 QuickBooks Desktop 2023, invoice created from check created from purchase order. Let's do it within 2-its QuickBooks Desktop 2023. 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. Here we are in QuickBooks Desktop Get Great Guitars practice file. We started up in a prior presentation going through the setup process. We do every time maximize the homepage to the gray area view dropdown hide icon bar open windows list checked off open windows open on the left hand side. Reports drop down company and financial P to the L profit to the loss income statement ranging changing 010123 123123. And then let's customize it so we can go to the fonts and numbers and bring that font up to 14 these days. That's what we do 14. Yes. Okay. Then let's go to the reports drop down again to pick up that other company and financial big balance sheet. That's another big financial report. Let's customize it before ranging changing from 010123 to 123123 and then fonts and numbers to change the font to 14 to match what we did with the income statement or profit loss. Yes. Okay. That's the setup process we do every time. Let's go back on over to the home page. We're not going to be entering an invoice which we have done in a prior presentation. This time we're imagining that we made the purchase of inventory with the purchase order and we linked it then or paid it with a right check form that we bought it specifically for a customer in mind and are now turning around to create the invoice after having received the inventory. In our case the guitar. So we're talking about inventory in this case when we're thinking about process you'll recall from prior presentations that when you have inventory the question then would be do you want a perpetual inventory system or a periodic inventory system. A periodic inventory system you might be tracking for example outside of the QuickBooks system. A perpetual inventory system means you have inventory turned on and are tracking it within the system which you can turn on by going to the edit dropdown and in the preferences and is indicated that it is on by this line item up top. Now when you make the purchase of inventory if you have to pay for the inventory when you purchase it as we typically do when we pay for online stuff personally buying stuff from like Amazon. Then we would record the payment with a check form or a credit card charge at the point in time we purchase it. However if we have the power to request the inventory before paying for it then we're going to use the purchase order. We've entered a couple purchase orders in prior presentations for example let's imagine Epiphone is the vendor that we're purchasing our guitars from. We're imagining that we had a customer come to us and say hey look I would like this guitar we don't have those guitars we say they want it in plaid or something like that so we're going to have a custom order for a particular customer. Then when we made the purchase order which we put together and we'll look at it in a second but we put it together in a prior presentation we actually added the customer field in the purchase order which is a request for the inventory. The vendor which is in our case Epiphone in this example doesn't need the customer information but by us adding it in there then when we get the guitars it'll make it easier for us to see who ordered it and turn around and then create the invoice. So in a prior presentation we made a purchase order for purchases of inventory guitars in our case specifically for particular customers we marked that on the purchase order. We then received the guitars we got the bill that we got and instead of entering the bill into our system which would increase accounts payable we simply just paid the physical bill with a check form. Now we're going to turn around and create an invoice because we're on the sales side of things and we're going to try to sell this guitar that we now have to our customer. Let's recap that again by looking at the vendor center I'm going to find it by going to the vendor drop down and vendor center and then if you go into you could go a couple different ways I could go into Epiphone for example. I want to look at all dates make sure I got all dates here and then I've got my two purchase orders down here and I can and these are the purchase orders that we have created for that particular vendor. We can also and then we and then we had the check form so let's take a look at that for example if I double click on the for here purchase order. It says we've received the purchase order as we can see and we purchased these specifically for the customer of Eric music so the purchase order is a request for vendor our vendor Epiphone to give us these guitars to ship out the guitars. It doesn't record a financial transaction because we didn't pay for them and we don't have the guitars. It's just a request. We put the name of the customer that we're going to turn around and sell the guitars to on the purchase order. Epiphone doesn't need to know about Eric music our customer but having it on the purchase order will make it easier for us to then win. We receive the guitars to kind of carry that through and turn around and sell these guitars to Eric music, the people we bought the guitar specifically for closing that out. If I go to the check form. This is the form that was used to pay to pay off for that those guitars and you can see down here. There's the two items. It's checked off as billable. They're checked off as billable because that's the thing that's going to indicate two quick books that when I create an invoice for Eric music. It's going to ask me do you want me to pull in these two items from from the time when you paid for these for these guitars and we're going to pull that in and that will hopefully create the invoice for us so that we can turn around and invoice the customer. Okay, closing that out. You can also see that over here on the on the transactions item. If you went into the purchase order, you could sort by the purchase order for Epiphone. And if we go into the checks, you know, we could find the checks just if you wanted to kind of sort around and find the purchase orders. So now we're going to be created. Let's go back to the homepage. I'm going to create an invoice now. So I'm going to go into the invoice and turn around because I'm imagining I just paid that. I just paid the check and I'm saying, okay, I can see that this is tied to Eric music. So I'm going to type in Eric music for the customer. And it says the customer or job you selected has outstanding billable time and or costs. Do you want to select the outstanding billable time and costs to add to this invoice? I'm going to say yes, we do add them and it's under time as a default. Notice that items are in the items over here usually indicating inventory items. So I'm going to check off the the two inventory items. Those are the ones I want to add and then say, okay, now if that pop up didn't come up or you did something different and you wanted to go to add add the item here, then you can go up to that item again and see these items that have been added. Alright, so then now it's just going to be an invoice that has now been populated from the purchase order that was carried over to the check form that we use instead of a bill form. And then we use that to create the invoice. Now that we have these guitars, we're going to say that the date is going to be 123 will say 2023 invoice number populates automatically. Let's make the terms net 30, meaning we're going to send out the invoice at this date. We expect to be paid 30 days later. This is the epiphone 50 of them were imagining they bought just for our example problem that comes out to $500. Notice here that it's actually using the proper amount because it's using because of the item. So if I got the lists and item lists, this is an ELP. If I double click on the ELP, we said it cost $400. That's what was populated in the purchase order, but we're selling it for $500, of course. So it's picking up the proper amount. And this is something I think it does better than the QuickBooks Online doesn't quite do that quite as well. It's a taxable item and then the semi hollow body $400 taxable. The sales tax is at the $1,450 because it's the items are being used to note that it has sales tax applicable. What this going to do, it's an invoice. The invoice is going to increase accounts receivable, including the sales tax for the $30,450. The other side is going to go to sales, not including the sales tax. It's going to be the $25,000 plus the $4,000. The sales tax is going to increase the payable, sales tax payable on the balance sheet, which we will have to pay in the future. And the inventory is going to be going down by amounts that are not on the invoice but driven by the items and caused a good sold. The expense related to us selling the guitars is going to be going up. And also the sub ledger for accounts receivable will be impacted by customer Eric Music and the sub ledger for inventory will be impacted for the quantity of inventory difference change. Let's check it out. Save it and close it. And I'm not going to email it. So I'm going to say save it and close it. You've changed it. I'm say yes. That's what we want. Let's go to the balance sheet and check it out. So we're going to go to the accounts receivable drill down on it. There's Eric Music. If I drill down on that, there's the $30,450. Closing it back out. Closing it back out. The other side going to the P to the L to the profit to the loss to the income statement. Double click it on sales. We've got the two line items, $25,000 and $4,000 because we have two different inventory items. No sales tax, however, including on the income statement. Closing those out. The sales tax is on the balance sheet. It's under the liabilities, liabilities, sales tax payable. Double clicking on it. We've got the two items of the sales tax because there were two different line items. One for the account, the state and the county or local or whatever. But the total was 5%. That we totaled up in our, in our made up example problem to get a nice generic 5%. Then we said inventory is going to go down. So inventory is going down by the, these two items because there's two different items by amounts that are not on the invoice, but driven by the item. So the system knows about them, even though not on the invoice. The other side going to the profit and loss for cost to goods sold. So there's those two items here. The net impact on the income statement is the increase in the sales minus the cost to goods sold will be the impact on net income. Back to the balance sheet. If I go to the receivables, I can also see this in the reports. Customers and receivables and take a look at the customer balance summary or let's do the detail customer balance detail. And that's going to give us this. Who was this? This was Eric. There's the 30,000 there. The total ties out to the 38671 50, which is on the balance sheet. That looks good. And then we've got the inventory 15678. If I see the sub ledger for inventory, sub ledger that is here. Let's make the date 1231 23. Let's say so now we've recalculated the amount on hand totals up to 15678. At this point, which should tie out to the 15678 on the balance sheet. Let's do it again. Let's go back to the, let's go back to the vendor center. And this time we're going to a magic music stuff store or we're going to imagine Gibson. Let's go to Gibson, Gibson USA. And then we've got the two purchase orders. Let's open one of these purchase orders. And so we received this purchase order and you've got, we assigned the customer. So we're imagining the customer came in music stuff stores, the customer requested a guitar, which is a Gibson type of guitar. We don't have it. So we're going to order. So we then made a purchase order requesting a GSP Gibson SG or whatever guitar and that, that we're going to buy custom for this customer music stuff store from Gibson. Gibson doesn't need to know about our customer, but us adding the customer will help us to follow this transaction through. We've received this item. So we imagine the box of guitars came or the one guitar came in a box and then we made a payment for it with a check form. So we made a payment and we made it billable. So now it's billable. That's indicating that when I make an invoice for music stuff store, it will then allow us to populate this item in it. So now if we go back to the homepage, we're going to turn around and we're going to say now we've done the purchasing process. And now we're going to create an invoice. We're now on the sales side of things. And we're going to go to contacting this music stuff store and saying, Hey, this is now saying you've got some items linked to it. I'm paraphrasing. Okay. Those items are in the items that indicates inventory items. We're going to say link to that. We now want to contact our customer and say, Hey, look, you ordered this thing. It's here. It's ready to go. Let's make this on the 24th terms. Let's make them all net 30 on the terms just to standardize our terms. So we expect to be paid in 30 days and so on. So this is an invoice. What's going to happen? I'm just going to say this every time because this is what I would recommend doing until you fully understand these forms. Invoice is going to increase accounts receivable by the 8,158.5, which includes the sales tax. Other side goes to sales, but only for the 7,070. The sales tax increases the payable sales tax payable. The inventory is going to go down by an amount not on the invoice, but driven by the item. The cost of goods sold is going to go up by the same amount. The net impact on the income statement is going to be the sales price minus the cost of goods sold. The accounts receivable will be supported by a sub ledger that will break out by customer from music stuff store. And the balance sheet account of inventory will be supported by a sub ledger, which will be adjusted down for the 10 units of the GSB Gibson guitars that we sold. Let's save it and close it. Check it out. I'm not going to do the email thing. We're just saving it. Yes, we changed the terms. Okay. Quick books. So now we're going to say accounts receivable double clicking on it. It's going. Here's the accounts receivable going up and it's by the full amount of the 8,158.50 closing that back out closing that back out. The other side going to the profit and loss or income statement double clicking on sales. So it's being impacted by the amount not including the sales tax. And then the sales tax is on the balance sheet. Let's close that out. Balance sheet under the the sales tax payable double clicking on that. And it's under these couple line items because there's two people that were paying for the sales tax, but we're charging just the 5% that's going to be paid to the city and the state closing that out closing that out. We've got inventory is going down. So if I double click on inventory, then it's going down by the amounts that is not on or the amount not on the actual invoice, but driven by the item closing this out. And then the profit and loss cost of goods sold is going up by that same amount closing this out. The net impact on the income statement is the sale price minus the cost of goods sold for net income. The balance sheet also has a sub ledger for accounts receivable 46830, which we can see the customer balance detail. So if I go into the customer balance detail, then there's there's the payment. What did we just make? We just made an invoice for not for Anderson music stuff store. There it is music stuff store. No music stuff stores here. That's the one. Okay. And then inventory. If I go into inventory, we've got this in inventory that should tie out to our inventory valuation summary on the left hand side, which has been adjusted for the amounts on hand now at the 9698, which is the 9698 here. Notice how much easier this would be now to use the trial balance, which we might start doing more and more in the future. Go into the accounting and taxes and trial balance where I can change the dates from 010123 to 123123. Customize it. Let's bring the fonts and numbers even higher up to 16 and say, okay. Yes. And okay. Okay. Because now you can check the accounts receivable and the sales and the cost to get sold on the same reports drilling down on them as long as you can imagine or envision or see where the balance sheet start and where the income statement starts without all of the sub totals. Also note that if I go into the customer center, the customer center, then we've got the receivables here that we can also track. That's how we would most likely track the invoices for like, say music stuff stores. So now we've got the invoice that we've got a track to receive the payment on. So that's the general process. If I go back to the trial balance, you can see where we stand at this point, want to check your numbers. If there's any, any discrepancies, then I would change the date range and it's often a date issue. And then you can double click and drill down on any discrepancies and possibly change the date if you need to, to, to, to line up here. We will be going through transaction detail reports after we get through the end of one month of transactions. And that's another way that you can kind of check your numbers at that point.