 QuickBooks Desktop 2023 Barter Sale Transaction 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 Sample, Raw Castle construction going through the setup process We do every time, maximizing the home page, going to the view drop down and getting that open windows list open making a bit more room over here for the open stuff in the open window Reports drop down, we're going to go to the company and financial, open up that P&L profit and loss income statement Tab 010123124, January to December that is We're going to customize that report so I can go to the fonts and numbers and change the font size on up to 12, okay? Yes, okay, and then go to the reports one more time Going down to the company and financial, down to the balance sheet standard this time with the changing of the range or the just date, 123124, customizing it, fonts and numbers, change the font, 12, okay? Yes, please, okay, that's what we do every time going back to the home page In prior presentations, we've been focusing in on the customer cycle which could be called the sale cycle, the revenue cycle the accounts receivable cycle and prior sections we've been looking at the vendor cycle which could be called the expenses cycle or accounts payable cycle Now note that at the end of each of these cycles, we expect something to be happening typically to the checking account On the customer cycle, we expect at the end of the process that there's going to be a deposit into the checking account for goods and services we provided to a customer At the end of the vendor cycle, we typically expect there's going to be a decrease to the checking account for goods and services that have been provided to us by the vendor But what if we have a situation where there's a barter or a trading type of situation how can we enter that into our system? The easiest way to do that would be to say, well, can I use the same system, the same process but then have the end result, the checking account be kind of like a clearing account which will be canceling each other out In other words, the vendor is giving us goods and services for example and we are giving back goods and services, let's say, of an equivalent value That would mean that if you put cash in the middle of that transaction then we would be paying the vendor, let's say 100 bucks for goods and services they give to us and they would just then be paying us, let's say 100 bucks for the goods and services that we provided them which would of course net out in the checking account So clearly you can just remove the transaction from the checking account and just provide each other goods and services in practice but in the system you're still going to have to record the transactions So you could basically imagine that at the end of the day, if we go to the balance sheet there's going to be a deposit to the checking account at the end of the day there's going to be a decrease to the checking account the two will net out even if they don't actually clear the bank, right? That's one way that we could do it but we don't really want to do it that way because then we're using the checking account as a clearing account and as you can see the checking account already has too much activity going on not at one date but 010124 it already has too much going on and because it's kind of like the lifeblood of the company there's the most different kinds of transactions the most variety of types of transactions in it so we don't also want to be using it as a clearing account for things that aren't going to clear the bank that'll make it difficult for us to reconcile to the bank the easiest thing to do when there's a barter transaction is to say well let's just create another account which is going to be a cash type of account because I would like to have it up here to be able to interact with our forms in the same way as other cash accounts but we're only going to use it for clearing accounts for like bartering transactions so to do that let's first go back on over to our homepage and let's go into our chart of accounts we could do that by going here and we'll talk more about the chart of accounts later but I usually go to the lists up top and then go to the chart of accounts this way and I'm going to add another account that's going to be in the type of a bank account we'll talk more about bank account types and future presentations up top and I'm just going to call it something like a barter type of clearing account or something like that you're going to add the account by going to the account down below and say I want a new account for Favore and it's going to be a bank account type because I have to have it interacting with my forms in a similar fashion as a bank account otherwise I would put it as like an other current asset or something and I'm going to call it a barter clearing account so it's a clearing account for bartering so we don't need anything else I don't need a description, I don't need a routing number we're not going to connect it to the bank feeds or anything like that so I'm just going to say okay save it and close it so I'm not going to set up any bank feeds I'm going to close that out and you've got the bartering account up top I probably should have put a number on it since they have the account numbers turned on here but I'm not going to mess with that at this point in time I'm going to go back to the homepage now now if we think about a bartering transaction we provide goods and services to someone else they provide goods and services of an equivalent amount to us those two things could happen at the same point in time or it could be that we provide the goods and services first for example possibly first creating the invoice and then they have the goods and services later or they give us the goods and services first in which case we would enter the bill first and then we provide the services that they're requesting in return and then we can create basically an invoice at a future point in time even if the two things happen at the same point in time obviously we're going to have to enter one side of the transaction first and then the other side also note that I'm going to do this with the full accrual process you might be able to enter it a little bit faster depending on the circumstances but I'm going to enter a full accrual process starting with the invoice to receive payment and the deposit on the sale side and then the enter the bill and the pay bills on the payable side because that will cover the largest amount of scenarios that could take place so let's enter the invoice first I'm going to go into the invoice so I'm just going to make up an invoice and I'm just going to call it, let's just call it barter a new customer, barter customer just to add a new customer and then we're going to say quick add just to add it quickly and we're not going to need a class I'm going to keep the template I'm going to say this happened in 2025 because currently the sample file is in 2024 so that I can see at least the income statement in and of itself in 2025 which might make it easier to see what's going on here with this one transaction, 011525 let's say and then that will keep that and okay and then I'm going to set up a new item here so I'm going to set up a new item to drive this I'm going to set up an item we'll talk more about items later I'm going to keep it simple with a service item instead of an inventory item at this point in time and we're not going to be dealing with the sales tax I'm going to call it just item 01 let's say and obviously you could use any item remember the items represent what you're selling so the goods and services that you're selling I'm just going to create a new item so that we can keep it distinct and then I'm going to say the rate let's say the rate is going to be I'm going to say $5,000 here I'm going to say it's not going to be taxable so let's say no tax so no sales tax in other words and then the account I'm going to say let's make a new account just to make it easy to see it and it's going to be an income type of account because this is the invoice side of things I'm just going to call it barter income hopefully I'm spelling barter correctly alright so I'm going to say save it and close it and then okay so that looks good so now we've got the item that we're going to be recording and we've made it nice and easy on the invoice so all that's going to happen is there's going to be an increase then to the accounts receivable for the customer of the barter customer account in the sub ledger and the other side is going to go to the sales account we're not dealing with sales tax and we don't have any inventory that we have to deal with so that is great so I can say save and close let's say save and close let's see what happens to the accounts go into the balance sheet I'm going to change the date to 25 now so let's say 01525 and so there we have that in accounts receivable double-click in the accounts receivable we see there's our barter there's the 5000 there we can track it by customer as well by going to the reports up top we can go down to the customers and receivables and take a look at the customer balance detail and if we go back down to the barter barter there it is there's the invoice right there you can also find it in the customer center if you went to customers customer center first tab barter and we can see it there but the dates are in fiscal year 2024 so let's say all there it is there okay so let's close this back out for now let's close this back out for now and then we can then go back to the home page and the other side of the transaction would be a bill so let's enter that so then on the other side we're saying that the vendor is giving us something so I'm going to enter that on the other side which would be a bill so I'm going to enter the bill which is going to increase the accounts payable we're going to say this is going to be what's let's call it the same name I call it barter barter vendor barter vendor barter vendor okay let's keep that I'm going to say tab quick setup on that one quick setup on and I'm going to have this happen on 01 let's say same date 1525 I believe it was and so there it is now on the expense side of things it would be whatever they gave to us right so if we exchange it for services whatever the service was we would put on the expense side of things here the other thing that they might provide us they might give us supplies something like that where we can put into supplies they might give us the like an asset that we're trading for in which case it was property plants and equipment we would put it into the property plant and equipment down here the other thing that might happen is what if they were to give you something for personal use so you gave them something of a business use and they gave you something for your own personal use well in that case it's not a business thing that you're getting here you don't have to put that into a draws account like an equity type of account and it would be basically a draws type of account but we'll put it into like supplies let's say supplies we don't have a supplies account I'll just call it supplies I'll just make a supplies account we'll just make it up here supplies did I spell supplies right it's going to be an expense account supplies it needs two s's any case we're going to say save it so there we have it what's this going to do an accounts payable account because it's a bill increase in accounts payable the other side is going to go to the supplies let's check that out well let's make an amount it's going to be for the same amount of the five thousand here and we might put in the memo it would be a good thing to put like it's a barter transaction or something like that to help us out in the memo so I'm going to say save that and close it and let's check out what happens with it so then if I go back to the balance sheet we can then say in the accounts payable side of things now right here we're going to double click on it and there is our bill that it will also be tracked by vendor so I can close that back out and see that by going to my reports drop down vendor payable and go to the AP aging or let's say the vendor balance detail report let's say and so we said this was barter vendor there it is right there closing that back out you can also find it by going to the vendor center which gives you vendor tab the barter vendor right there if I look at all date ranges want to see all of them so there is that so closing that back out so now we can kind of finish this transaction off so if I go back to the home page we enter the bill so now it's in accounts payable and it's in the accounts receivable so if we've exchanged the goods and services we're just going to go through the rest of the process until the customer side gets the deposit going to the checking account normally but no it's going to go instead to the clearing account and then the bill will go what it would be to the checking account normally but no we are instead going to be putting it into the clearing account the clearing account then netting out so the next step on the invoice would typically say receive payment so the receive payment I'm going to put it into un-deposited funds which is the normal kind of process I'm going to say the received from the barter transaction just note before I do that that you could track this and then say okay if I go into my customer center and I go into my customer for barters I could say okay there's my barter and I can track it just like anything else and say I can call this person up hey barter customer you need to pay us not in cash but you need to pay us the equivalent of goods and services that you promised to pay us right we could track it in a similar way even though we're expecting at the end of the day not to get goods and services but to get some others not to get cash but to get goods and services so you can also open up the invoice you'll recall and you could say that I'm going to say okay I received payment for this particular invoice and so okay and then we're backed off so there's the barter received payment that we have there's the number we're going to be putting it into undeposited funds and you could say that it's something other so I added barter here so barter and so I'm just going to say okay as the type it doesn't really matter even if you pick like cash because this is more of a more informational type of thing than anything else but in any case we'll keep that what's this going to do decrease the accounts receivable the other side's going to go into undeposited funds note that if you have this drop down you could put it directly into the barter account if you want and skip the next step but I'm just going to go through the full process here so we're going to save this one okay so that one has been saved I'm going to close this out now and say okay what happened with that with that if we go to the balance sheet we know that it's going to be going out of accounts payable so if I look at the I'm sorry it's going out of the accounts receivable so we should have a payment when did I record that repeat see payment I think I recorded it in a prior period let's go back to the customer center that payment is happening in December let's double click on that I'm going to change the date to 01 15 25 and save it so now let's check it out so if I close this back out and so there's the payment so it goes back down and we could of course track that in our in our second report customers and receivables and we can look at the customer balance detail and we can see the barter customer has now been cleared back out but the other side is in the clearing account which is an undeposited funds at this point in time there's the 5000 I want to take it out of undeposited funds and put it into then not the checking account but the barter account which is going to then clear out with the transaction from the other side so I'm going to go back to the home page to do that you can see I have the little red thing here so I'm going to click on it and we just want the 5000 that I'm going to make the deposit on okay I'm going to deposit it this time in the correct date 01 15 25 and then it's going to come out of undeposited funds into the checking account so we'll save it and close it just like any other normal transaction except hold on I went to the wrong with it didn't I let's go into the checking account double click on the deposit and the thing that we want to change is it's not going into the checking account I want to put it into the bartering account so I'm going to change the account that's why we kind of set it up as a cash account so it can still interact in a similar way as the other cash accounts but it's going to be a clearing account okay now let's save it and close it and now if I close this back out it went into bartering account up top so that's a clearing account so we'd expect to go back down once the second half of this barter transaction has been made notice again you could say well why don't you just keep it on the checking account and you could have the checking account go up and down it would result in you in the same spot as before the transaction happened you could do that but you don't typically want to because you don't want to muddy up your checking account and you're also going to have to reconcile the checking account to the bank statement so if you have transactions that are going in and out of it even though they clear out fine it'll cause a problem with the reconciliation process potentially so we're going to go back to the homepage and do the other side so if we entered the bill and now we're going to say we're going to pay the bill so let's go to pay bill side of things and we're just going to be picking up that 5,000 up top so we're going to 5,000 now notice you could say well what if they only gave us half of the transaction and so on so we could say well what if they what if what if we only provided half of it for example then we could still you know put the 2,5 here and then there would still be an outstanding balance and we would have to provide the difference right so you could track that kind of similar kind of thing with the accounts receivable and the accounts payable in a barter transaction so let's just pretend that was the case let's put this here as of 1525 and once again we don't want it coming out of the checking account we want it going to the bartering account so did you know you can select I'm not going to choose the default and we're going to say select bills and pay we're not going to print the check number so I'll say check number down here select bill I'm not going to put a check number okay closing it back out so now if we go to the balance sheet we can see the accounts payable should have going down on the liability side so accounts payable we have a decrease of the 2005 if I go to my vendor center customer vendor center with the barter customer where's my barter customer so we still have an outstanding balance because we only paid off the 2,5 closing that back out and we can see then up top the barter account is now at the clearing account 2005 because I haven't paid the second component of it and I'll just do the next half of it so just to note that you can still kind of track the receivables and payables using using the system even though you don't expect to get cash at the end of the day let's finish it out and let's pay the rest of it pay the bill we're going to say the barter transaction we're going to we're going to pay the second 2005 as of let's say this is going to be 11525 it's going to be a sign the check later changing the checking account to the barter and account that's the key it's not going to be changing the default pay selected bills no check number and I'm going to say okay and then let's go back to the balance sheet so now we can see the barter account has now been removed because it basically went up and down one way to see that I like to look at the trial balance you could change the settings so you could see a balance that is at zero but let's take a look at the trial balance because it does that automatically and I'll start looking at the trial balance more in the future course or future presentations it's down here in accounting and taxes trial balance and let's go from 010125 to 123125 and so there's the clearing account with a zero balance in it if I double click on it then of course you could see it went up and it went back down again that's what it means to be a clearing account it's being used so that it will clear out periodically not just in terms of a temporary account which you might hear from accounting terminology like the income statement accounts clear out at the end of the period but it's going to clear out periodically with a particular use typically you might say well I could have just done that same thing in the checking account but look at all the activity going on in the checking account 010124 you don't want to have you don't want to muddy up the activity in the checking account and you don't want to mess up the reconciliation process that is then the point of the other account being used and then of course if I go back to the balance sheet and we look at the accounts payable let's do it this way vendors vendor center just to round things out the barter vendor balance is back down to zero so that's how you can enter the barter transaction you could possibly not go through the full accrual process you know and do it more in a cash based method but just remember that at the end of the day you can imagine a barter transaction as though you implemented the cash into the barter transaction right you could say well what if I actually pay you the five thousand dollars and you pay me the five thousand dollars and then it'll go properly through our checking accounts you could do that but then you could just say well why am I going to do that I'm just going to eliminate the five thousand dollar exchange between each other and just call it a barter with the bookkeeping side of things we still kind of treat it as though it's a cash transaction that's the easiest way to do it and so therefore you want to set up a cash account so that the end result of these two ends of the transactions because you're still buying goods and services and you're still selling goods and services right so at the end of the transaction they'll net each other out in not the cash account or not your checking account but another cash type of account is the easiest way to think about that kind of transaction