 QuickBooks Online 2024. Interpurchase Order Form, otherwise known as the PO Form. Get ready because we're going to Bookkeeping Cloud 9 with QuickBooks Online 2024. Here we are in our Get Great Guitars 2024 QuickBooks Online sample company file. We set up in a prior presentation, opening up our major financial statement reports like we do every time reports left hand side. In the favorites, we're going to be right clicking on the balance sheet, open link in new tab, right click on the profit and loss, open link in new tab, right clicking on the trial balance, open link in new tab. If you don't have that trial balance in the favorites, you can search for it. If you don't have the balance sheet and the income statement in your favorites, something's wrong with you, that's everyone's favorite. Fix it. Let's go to the tab to the right, close up the hamburger, scroll up and let's do a range change. Just looking at the month of January 2024, 01.01.24 tab, 01.31.24 tab. We will run it because we want to refresh it, tabbing to the right, closing up the hamburger, and then after we close the hamburger and ate it, we got to run the report and refresh it, 01.01.24 tab, 01.31.24. And now we're going to run, not right after you eat the hamburger, but after a little bit of time. Then we're going to tab to the right, close up the hamburger, and then we'll change the range one more time, 01.01.24 tab, 01.31.24 tab. Run it so we can refresh it. Okay, let's go back to the balance sheet and prior presentations. We set up the beginning balances, we set up those foundational items we can find in the cog. We talked about the first things and transactions typically entered being those that aren't normal and that they're not part of the normal cycle and therefore might not have a form directly related to them under the customer, vendor, and employee cycle. Those things including things like financing the business, remembering that when we think about assets, liabilities, and equity, then when we start the business we might have to purchase fixed assets and possibly inventory. We'll typically need money to do that. We can't get the money from customers because we need the inventory and the fixed assets in order to generate the revenue from the customers in the future. Therefore we'd have to finance it with a third party like the bank, liabilities, or from us, the owner, or possibly take on another owner, like a partner, or become a corporation, issuing stocks in same kind of thing. So then once we have the money, we bought some fixed assets here, so now we bought some of the furniture and fixture, although someone stole our chair, but we still think we can get by, make money, even though it's a crazy world out there. And then we also put some money into a short-term investment account as well. So now we're going to start to think about what's the other thing that we need to purchase. If we're selling inventory like we're doing here, we're going to need to be purchasing the inventory. We sell guitars, so we're going to be needing to purchase the guitars. That is something that's part of our normal accounting cycle, although it's not something that we're going to be generating revenue from as of yet. So if I hit the plus button up top, then you'll be looking at the vendor cycle. So now we're at the vendor cycle. We want to be purchasing our guitars. Realize that there's a couple different ways that this might happen. This might go down. You might simply purchase the guitars directly and pay for them, in which case you would use an expense or a check form. If you have to purchase things in a similar fashion as you do, as an individual purchasing things from an online store, then you're still possibly going to use a check form or an expense form because you typically have to pay for it or bill form at that point in time. You're possibly a check or expense form. But if you have some more power in control, say you have a manufacturing company that's manufacturing the guitars possibly, like in China or something, and you're a big seller of the guitars, it's possible that you can then issue a purchase order. Purchase orders are different than what most people are used to when they individually purchase something because the purchase order is just a request for the inventory. We have not yet paid for it. So they would actually produce the guitars, ship them to us without us paying for it, and then we get the guitars, check if they're okay, and then we enter the bill at that point in time. So notice the purchase order then doesn't actually have a transaction related to it. It's an internal request form because we didn't actually pay for the inventory yet, which would be done with an expense form or check form, the forms that decrease the checking account, and because we don't have the inventory yet because it hasn't been shipped to us at the point in time that we enter the purchase order. Let's take a look at a flow chart just to get an idea of that. This is the QuickBooks desktop flow chart on the home page, but we're just looking at the flow, which is the same for most accounting systems, if we're dealing with inventory, remembering that whenever we think about inventory, we have to remember what's our inventory system, and if you're a bookkeeper, you want to think about where you might specialize in inventory. Do you want to deal with inventory? Do you want to track inventory perpetually within the system? Do you want to have a special field in a certain type of inventory, such as a retail store or possibly online inventory, Shopify store, Amazon store, or possibly in a job cost system, the construction of inventory. This will really help you to manage your client base so that you can maximize your results, and so that's quite important. So if we have inventory, then the question is, do I have a perpetual inventory system, in which case, and that's what we will run here, we're going to track the inventory when we purchase it and when we sell it. Each time we enter a purchase form for inventory, not the purchase order, but the bill form or the check form, we're going to increase not only the dollar amount of inventory, but also the units of inventory. And whenever we sell the inventory, either with an invoice form or sales receipt form, we will not only record the sales amount, but also the reduction in inventory and the related expense cost of goods sold as well as the reduction in the units of inventory. So that becomes a lot more tracking within the system. Your other methods might include you track the inventory outside of QuickBooks, possibly if you have a Shopify store or an Amazon store, maybe you track the units of inventory on an outside system and enter that information periodically into the QuickBooks system to adjust your inventory amounts, possibly at the end of the month, or maybe you can even get away with at the end of the year, so you can do that periodically for the just for the tax preparation side of things. Or you might be tracking inventory on an external worksheet using some kind of flow assumption, first in, first out, or weighted average, most common. And you might do something like daily, if you sell things like sandwiches or cookies or something, you might have, this is the amount of cookies that I had at the beginning, even as a shift, the beginning of the shift, I had this many cookies, and then I made this many more cookies, and then at the end of the shift, I only had so many cookies left over. The difference between the beginning balance plus the purchases minus the ending count is the amount of cookies that I presumably sold. Although you might have lost some, some might have spoiled, you might have dropped one on the ground, someone might have stolen one like they stole my chair, and so that could have happened as well. But that's the general idea, and then you can make a periodic adjustment into your, into your QuickBooks system, decreasing the dollar amount of the inventory in QuickBooks and recording the cost of goods sold at the end of the month, or the end of the day, or the end of the shift, or the end of the year on a periodic system. We're going to use a full perpetual inventory system here, however. So that means that we're going to have, we're going to have transactions both on the purchasing side and on the customer side or the sales side. On the purchasing side, the easiest kind of inventory purchase would simply be, you're going to use a check form or expense form to buy the inventory, and then you would just buy, if you bought it physically at that point in time, you can record it at that point in time, or if you're ordering it and you're paying for it at the point in time, you order it, then you'll typically just use an expense form, possibly even being able to use the bank feeds that will flow through and record the expense form. But if you're ordering the inventory, but you're not paying for it at that point in time, that's when you might use the purchase order, something like manufacturing things, oftentimes like in China, you might be able to come up with a new kind of thing that you're manufacturing and possibly have it manufactured in China, because it's typically cheaper to manufacture there, and then maybe you can have a situation where they ship you the stuff before you pay for the stuff, right? If that's the case, you're entering a purchase order for the request of the stuff, and then when they, when you get the stuff, that's when you're going to receive it, and at that point in time, you'll typically enter the bill or possibly an expense form recording both the inventory in terms of dollar amount, the inventory in terms of units, and the payment if you make an expense form or the accounts payable if you're entering a bill at that time. Once you have the inventory on hand, you can of course sell them. So we have guitars on hand, we would imagine when we sell the guitars, we're going to sell them with either an invoice form or sales receipt form, the sales receipt form being the one that we can think about doing when we're at a check register, the invoice being the one that we would use when we're not at a check register and we're billing someone sending them the invoice by email or something like that, but the sales part of it is much the same. We're going to record what the client can see or the customer can see the sales price, what they're going to owe us, including sales tax, and what is not included if using a perpetual inventory system will also be recorded behind the scenes in a similar fashion as when you're at the grocery store, for example, if you have one of those self-checkouts and you scan your item, it gives you what the cost is to you, what the sales price is, what you're going to pay, but that system is also recording on a perpetual inventory system the cost to the store using some kind of flow assumption. That's what we're going to be setting up here as well with the help and the use of the items. So it'll actually reduce the inventory and dollar amount and count and record the cost of goods sold when we sell it. All right, let's check it out then. So if I go back on over here to our sheet, we're going to go to the first tab and we're then going to go into our plus button and we're in the vendor cycle. So we're entering a purchase order. We're imagining we're going to our vendors and we're saying we need stuff and I'm going to hit the drop down and we're going to go to Epiphone. That's who our main vendor is for our guitar sales. We would typically want an email because oftentimes we would be issuing this externally with an email. This is also a form that you might want to customize given the fact that you will be providing it to a customer, meaning you might want to put your logo on it and that kind of stuff. So the mailing address, if it was necessary, you would have that but we only included the name for the vendor. I'm tapping through this by the way. Ship to. Now notice it's defaulting to shipping to our address. We're going to imagine that that's our warehouse address. But if you wanted to ship it someplace else like to a customer, for example, you might have a system where that is the case. If you chose Anderson guitars, then this field will populate based on the client's shipping address and you can use a system like that if you so choose. But we're going to imagine it's coming to us in our warehouse in Beverly Hills, 90210. And we're going to say that we don't actually have a warehouse there by the way but that's what I like to use because no one remembers the TV show 90210 anymore. I didn't. But that's what that's that's the zip code that just comes to mind all the time. So any case. So so one 1220 other than mine, I don't want to use my zip code because that would be weird. So any case shipping address ship area and then down here notice the category field is not populated because we're not going to assign it to a category because if we used a category, it would assign it just to the account like inventory but would not be tracking the inventory on a perpetual inventory system. So we would only use this category field if we're not tracking the inventory on a perpetual inventory system in our books, meaning not the units of inventory. So I'm going to use the item and we set up the items before you will recall. So we're going to put some multiple lines on here in accordance to what we put in the product list, which you can find under the sales section we did in a prior presentation. So I'm going to say ELP. So this is going to be like the abbreviation that I put in for it. I probably should have listed the name and then put that in the SKU number but it is what it is. There it is. We'll pick that one up. That's an epiphone less Paul. If I'm not pronouncing it right or treating it right or this isn't the cost of them. We're just making up some stuff here. Okay. So that's not the actual cost. Now note we put the quantity in the rate. That rate is being populated because we put this information into our items list. The customer is something that we could populate but don't always need to because obviously when we're purchasing the guitars the people we're purchasing it from epiphone doesn't care about who we're selling it to. They just want to ship it to us. Why would we have a customer field then? Well possibly that can help us to determine once we receive the guitars who we bought them for. We can turn around and sell them to a particular customer when we receive the actual box of inventory. But in our case we're going to imagine we're putting these into the store and we're going to sell them to all the people that travel into our store just because it's a beautiful location. We bought all that nice furniture. ERP. So then we have an ERP. It's an epiphone. It's an EPR. An epiphone Riviera that we're going to buy. We're going to get five of those at 440. That's $2,200. Man, we're buying a lot of guitars. Hope no one steals them when they leave them, when they leave them at our warehouse. An EPSH. That's going to be a semi-hollow body. Okay. So how much of and how much we're going to buy four of those at 320 that comes out to 1,280. And then we're going to buy an EPSP. Which is an epiphone standard pro, we're going to say, just making these up. I'm not an expert on these guitars. I only have, well, I have two guitars, I guess, but I got my, any case, I won't get into that. I don't know. I'm not like an expert here on the types of, is what I'm saying. So don't expect like guitar, vintage guitar knowledge to be flowing out from may hair. So, but any case, you could see that that comes out to the $13,880. Now note that because you see a dollar amount here, you might think that there would be an impact, a transaction, something happening to the balance sheet and the income statement. But no, there's not. Because again, the purchase order is just a request. It's not actually tracking anything on a financial transactions because we haven't paid for it yet and we haven't received the inventory. We could add a message down here, your message to the vendor. Please give us the guitars. We really need them. Make sure to put them in the lock box with the delivery person because we've got some kind of shady characters laying around the streets. They're like in the gutters, like right next to where the shipping point is. And then we can attach attachments if we need to. We've got the cancel button down below, the clear button. We can print it. Also preview it within the printing here. So here's the preview process. There is our form. So that looks good. I'm going to close this back out. And then we've got make reoccurring. So if this is going to be something that's happening on a reoccurring basis, we can of course make it reoccurring. And then under the more, we can copy it. So notice that some of the purchase orders can get quite complex, especially in a job cost system when you're ordering material. So you might have a situation where you want to copy the purchase order so you don't have to add all the lines over again. You can delete it. You can add audit history. We could save it. And then over here, we've got the save and new, save and send, which is probably most likely the case if we had an email system, which is often the case these days. And we're just going to save and close it, however. Let's save and close it. Let's see what happens. K-PASO, what has happened. Let's go to the sales on the left hand side to check that out. And then within the sales area, I'll close up the hamburger because it's making me hungry. We're going to go into the all sales transaction tab. And we can see here. Hold on. I'm in the wrong area. Sorry about that. Hoping the hamburger expenses. We're buying stuff. We're not selling stuff. That hamburger confused me because I was like, it made me hungry. And then my mind got clouded. So if I go over here, then here we go. There's the purchase order. Now we could sort this by purchase order if we wanted to just check out the purchases orders is only. And so that's how we can kind of track it internally even though it's not something that's on the financial statement. It's not going to be in the bills, of course, because it's not going to be a bill, but we can take a look at it and a vendor by vendor basis where you've got this nice little blue thing up there which is going to give you the purchase order stuff. So there it is. Now after we get the purchase order, if I select the dropdown, we're going to most likely create a bill from it. So when we get all those guitars in the box, if they're not stolen from us before we can get our hands on them so that we can do our business for crying out loud, I mean, what is wrong with people? Well, okay, if we get them, then there's probably going to be a bill inside of it. So within the bill inside of it, we can use this information to create the bill, right? That would be the process, the next process that we can do. So here's the purchase order from the vendor of Epiphone. All right, let's do another one because this is Good Times. Rock it and roll it with Ultra Bass another time. We're going to hit the plus button up top, another purchase order. This time we're going to say it's a new vendor. People are coming in, they're requesting Gibson guitars. And we're like, I don't know, we never bought from Gibson before, but let's do it. Gibson, we're going to add Gibson USA. And so it's a new vendor I'm going to tab. And all I need is this asterisk one here. But if it was a vendor that I'm purchasing from all the time, I would probably want more information for their contact information because we would like to build a good relationship if that's going to be one of our primary vendors for inventory, as opposed to other vendors where we don't really care too much like the telephone company or what not. All I need is really the name. But I'm just going to keep it at that. We would of course want the email address if we're going to be sending it to them. What happened? Gibson USA tab, just save it. Okay. And then we would want the email address if we're going to send it to them by email. Shipping, we're going to give it to our normal shipping. We're not going to ship it to a customer. Did I do a date last time? Did I have the right date? Let's just keep, I think it's right. 112, we'll keep it at that. And then we're going to say that the shipping is there. No tags. Once again, we're not using a category, but items because we're purchasing inventory. All right. So let's do this one. We're going to say the product. I already set this one up. It's a G-I-U-S-A is what we called it. Now, we already had the product, by the way, because we set up the product even though we didn't set up the vendor because there was no vendor that we owed money to at that point in time, even though we did have some Gibson's already. So we had done business with them before. So I might have misspoke a little bit before, but so there it is. Gibson, so Gibson is on the books. We're going to be purchasing that. No transactions going to be affected right here. Same kind of setup you can do down below, but instead of going save and close, this time we're going to go save and new because we're going to do another one before we take a look at the other one. This one will also be a new vendor for us, although again, I think we already have some stuff from them, but we didn't put the vendor in our center because we didn't owe anything to them. So I'm going to call it Diamond Head. This is who we buy our ukuleles from apparently. I'm not an expert on ukuleles either, although I think they're neat and I have, well, I had a ukulele. I guess I borrowed a ukulele, but I don't have it right now. But in any case, there's the email. I could use an ukulele. I think I know how they work now, but if we wanted to email it, we can email it ship to boom, same, same. So let's see, we're going to just go down here and just put that we want the ukuleles, which we call D-U-K, which are Diamond Head ukuleles. It's what that's supposed to stand for in our practice problem. We're going to buy three of those. You can always have a few, need to have a few of the ukuleles. That's not what we try to get people to buy because we want to get them to buy the expensive guitars, but we might try to get them in the door with some of these nice ukuleles. Look at that, they're only $72 people, or that's what we purchased them for. But in any case, no, we don't do that, we don't do that kind of bait and switch thing, but I'm just saying, it's good to have some ukuleles in there. In any case, there's that one, nothing's going to be recorded. Let's do the save a new thing again. All right, so let's do another one. This one's also going to be with Epiphone. So we're going to do another Epiphone one for fun. And then tabbing through it, we'll keep the same date. Everything's the same. And then, but in the items, notice it's populating the items down here. Now, why is it doing that? Because in the settings, when we set up the settings, we told it that we want it to populate based on the prior form, which works great when you're dealing with things like expenses, for example, because then it'll put the proper account category. Not so great with the items, but it's usually a good thing to do. So what I'm going to do is I'll delete all these. I'll say I don't want these, and I'm going to do, and so I'll just make it from scratch again. I'm going to say we want an ELP, another ELP, but this time it's going to be, we'll have 50 of them, but we got a custom order this time. So now we're going to imagine that a customer came in, they said that they want 50 of these ELPs, and they're different, they're custom, right? We don't just have them on hand. So we're going to say, okay, we'll purchase those specifically for you because they want some crazy color. They want it to be like plaid or something in the shape of, I don't know, something weird. So we're like, okay, we'll buy them directly for you. So I'm going to put the customer down here, Eric, because we have the connections with the vendor, so we'll ask them for it for you. So now we're going to add a customer as we go. So I'm just going to save the minimal information, although you would probably want all the information if it was a new customer that you're expecting to repeat business from, but I'll just save it here with that. And so now remember that Epiphone doesn't care about the fact that we're buying these guitars for this customer. However, when we receive the box of guitars and we compare it to the purchase order, it will be useful to know that we bought these specifically for this customer so that we can turn around and immediately issue an invoice. That is the point. Let's do another one because they want another one too. They want an EPSH, we're going to say is a semi hollow body and they want 10 of those, we'll say. Also, now note here that I could have one purchase order and assign it to multiple different customers because I would be purchasing from the same vendor, but I'm buying the stuff for multiple customers, which the vendor doesn't care about. But when I get the box of guitars, if they're not stolen, then we can turn around and try to do our business for crying out loud and sell it to the customers, which we know because we put it on the purchase order so we can make an invoice right after. Okay, so this is, but we're going to say it's the same one here. Eric Music again. Eric Music. Okay, so we're going to do the save and new again. We're going to make another one because we're purchasing like crazy right here. This one's going to be from Gibson USA, which we set up already. So we're going to go boom, boom, everything's the same up top, and then it's going to be an item down here. It's trying to populate the same item we had before, but we don't want that item. I'm going to close it out, and then I'm going to add a new item. Now, this is a totally new item that we don't have yet. I'm going to call it a GSB, and then I'm just going to add it. I'm going to add the item on the fly, meaning as we go, as we do the data input into the purchase order, we're going to add the new item. Let's hit the plus button. The name is going to be a GSB. It's going to be going to a type. It's going to be an inventory item that we are purchasing. We might have a picture of it, which are great, because if you have someone doing the data input, you can give a picture of the guitar so that they know which guitar. We don't have a number for it. We're not going to add different categories. Although we could, by this point, add categories by vendor, maybe. We might say these are the Gibson guitars, or maybe these are the electric versus the acoustic or something, but we're not doing that right now. Quantity on hand is zero, because we're just purchasing them. You never want to put anything, usually, in this here, unless it's the first time you're starting the business, but they make you put something there, so I'm just going to put it zero as of the beginning of the period. Reorder point, I'm not going to put one, or I can just put zero on the reorder point when it gets down to zero. You can start giving me warnings and stuff. Inventory asset, that's the account that will be going up when we buy the inventory, not with the purchase order, because we don't get the inventory yet, but with the bill form or check form or expense form, and then it will go down when we sell the inventory with a sales form or invoice form, the description we want. It's going to be, I'm going to call it a Gibson SG, and again, I'm not an expert on the guitars, not the prices. We're just making it up here, people. So there it is. We're going to say the rate is going to be, we're going to say we sell them for $5.98, and we don't actually sell these. So like, if you're trying to, if you're thinking you want to request a guitar, because that's like a good price for them or something, I have no idea. We just made it up, all right? We just made it up. But we're going to say this is the income account. It's going into the sale of product income. That's going to be on the income statement when we sell them with the use of an invoice or sales form, and then on the purchase side of things, when we buy the things, I'm going to say it's the same description that will show up on the purchase order, the bill, the expense form, or the check form, whatever we use to purchase it. Wait, let me switch these. I'm going to say that we purchase them for that $5.98, and then we're going to sell them for, we're going to say $7.77. Okay, so now you don't want it anymore. Is that it now? Because I raised the sales price. But in case we're going to say, that's how we'll do it. And then the cost to goods sold, that's the account that will be impacted on the expense side of things, actually will be recorded when we record a sales form, invoice or sales receipt, the sales form reporting both the income side, income account, and the cost, meaning the cost of goods sold. And then we could add a preferred vendor, which was Gibson, I believe, so we could put the preferred vendor if we so choose as well. And boom, we have created on the fly as we go during the data input of the purchase order a new inventory item. Impressive, very impressive. Let's put 10 of those. We're going to say we get 10 of those. And once again, we're going to say that some, we have a customer that wants those particular guitars. That's why we set it up. So we're going to say it's called music. This is our customer name stuff store. I know it's a horrible name. Our creativity is waning at the moment. So bear with us. That's what we call it. So there it is. Once again, nothing will be recorded with it. This is an internal transaction. So let's save it and close it this time, selecting the drop down, which is actually a rise up because it's on top instead of below. And we'll save and close it. Save it and close it. And then once again, we can track this information in the expenses on the left hand side, possibly in the expenses area where we can filter by the purchase order. Now we've got our list of purchase orders. And then we can, we can filter by the purchase orders, right? I can use my filtering option. And I can look at the status. We're looking at all the purchase orders. They're all open right now. So obviously if I say open purchase orders, they're all there. If I was to change them to closed purchase orders, those that we have created a bill with or that we have received inventory for, obviously nothing is there for those ones. Let's go back to the all transactions now. Let's go back to the contractors and not the contractors, the vendors. And now we've got five people that we purchase stuff from. And there is our open purchase orders. We've got two for the diamond or one for diamond head, epiphone two and Gibson two. And the next thing we expect to be happening, we get that box of guitars. We hope that no one takes them before we get our hands on them because we need to, we're trying to feed, we're trying to put some food on the table here for crying out loud. How can we put some food on the table to steal our inventory before? Okay. So, but then we'll have it and there'll be a bill inside of it. And then we'll enter the bill into the system, which we can populate from the purchase order. And if there was a customer on the purchase order, we can finally turn around and try to make some money for crying out loud by issuing a sales receipt form and an invoice because we purchased those guitars specifically for a customer. No impact on the financial statements for the purchase order. As we mentioned, therefore the trial balance, if you were on last time, then it will be the same this time and we should be good to go forward to next time.