 In this presentation, we will create an invoice and apply a credit or advanced payment to it. In other words, the scenario is that we had a customer come into the shop. They want a guitar. We sell guitars. We don't have the particular one that they want. We're going to order that guitar for them, but we want a security deposit. They gave us a security deposit or a prepayment on the sale. Now we're going to make the invoice and we need to apply that prepayment to the invoice that we are creating. Get ready because here we go with Sage 50 Cloud Accounting. Here we are in our Get Great Guitars file. We're going to start off by opening up our reports this time. We're going to go to the reports dropdown. We're going to go to the financial statement reports. Open up that balance sheet report. So we're going to be opening up the balance sheet. I'm in the current period for February. That's the one I want. So I'm going to say OK. And then I'm going to maximize this report and recall last time that we entered a deposit. We had a security deposit. It's in accounts receivable, but it's there as a negative receivable. So we have this credit. It's not tying out to anything. So the accounts receivable account itself is still positive showing people O&S money, but it's understated by the 250 until we actually complete the work to receive that and enter the invoice that will match out against it. So to see this more clearly, let's take a look at another report. Closing that back out and then opening up, going back to our reports, going to the accounts receivable reports up top. Then we want to take a look at the customer ledger. I'm going to be opening up the customer ledger report. And then in this Anderson, that 250 right there for that particular customer Anderson isn't applied out to anything. So that's the problem. And so it's actually a negative receivable. So that's okay because logistically that works well for us because then while it's in the receivables, we can tie it out to an invoice. So as long as the invoice happens in the same time period and this doesn't cross over the cutoff, we won't have to do any kind of adjusting entry for it. It will be fine. If that is still outstanding and we have not yet issued the invoice as of the cutoff date, then we would need to do an adjusting entry to make the financial statements correct as of the cutoff date, which would be increasing the receivable and increasing or increasing the liability. So what we're going to do now is say now we have the customer is going to purchase the guitar. So here's our scenario. The person came in, they wanted the guitar. We didn't have the color they wanted. So we said, hey, we're going to order it from the vendor and we want a security deposit. So we had to enter the deposit first. We got money. We got $250 on the guitar that we haven't yet delivered. And therefore we got the receipt before the money. So we put that in as a negative receivable, which again, it's a little bit funny. It actually means that we owe the customer money, which normally would be a liability account. It's really a liability in essence because they gave us money and we owe them something. We owe them the guitar. Now we're going to go back in terms of our flow chart here and go to the first thing, which is usually the first thing, where we will create an invoice and then we need to apply out that payment to it. So I'm going to go to the sales item. I'm going to say this is going to be a new sales invoice. Now this is kind of a two-step process. We will make the invoice and then we'll apply out the credit, the prepayment, the deposit from the customer to it. So we're going to say, I'm just going to say it's a customer ID. I'm going to say it's Anderson. Anderson is this person that we have this deal with that they have made a prepayment for us. And then we're going to go through here and I'm going to say this happened, let's say on the 18th now or the 19th, something like that. We'll be fine. And then the invoice. I'm going to put an invoice number just for practice problem here. And then I'm going to go down and we're going to say that we're selling one. It's going to be an ELP. Once again, one of our standard ELPs, but it's that one that was green with like that strap that they wanted. So we're going to have that one. And then we're going to say the sales tax on it is going to be down here. We'll buy the sales tax. Now here's the amount that's owed the 547 50, but they already paid us the 250. I'm not going to apply that out here on the invoice. We're going to then tie this invoice out to that prepayment. So what is this going to do when we record it just like any invoice is an invoice. It's going to increase the accounts receivable by that 547 50, but it's going to match out between that, that 250. So we got that. Then the other side is going to be going to revenue for the 500. The difference going to the sales tax payable, the 47 50, and the inventory is going to be going down by 400, which is driven by this inventory item that's not shown on this report and cost of goods sold goes up by the 400. So let's go ahead and do that. So we're going to say save this and then I'll close this back out. And then if I look at the invoice now, if I go to this invoice thing and I say, I want to view and edit the invoices view and edit the invoices. I'll make this large. You'll note that this invoice that we have made is not showing any payment on it, right? These two, these two items have been paid. If I was to double click or open an invoice that had been paid and open that up, then it's going to say, hey, it was paid in full. This one right here hasn't been paid yet. Even though it's not showing any payment, even though we got 250 on it because we have got it before, you know, we made the invoice so we have to tie that 250 out to it. Now, if we look at the financial statements before we do that, let's take a look at what happened to the financials. It's going to be the standard kind of process here. If we open up the balance sheet, we're going to say that the accounts receivable went up. So if I double click on the AR, it's going up by that 547.50. And that 250 kind of matches out. It's already matching out in here. You know, this accounts already basically correct now. It's just that that 250 isn't applied to that actual invoice. So it's a problem with our matching problem, even though the GL account is basically correct in the receivable at this point in time. So just note that we still have a problem, but it's kind of correct in terms of the end number right here on the financial statements. It is correct. And then the other side is going to be going to the revenue account. So if we were to open up the income statement, let's do that. Back on over taking a look at the financial statement reports, financial statement reports. Let's take a look at the income statement report for the month of February. I'm going to remove the zero balances and say, okay. So the income statement, we have the sales item up top. If we double click on the sales item, then we're going to see that $500. That is the amount that we get to keep, not including the sales tax. Then the sales tax is going to be, of course, back on the balance sheet. If we go back on over to the balance sheet report, we see the sales tax, it's going to be a payable account. So sales tax payable that 329. I won't go in it now, but it's going to be there. And the inventory item is going down by the 400. So inventory goes down by 400 driven by the item. And the other side is on the income statement. So the income statement, if we jump to the income statement, then we have the cost of goods sold is being affected by the 400 as well. So that's the standard invoice transaction. Also note that if I go back to the report for the receivable, the receivable report here, and we were to refresh that now, then you can see that 547.50 and the 250, it's matching out here at this point in time. And so the balance is correct. But again, these two aren't matched out. If I was to go into this, this invoice, it's going to be showing as unpaid, even though I got 250 for it. All right. So how are we going to match that out? That's the problem. So we're going to go back on over and say we need to match this out. So let's go back on over here. A couple of ways you can do it. Now you might think of it this way. If you just create the invoice, you might create the invoice and then say, I'd like to go back into it and say now view and edit the invoice. And then actually open up the invoice that you're dealing with that's unpaid here. And then you can pay it from this section. Right. I could say I'm going to just choose this pay now section pay now. And then match out what has been paid already, which is going to be the 250, 250 and the 547 you're going to match those out. Now what happened when we do this, we basically entered a received payment form. So, so for example, if I close this out, another method we get to the same area without recording that, I'm going to close this out to get to that same area. I'm going to close this out. I'm going to close this out is we just go to the receive money. And I'm going to say receive payment. Now we're not receiving payment. We already got the 250 before we're just basically applying it out at this time. Now we're not actually going to record it right now. I just want to show how it would be done, right? So we're going to go up top and we're going to say this is Anderson. And so then we're going to say Anderson. Now, if they're going to pay us the rest, the deposit, the rest of this, you can see these two are matching out. The 250 matches out to that 54750. So when they pay the balance due, I would check both of these off. And then they're still going to owe us then the 29750. So when they pay us that, they're going to pay us the 29750. I'll check both of these off. And then we will have completed this transaction. That'll show the invoice then having been paid after we record this transaction. And that'll complete the process. So that's going to be how we finish this off. I won't do it at this point in time. I'm going to close this for now. And we're going to say the transaction edit has been changed. So I'm going to say no, don't record that at this point in time. And then of course the amount that is due at this point in time for Anderson is represented. And then run the balance is actually the 44798. And that represents, like we say, both the transaction that we have thus far. So if we go to Anderson here, which includes the prepayment and the sale item, plus there was a transaction before that Anderson still sends still owed us for. So if we're going to run a report for Anderson, how much does Anderson owe us? We can then take a look at this and I'm going to bring this back to January. So we could see January's detail and say OK. And we see that we have this 44898 that was never was never paid here as well. So what's owed for Anderson if we were going to pull out the old trustee calculator, the 448.95 and then plus the 54750 minus the 250 that was paid to us. That's what is making up the 74645 that is still due or owed to us from Anderson at this point in time.