 QuickBooks Desktop 2024, normal cycle, estimate, sales order, and purchase order. Get ready and some coffee because we're locking into some non-stop QuickBooks Desktop 2024. Here, first a word from our sponsor. Yeah, actually we're sponsoring ourselves on this one because apparently the merchandisers, they don't want to be seen with us. But that's okay whatever because our merchandise is better than their stupid stuff anyways. Like our, trust me, I'm an accountant product line. Yeah, it's paramount that you let people know that you're an accountant because apparently we're among the only ones equipped with the number crunching skills to answer society's current deep complex and nuanced questions. If you would like a commercial free experience, consider subscribing to our website at accountinginstruction.com or accountinginstruction.thinkific.com. We are in QuickBooks Desktop sample company file. We set up in a prior presentation the enterprise version so we can focus in on the unearned revenue under the view tab. We have the hide icon bars and the open windows selected open windows. Then on the left hand side, the home page currently being open. If you don't have the home page open, you can go to the company drop down and open up the home page. I'm going to open up reports, which is usually my custom every time by going to the reports drop down up top company and financial. Going to go down to that balance sheet standard report and then I'm going to change the date to 123127. And then I'm going to customize it as well to make it a little bit larger on the font. You can go to the fonts and numbers change the font. I'm going to bring it up to 14 for the presentation purposes, say OK, yes, and OK. So now it's a little bit larger. I'm going to go to the reports drop down again company and financial. All this time the profit and loss tabbing 010127 to 123127 our practice problem will be in that year. So we have nothing to start with in the report. I'm going to customize it just to show what I'm going to do every time customize fonts and numbers change the font size. I'm going to bring it up to 14 OK, yes, and OK. All right, back to the home page. What we want to do first is go through this process and think about the normal process. When we do not have a deposit or unearned revenue to have something to compare and contrast to. If you're not used to using the enterprise version, you might not be used to this new this sales order. So we'll kind of throw that in the mix as we do our normal process. So first I'm going to do an estimate and then we're going to create a sales order from the estimate. And then I'll use that to do the purchase order as though we're going to be selling inventory. So let's imagine someone comes in and they have an order for a custom surfboard or whatever. And that's what they want to be purchasing. We're going to make an estimate to say how much it's going to be costing. Now they might not accept the estimate if they do accept the estimate. Then we're going to create the sales order and that kind of locks in the estimate. Both of these being non reporting transactions. So we're going to record all kind of the non reporting transactions first. Now if I need to order the surfboard because I don't have it on hand, then I would have to go to the vendor side and create a purchase order. If I'm using a purchase order for the purchasing process, which will be a request for the for the order on my vendors side of things so that I can receive the surfboard and then turn around and take usually the sales order to create the invoice which I can now invoice the client. Now I'm not going to put in the down payment which is the added wrinkle that might happen in this scenario where I'm going to take some money down when I create the sales order because I want to contrast it first with just a process where I don't have to do that first. All right, so we're going to start with an estimate. Let's make an estimate and someone comes in and they're saying like I want a surfboard man and and we're so so we and we're like okay we have surfboards and they're like no we want some psychedelic like airbrush colors on it and like okay we're gonna have to order that one. Let's see how much it'll cost. We're gonna say and I'm gonna say I'm gonna name the customer a number one and then tab and I'm gonna put just say this is the normal process so I'm gonna try to name every everything in here to relate to the normal process I might misspell some things as I go but the point is I want to differentiate this normal process from the next process by labeling everything with a one and then the fact that it's going to be our normal process so I'm going to say tab and it says quick add we'll do the quick add I'm going to copy that thing right there and then no class estimate I'm going to make this as of 2027 so this is going to be 010127 do tabbing through tabbing through tabbing through I'm gonna make a new item which I'm gonna say once again is a number one I'm pasting this in number one and then I'm just gonna say item so tab quick books we don't have that so I'm gonna make the item so I'm gonna say let's make the item I'm gonna say it's an inventory part so we have to deal with the inventory because I'm imagining we're purchasing the surfboard here so we're gonna have to say I'm just gonna tab through this normal item okay I'm not gonna category I'm not gonna deal with categories right now I'm just gonna go down to the description and once again I'm gonna call it normal process item tab and then the cost let's say it costs $100 and then tab it's going to go to cost of goods sold when we sell it tab tab tab and then on the purchase side same thing when I'm sorry cost goods yeah when we sell it and then the sales price we're going to sell it for $175 so we're going to make $75 on the sale is there tax related to it they already have some taxes set up let's make it a taxable item so that we have to add the complexity of sales tax and our practice problem and I'm going to make a new account the income account which I'm going to call income income and then tab the normal process so again it'll create another income account which is going to be an income type of account income normal process so I can then again distinguish the processes with different income accounts you wouldn't probably do that in practice but it'll be good for a practice problem I don't have any inventory on hand yet because I haven't purchased any yet I'm going to use this estimate to then create the sales order and once I have the sales order then we'll use that to make the purchase order to purchase the psychedelic airbrush surfboard that this person wants now normally if someone wants a psychedelic surfboard airbrush I'm going to want a down payment because you know I would like to have some confidence that they're going to pay me on it right but what's this going to do this isn't going to do anything in terms of financial statements it's not going to record anything on the financial statements it's just an estimate so we're like hey you know that's going to be what that's going to be costing you the markup is 75 now your the format down here could be different depending on how you have it set up but we have this is the charge this is the markup this is the sales tax which gets us up to 188.56 so bottom line you're going to owe me 188.56 so we're going to say okay save it and close that if I want to track that can I do any I can't see it on my profit and loss or anything nothing new is happening here but if I if I go back to the home page and I go to my customer center dropping it down customer center then I can say and this is a little bit squished because I've increased the size of the screen to 150 so you might drop it down a little bit to 125 to toggle back and forth but I could make this over here and I'm looking for a normal process I can't see anything because I'm working in the future so I'm going to change the date range to say all dates and so there it is there's our estimate so we see our estimate there another place you could go to see the estimate just so you're aware of it if you go to the list drop down and you go to the chart of accounts and you go to the bottom of the chart of accounts the bottom of the chart of accounts then you've got your estimates here and if you and it's a non-posting transaction so it's not hitting the financial statements if I double click on that then you this is another kind of report that you can get to fairly easily you can also run reports for the estimates in the drop down up top where you have possibly in the sales so you've got the sales so it's none of their sales it's under the the jobs time mileage and then you've got some uh estimates down here we've got the estimates by job so you've got some reports that you can run in there but oftentimes internally we probably be going to the customer center and saying this is the particular customer we have an estimate basically outstanding for them uh now the next step would be if I go to my home page to look at the flow here we have an estimate nothing has happened we're going to email most likely or give the estimate to the person and if they accept the estimate then we could go ahead and you might make an invoice from the estimate that's what we would do if we didn't have this sales order in our workflow but if we do have a sales order in the workflow then we might go ahead and put this middle step in and say now I'm going to accept the estimate that's very important if you're like in a job cost system where oftentimes you might make many estimates many of which are not accepted so that you can distinguish the ones that have not been accepted and the ones that have been accepted right so that's an added basically step now you could just open up the sales order and then type in the new customer but most likely you might be going into the customer center over here and I'd open up the estimate double clicking on it and then you've got your sales order up top so I can create a sales order directly from the estimate which is probably the best way to go or a good way to go because then the sales order will be the exact same as the estimate so I'm going to create a sales order the estimate uh has been copied to a sales order if you if you wish you can edit the sales order as you would any other quick book sales order you can add line items modify any of the quantities or amounts so if from the estimate the guy's like well I want like da da da on it or something then you could still use the estimate I mean you might adjust the estimate and then pull it over but you could or make another estimate right but you could then pull it over and then adjust it over here when you have the more formalized document uh over here it's saying you don't have sufficient quantity available to sell we don't have any of these items on that's okay because we're also going to use it to purchase with the purchase order we have not yet done that so we're going to have to track the inventory so I'm also going to use this to make a purchase order uh request uh but before I did that if I was and then it says want to avoid negative quantities okay I'm going to say okay before I did that I might want to finalize the sales order to make sure it's finalized and use that then to make the purchase order which we'll do uh which we'll do next here so now we have the sales order it's once again for the normal process that's our customer I'm going to make the date as of 010127 so I'm saying it's half let's make it 010227 so they accepted it the next day tab tab tab tab and then uh if there was a purchase order number from it meaning if I was selling to a company and not an end user they might have a request that came to me with a purchase order right because they're requesting inventory from me so if that was the case I put the purchase order number in here and that can help me to kind of tie out my forms the item pulled in like normal the rate is pulling in so once again everything looks normal here you could see the active estimate on the right I'm going to close this out still though nothing is being recorded yet at this point in time we're still just kind of saying this has been finalized we're going to act on it now by actually doing what we need to do to get the job done in this case we're imagining going to the vendor and ordering this custom surfboard now I'm not going to print it in this case in in practice you would probably email it right to the to the client I can save it I'm going to go up top and save the sales order so now it's been recorded but again nothing has happened with it so if I if I close this for example and take a look at it we're going to say now in normal process customer number one we've got the uh we've got the transactions and we're looking at uh all the trans all date ranges and we've got the sales order you can run another report from it you could look at it this way let's drop down chart of accounts going to the bottom of the chart of accounts we see the sales orders another non posting transaction in other words that didn't record anything to the financial statements but if I double click on that you get a report this way closing that out if you go to the reports up top and uh we go down to the sales so here we have the open sales order by customer which could be a useful report to be running right so now these are the ones that have been processed to the sales order side of things and there's our sales order but oftentimes we might be using this report then to go back to our customer center here and say once I have the sales order let's go to my home page the next process this would be where I might collect the prepayment if I was going to do that either by selecting receive payment here and then making a negative receivable or turning on the prepayments and collecting the deposit but I'm going to imagine we don't get a prepayment this time so that we can see the normal process without the prepayment so the next thing that's going to happen to us is we're going to order the surfboard the psychedelic surfboard we're going to get it and so we're going to make a purchase order so that we can then order it from our vendor and then receive it and once that happens then we'll turn back around and create the invoice so let's do that if I the way we probably would do that is to go into here and say now we have a sales order I'm the next process would be from the sales order I'm going to make a purchase order so I'm going to make a purchase order now and it's going to say specify what to include in the purchase order I'm going to create the purchase order for all allowed items meaning everything down here if there were multiple items I'm putting them all on there you could create a purchase order for selected items if you had multiple items and you wanted to distinguish them but I'm just going to say all items making the purchase order and now this is going to go to my vendor so once again I'm going to call the vendor normal process one normal process vendor because I want to have all of them tied out to this scenario so we can compare it with the next scenario right so I'm going to say tab I'm going to quick add the vendor and then I'm going to put this in as well as 010 let's say three two seven tab tab tab tab I'm going to close this on the right item is pulling in properly and it's a hundred dollars notice here we only have the cost we don't have our markup here because we're purchasing it so it's not 175 dollars and we don't have the sales tax because we're imagining the sales the taxes only being applied in this case when we sell the item not when we purchase the item so this is just the cost to us but once again it's just a request internal document we're requesting and we're imagining that we have the ability to request something without paying for it yet at that point in time if that were the situation that's what a sales order does now we're requesting from our vendor to send us the psychedelic surfboard with a bill in it possibly and then we will pay it right so I'm going to say save and close and once again nothing has been recorded these are all non-recording threats I'm going to close this back out and if I go to my vendor center now drop down vendor vendor center I can see here if I change the dates again to see all of the dates all dates there's my purchase order so now I have my purchase order you can also see that if I went to the lists drop down chart of accounts bottom of the lists there's our purchase order another non-posting transaction so if I go into it the purchase order there's a report this way you can also see reports in the reports drop down and go down to the purchases and we're looking at the open purchase orders for example or open purchase order detail if you wanted or open purchase order by job depending on the circumstances let's look at the detail so there it is there is our purchase order but once again nothing being reported or recorded to the profit and loss or to the balance sheet you can't see it it's clearly on the balance sheet because it already had data in it but nothing has been recorded to either of these now that's the starting point that we're going to continue on with this and collect the inventory and enter a bill and then we'll continue on with it next time however I'm going to open up quick book I mean uh excel and I want to take a look at this from an excel standpoint as well I'm going to bring this down to like 125 and then so I can see it a little bit better and then I'm just going to set up an excel worksheet so we can see the debits and credits in excel because that's going to be more transparent so we can see each step so I'm going to say this one the starting one is going to be the normal process process that's going to be my tab I'm going to do this fairly fast because because it's not an excel course but you so you don't have to actually do it but I think it's useful to kind of do it if you want to I'm going to right click on this we're going to format the cells I'm going to make this currency negative numbers bracketed I'm going to get rid of the decimals and no dollar sign okay that's my normal starting point home tab font group I'm going to make it bold as well just so it stands out you don't have to do that but when I'm recording I'm told by my editors and producers that I have to be bold have to be bold so I'm being as bold as I can so there's going to be the form the account and then I'm going to say this is debit slash credit and the credits I'm going to say are going to be negative if my spelling is wrong then I apologize okay I'm going to actually pull this down I'm going to say cut and paste it down here I'm going to scroll in a little bit these are my headers for my journal entries and I'm going to make this my header label so I'm going to go up top and say home tab font group making this uh black and white that's what I typically do with my headers I'm going to center this one home tab alignment and center it and so the first one we had the forms are an estimate where there is no financial financial financial transaction so in other words nothing's being reported to my actual financial statements for that one and then we had a sales order where once again let's skip a column this is where the journal entries would go but there is none because there was no financial transaction and then we entered a purchase order order and once again no financial transaction okay okay on the right hand side I'm going to make my reports where I'm going to put an E here I'm going to make my format where I'm going to post my stuff so I'm going to make a skinny D and then skinny D let's make it really skinny and then I'm going to copy the account making that a little bit larger and I'm going to say this is the beginning trial balance which has nothing in it these are going to be my entries and then I have an ending trial balance let's just call it trial bound trial bound and then I'm going to pull this down this is going to be what we'll post it to just so we can see this I'm going to go home tab font group black white center make this black white okay and I'll just add some accounts now so we can get a feel for what this is going to look like and then once we start actually posting things we'll see the debits and credit so we're going to say there's going to be a cash account there's going to be an accounts receivable that's going to be one of the key accounts that we'll have to deal with there's going to be an inventory account uh let's just call it inventory and then we're going to there's going to be an accounts payable account and we'll just call an equity account there's going to be an income account and there's going to be a cost of goods sold which I'm just going to say cogs cost a good sold and then that's going to give us our total debits and credits I'm going to say the credits are going to be negative in the worksheet so I don't have to have six columns but only three columns to do this and then my net income and I'm just going to color code this thing so it looks fancy I'm going to make my assets green so I'm going to go up top and say home tab font group I'm going to make this dark green and then white on my assets and then my liabilities I'm going to make those uh orange let's make that orange and white equity I'm going to make this lighter blue and then this white and then all of my expense accounts income uh or uh expenses I'm going to make both of them the darker blue and then this white and then down here I'm going to make this kind of like my header one but now it's the footer black and white okay and then I'm just going to sum up this is going to start with zeros there's nothing in the beginning balances that's different than what's in quick books because we had something in the beginning balances but I'm going to start with zero equals the sum brackets of this and then my entries will be here and I'm going to I'm going to copy this across and then the ending balance is going to be equal to the sum of these two because my credits will be negative so this is going to be my little worksheet that will will work on and then I'll do some fancy formatting down here because I'll say that if this is between if this is between negative one and one I want to make it green because then I'm good if because it's rounding I'll give it some rounding between negative one and if it's greater than one it needs to be red and then if it's less than one less than one negative one uh hold on a sec less than negative one it needs to be red so let's test it out if this goes to if this goes to one it's good but if it goes to two red and if it goes to negative two red okay good so that looks good and then down here the income is just going to be this minus this so I'm just going to say this equals the sum of these two I'm adding them up because the income is going to be a credit or negative and so I know I'm doing this fast but I'm going to copy this across so this is going to be my net income and I want my net income if there's income it's going to be a credit here like like a 100 and if there's an expense it's going to be a debit so I don't want now it looks like I have a loss I don't I have income so I want to make it not red and then I'd like to indicate that it's good with the green even though it's a negative number so I'm going to say right click I'm going to format these cell and I'm going to remove the number currency being negative and just make it normal and then I'm going to say conditional formatting if this is less than if it's less than let's say zero then we want to make it green it's actually good because that means the credits are greater than the debits and you want a green and then if it's let's actually make it less than let's say this is going to be if it's less than negative one so that that zero will be green so I'm going to make it green I'm sorry less than positive one then it's going to be green okay so zero is included and then if I say this is going to be if it's greater than if it's greater than let's say zero then I want to make it red okay so that means that if my if my cost of goods sold was at 150 this would be positive and it turns this it didn't turn red okay posso uh let me do that again conditional formatting if this is greater than one we want it to be red okay so this turned out to be 150 it turns red okay I don't know exactly what I did there but there it is let's bring this back to zeros and then I like to make my little worksheet where I'm going to be doing data input a blue I'm so I'm going to right click I'm going to format the cells for my data input or let's do it this way I'm going to go to the home tab font group bucket drop down my blue isn't there so I go to more colors and standard colors I like that blue right there that's the one I've worked with for a long time so that's the one I use you can use something different if you want I'm going to put borders around it border blue do the same thing here home tab font group border blue and then I'm going to put borders around this whole thing okay so there's a little worksheet I know that was kind of a long tedious worksheet but I think it's useful to to set up hopefully it'll make more sense uh it might not be what you're kind of used to because it has debits and credits on one column but hopefully that'll make sense and we'll play with that in the future