 QuickBooks Online 2023. Apply customer deposit or credit to an invoice. Get ready to start moving on up with QuickBooks Online. Here we are in our Get Great Guitars practice file. We started up in a prior presentation with a 30-day free trial. We also have opened the free QuickBooks Online sample company. If you want the to open at the same time we suggest using in card needle window. 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. Or another browser you can open incognito window if using Google Chrome with the three dots incognito window type into the search engine QuickBooks Online test drive. We're using the sample company to compare the accounting view the view Get Great Guitars file is in and the business view the one that the sample company is in. You can change between the two by going to the cog up top and change the view down below. Let's open a few tabs to put reports in like we do every time right click in the tab duplicate it duplicate the tab duplicate it back to the duplicated second first duplicated tab in the middle and then we're going to go to the reports on the left hand side open up that balance sheet report but how do you get there in the business view in the business view you can get to the reports by going to the business overview on the left and then the business view tab back to the accounting view get a tab to the right going to go down to our reports open up the other favorite that being the profit and loss these are our two major financial statement reports close in the hand boogie and change the range from 010123 to 02282823 and then change it from total to month so I can see the two months Jan Feb and the total year to date then I'll tab to the left close the hand boogie and change that range 010123 to 022823 and let's just run this one that's the setup process we do every time now last time we're thinking about a situation where we got an advanced payment kind of like an unearned revenue type of situation from a standard accounting textbook but we're going to treat it a little bit differently due to the logistics of the software so remember if you've got the customer cycle here then you're going to end up hopefully with money coming into the company at the end of the day it might happen a few different ways one you might just have gig work from like a YouTube or something you just deposit it when you get it possibly with the bank feeds that would be the easiest thing to do but can only be done in an industry like that you might be at a cash register in which case you want to use the sales receipt typically and then you're going to make a deposit or you might have to do the whole a cruel thing which is kind of cruel because it takes a little bit more time but it's not too bad where you have to do the work first like in a bookkeeping firm law firm or something invoice the client track the accounts receivable then receive the payment and then make the deposit but also you could have an industry where you get paid first and we talked about some of those industry is like a newspaper you get paid first magazines now online subscription models for applications you get paid before you do the work in that case from an accrual standpoint you should put the money on the books as a liability for its income or sorry revenue not revenue cash goes up and the other side is not revenue but rather a liability unearned revenue because you owe the cash back or you owe the work that needs to be done when you do the work that's when you would record it as revenue that's the general idea now in our example we're saying we have a situation where we're trying to provide guitars which is a high priced item we're not making the sale at the point in time it's requested but to make sure that the customer is committed we want that deposit so once again we got money before we did the work we expect to be invoicing in the future but we got the money before the invoicing instead of putting it into a liability account we made a negative receivable because from a logistic standpoint in the software it's easier to track everything related to customers in the sub ledger account that's tied to accounts receivable if I make a liability account like unearned revenue or a deposit or something down here then that deposit is not tied to the customer so I'm not going to be able to tie the invoice to it as easily now we might have a work around around that that we can talk about later but from a bookkeeping standpoint the easiest thing is typically the thing that looks most natural is to make this negative receivable credit the accounts receivable before you have the invoice and let's see what that looks like on the sub ledger report right-clicking duplicate another tab to look at the AR sub ledger and we're gonna go down to to the reports again and let's open I'll close the boogie so I could see stuff and then I'm gonna go down to the who owes you and let's look at the customer balance detail report let's look at that one shall we and so then mr. Anderson you could see here we put a payment on it even though and so now we have a negative amount in there that's a that's a problem if I was to create my external financial reports which we can solve with an adjusting entry if we needed to at the end of the period but logistically it works well because I can look there and say okay yeah if this person came in and said that they wanted to complete the purchase I can easily go and say ah yeah you owe us we owe you money basically so we got a complete that or apply it to the purchase if I go to the first tab over here and check that out in the sales area and we go into the customers for example and I go down and say mr. Anderson wants to complete the process I could see mr. Anderson has that negative amount there so I'm gonna go into it and so now we have the information here so it's another way we can look at it we got we're gonna go if they came into the shop he say oh yeah we've got this unapplied $300 deposit so when you make the actual purchase of the guitar now that we've got for you then we could apply that $300 out to it if you're in the business to you by the way we're currently in the get paid and paid area and customers we're under the customers tab okay so that's what we're gonna do now so now we're gonna say that that we're gonna get the actual money now also note that you might have a situation where you'd say well how did I come up with this like a $300 amount if someone called in and they're like I want to get a guitar or something like that and you're trying to figure well how did I come up with the 300 you might use the estimate in that case so just to get an idea of like how the estimate like you might say okay if someone called in and they're saying I'm I want a guitar and we're saying okay we'll give we'll possibly we'll see how much it is I might use the invoice to try to figure how much what they want to purchase is or I might use an estimate form which is like an invoice but it's gonna be an estimate the step before an invoice so I might say oh if I'm talking to someone on the phone and they're and they're telling me that they're they're gonna want to possibly purchase something I might think then make an estimate and say okay Anderson is talking about this thing that he wants to purchase and it's as of and then if they're like okay that I'll say this was on the 0 to 25 to 3 let's say and then down here let's say they're saying I want to purchase an EPSH and we're gonna go okay that's let's say they want two of those for whatever reason and they also want an EL the good old ELP one of our standards the epiphone less Paul we're gonna say that's gonna be one of those and so that comes out to 1,300 so we might be talking to him and say okay 1,300 and then I'm gonna change the amount down here to be our 5% generic on the sales tax so that comes out to a total of 1,365 and we might use this and have a standard policy of saying okay maybe we're gonna take you know 10% of that to commit you to the sale so that will hold on to the guitars until you get here otherwise these are popular guitars Mr. Anderson they might be gone by the time you especially that color you wanted you got to commit to it right now with like a down payment or else those things go like hotcakes so and so so this won't actually record anything but you might use this to kind of make make the estimate and then record the down payment related to it and then I when they come in I could see the estimate and the credit amount in their account so let's say for example I save and close this and mr. Anderson comes in and now I can see okay yeah I've got an estimate here and then I've got the $300 that I'm trying to apply to it so if they actually come in and they want to follow through with that after making this payment we're gonna say okay then I could create the invoice from the estimate if I so choose if I didn't make an estimate then I can just create the invoice of course and then I'm gonna try to apply this $300 to it so I could go in here and say okay let's complete this by going to create the invoice from the up the estimate okay so we're gonna say okay pulled it in here we've got the the date 225 let's keep that and then it pulled in this information and then down below I pulled in the rate at the 5% as well so I don't have to change the tax so it looks good now notice what it's not doing it's not applying out that $300 and you would think that you think maybe it wouldn't have a little thing over here that applies out the credit to the invoice and that's not really the way it QuickBooks does it for whatever reason with the credit we're gonna basically record it and then QuickBooks usually will automatically apply the credit and then we can basically go back into the invoice after that point and it should apply the credit out so it's a little bit of a two-step kind of process so in other words this is an invoice what does the invoice do it's gonna increase the accounts receivable the other side's gonna go to sales 1365 and and I'm sorry the other side goes to sales of 1300 the difference of 65 goes to the payable for sales tax and then inventory goes down by an amount driven by the items cost of goods sold goes up net income is impacted by the sales minus the cost of goods sold also the sub ledger for Anderson will be affected by customer the sub ledger for the guitars will be impacted so let's go ahead and save it and close it and we're gonna then take a look at Anderson stuff here so so now if I look at notice all automatically then you've got this invoice has a partial amount because they applied out the $300 payment to it automatically now the settings are on so that it does it kind of automatically like that so if I go to that $300 right there it applied it out basically automatically so if I go back into that then notice now it's checked off the invoice and it applied it out automatically to that invoice if you didn't want that to happen for whatever reason you could turn off the settings or you can go back in here and uncheck this off so it doesn't apply out but you could just note that the default settings are to apply out the credit to the invoice so if I close this back out instead of having to do that next step it basically did it for me and then I can go back into the invoice which now has the credit applied out to it so if I scroll back down now it's got the the amount applied to it so now the invoice can be given to the customer at this point in time so notice it's a little bit tricky you have to create the invoice post it in essence then apply out the payment which is usually done automatically then go back into the invoice and you've got this thing at the bottom when you look at this at the bottom you might say well doesn't that impact the transaction that's gonna happen and the answer is is really no because notice from a financial standpoint and this if I if I look at this application of the $300 didn't really change the actual transaction of the invoice it's just it's just an internal linking saying hey look this invoice has been partially applied out by this credit but there's no change to the impact on the financial statements in other words if I go back into the invoice the transaction is still going to be an increase to the accounts receivable of $1,365 it's just that there was already that outstanding $300 there so I don't need to post the $300 or do anything different the net balance is $1,065 because that $300 was already standing as a credit right so I don't so this bottom part then isn't doing anything different to record the transaction the other side's gonna go to revenue of the $1,300 sales tax of the $65 and then the the cost to get sold and inventory are clearly not gonna be affected by that $300 as well so let's check it out I'm gonna close this up go to the balance sheet and run it holding control down if I go into my accounts receivable and check that out so now we've got Anderson down here there's the invoice so notice the invoice still went on the books for the full amount not minus the $300 it went on for the $1,365 that makes sense it didn't it didn't this $300 didn't impact the transaction that's being made it's just informational stuff that's useful to have at the bottom of the invoice you can give the customer okay and then if I go back on up top the other side went to the profit and loss obviously into the products sales if I go into that and scroll down then we've got Anderson got these two items then the other side is gonna go into the balance sheet liability for the sales tax clearly no difference or change than a normal invoice that we've seen in the past on that one and then the inventory is going down like normal so I'll do this fairly quickly because we've seen the inventory impacts multiple times and so there's that for Anderson multiple line items because it's using a first in first out method I believe is the rush rationale rationale that's rash Chanel that was rash Chanel I don't know what I'm talking about this is invoice there's that okay so that looks good and then if I go to the tab to the right and run it again Anderson now owes us the 1065 and so on this invoice that's outstanding and if I look at the detail internally you see this detail and look how nicely it works from a bookkeeping standpoint so from an from an accounting textbook standpoint people are gonna say I have people that are focused on the financial statements are gonna say I don't like how that negative receivable was there and I get it you know that's what I first learned on this side before I really did the bookkeeping side of things but from the bookkeeping standpoint it's like that's just the total natural thing to do it looks it looks completely right from this side of things so now the next step would clearly be that we expect to be paid on the invoice and so on just like normal going forward from this point so let's just take a quick recap over here on the customer balance detail because now I just want to point out that if you looked at like this sub ledger this Anderson looks correct now I have no problem it was just a timing issue where I have that negative receivable but once I've completed the transaction then it looks right no problem we still have these other items where we have Eric music and the Sam the guitar man with these negative items here those still look funny from a financial reporting standpoint until we record the invoice related to them if they look funny as of the financial statement reporting dates into the month and the end of the year for example then we can fix that temporarily by just doing adjusting entries meaning I could just do an entry to increase the accounts receivable the other side goes into the liability increase in the liability and then I can reverse that so that I can do my financial reporting properly as of whatever date I need to do it and then get it back to this format which is quite useful for internal reporting there's also some other workarounds we might take a look at to try to record these these into unearned revenue without having to do an adjusting entry which will probably make financial accounting people the people that learn the textbook kind of to create the financial statements more happy but just as you go but I think it will be still not perfect for the bookkeeping side I think this works the best you know from the bookkeeping side this looks quite natural looking at this side of things to try to match everything up and that's the side that we want to run most smoothly from the day-to-day purposes and then to my opinion used to the adjusting entries periodically for financial statement reporting is a good way to go but we'll take a look at another method probably in a future presentation so I'm gonna I'm gonna open up the hamburger and go to the reports on the left-hand side let's take a look at our trial balance the trustee T to the B TB or that's that you can't just type it in like that you have to type in trial balance it'd be cool if they had a TB abbreviation though maybe I'll recommend it no one listens to you don't have don't even bother recommending it whatever people listen to me all the time I've got good ideas anyways this is where we stand at this point in time if your numbers tie out to this number that's great then we're at least on the same page if not possibly totally correct about everything but I think we're correct and we've got this is where we stand we've got four legs now because we got debits credits and debits and credits for the two months we're like an animal at this point because we're so fast with the four legs this is where we're standing on our four legs and if your numbers don't tie out to this we'll try to do a transaction detail report at the end of the at the end of entering the second month of data input to further drill down on any differences