 QuickBooks Online, barter or trade transaction. Get ready to start moving on up with QuickBooks Online. We're gonna be using the free QuickBooks Online Test Drive getting there by searching in our search engine for QuickBooks Online Test Drive, choosing the option that has 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. The Intuit.com and the URL, Intuit being the owner of QuickBooks. We're gonna select the United States version of the test drive and verify that we're not a robot. Zooming in a bit by holding down control up on the scroll wheel currently at 125% on the zoom and note that if you hit the cog dropdown we can switch back and forth between the business view and the accountant view. We're currently at the accountant view. We'll try to toggle back and forth so you can see where things are located under the two views. We're gonna duplicate a couple of tabs to put reports in as we do every time. Right click in the tab up top, duplicate it. Right click on the duplicated tab, duplicate it. Go back to the middle tab. Down to the reports on the left hand side in the accountant view. We're gonna go to the balance sheet, tab to the right, back to the reports on the left. This time the income statement or profit and loss report. Close in the hamburger, scrolling up to change the dates. First date range, I'm gonna go from 010122 January 1st, 2022, tab 123122, December 31st, 2022, tab and then run the report to the middle tab. Close in the hamburger, scrolling up, changing the date from 010122, tab January 1st, 2022, to 123122, tab December 31st, 2022 and run it. And then we're gonna go to the first tab. That's the setup process we do every time. I'm gonna hit the plus button. We've been looking at the customer cycle, which at the end of the day, we're hoping will result in an increase to the checking account or the end of the cycle, I should say. Last section, we looked at the vendor cycle, which at the end of the day, we expect cash to be going out of the company, typically for goods and services that we're purchasing, as opposed to those that we're providing to customers. Now you can imagine a situation where you're saying, well, what if I'm not expecting cash at the end of the customer cycle or to go out at the end of the vendor cycle because I'm bartering, I'm trading. Well, in that instance, we can kind of set it up as if we're still gonna have cash happening at the end of the cycle because that's what the two cycles are designed to do. Let's go on to a flow chart and I'm gonna use the flow chart from the desktop version just to visualize the transactions and then we'll go back in and record the transactions. So here's the vendor cycle, which at the end of the cycle, we would expect there would be a decrease to cash, typically for goods and services we buy. Here's the customer cycle, which at the end of the cycle, we would expect to be going up for goods and services that we sell. If we trade goods and services, you can kind of imagine a trade as if cash was involved. You would be something like, okay, you give me X product, I'm gonna pay you $100, I'm gonna give you Y product and you pay me $100. Therefore, the $100 just went one way and then back the other way. Therefore, we can just eliminate the $100 changing hands and make it just a barter type of transaction. However, putting it into the accounting system, we can still just do it as if the $100 is going back and forth trading hands, meaning at the end of the process, we can have a deposit going in on the customer side and then a decrease to the checking account, a check index and form on the expense side and they will net each other out. Now the problem is that we do not wanna do that in the checking account because these are not actual physical money that's going in and out of the checking account and we want to be able to double check the checking account to the bank statement. So I don't want any transactions, even if they're clearing transactions, I can check them both off into bank reconciliation so it won't throw me out of balance but I don't wanna muddy up the bank statement. So the easiest thing to do is just to create another account which would be a checking type of account that we can then use as a clearing account for a bartering type of transaction, increasing it and then decreasing it so it nets back out to zero. That also allows us to basically, if we're going to have an accrual kind of process, for example, if we provide the services first with it, I can enter an invoice in the same way that I normally would even though I don't expect cash to be received but instead goods and services from the other vendor and then I can check up on them and say, hey, you haven't given me my free meal yet or whatever they're supposed to give me. And on the other side of things, I can enter a bill and then for goods and services that have been provided to me and I can still track the payable. I can still say, yeah, I need to pay this person even though I'm not gonna pay them with money, I'm gonna pay them with my goods and services that we are gonna provide an equal and opposite measure would be the general idea. So we're gonna enter the same transactions, the only difference is I'm gonna end this thing with it going into a clearing account, let's pretend we're providing goods and services and getting goods and services that have an equivalent value of like $100. So let's do this, we're gonna go back on over. I'm gonna go back into my chart of accounts which in the accountant view is under the accounting area and then I'm gonna clear this chart of accounts. I'm gonna then close this and I'm just gonna make a new account which is gonna be a cash type of account but it's gonna be like a clearing account. So I'm gonna make a new account. So it's gonna be a banks item, I'm gonna hit the dropdown here, it's gonna go under the bank accounts, select the dropdown, this is going to be, let's put it in a cash on hand item, the account name, I'm just gonna call it barter like clearing account, let's say. And then there's not gonna be any opening balance, I'm not gonna put any added description to it for it, so I'm just gonna say save that. And so now we've got this account that we can use as in essence our clearing account. So then I'm gonna select the item up top and let's just record the invoice side of things first. So I'm gonna go to the invoice and assume that we provided goods and services to someone else who is gonna return the favor and have a barter in transactions. So let's say this is gonna be AAA here for the customer, that's all I'm gonna set up for the customer. And if we were gonna email it to them, we would need an email address, terms, net 30, that's good. And then down below I'm just gonna make it a service item. Now, obviously if it was dealing with inventory, we can use the items to track the information related to the inventory and the sales tax and whatnot as well, just because you traded something and no cash added, actually traded hands still doesn't mean that you're not necessarily gonna be subject to sales tax and all that kind of stuff. But I'm gonna just do a service transaction here and I'll call it this service one. I'm gonna copy that and then say that's our description. The rate, let's just say is $100. It's gonna go to the service income. I'm gonna say it's not taxable. So I'm gonna remove the taxation on this item that I'm setting up. Non-taxable item, that looks good. Save it and close it. And so there we have it. What's this gonna do? Well, it's gonna increase the accounts receivable. The other side's gonna go to the service sales account and it's gonna increase the sub ledger for AAA customer. Just like normal, just like a normally would. So I'm gonna save that. We're gonna say save it and close it. And then if I go back on over to the balance sheet and I was to go up top and run the report, then the accounts receivable goes up just like normal. We still expect to be paid just not with money. So then I'm gonna go back down and say, okay, there's the AAA just like we would expect scrolling back up, back to the prior report, the income statement side of things. I'm gonna run that report. We still have to record income even though we didn't, I'm gonna go into the services even though we don't expect to get cash. So we're gonna say there it is there. If we have to pay taxes on it, we still typically have to pay taxes on it on the income tax side of things generally. So then we're gonna go, there's that. So, and then the sub ledger, if I right click on this item, duplicate, and we go down to the reports and we're gonna close the hamburger and go down to the who owes you. Let's go to the customer balance detail report. And there's the AAA right there. The total of this report is at the 538152 which ties out to what's on the balance sheet for accounts receivable, which it should because we still expect to collect on it with something of equal value just not happened to be cash. So if I go to the first tab, we can also track this like we normally would for an invoice that was outstanding under the sales area and we can find the sales by the sales tab which is under the bookkeeping area and the business view. And we can search for the invoices, for example, and the open invoices here. We can also search for them in the customer area and look for AAA and say, hey, you owe us something. You're not gonna pay us in cash. I know that, but you still have to pay us whatever you're gonna give us on that side. Now, if we recorded the other side first, it would look the same to start out, meaning we can enter a bill form, which is the form increasing the accounts payable. So let's say that they provided us with goods and services that we expect to return the favor not with cash but goods and services, we can enter a bill. So let's enter a bill and let's say that it was for BBB vendor and I'm just gonna add that normal thing with the bill that we've seen in the past. I'll just say it's due in 10 days and the category, let's say it's meals and entertainment of course, meals and entertainment. And let's say the amount was $400. So they provided us meals and entertainment for $100. We provided them goods and services for $100. It should wash. But if I recorded this one first, it's gonna do the normal thing, increase accounts payable. Other side's gonna go to the expense, meals and entertainment. Let's go ahead and save and close that. So then I go to my balance sheet, run it. And then in my accounts payable liability side, going into the accounts payable, we now have the BBB bill as we would expect $100 going back to our prior account. And then in the income statement, running that, looking for that meals and entertainment account down here, meals and entertainment, there it is. So we had that. They provided us an excellent meal and entertainment, $100 going back on over. We also have the sub ledger for the balance sheet account of accounts payable. So I can make another report over here, right clicking on it, duplicating it. And then look at the sub ledger just to see what we can track this information like we normally would, even though we don't expect to be paying cash, scrolling down to who, what you owe. So let's look at the accounts payable, aging. Let's take a look at the vendor balance detail. And so there's the BBB scrolling down. There's the 170267, which should tie out to what's on the balance sheet, which is at the 170267. We can also track the fact that we owe them something for the goods that they provided us by going to the first tab, going into our expenses area, which under the business view would be the pay and get pay area. And then in here, we can see that we have the expenses up top. We can look at the bill and sort by the bill this way. We can look at the bills tab and we can look at the vendor and look at that particular vendor. Okay, so now we can make the payment and receive the payment. So the next step on the bill side of things, would say, let's say that now we did the work for them to repay the bill. So just like normal, the next step would be to make the payment. So I can go to the plus button up top, the bill, and then we're gonna pay the bills. Now I'm gonna pay the bill. Now the trick here is that we're not gonna pay the bill from the checking account, but rather from the clearing account, the barter clearing account. That's where it's gonna net out. And then I'm gonna select that one bill that we're gonna pay $100. This is a bill pay, so it's gonna decrease the accounts payable and the other side's gonna now go, not decrease the checking account, but decrease the barter clearing account, which is a checking account that will clear out to zero. So let's save it and close it. Let's just save and close and see what happens. If I go to my tab to the right and refresh, then we now see that the barter account has a negative $100 in it. So we don't wanna put that $100 in the checking account, even though it's gonna net out once we record the other side, but there it is. And then the other side here is in the accounts payable. Accounts payable has gone back down, just like we would expect it to normally do, so we can just use our normal process with the bill pay and then go back to our report. And then in the first tab, if I go into BBB, we can track what is happening, just like we normally would. If cash was impacted, we might wanna put a memo that it was a barter transaction and whatnot in the memo so we can see what's happening here a little bit more clearly that way, but we can still see it pretty clear because the deposit's going into not the checking account, but the barter account. And then on the other side of things, we can say, okay, on the sales side, we had AA, and now we have to basically say that we're gonna collect on this side as well, so now they're gonna provide us with the goods and services so we can net this out. The next step, typically here on the sales side would be that you have an invoice and then you receive the payment. Now, oftentimes that might not be necessary to put the payment, let's put this for AAA, and so payment method, you can put barter here if you wanted to, barter, you can add a method, and then it's not usually necessary to go into undeposited funds now because it's not going into the checking account but directly into the barter, so I'm just gonna put it directly into the barter account. At that point, check off the invoice just like we normally would, so we have the same kind of thing except it's not going into the checking account, it's not going into undeposited funds, but rather directly into the barter account. We're not clearly reconciling the barter account to a checking account or anything like that, therefore we don't have the same kind of issue with undeposited funds, so we're gonna go ahead and save that, and then if I go to the tab to the right, scroll up, run the report again, we can see that the barter account is now back down to zero, like that's what we would expect, that's what a clearing account is in my mind, different from a temporary account which are in essence mainly income statement accounts that go down at the end of the month and start over, this is a clearing account that's gonna go up and down based on a particular series of transactions that have taken place, so there's the barter, it's complete. Now you might say, why don't I just use the checking account because these two would net each other out, it wouldn't affect the checking account at the end of the day and I could just check them off when I do the bank reconciliation and it wouldn't even mess up my bank rec, but you still don't want it in the bank rec, because these two amounts are not gonna be on the bank statement, so all it's gonna do is muddy up your checking account which is already messy enough, remember the checking account has more kinds of transactions and bigger number of transactions than any other account due to it being the lifeblood of the company, so we'll just make another account and use it as a checking account clearing account, so we can use the normal system that we normally would as if cash was going both ways trading hands, we're just gonna give the $100 back and forth because that's just the natural way the accounting system works. So I'm gonna go back then to the first tab, obviously the accounts receivable has gone back down, so if I go into the AR, then we have received the payment, invoice payment, just like normal, only difference is that we put it into the barter account and then if I wanted to track the information for AAA here, we've got the payment and the invoice tying out, so I can track it just like we normally would in any normal transaction if we were expecting to get paid cash. So just one last thing, if I go to the cog dropdown, switch to the business view just to see where these items are located in the business view, if you go to the homepage or the get things done page or the dashboard, whatever you wanna call it, it's the same, dropdowns are the same up top here, we've been working mainly in the get paid and pay area, meaning both the customer and vendor side are kind of in the same area and you've got the get paid stuff up top, the pay stuff down below, the get paid being the customer center or sale cycle, revenue cycle, here's the customers, here's the invoices and then on the pay side, you've got the vendors and the bills sorted down here. Now the transactions, both all of the kind of expenses transactions or expense cycle transactions and the sale cycle transactions they put in a different location in this view, which is under the bookkeeping view and transactions up top, here's all the sales transactions where you're tracking normally outstanding invoices for example, and then these are all the expense type transactions or purchases transactions and where we sort oftentimes bills in this area. So just note that the layouts can change for QuickBooks, they might change things around but the accounting process is going to be basically the same. One more thing, the chart of accounts here as well is under the bookkeeping view here. So let's go back up here and then go to the bookkeeping and then you've got your chart of accounts. So that's another thing that we were looking at. So like I say, all the stuff should be there no matter what QuickBooks does or how many different views they look at or what they change the names to, it's just gonna be a different look and feel. We'll try to look at it from multiple angles.