 QuickBooks Online 2024, set up inventory items, get ready and some coffee because we're diving into it with Intuit's QuickBooks Online 2024. 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 but that's okay whatever because our merchandise is is better than their stupid stuff anyways. Like our Accounting Rocks product line, if you're not crunching cords using Excel you're doing it wrong. I must have product because the fact as everyone knows of accounting being one of the highest forms of artistic expression means accountants have a requirement, the obligation, a duty to share the tools necessary to properly channel the creative muse and the muse she rarely speaks more clearly than through the beautiful symmetry of spreadsheets. So get the shirt because the creative muse she could use a new pair of shoes. If you would like a commercial free experience consider subscribing to our website at accountinginstruction.com or accountinginstruction.thinkific.com. Here we are in our get great guitars 2024 QuickBooks Online sample company five we set up in a prior presentation continuing to lay down those foundational items necessary for us to run through our normal accounting cycle, the normal accounting cycle including recording of financial transactions with the use of forms generally located in the plus button broken out by the cycles within cycles of the customer or sale cycle, vendor cycle or expense cycle, employee or payroll cycle. We then manage the communications with the people we do business with in the centers, sales center or customer center, expenses center or vendor center, payroll center or employee center. We've been going through the setting down and laying out the foundational items typically felt in the cog or found in the cog over here. Now we're thinking about our chart of accounts in part as we pull in our beginning balances, imagining that we had a prior accounting system that we're going to pull those beginning balances in from and these then are those balances as of the last period of the last year and we're going to be starting the new balances as of January of 2024. So the process we're using instead of pulling in all the transactions from our prior accounting system, we're just going to pull in the ending balance as of the end of the prior period and then start going forward in the current period, meaning that we only have the balance sheet accounts because we're going to be starting in January and the current time frame and therefore the income statement accounts are zeroed out. We're starting out with the most complex typically of the beginning balances that being the inventory because inventory is one where we have to think about what how we're going to be tracking inventory. Is it going to be internal or external? We talked about that in a prior presentation. Are we tracking it perpetually in QuickBooks? Are we doing it periodically in another system such as possibly a Shopify store if we're using that or if we're doing Amazon or possibly with an Excel worksheet or some other inventory tracking software only making periodic adjustments into our system? We're going to imagine we're doing the kind of more complex thing for QuickBooks, for at least QuickBooks is the side of things that being a perpetual inventory system. So that means that this amount 2008-96, we can't just put on the books as a journal entry because we also need to put into QuickBooks the things that we sell. We need to do that so that we can create future invoices tracking inventory as we do so as well as bills when we buy the inventory and so that we can support this number telling QuickBooks what units of inventory these represent so that when we sell these inventory units it can properly allocate the cost of goods sold and decrease the inventory on a perpetual inventory basis. So we're going to imagine we have this information for the inventory and we're going to list this out. We're imagining we sell guitars if these aren't exactly the right names of the guitars and whatnot. I apologize, but the idea is we're selling the guitars. So we have an item name, the sales description, purchase description, cost of the guitars, sales price of the guitars, the cost of goods sold account, the account that will be impacted when we sell the guitars, the expense of the selling of the guitars, the income account, the sales account, inventory account being the asset account. We need to note the quantity of the guitars on hand. Are they subject to sales tax, which we're going to dive into next time? We're going to say they're subject to sales tax and the as of date, we're going to say as of the end of the last period, which is now important. Now notice this is similar to what we did with the service items, but now we have more fields to deal with, given the fact that we're tracking inventory. Now if I multiply out, just to show this, if I multiply out the cost times the units on hand and I copy that down and then sum it up equals the SUM, we're going to get to that 2008-96, which is matching here 2008-96. So we want to put this on the books, not simply as one lump sum number with a journal entry, but we want to list out the actual guitars on hand and give the cost as well as the sales price of them, so that when we sell those actual guitars, QuickBooks can on a perpetual system decrease the units of guitars in unit amount, as well as decrease the proper dollar amount to record the proper amount on the income statement and then record the proper sales price. Okay, that's the idea. So how do we get these things into QuickBooks? Let's go back on over to QuickBooks here and this is just like the service items we did before, remembering that the major forms that will be impacted here would be on the vendor side when we make a purchase with a purchase order if we use them or we might just go directly to an expense check or bill form when we buy the inventory. When we buy the inventory, I would like it to be as easy as possible, possibly by already having the items down here, not the category, we're not going to assign it to just an expense, we're going to have the items and then we want to have the items of inventory items so that the cost will be calculated down below as well as the quantity when we purchase them and then when we sell the inventory, I'm going to say do you want to leave? Yes, we're going to be using the sales forms if we're using a perpetual inventory system of invoice or the sales receipt. Let's look at a sales receipt this time, the point here being at the point of sale, we're going to be populating our items here, which will allow QuickBooks to know what to do including record the proper sales price, record the proper accounts receivable, record the proper sales tax, record the proper reduction in inventory and the proper cost of goods sold, the net impact on the income statement from the sales forms of selling inventory on a perpetual inventory basis being the sales price minus the cost of goods sold. So we are expensing with cost of goods sold at the point of time that we're selling if using this perpetual system. All right closing this back out, how do we do it? Let's go into the sales tab over here now and I'm going to close up the hamburger. Last time we added the service items, same kind of process, we could add the inventory items one at a time, we could go into the new button, we won't do it one at a time but if we did we go into the new button here, we would want an inventory item this time, not a service item, not a non-inventory item, we want the inventory item. So I'm going to go into this one and say what would be included, we'd have the name, we've got the type inventory and we have the name, let's just put a mock name in and then the inventory, it's an inventory item that means we're going to be tracking it and so I'm going to set our inventory item, SKU number would be a number for tracking if we have it, if not we can leave that blank, we'll leave it blank here, we could create a category, if we want to categorize our items say by acoustic guitars versus electric guitars or something like that or maybe we categorize like by the vendors or something like that and then we've got the inventory, the initial quantity on hand, how much are we starting with, oftentimes when we first start out we're going to populate this field with a number of how many units we have on hand which means QuickBooks will have to create a journal entry to put those units on hand, after we do this in the initial starting point we're not going to do that anymore going forward because when we buy inventory we're going to purchase the inventory, we're not just going to stick this number here and make QuickBooks do a random journal entry, so usually this will be zero but this time we'll put something on hand and when we purchase inventory we do so with a purchase form which is an expense form or bill form typically, so reorder point meaning once the inventory gets down to a certain level when do we want to reorder, do we want to wait till it gets down to zero or possibly if we're down to two guitars of one kind is that the point that we want to reorder, the inventory account is going to be the account that will be impacted when we sell by the inventory and sell the inventory going up when we buy down when we sell, the sales description is going to be the description of the inventory like some kind of guitar, the sales price is what not what we purchase it for but what we sell it for if it's a retail store we purchase it for lower than what we sell it for, this is going to be the account that it's going to go to it's going to be an income type account of some kind and usually when we deal with inventory we call it a sales account of some kind we might just call it just sales or sales of product we usually don't set a whole lot of different accounts meaning I'm not going to try to set up a different income account for every type of guitar that we sell why because we have sub ledger reports to do that we don't want all that detail clogging up our income statement we're not going to create a separate income account for every customer that we sell to same reason we can make a sub ledger account for that the purchasing side note that we didn't have a purchasing side last time we do this time because we're going to purchase the inventory unlike if it was a service item the purchase cost this is what we buy it for it should be lower than what we sell it for typically and the expense account cost of goods sold is the account that will be impacted when we sell the inventory notice we have two cost of goods sold here so we might want to take a look at that and then if there's a preferred vendor we can go into the preferred vendor so before we add this stuff let's just review our accounts I'm going to close this back out let's cancel it down here and then I'm going to hit the hand boogie and we're going to go into the transactions and then the chart of accounts on the right hand side and let's just take a look at the accounts impacted now inventory we have two inventory accounts now I don't really like that because that's going to be confusing I don't know why QuickBooks gives us two inventory accounts I think that's to me that looks like an error let's see the one that they that they use when I go into my sales tab and just pick that one so if I went new inventory item the default that they want to go to is inventory asset so let's use that one and I'm going to make the other one inactive transaction let's go and say okay I'm going to get this one inactive so I don't mix it up I don't want to things go into two different inventory accounts so I'm going to say make inactive make inactive so okay yes boom so now I've only got one active inventory account on the sales side on the revenue side of things let's see what we have down here what did they give us we've got a revenue billable discount refunds so here again we have two revenue accounts so both of these seem like for the same thing I don't like that they have a duplicate here I think they used sale of product income so I'm just going to get rid of the sales account so I don't again I don't make a mistake I'm going to make inactive on that one so I only have one revenue account that refers to selling actual units of inventory and then on the cost of good sold once again they have a parent account for the cost of good sold and then another cost of good sold down here I don't really like that let's go on over again and say okay which one do they like going to here let's say we have an inventory item the one that they're going to by default is just a cost of good sold account so maybe all that all the sub accounts I'm going to basically remove so I'm going to go into my transactions and go into that cost of good sold and so maybe these I don't think they're using this one with the one so let's make that one inactive and then I don't need this other stuff under it either up here I don't need the equipment rental subcontractor and supplies I'm going to I'm going to try to select all three of those and see if we can do a batch action up top to make inactive all right so now I'm I'm less likely to record two cost of good sold accounts when I really only want one where did it go and then the shipping I don't really need that one either I'll just leave that one there I won't mix that one up okay so let's go back on over then and go back to my sales tab and then we're going to go close up the hamburger so we we saw that we could enter it one at a time but what we want to do is a bulk import now if I select the drop down here they used to have the ability to do the bulk import in this section they just basically moved that to a different location down here you have this one that says import from sales channel so that might mean that you have the inventory that's being tracked somewhere else on some other site and possibly be able to integrate that into QuickBooks be careful with that kind of thing however because that might not be what you always want to do if for example you have a Shopify store or an Amazon store it's already tracking some of the units of inventory there you might not want to pull in all of that information duplicating it into QuickBooks so make sure you do some research before you pull in all the inventory items in a system like that we have a course or section on something like a Shopify store or Amazon for example if I go to the cog up top then within the cog we have the ability under the tools to import data so this is where the importing data is currently located remember that QuickBooks kind of pushes around buttons from time to time they usually still have the same things the functionality is the same but sometimes it might be located in a different area we're looking at the products and services that we want to be importing so let's go into that here's our import screen just like what we saw with the service item so here are all the fields that we saw when we opened it up as though we were going to import one at a time and over here it says that we can import a CSV file which is a comma deliminated file which if you were to open it on on your desktop usually opens in excel but it's stripped of the excel formatting you can create a CSV file from an excel document so if you get your list of items then you just want to make sure that your headings line up so that you can then import it as easily as possible and you can convert your file if it's an excel to a CSV file same if it was any kind of spreadsheet can typically be saved as a CSV file let's go to the learn more here wait hold on let's close that up let's go to import to CSV file and then it says upload your CSV file to make sure your layout matches QuickBooks let's download this sample so I would typically download the sample which is going to open up over here and then then clean up their sample now this sample is currently in a CSV file even though it opened in excel I'm going to save it as an excel file and then clean it up so I can use formatting to clean it up and then save it again as a CSV file so let me show you what I mean let's go to file tab up top save and then I'm going to put it down here I'm just going to call it inventory inventory excel file and see it's at a CSV I'm going to change it to excel so I'm going to change that to an excel file so that I can format it because that'll be easy for me to look at it in otherwise all the changes I make in it it's going to it's going to remove them every time I close and open the file now all this stuff down below I don't need it so I'm just going to delete these rows right click delete and then I would like to make the headers bold so I can see them as a header the bold will not stay when I convert it to a CSV file but when I'm trying to fix it I want to see it that way so I'm going to say font bold and then I'm going to select from A over to O the headers and just double click on any of the cell of the lines between the cells so now it's made each of these columns as long as it can to perfectly fit whatever is in it now our worksheet over here basically matches almost exactly because this is another quick books formatted worksheet but you might have different header names up top so instead of changing your header names in your worksheet I would simply just copy everything that's under the header under the sample worksheet names and that way you're sure to have all of your headers tie out to exactly what quick books wants when you import the file so if I go over here we've got the item name I'm going to copy that and go over to the other one and say here it has the product or service name so I'm going to name it this this is actually the abbreviated name which you might call like an SKU number maybe it would actually be better for me to put that under the SKU than the name but I'm going to put it there because that's what I've done and that's what's been done in the example here so let's go in the sales description purchase description same field we're going to sell an epiphone less paul epiphone standard pro epiphone Riviera and we just made these up so this obviously we're just making up some inventory that we're selling these are actual guitars but the sales prices and everything the cost is not at all accurate that we just made it up all right so there we have that's what we're going to have here the category actually we don't have a category there is no category let's do this one at a time the category would be maybe I break out my categories by type of guitar acoustic versus electric or possibly by the guitars by vendor maybe and that will help me to to categorize my guitars if I have a lot of inventory the inventory item it's going to be an inventory item so I'm going to copy inventory we're not doing any service items we're just looking at inventory items no SKU number I probably should have used these maybe as the SKU but I'm going to use those as the product or service and then no SKU here we are with the sales description this is the amount that's going to show on the sales forms which include the sales receipts if you're at a cash register and this one needs to go down one more and also the the the inv in voices and then we're going to say the price uh what am I on here it's hard to go back it's better to have two screens you could do this easier but here's the sales price this is what we sell them for not what we buy them for so sales price I'm going to copy the sales price and put that here so that's what we sell them for 500 for the epiphone epiphone standard pro 600 epiphone Riviera these are not real sales prices for actual guitars we're just making some numbers up I'm going to copy this one over to this side that would be the cost well let's do that in a second and then the income account remember we changed the income account to sale of product income so I'm going to say that's the one we want because I removed the sales one so I think we want that sales of product purchase description the amount that's going to show up on the purchase forms like a purchase order like the expense form check form bill forms when we buy the inventory I'm going to say that that's going to be the same description that's what same description and then the cost all right the cost this is what we buy them for not what we sell them for going to purchase pick up the cost and then the expense account is going to be cost of goods sold we only have one of them now so that's good it's just going to that's going to be the account that we expense it to when we sell them using the invoice or the the now this one is a little confusing by the way because you might think well it's an expense form it should be a purchasing form like an like an expense form check form that records the cost of goods sold but no because we're going to record the cost when we use an expense or check form it's going to go into inventory it's when we sell it with the sales form invoice sales receipt that we record both the sales side of the transaction and the cost being an expense when we expense it and the expense form is cost of goods sold okay quantity on hand I feel like I kind of bungled that up but it is what it is hopefully that made sense and then we're going to go here quantity on hand is going to be here so we're going to say we have one of of of the epiphone less paul one epiphone standard pro one epiphone riviera two of the epiphone semi hollow wood and so on as of date we want to do this as of the end of the prior period now this is very important for the inventory accounts because if it records the other side of the transaction if I tell it that I have these on hand it's going to multiply that number times not the sales price but the cost over here where's the quarter to cost go would cost go it's right there times the cost and that's the amount that it's going to make a journal entry for in essence or it'll make however many one two three four five six journal entries and it might put the other side to the income statement I'm okay if it does that as long as it puts it to the prior period of 2023 so that it rolls into equity so that it will be in retained earnings for the starting point of our new cycle our new year which will be that we're doing the new system in january of 2024 okay reorder point I'm just going to say zero so we're just going to wait till it gets down to zero before it's going to give us like a message to order it again and then inventory asset is the asset account that it's going to go to all right so I think that's it and then I should have sales tax on here too but I believe there's going to be but we haven't turned on sales tax so we're going to deal with sales tax later all right I think that's it let's double check it so what's this going to do in terms of total cost it's going to take the purchase cost times the units and that's what it's going to make it's going to make this many journal entries one two three four five six journal entries which will sum up to the asset account of 2008 96 showing on the balance sheet and the subsidiary report will show basically this giving us the units of inventory the cost of each inventory unit which will add up to that okay deleting that let's go ahead and save this as an excel file and now I'm going to save it as a csv comma deliminated file which will strip the formatting file save as browse not excel but csv file comma deliminated and then I'm going to call it inventory inventory csv file and let's save it and then if I close this I can then see my inventory files now where are they I saved them in the wrong folder but I found them now so this was the starting worksheet which we converted to the excel worksheet over here and then we saved the excel worksheet as a csv file which now if I right click and look at the properties even though it looks kind of like an excel file we can see that it's actually a csv file so then if I open it back up it will strip it of the formatting of the excel formatting so it looks like this again right so it's kind of ugly looking it's hard to manage but it's it's it's in a format that's clean to upload to quickbooks that's what quickbooks want so I'm going to save that location copy it and then go back over here and I'm going to browse and pick up the csv file so I'm going to say there's words located and notice it's only showing the csv files if you have an excel file in here it's not going to show it because it's only looking for the csv file so I'm going to then go inventory that's the one next and then it has the mapping it's simply mapping the headers headers to the headers we had in the excel file they all map out perfectly because we took the information from our sheet and and pasted them under the related header so that it would work out perfectly notice the quantity on hand here didn't pull in the date so I'm going to pull in the date and I'm just going to make it uh oh no it's it's giving us the date format is that the format the date that we have hopefully we use the same date format I'm going to be okay with that we're going to say next all right does it have any red things in it if it has red things it didn't like something all right so I think it pulled it in properly so we've got we we we both buy them and we sell them because it's inventory this is the product service name which I possibly should have put the name here and put this into the sku but I put this abbreviation into the product name category we don't have any inventory good no sku number we've got the sales description the sales price the income account this is the income statement account when we sell them the purchase description on the expense form and or the bill form and the purchase order the purchase costs what we buy them for cost of good sold the expense form that will be hit when we use the sales forms such as sales receipts and invoices these are the quantity on hand we're making sure the date is right that's important because we want them as of the starting point of the new period but if they put anything to the income statement it's not in the current income statement it's going to rule in the equity reorder point I just put zero for all of them inventory account looks perfecto just like moondo would do it and moondo we all know is a perfectionist it's perfecto moondo all right so we're going to go then hit the hand boogie and down to the sales items and then within the sales products and services I'm not giving you a review right now and then here we have it so we've got all of these items for inventory we can tell their inventory versus service items because there's a quantity on hand and we have the cost those are indications that it's inventory as opposed to service items which don't have a cost because we didn't buy them their services and we don't have a quantity because they're not tangible if I then go into my plot my my plus thing over here if I was to buy them when I buy them I buy them with expense forms check forms or bill forms from a vendor selecting the category and if I was to buy uh not a category selecting an item if I was to buy an epiphone semi hollow body I'm not going to record this but just to show if I was to buy the semi hollow body note it was doing something a little bit wonky there I just refreshed the screen and that kind of fixed it so sometimes that you might need to do that from time to time if something's not working right try to re change the size of the screen and then possibly refresh it if you need to but there it is there's the description there's the quantity that's the rate that's what we buy them for if I change the quantity obviously it'll change uh the total amount that we're going to purchase this number then would increase the inventory dollar amount on the balance sheet and it's going to be decreasing the cash if we paid cash for it and it's also going to have an impact increasing the sub ledger all right so that's the big the big deal if I'm going to close this back out I'm not going to record it and then when we sell the inventory we can go to the invoice now or sales receipt form and then down here they have the new look on the invoice I'm still getting used to but if I sold an EPSH then now we've got once again the rate times the quantity that's the sales price not what we purchased them for and this is going to do a lot this form even though the data input is easy once you have this set up because what does this do it's going to increase the accounts receivable by 400 it's going to be increasing the sales by 400 it also decreases the inventory not by the 400 but by the cost which isn't on the invoice because we don't want the customer to see it but the system knows it and it's going to increase the cost of goods sold the expense account of us selling the inventory the net impact on net income being the 400 sales price minus the cost of goods sold and it's going to track the sub ledger of who owes us the money being the customer by customer and it's going to track the sub ledger related to the inventory showing us the units of inventory that have now been decreased because we sold the inventory as well as the dollar amount so we'll see those transactions later but notice how simple the data input form is and how complex the actual transaction is also we're going to have to deal with sales tax we probably should have set that up first but we'll talk about sales tax in its own thing shortly in a future presentation closing this back out I'm going to say uh do you want to leave without saving yes let's actually create our financial statements now that we have something on the books I'm going to go into my reports and then I'm going to right click on the balance sheet open in a new tab right click on the profit and loss open in a new tab if I go to the balance sheet close in the hand boogie and do the range change going from 0 1 0 1 2 4 12 3 1 2 4 run it 12 3 1 2 4 run it so there we have it so now we have our inventory on the books and the other side went into opening balance equity so if I drill down on this and say what did it do like how did it get it there because all I did was list out the units of inventory and the cost how did it how did it put this on the books what are the forms that were used well if I go into this you can see that the activity in here uh was in the prior year let's go back to 2023 here's the activity put 1 2 3 4 5 6 transactions because we put 6 different units on and it used an a form type of an inventory starting uh value meaning it basically made up its own form kind of like an inventory adjustment form so if I was to select the drop down here uh it would be similar to this inventory adjustment quantity so it basically made up the transaction it made a form it didn't do it with a journal entry because it made up a form that it can track the sub ledgers with so so it still did a journal entry but it did it with a form so if I go into that one of these it doesn't go back to the data input screen that we used but instead it goes to the inventory starting value form that it basically made up and here's that one piece of inventory that we put basically on hand here right and so it did so that's going to be the transactions notice that all of the forms do you want to leave it yeah all of the all of the transactions that we make will typically be defaulting to the primary form the transaction type that we use to enter to that particular account not to just a journal entry form typically and that allows QuickBooks to do the data input consistently and easily as well as uh properly do the sub ledgers that will be involved that's why we don't just do it with a journal entry all right let's go uh exit without saving yes there's nothing on the income statement because it didn't record anything to uh income either year whether we talk 2024 2023 because the other side went to uh hold on I closed my balance sheet the other side went to opening balance equity right here so this account is a made up account QuickBooks is basically telling us hey look we dumped the other side into equity that's fine that's where we wanted it to go but we don't want to leave it in opening balance equity at the end of this process we're going to clean it all up like we talked about in our plan putting it into retained earnings let's change the dates again go from 0 1 0 1 2 4 to 12 3 1 2 4 run it now we also why did I do that again 2 3 2 4 run it now we also have inventory so we need a sub ledger for inventory so let's go to the tab to the right right click on this duplicate the tab and then I'm going to open up another report which is going to be a sub ledger reports on the left hand side closing up the hand boogie I'm just going to type in inventory I want the inventory valuation summary and I'm going to make this as of 12 3123 I'll just make 24 I'm used to putting the three there 2023 is over man get with the program so now this gives us the units of inventory we had on hand as well as the asset value at 2008 96 which now that is going to match what is on our inventory to 896 and we have now put this balance the most complicated one if you're using a perpetual inventory system of inventory on the books in such a way that we have the sub ledger properly recorded and so that when we sell those guitars it will properly record the cost of good sold reduction in inventory sales price the way it should do on a perpetual inventory system the other side went into equity just as our plan was but it dumped into opening balance equity which is fine once we do the same process for every other account then we'll just adjust the equity account and note that most other accounts are easier than inventory if in inventories it would be easy as well if you weren't using a perpetual inventory system so we did the most difficult one up front if that was intimidating maybe you don't even have inventory in your business or maybe you're tracking it outside of the system but whatever the case the next ones will be easier not perfect not the simplest thing but easier okay so we'll move on to those now by the way before we finish uh i often go to the trial balance to check the numbers because the trial balance shows the income statement on top of the balance sheet or balancing on top of the n's oh one oh one two four twelve thirty one two four so you can see everything in one spot so what did it do it put uh it put the inventory went up the other side went into opening balance equity this includes both the balance sheet and the income statement impacts thus far there are no impacts on the income statement yet because it just dumped it into this opening balance equity instead of putting it into like the other side into some kind of like a cost a good sold account or something like that so this is actually the cleanest form to look at you can see how much cleaner it is to see the accounts impacted then go into the balance sheet because you have all these subtotals it looks like there's a lot of going on even though there's only one transaction which had an impact on two accounts that happened nothing on the income statement you can see both of those again on one statement with that nice trustee trial balance even if you don't understand the debits and credits it's still a useful tool