 In this presentation, we will record a sale on account within our accounting system, which is another way of saying we will create an invoice. If you hear the term record a sale on account or record a sale on credit, these are things you might hear in financial accounting when you think about the transaction for the recording of a sale on account, the creation of an invoice. Time to engage with Sage 50 Cloud Accounting. Here we are in our get great guitars company file. We're currently in the customers and sales section. We're going to be entering an invoice now. So we're going to go on down. We're going to be entering the invoice standard kind of process this time comparing and contrasting the process we had last time where we have the prepayment and then the invoice. Now we're going back to the normal process where we have the invoice and then we'll receive the payment after that point. So we're going to go to the invoice and we're going to say we want a new invoice. The invoice is going to be going to music stuff store. I'm going to make this large so we can see it a little bit better. We're going to say music stuff store and I'm going to tap through here. Let's make this as of the 21st this time. Let's say this is the 21st sounds like a good date. I'm put an invoice number here for the purposes of our practice problem. And then we're going to go on down to the sales information. Now we're going to make this quantity one. We're going to sell another ELP or standard ELP. We're going to sell one of those and that looks good. We're going to be applying the sales tax to it. So we will be having the sales tax because it is an inventory item standard for the U.S. to have the sales tax applied. If we record this out what's going to happen the accounts receivable is going to go up by the 54750. The sales is going to go up by only the 500. The difference of the sales tax 4750 is going to be going to a payable account liability account for the 4750 that we'll have to then pay to the government. The inventory will be going down by an amount not on this invoice that amount as we know at this point because we sold a lot of ELP. Epiphone Les Paul guitars is going to be 400 decreased to the inventory that will also be increasing the expense account of the cost of goods sold net effect on net income increase in revenue of the 500 increase in the cost of goods sold 400 difference being the net increase of 100. Alright let's save this one and do another one. We're going to save this up top and we're going to say this is going to be to Smith Smith guitars another invoice. We're going to tap through here we'll say this is on the 21st as well so let's keep that change the invoice number and everything looks good up top. Then the sale item will we're going to say another epiphone so one it's going to be an ELP once again Epiphone Les Paul we're going to be adding the sales tax down before. Actually this is we're going to have a semi hollow body this is going to be the semi hollow body let me change this one up we want the epiphone semi hollow body. So that's the one we want. So that's going to be the $400 sales price will add the sales tax to it down below so we're going to be adding the sales tax do that. And so what's going to be the effect here similar similar process of course we're going to say that the accounts receivable because it's an invoice is going to go up by the full amount of the 438 plus which includes the sales tax sales goes up by the 400. The difference this time being the 38 which is going to be the sales tax payable liability account. Then the inventory is going to go down by some amount that's not on this report we don't really know what it is it going to be like 300 and something I would I would think. And then the cost of goods sold is going to be going up by that same cost amount how would we know what that is going to be driven by the inventory item. So let's go ahead and save this and then check it out. I'm going to close this one I'm going to be opening up our reports again let's go to the general ledger reports this time we'll go into the old GL reports we want to look at the trial balance everything should be on the TB trial balance the trustee TB. Let's go to the options up top and we're going to remove the zero balances I'm going to remove the zero balances and make sure that we're in the current period I think that's OK want to be in February. Let's just double check it off to I'll take the specific date. Let's make it February February 29 and then I'm going to say OK. All right so then the accounts receivable should be going up if we double click on that accounts receivable we're then going to see the increase of the 547 and the 3 the 438 for our two invoices music stuff store and Smith guitars respectively. That's for the full amount including the sales tax clothing is closing this back out the other side is going to go to revenue down below so we go on to the revenue down below. It's going to be on the income statement type of accounts in the sales account if we open them up. We're then going to see the 500 and the 400 for the music stuff store and Smith guitars respectively for the ELP and then the Hollywood respectively this is the cost not including the sales tax the sales tax then closing this back out. It's going to be in a liability account liability account up top the liability called sales tax payable because we're going to owe it in the future double clicking on that amount. We then see the 47 and the 38 the sales tax for the music stuff store and Smith guitars for the ELP guitar we sold as well as the epiphone semi hollow body. Closing this back out then we're going to take a look at the inventory inventory is going to be reduced if we go to the inventory up top double click on that inventory we sold inventory it's going to be going down by 400 and 320. Both amounts not appearing on the actual invoice because we don't want to show the customer that but it's being driven by the invoice the invoice knows what those amounts should be by the items that we put into it. So the other side of that closing this back out will be in the cost of goods sold if we go on down to the cost of goods sold double click on that item. We see that once again the 400 and the 300 and 20 so there's going to be those items closing this back out. We also note that we have affected the accounts receivable therefore we're going to have receivables that are going to be tracked in the subsidiary ledger by customer. Those two customers that owe us money will increase will need that information and the inventory will also be tracked by inventory items. We sold the ELP and the semi hollow body those two inventory items will be decreased and we will track the inventory items using the first in first out method to support this number on a financial statement basis of the 1007 92. That's going to be it for now let's get out of here.