decrease there of the $400 an amount that's not on the invoice but driven by the item on the invoice back on over and finally lastly or almost lastly until we get to the sub reports we go back to the income statement. We also had cost of goods sold. There's the $400 there. We also have to worry about whenever we do an adjusting entry related to inventory and accounts receivable we got those sub ledgers. Let's open up a couple of reports just to check out those sub ledges right click and duplicate this one and I'm going to do it again back to the left right click and duplicate again while that's thinking I'm going to try to go to the one that's already been thought about this one and go down to the reports and let's do the sub ledge for the accounts receivable shall we shall we let's try it out. I'm going to do it. You don't have to if you don't want to you can just follow along maybe but I'm going to do it. Who owes you money? We're going into the customer balance let's do the detailed report customer balance detail and then we'll do the range customization because I'm happened to be working in the future 1231 222 let's do and then there we have it. Mr. Anderson there's the 525 right there total of this report adding up to 22701 50 that ties out to what's on the balance sheet the 22701 50 just as we would suspect it would let's go back to the tab all the way to the right and do a sub report this time back going to the reports on the left hand side for inventory this time inventory inventory let's do the inventory value asian summary and I'm changing the dates because we're working in the future or I am 1231 222 and run it I did all the stuff I need to do in the present so I work in the future now so this is what we got the 4346 at the total so we're going to go back to the balance sheet we can see right here the 4346 okay so now what we want to do is imagine that we need to pull this back in to the prior period because the actual transaction took place before the cutoff date even though the invoice was entered after it now you might say that what I should do then is just adjust the invoice to get back to before the cutoff date in other words you might say hey look if I have to pull this back before the cutoff date why don't I just drill down on to the invoice just going into here for example I'm going to hold control and scroll down and then go into here for example and then I'll just change the date once I'm in here to whatever date I can change it to the cutoff date right there you could possibly do that but we don't typically want to do that because one there could be things that are going to be attached to this meaning we might already have the invoice attached to the payment that has been received and so on and so forth and we also want to keep the original invoice that we had on the date so that we can track the invoice and what the money is owed to us accurately with what we reported to the client so in other words we don't really want to mess up the current system that has been set up from the accounting system if it's working for them we just want to make an adjusting entry periodically to make the financial statements more according to the accrual basis without messing up the current accounting system or cycle that is in place that's the general overarching idea with the adjusting entries or what we will do is an adjusting entry that will in essence be the same as basically having or putting the invoice in in the current timeframe now we're going to do that with a journal entry you might then say well if I'm just going to enter the invoice why don't I just enter another invoice one that is before the cutoff date which will just record the same thing and it'll be easier than doing an adjusting entry and the reason we don't typically want to do that is because I don't want to use an actual invoice form to record the adjusting entry one because sometimes we do the adjusting entries like outside of the system first we might do it like in an Excel worksheet and two we want to show that it is an adjusting entry by using the journal form so that we can see that hey this isn't part of the normal accounting process this is an adjusting entry a period in adjusting entry and then three you might say well hey if I enter a transaction that's in essence similar or the same thing as an invoice but with a journal entry won't that mean that by the time of March 5th we will have doubled up on that transaction it will have been entered twice at that point in time answer yes it will have it'll mean that we entered in twice and that's going to cause a problem so what we want to do is make it correct as of the cutoff date by entering the journal entry and then reversing it the day after so that we don't mess up the accounting department we can then get the financial statements correct as of the cutoff and not mess up the accounting department hopefully by simply reversing it the day after so the way that you typically want to do this I would think about what is the journal entry and you might actually want to just write down the journal entry so you might for example go into the actual form here and say okay what's the journal entry related to this invoice and if I was to write it down and again it tries to change the sales tax on me so I'm going to go back in here generic 5% QuickBooks I told you why I told you why because reasons because reasons that's why you know here we go so in any case then if we go back on over here we're going to say this is going to be accounts receivable let's just say AR accounts receivable for the 525 and then we have sales is usually the other side this is the way many people will typically think about it 500 I'll make it a negative on the credits this is a credit of 500 and then we've got the sales tax payable sales tax payable which is 25 I believe it was because it was 5% because we changed it to the generic 5 negative 25 and then we also have the cost of goods sold and then we've got the inventory and that I believe was 400 which you would have to get basically we could see that if we drill down on the account as we did for the cost of goods sold or inventory this is the journal entry that's being recorded in essence by that transaction now we have a problem with this account and we have a problem with possibly this account possibly not but the accounts receivable QuickBooks would not record anything even a journal entry to accounts receivable without recording something to the customer because if we were to then QuickBooks would have a difference in their sub ledger over here for the sub ledger and so QuickBooks actually has more restrictions than you might see in other software because the adjusting entries we would actually like to not enter a customer because I don't want this messing up the customer balance detail in other words if I go into the get paid area if they force me to put a customer like Mr. Anderson here then I'm going to have this adjusting entry that shows up in the detail and I don't want to do that because that's going to mess up the customer but I have to do something or else they won't let me post to accounts receivable there's two ways that you can do that you can say okay I don't want to mess up the bookkeeping system with my adjusting entry to make the financial statements correct at the end of the period so maybe I create another account called accounts receivable 2 or something like that which would be an other current asset instead of an accounts receivable account for which I don't need a customer for but I can basically combine them together when I'm thinking about my adjusting entries and creating the financial statements that'll be looking a little bit more ugly on the on the actual financial statements in QuickBooks but if you're going to export them or something like that then it wouldn't cause as much of a problem or you might say hey maybe maybe I won't use Mr. Anderson maybe I'll try to use some other customer that they know as an adjusting entry customer so I might say I might just call it like a ZZZZ ZZZ adjusting entry customer or something like that and the reason I do that is I'm hoping the ZZZ will put the customer at the bottom of the list so it doesn't bother them too much it'll indicate that it's an adjusting entry and after we do the adjusting and reversing entry it should go back to zero and hopefully not be a problem to anybody so that's what we're going to attempt to do here we also might have a problem with the sales tax because we paid the sales tax with the sales tax widget so you might have a similar kind of situation where you'd say maybe I want to make another account for the sales tax to put it to connect it to the sales tax so I make sure I don't mess up anything I don't think it will but you might do that you might make another account and make it possibly a sub-account of the sales tax to make sure that you don't mess up however the widget works when it's calculated in the sales tax we might do that as we enter it so once we do that we can say okay let's go back on over here and I'm going to go to the first tab now this is one you might last time we tried to enter the journal entry with a by going into the registers but this one's too long of a journal entry I think the easiest way to do this is just to enter a normal journal entry and do the debits and credits for it so I'm going to go basically up top and I'm going to go into the into the journal just do a straight up straight out journal entry and this is going to happen as of the cutoff date 03 28 22 and this is going to be then accounts receivable accounts now wait a second I'm in the business view I don't want to do this in the business view because I might need to add an account and the business view tries to drive me crazy when I do that do you want I'm going to leave right now yes I do want to leave I'm not going crazy I'm not going and you're not driving me to crazy business view I'm going to right click on this and duplicate it changing it on over to the to the accounting view by going to the cog drop down and then we'll go on to switch to the accounting view okay let's do it again ultra base plus button and then we're going to go into the journal entry a journal entry and this is going to be as of 0228 22 and then we'll say this is going to be in accounts receivable accounts receivable and so notice it gives me the type over here where it didn't do that in the business view way better I think they should fix the business view in that regard but no one cares what I think so that's okay that's okay is this going to be an adjusting entry and adjusting entry so and then we have to assign a name over here and so I could put you might be inclined to put Mr. Anderson but I don't want to put Mr. Anderson because I don't want it to mess up there Mr. Anderson sub ledger report so I'm going to create another one called ZZZ adjusting entry ZZZ adjusting entry entry there it is and that's going to be a new customer hopefully that won't mess anyone up and it'll be very they'll be able to know what I'm talking about there you know what I'm talking about and then the other side is going to go to sales sale of product income I believe that's the one and it's not for five thousand five two five there we go and then the sales is going to be for one hundred adjusting entry and then we've got the sales tax payable now this is the one where they have the sales tax here at did I I just deleted my where's my balance sheet my balance sheet is gone let's go back I think it's in here balance sheet the sales tax account was the California board of something something let me just check it down here it's called the California so I'm going to try to make a sub account of that account so that I don't I don't mess up that account so I'm going to say okay sub account I'm just going to call it sales tax payable sales tax payable I should make the California account the sub account of this one but anyways sales tax payable tab and then I'm going to add it it's going to be a liability account other current liability and then I'm just going to say other current liability sales tax payable sub account of the California California department of tax so I can kind of connect it together without actually recording something directly to that account so it doesn't mess up the little widget thing that they use with the sales tax saving it there we go okay here we go and then I've got the cost of goods sold cost of the goods that are sold 400 nothing special needs to happen there no special needs happening on the cost of goods sold and then inventory inventory has a sub ledger too so you might think maybe I should have another inventory account but QuickBooks allows us to post to the inventory without kind of recording an actual item unlike the accounts receivable which is actually good for us it's going to throw off the sub ledger but that's okay because I know exactly what it is and when we do the reversing entry we'll be back in balance so I'm going to say inventory I'm just going to record that right to the inventory asset account there it is hold control scroll down a bit so we can see it in the glory that is this adjusting journal entry so let's go ahead and record it and see if it does what we think it should which is in essence pull in that invoice into the current period let's see if it lets me save it or if it gives me any kind of error no saved perfectly fine go back up top run it again rerun this is a rerun let's do this as of let's do it as of 022822 just that one date 022822 so I can look at just that transaction run it holding control scrolling up a bit and then I can go into the AR and then if I go down we see there's my journal entry there's my journal entry as of the end of the date now if I pull the date up to 030522 then you can see it's in there twice now that's a problem but it's correct as of the cutoff date and we'll do a reversing entry to fix it after after the cutoff date so we'll deal with that next time going back to the balance sheet back to the big balance sheet if we then go to the to the income statement which is the side by side comparison I love that works so good right here that we can see it all side by side then we can see that if we go to February here the month of Feb we've got then the 500 for the adjusting entry right there and then if I bring the date range up to 030522 you see the same thing it's going to be doubled up if we bring it out on that transaction that happened on 0535 but we're going to do a reversing entry on 031 next time which will fix that problem right now we're correct as of the cutoff date end of February the difference between those two is back on the balance sheet and it's down here in the California department of so on notice I just made this one a sub category so we can kind of close it up and still use this to report it nicely without it being too ugly but there's the 25 that we recorded there and then we've got the inventory is going to be up top inventory there it is if I go into the inventory we're going to have the same kind of activity let's see it check it out there's the $400 for the adjusting entry journal entry if I was to increase the date range to 030522 run it again again there's the 400 it's doubled up because it's in there twice we're going to do a reversing entry to fix that but it's correct as of the cutoff date which is the point for the adjusting entry we'll worry about the next thing next time we're then going to go to the tab to the right and one more time we'll look at the cost of the goods that are sold let's check it out shall we cost of the goods that are sold that's what we want to look at this time so if we go down there it is the journal entry looks good if I change the date range once again 03050 or 2222 we run that look at there it is there's the 4 and the 4 it's in there twice again we'll fix that with the reversing entry but this is what we want for now this is good for now back then to our profit and the loss now let's check our sub ledgers if I go back to the first tab and I go to my accounts receivable there's my accounts receivable what happened to the sub ledger because they made me put a customer next to it so if I go to my sub ledger over here is that the sub ledger yeah let's run it again run it run it Jenny told me to run so I was running so I'm going to change the range up top and end this one on oath on 022822 022822 and run it and then if I scroll down notice we didn't include it in Mr. Anderson so it doesn't mess up Anderson's customers detail what we did is we put it down below way down here so it's kind of out of the way for our adjusting entry notice everything else is being made up of invoices down here we have a journal entry that's a little funny that can mess things up because it's harder to connect the journal entry to another journal entry that's going to close it out right so in other words the invoice is typically going to be connected to the payment that happens after it so and that's the process that we would like to see we would only really like to see on the bookkeeping side of things invoices and then the pay kind of documents that will be tying each other together so we can track that information looking and finding and tracking the invoices that are open so in any case we got the 525 it is recorded that we're up to 2270150 that should tie out still to what's on the balance sheet because they forced us to be able to tie out by making us enter that customer but the inventory they did not make us enter an item and therefore the inventory is not going to tie out to the sub ledger if I go back on over to the sub ledger here and I was to change the date let's make this one as of 022822 run it we're not going to be tied out here and if I pull out the trusty calculator for some trusty calculations I want to do some calculations you need the calculator for that 4746 at least I do let's go back on over and then I'm going to go back to the balance sheet the balance sheet and then the balance sheet is at minus 4346 it's off by what 400 I've seen that number before that's the cost of the inventory that we put in so it's off by the inventory that we put in there which makes sense because we didn't assign it to an actual item so it couldn't pick it up in the sub ledger which is actually good in this event it's bad in that it's easier to get out of context or get out of alignment with the inventory but good because I don't have to mess up the inventory sub ledgers over here in tracking the inventory to put the adjusting entry in place so that is nice it will be back in balance once we do the reversing entry next time so don't worry don't worry it'll be okay I think I'm pretty sure so let's go to the first tab then and hold down control scroll down a bit and I now want to look at the get paid and pay area just to note that if you're on the bookkeeping side of things again if you're on like if you're doing the accounting you're concerned with especially if you're in an accounts receivable department you're concerned with tracking the receivables of course and if you're in the adjusting department and you've never really worked in the accounting department you work for example at a CPA firm you're concerned with making the financial statements correct and you might not be thinking about all the other kind of things that are going to be involved on the other side of this center if I put that information the journal entry into Anderson here which is probably what most accountants would do that are in public accounting just because they were forced to put it somewhere and that's where they then I'd have that information that would be in here on the bookkeeping side which is kind of annoying to have and so even if you reverse it we're still going to have that in this customer's account which is kind of annoying so instead we could either make another account entirely once again that wasn't an accounts receivable account to avoid the sub ledger all together so it wouldn't mess up this area or we tried to down here make an account called ZZZ adjusting entry at the bottom because it starts with the Z's and so hopefully this would be an indication to the accounting department hey look this is an adjusting entry thing it should go away you should see it ticket and tying out to see the normal invoice and then the pay amount because they're adjusting entries hopefully it doesn't mess up any other reports as we do that that's that's the goal so we'll do the reversing entry next time but for now let's take a look at the trustee TV here to see where we stand and let's do this as of the cutoff date so I'm going to run it as of the cutoff date and then if you tie out to what we have here great if not then then try changing the date range and we'll do another report which will be the journal entry reports at the end to double check our numbers let's take a quick look at that journal report now too because this is an interesting journal entry I could hold control down and scroll down go into the reports area and let's just take a quick look at the journal report the journal report and so let's run this one as of 2822 to 022822 run it and then I'm going to change so I can just look at the journal so I'm going to customize it be doing some filters some filter action transaction type which is going to be a journal entry that's what we want run it there we go so now we've got these two adjusting entries and we got this one so fairly longer kind of adjusting entry but you can see how you can kind of look them up and see that they are you know differentiate the adjusting entries from the other kind of transactions due to them being a journal due to us reporting adjusting entry in them due to them being at the end of the period in this case the end of the month end of February 228 the cutoff date