 QuickBooks Online 2023. Enter purchase order or PO form. Get ready to start moving on up with QuickBooks Online 2023. Here we are in our get great guitars practice file. We started up in a prior presentation using the 30 day free trial. We also have open the sample company. If you want the two open at the same time, we suggest using the incognito window or another browser. Support accounting instruction by clicking the link below, giving you a free month membership to all of the content on our website, broken out by category, further broken out by course. Each course then organized in a logical, reasonable fashion, making it much more easy to find what you need than can be done on a YouTube page. We also include added resources such as Excel practice problems, PDF files, and more like QuickBooks backup files when applicable. So once again, click the link below for a free month membership to our website and all the content on it. You can open the incognito window if using Google Chrome by selecting the three dots in the browser, new incognito window, and then typing into the search engine, QuickBooks online, test drive. We're gonna be using the sample company to take a look at the differences between the accounting view, the view that Get Great Guitars is in, and the business view, the view that the sample company is in. You can toggle back and forth between the two views by selecting the cog dropdown, switch the views down below. Opening up a couple tabs to put reports in by right clicking on the tab up top. We do this every time, duplicating the tab, right clicking on the duplicated tab to duplicate again, back to the tab to the middle to put the balance sheet in that tab by going to the reports on the left-hand side, opening up then the big balance sheet. By the way, if you're in the business view, the reports are located in the business overview and then the reports on the left-hand side. I'm then gonna go to the tab to the right and then open up the reports again to look at the P to the L, the profit, the loss, the income statement, and then I'll close the hand boogie up top. We'll change the range in the middle from 010123 tab, 123123 tab, run it to refresh it, there's nothing there. We haven't done anything on the income statement still. And then I'm gonna go to the tab to the left, close the hand boogie, scrolling up, change the range, 010123 tab, 123123 tab, run it to refresh it. That's the setup process we do every time. In prior presentations, we set up the new company file. We put the beginning balances in place. I'm gonna collapse the assets, the liabilities. We then thought about how we would start the new business, typically new business transactions would mean that we need assets typically to get things rolling, to get the bulls started. We often have to buy property planting equipment. We finance that possibly by taking out a loan or possibly by putting our own money into the business on the equity side due to the fact that the business has not been up and running long enough to provide its own equity side of the revenue side of things here. And then we financed it. We bought some property planting equipment. We put some assets also into our short-term investments to hold on to them till we buy more stuff. And now we're thinking about the next thing, which if we sell inventory would be the purchase of inventory. So we're gonna be buying and selling guitars. So clearly if we do that, then we might do that a couple of different ways. One, we might have the guitars already in our shop so people can come in, test them out, take a look at them and possibly buy one on the spot. But we also might have a situation where we buy custom guitars. People come in and they want some kind of a custom job or something like that in which case we might buy something as the customers come into place. Now, this being our new shop, we're kind of focusing in on most likely buying our inventory that we can have basically on hand within the shop, which would be a similar process for many types of businesses. So once again, we're buying something that is not gonna be expensed at the point of purchase, even though, even if we paid cash for it because we're gonna be putting on the books or similarly as we did with the furniture and equipment as inventory, that's the typical thing with inventory and then we're gonna expense it in the form of cost of goods sold when we sell the inventory. So we'll get into that in a future presentation. Quick look at the flow chart for inventory here. This is the desktop flow chart but it's just a flow chart of the general flow of transactions. And I think this one's a good one to look at. Inventory is gonna span both the purchasing side, the vendor cycle and the selling side, the customer cycle. So when we purchase the inventory, we're gonna have to put it on the books typically as inventory and then when we sell it, we're gonna have to decrease inventory and record it as cost of goods sold. Now remember, there's a couple different ways we can deal with inventory. The easiest way to deal with inventory would be that we're not even gonna record it as an asset, we say in a cash-based system. So that would only work if you're buying inventory in a just-in-time type of system. You buy the inventory, you expense it at the point that you purchase it. But most of the time we have to do an accrual thing, put the inventory on the books as an asset. We could then use either a periodic inventory system, tracking the units of inventory outside of QuickBooks or a perpetual inventory system, tracking the units inside QuickBooks. We're gonna be using a perpetual inventory system, therefore we're gonna have to track the inventory in units and dollars every step along the way. So the first thing we do is purchase the inventory, which we might do with a bill form, which would increase the accounts payable or a check form or an expense form. However, we could have one step before the purchase of the inventory and that's the purchase order. That's what we're thinking about here. Note that not every company will have a purchase order and a purchase order is a little bit abstract because if you think about your own purchases, you don't use something like a purchase order. So individuals, if you bought something online or something like that, then you're gonna pay for it when you purchase it online, even though you haven't received it yet typically and then they're gonna ship it to you. The only time you use a purchase order that might be the case sometimes in business, in which case you would just basically write a check and record the inventory or have an expense form when you purchase it. But in some cases you might be able to order the inventory before paying for the inventory. That's what a purchase order is doing. That would only happen if you have some leverage over the transaction. Possibly you have something that you wanna manufacture like overseas and like China and they're gonna manufacture 1,000 cups or something like that. Then they might actually be able to set up or they actually do the job, give you the merchandise and then give you the bill with it. In that case, the purchase order is just a request. So the other thing that's a little strange about it is there's no financial transaction with it if it's just a request because we don't have the inventory number one and we didn't pay for anything at number two. We just had a request. It's an important form then if you're using the purchase order, if it's part of your process to track, but it's not something that's gonna have an impact on the balance sheet, the income statement, the financial statement. So we're gonna track it internally. That's different than most every other form here except possibly the estimate form is the main other exception we'll get into later. So that's what we're imagining here. We're gonna request the inventory but we have not yet received it. There will be no impact therefore on the financial statements until we receive the inventory. Back to the first tab. We're imagining we're buying guitars and this now is a normal transaction. So normal transactions are usually in the little plus button. Plus button, we're in the vendor cycle because eventually we're gonna purchase the inventory and we're gonna go down to the purchase order with a P.O. on down below. It looks kind of like an expense form or kind of like an invoice type of form. And so you would think a financial transaction would happen but no. We're gonna say this is epiphone. I'm just gonna type it in here. This is the vendor that we buy our guitars from. So we're gonna buy them and then sell them. It's open right now by default. So obviously it's an open purchase order because we're processing it. We haven't received it. You're gonna have to enter the email. If you're gonna be emailing the purchase order, the purchase order being a form oftentimes that we will be providing to an outside person outside of our company, not just a data input form. Therefore it's a customizable form when you might wanna like put your logo on and all that kind of stuff. You got your mailing address which is here. We've got your ship too. So if you have your ship two options, if you were to ship it to someone other than us, then you can select the customer. So if you're gonna ship it directly to the customer, you could select the customer which will then change the shipping but we're gonna say it's gonna come to us. It's gonna come to our store. The purchase order date, let's say it's on the 12th. I'm gonna say January 12th. Let's say minus. Notice I'm hitting plus and minus if I'm close to the date and it'll then change the date. So I'm using the keyboard to do that. Anytime you use the keyboard, you're more of a geek and that's good typically because it saves time when you're doing geeky things like entering data into the system. There's our shipping address which is our default address. And so we're not gonna put ship via anything here. No tags. Notice that the category field is compressed automatically because I'm not gonna put it to the category of anything. I'm not gonna put it to inventory generically. I'm gonna use the items that we set up before or add new items as we add them, giving us the actual units of guitars that we're requesting as well as the dollar amount for the cost of them. So I'm just gonna add a couple guitars here that we're gonna be requesting. So if I hit the dropdown, we already set up all the guitars. That's when we set them up in our products and services. Now we might have sometimes that we add them on the fly or as we go as they say, but we're gonna add some that we already have. So we're gonna purchase an ELP because this is our main vendor and we're imagining that we do business with them often. We already have our deals set up between the two of us. And so there's the rate that we set up when we added this to our products. I'm gonna say we're buying 20 of these and the rate is 400. The system knows that because I already set up the item. If I hadn't set up the item, I would then set up the item and put the rate. The amount is gonna be 8,000. Notice I have a customer field and you might say, why in the world would I have a customer field over here when I'm buying something from the vendor? I'm the one that's buying here. The customer is the one that I sell to. The reason we have a customer field is because I might be in a situation and we will do this later where I purchase specifically for a particular customer. And if that's the case, the vendor doesn't need to know about that customer that I'm purchasing for. But I would like to track the customer so that when I receive the guitars, I know that the next step that I wanna do automatically is contact that customer and generate an invoice, which is the sales side of the transaction because I now have their guitar. So if it was a custom guitar, a customer came in, says I want a guitar and we said, great, we don't have that on hand. I will order it for you custom. Then I might put the customer here so I can track that as we go. All right, then I got the other one's gonna be an EPR. That's gonna be our Epiphone Riviera. So we're gonna say that we're gonna buy five of those at a rate of 440 dependent that's determined by the system. So that comes out to 2200, no customer. We're gonna say that we also are gonna buy an EPSP that we set up. And so there's that one. Hold on, what happened here? It's an, oh, it wants to set it up. I messed up something. It's gonna be an EPSP, that one. That's the one, an Epiphone Standard Pro. I kind of made these up so these are guitars, but they're just part of the practice problem here. So I got five of those. We just put some guitars in place and that's 480. So 2400, the rate, this is the cost, by the way, not what we're gonna sell them for. Obviously we're gonna mark them up and sell them, which again is determined by the item already set up in the past. We will set up new items as we make more purchase orders and invoices and whatnot in the future. Okay, so that comes out to a total, oh, I got one more, let's do one more line here. This is gonna be an EPSP, an E-P-S-P. Wait, I already did that. So that's gonna be an Epiphone. Let's make this one. I'm gonna make this one an E-P-S-H, E-P-S-H. And then, so that I bought, and how many I bought, four of those at 320. Okay, let's do that. And then I bought the E-P-S-P Epiphone Standard Pro, five of those at 480. And that comes out to 2400. So the total here is 1380. So note that we would think then we're gonna, okay, there's a total down here. This looks like a financial transaction is happening. I would think there'd be something happening to the balance sheet and the income statement. There is not, because this is just a request. Nothing's actually happened yet, but I can use this purchase order to then populate a bill. Notice I can add lines. I can clear lines. I can put a message here if I want to. On the purchase order, I can put an internal memo. I can add attachments if I want to. Down here, I can cancel. I can clear the whole thing. We can print it and we can make it reoccurring. Let's look at the preview right now by going to the print. That gives us a preview. So this is what it would look like when we provide it to the vendor. There's my little test item with the memo. And so there it is. I'm gonna close this back out. And then we're going to, and then you could have more options, copy, delete, and audit the history. Then we have the options of save new if we wanna make another one, save and send it. If we're gonna email it, I'm gonna save and close it for the purpose of the practice problem. Okay, so no impact on the financial statements from that. So how do I track it then? Well, we're facilitating transactions with a vendor now. So we're gonna go into the vendor center, I would call it under the expenses area. And then you've got your options up top. Now note that if you're in the business view, by the way, then it would be under the paid and paid area. And we're looking at the vendors down here. You've got your vendors and you've got your bills on down here. It's a little bit different over here because you've got that added tab of the expenses, which is a nice tab. So let's go up to that one actually first to find that one in the business view. They put that under the bookkeeping. So you can go under bookkeeping and then you've got your transactions up top and then your expenses tab to the right. So it's a different, a little bit different location on that one than you might expect on the transactions. So we've got, if we go into our expenses, I'm gonna close this out. It'll give us the filter of transactions up top and we might filter this by the purchase orders. So this is one way we can look at the open purchase orders. You have all status, you've got your date ranges and you've got your payees and your categories if applicable on down below. I'm gonna say apply, there's our purchase order. Now, as we accumulate more purchase orders, we could then say whether the purchase order is open or closed, obviously it is open. So there's the open purchase order. If I said the purchase order was closed, the purchase order would disappear. We don't have any closed purchase orders, closed meaning we have received the shipment and that's gonna be the next step in the process. So the next step from the purchase order is we're gonna basically make a bill with it, right? Typically, because we'll get a box of guitars with a bill in it and then we'll enter the bill possibly populate in the bill for the information of the purchase order. Okay, let's open this back up again, go to the expenses tab and then we're gonna go down to the vendors. This is another way we can kind of track the information, close up the handbookie. Up top, you got a nice little sort field. I can sort my purchase orders. That'll give me the vendors which have the open purchase orders. There's the purchase order. Or I can go into just by vendor directly and if I'm communicating with the vendor, I can go in here and say, okay, yeah, we've got this purchase order that is an open purchase order. I can then hit the dropdown and I can copy it to a bill. So we'll make a bill of it next time and I can send the purchase order if I need to from this area. So the next step, of course, again is gonna be that we're gonna receive a bill. We'll talk more about that in a future presentation. For now, let's make another purchase order. So we'll do it again. Let's run it back. We're gonna go up top, hit the plus button and I'm gonna say this is gonna be another purchase order under the vendor tab, purchase order. And this time we're gonna say Gibson. This is another, I'm not sure, do we have Gibson? This might be a new vendor. We don't have Gibson. So I'm gonna set up a new vendor as we go which often is the case when we enter expenses we set up the vendors who we purchase from. This time we're gonna do that with the purchase order because we're buying stuff with it. So we're gonna say Gibson, USA, tab. Now note that you might want to add more detail if this is a primary person that you're purchasing from, such as, for example, at least the email address in practice. If it was a vendor that you're just buying like the utility bill from or something, then all you would really need the name but the name is the only required field and that's just what we're gonna do for the practice problem. I'm gonna save it, hold on, it didn't do it. I'm saying Gibson, USA, that's the required field. So I want that, so I'm gonna say, okay. So now it's good. Okay, email, I didn't add the email but if you're gonna send it by email then of course we would need the email. We've got the ship to, if it was going to a customer but we're gonna ship it to ourselves. The date I'm gonna put here will be, so I'll keep the date as is up top and then we're gonna go into the items and I'm gonna say that this is gonna be a GIUSA. So we already have this one down here so because we set up the products in a prior presentation so you can take a look at that if you have it and then this is, I'm gonna put three of them. They're giving us the quantity on hand so we're buying more of them, three and that's kind of neat that they give us the quantity on hand as we go through but there it is, we have no customer for it. So we're not gonna add any detail on down below. We saw the options down here, same options. This time however, instead of saving and closing I'm gonna say save and new and we'll just add another one here. So we're gonna add a new vendor as we go again so we're gonna add a new one but I just type it in here, typically diamond head. I'm just gonna call it that and so I'm just making up the name here and I'm gonna copy that over to the vendor so that's gonna be our vendor name. So we'll save that and I'm just gonna put that information. I'm not gonna put an email address, same stuff. Let's keep the date the same as well and go on down to our items. So this one we're gonna buy the DUC which is the diamond head ukuleles and again I kind of just looked up ukuleles here a while ago. So I'm not trying to recommend any of these instruments here. I have not used pretty much any of these instruments. I'm just rolling here. I've just got like a one couple. I've got a couple. Anyway, that's that one. So we're gonna request that one. Nothing being recorded again. Let's do the save and new again. So this one it's gonna be epiphone again. So I'm just gonna type in epiphone. We already have epiphone. So everything looks good. We'll keep the date the same. And then notice it's trying to populate the last detail that we had which is usually often a good thing but we want a different, we want to populate it differently here. So I could clear this one at a time with the trash can so I can populate what I want or I can go to clear all lines down below and just clear that up and then we're gonna add the new data. So we're gonna buy some more ELPs, ELP again. But this time we're gonna buy 50 of them and we're imagining that we're buying them specific for a customer. So we had a customer come in and say we want these specific guitars and we're gonna say great, we'll talk to our vendor on it and get you those guitars. And so this isn't gonna make any change to the actual transaction. The vendor epiphone doesn't care about our customers but it's useful for us to track internally so that when we receive the guitars we can turn around and invoice the customer. So I'm gonna add a new customer as we go. So now we're adding a customer, not a vendor. I could do it this way but I typically just type in, I'm gonna call it Eric music, I'm just making up a customer music and then tab. So now we've got the customer, I'm just gonna put the minimum data to add the customer. So I'm gonna save it and actually they want the minimum data over here to add the customer. So I'll copy and paste it and then save it. Okay, and then I'm gonna do also an EPSH, an EPSH, I'm gonna say we want 10 of those and note that we could have two different customers with the same purchase order and then when we receive those guitars we can turn around and make invoices with them but I'm gonna have the same customer here once again, Eric music for these two items. So there's that one comes out to the 23,200, no transaction on the financial statements yet. We're just requesting, we expect to get a box of guitars with a bill in it at some point. We're gonna say save and new again. Now this one we're gonna add a new item as we do the purchase order. So this is gonna go from, this is Gibson, no this is gonna be, yeah Gibson USA that we're purchasing from Gibson USA. And so that populates because we had that in, we'll keep the same date again. Notice it's trying to populate something down below. I don't want that one so I can exit out or trash it out here and or I can go to clear the lines and then I'm gonna add a new one that we've never bought from them before or requested. I'm gonna call it GSB. So that's gonna be the nickname GSB that I'll call it. I'm gonna have to add it. So I'm gonna go ahead and add it or I can select tab and it will then populate. These are the selections that we saw when we put the items together. So we're gonna add the item on the fly. We're gonna track the item inventory. So we wanna select the top option for the inventory tracking and here's our detail. So now if we tab through this we're not gonna say that there's an SKU category. We could categorize it as guitars versus basses versus drums or something like that but I'm not gonna do that here. The initial quantity on hand they make you put something in here even though most of the time it's gonna be zero like when you're just starting and they have to have as of date. So I would always put like the beginning of the period or something like that. Reorder point I'm just gonna put at zero meaning it's gonna give us a warning when we get down to a low point but I'm just gonna put it at zero. The inventory asset account that's what's gonna increase when we purchase it. The description that's gonna be on the purchasing items is gonna be our on the sales items is gonna be Gibson GS or SG I'm gonna call it. Gibson SG is gonna be the name of these guitars apparently. And then I'm gonna say we sell them. This is the sales price not the purchase price 598. When we sell it which isn't being done in this form this it would be a sales form would be an invoice or sales receipt. This is the purchase order. We will go to the sale of product income the income statement account taxes will be applied. That's the case by default if I go into here taxes are being applied so I'll keep that. And then we're gonna say the purchase this is what's gonna be populating on the purchase forms which will be included here the purchase order although this is not the thing that's actually gonna record the purchase it's just the request and then the bill will record that as well as an expense form if we bought it with that and then the cost. Okay I'm actually gonna change this up a little bit let's say that let's say we sell it for 777 and then the cost is gonna be 598 and then the expense account so 777 cost 598 so this is what's gonna populate here the cost on the purchase order for the request. Cost to get sold is the expense account that will be impacted when we sell it with an invoice or sales receipt. The vendor could be Gibson USA that's who we purchase these from. Okay so let's go ahead and save and close that. So there we have it we're gonna say that we're buying 10 of those we're gonna say the rate has been applied now that's the rate we just set up we're also gonna add a customer for this one I'm just gonna make up another customer that we're buying these specifically for the customer came in and said hey I want this kind of guitar we have never bought those before but hey we'll buy them specifically for you from our vendor cause we do business with Gibson USA so we're gonna say music, stuff, store I'm just typing in the name of the customer and I'm gonna copy that over to the required field and just keep it at that and then so I'm gonna save it and so there's the amount of 5,980 so I'm gonna record this one this one is the last one so I'm gonna say drop down or rise up and save and close. So now let's just check them out again so if I hit the carrot over here then we can go to the expenses tab and then I could look at my vendors which would be if you're in the other view that would be in the get paid pay tab and now we're in the vendors so the vendor center I would basically call it then you've got your vendors and you could check them out by the purchase orders the open purchase orders and you can see here here's the vendors that have the purchase orders you can see you got two purchase orders on these two and so on if I was communicating with the vendors I can go into them here I could see the purchase orders I can send then or I can then create or copy over to a bill that's what we expect to happen next in the process I can also go to the expenses tab up top and you can find the expenses tabs a little bit different location over here on the business view it's under bookkeeping and then transactions and then the expense tab up top so it's a little bit different location there and once again I can sort by filter purchase order and I would generally sort by the open purchase orders and then I can manage my purchase orders this way as well. Okay so there's no impact on the financial statements yet and in future presentations we're gonna start to hopefully record the bills assuming the next step in the process of receiving the inventory that's when the financial transactions will happen increasing inventory on the balance sheet increasing the accounts payable and also increasing sub ledgers related to the inventory asset account as well as sub ledgers related to the accounts payable accounts so we'll look forward to that in future presentations.