 Here we are in our QuickBooks Online test company file using the accountant view as opposed to the business view. You can toggle between the two views by going to the cog up top and switching the view down below. We're going to duplicate some tabs to put reports in like we do every time. We're going to right click on the tab to duplicate it and yes we're going to right click on the tab to duplicate it and then back to the tab to the middle as the one to the right is thinking and reports on the left. We're going to open up the balance sheet as always tap into the right as it's thinking even though it's done thinking and reports on the left this time the profit and the loss. Closing the hamburger I'm going to change the range this time for the frame of let's go from 040125 to 053125 that's where the work's going to fall here. Going to hit the drop down and see this in a month by month side by side run it nothing's in it yet that's good. Tab to the left close the hamburger scrolling up same range that we're going to change here 0104, 0125, 053125 we could also see this on the side by side in the month by month. Run it and there we have it tabbing to the left we've been looking at e-commerce situations selling inventory but not on ground in a store but rather online in the cloud with the help and use of third-party software such as like an Amazon or Shopify amongst others. So in prior presentations we talked about how we can pull in the sales side of the transactions because generally most of the time we're going to be separating the sales side from the inventory and cost of good soul tracking which means we're going to be using in essence a periodic inventory system for the most part and now we want to think about a system on the inventory side where we're doing the easiest thing possible just expensing the inventory and then possibly making a year-end adjustment to comply with our tax compliance so that we can get a cost of good sold and ending inventory calculation. So what might that look like well if we had my Shopify store over here we've got our Shopify store and it gives us some inventory tracking so you're going to have some logistical information to track the units of inventory so that you can make sure that you have your stock in place to cover the sales that are happening in the future. What most people aren't doing or what takes a little bit more is to track the inventory not just on a unit by unit basis to cover what you think the potential needs might be in the future for sales but also to convert that to a dollar amount which usually requires like a flow assumption as well like a first in first out or a weighted average type of flow assumption but we're just going to expense it when we buy it and this results usually in some kind of timing issues and so that's what we want to kind of focus in on. So let's imagine we first just buy our inventory so we're going to buy inventory when we buy the inventory we might see it eventually whatever our purchase structure that we're using to purchase the inventory is would eventually go through the bank feeds because we're going to be purchasing it with cash so let's imagine we're going to have a cash transaction goes to the bank feeds for the purchase of inventory so we'll start off with like two units of of our product number one so most likely we've been saying hey we need to we need more units of product number one so because we're getting low so then we go through our purchasing process and eventually cash is going to go out of our checking account so I'm just going to enter that instead of with the bank feeds the expense form which is a decrease to the checking account so decrease to the checking account because we're going to be paying for this I'm just going to call it vendor number one generic vendor and the account is going to be the checking account it's going to be coming out of the checking account let's say this happens on 040125 and we're purchasing notice I'm not going to use items down here because I'm not tracking inventory within the system but rather I'm just going to use an account and record it not to inventory but rather just to the cost of goods sold so I'm just going to dump it into cost of goods sold boom and that's it so I'll dump it right there and the amount let's say that the amount is going to be for forty dollars and so we purchased two units we're going to imagine at the forty dollars total so there are twenty dollars each but obviously when we pay for it it's just going to be a lump sum you know that we're purchasing for the multiple units so let's save it and close it and if I go to my reports here we're going to say all right what did that do on the balance sheet side of things we should of course have cash that is going out of the checking account cash is going out of the checking account right there forty dollars the other side simply going to the cost of the goods that are sold now they haven't been sold that's the problem because normally we would put them on the books as an asset and then expense them in cost of goods sold when we actually sell them so that's why we end up with this timing difference but of course that accrual component of putting it on the asset of inventory and then expensing when we sell it means that we can't just rely on the bank feeds which was the easiest thing to do to just expense things when they leave the bank account all right so that's going to be the issue but that allows us then to go over here and say okay now I've got enough products and I can adjust my products in my Shopify store to line up to meet the current needs let's also track this in excel noting that we are imagining a scenario where you are not tracking this information in excel but for the practice problem we want to put it in excel so we can see what is actually happening over time so I'm going to zoom in a bit by holding control and zooming in you can see you can also zoom in over here I'm going to select the triangle right click on it and format the sales I'm going to choose currency bracketed numbers no dollar sign and no decimals I'm going to put my headers over here which are going to be product one we'll just put keep it at that and then units and then unit cost and then the total cost so let's make these are headers home tab font group and black and white and then I can center them let's say and then these ones are going to make them a little bit skinnier like that and then I'm going to select these as well and wrap them home tab alignment and wrap them so we can fit it there I'm going to make this a date column you can do that by going to the numbers and then use the short date but I'm I'm going to get a little bit more fancy right clicking on this and format and I want to go to the the date format that has no year in it so I'm just going to pick this one that has no year and there we have it so it's going to be on four one we purchase two units at twenty dollars multiplying that out that comes out to the forty dollars so what we're tracking in our excel system is just the the forty dollars again I'm imagining we're not doing this excel sheet in our if we were doing this in practice we're imagining a scenario where we're not tracking it in excel but for the practice problem we'll actually track it in excel so we can see what's happening okay so if we go back on over notice that we have no other schedule within quickbooks that's tracking the the units of inventory on hand because we just expense them at the point in time that we purchased them now let's imagine sales happened and whatnot and the sales are coming through and being recorded into quickbooks in one of the ways that we looked at in prior presentations but as those sales are happening we're not recording anything related to inventory because we've decoupled them we're not recording the decrease to inventory as the sales happens but rather we're just expensing the inventory as we purchase it so then let's imagine sales are happening and we decide that we need and the in our in our Shopify store the inventory is going down and whatnot and units and we decide we need to purchase more inventory so let's do this again and let's first put it into excel and imagine what we're gonna do we're gonna say this time I'm gonna say on four fifteen we're imagining we need more inventory and we're gonna say just one more unit of this one let's say at twenty two dollars the point I want to point out is that the cost of this