 QuickBooks Online 2024, invoice selling inventory, get ready and some coffee because we're going to be on top with 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 that's okay whatever because our merchandise is better than their stupid stuff anyways. Like our crunching numbers is my cardio product line. Now, I'm not saying that subscribing to this channel, crunching numbers with us, will make you thin, fit and healthy or anything. However, it does seem like it worked for her. Just saying. So, subscribe, hit the bell thing and buy some merchandise so you can make the world a better place by sharing your accounting instruction exercise routine. 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 file. We set up in a prior presentation, opening up our major financial statement reports like we do every time. The reports, they're on the left hand side. Within our favorites, we're going to be right clicking on the balance sheet to open the link in a new tab. The profit and loss, same thing. Otherwise known as the income statement, same with the trustee trial balance, the TB, not tuberculosis, the trial balance. If you don't have that trial balance in your favorites, you can search for it up top here. Let's go to the tab to the right, close up the hamburger and change that range. Just for the month of January, 2024, 010124 tab, 013124 tab and we'll go for a run. And then tab into the right, close enough the hamburger and then we're going to go 010124 tab, 013124 tab. And then right after we dealt with that hamburger, we're going to go for a run. And then we're going to go to the tab to the right, have another hamburger that's going to close up. And then we're going to go once again 010124 tab, 013124 and then once again for a run after the hamburger. Let's go back to the balance sheet and recall that we set up a new company file. We then put together the foundational items which include your company information settings, users, the list chart of accounts, product list, customers, vendors, and employees. We then put the beginning balances into our system. We then imagined that we're putting together those normal starting journal entries often needed to start a new company up, which means that we'll typically need money, so we have to finance the business somehow. How do we get the assets? How do we get the money? We either take out a loan and or get it from the equity. Once we have the money in the checking account, so once we have the money in the checking account, we bought the stuff that we need in order to generate revenue in the future, which are basically investments including the fixed assets. So now we have our guitar shop that has beautiful furniture in it, so people just really want to come in just like it's a coffee shop even before we had the guitars. People were like they wanted to come in and just hang out. But then we bought the guitars first with a purchase order and then they shipped us the guitars. So now we've got guitars everywhere and a nice furniture. So now we're ready to start selling stuff, which is what we're going to do this time. We're going to start selling some inventory. So we'll start with an invoice. So let's go to the tab to the left and we're going to imagine we will invoice. Now remember that we had those two people that we purchased the inventory directly from that we were going to turn around and invoice them. But before we get into that, we want to just do a normal kind of invoice. So what would an invoice look like? So if I hit the plus button here, recall that the sales forms. So jumping from the vendor side of things to finally, finally the revenue side of things. And the sales form is typically going to be done with either an invoice or a sales receipt. The invoice is something that you will often do when you're billing a client. You're going to send them the bill for work that is already done. Usually you think about that as a company such as a bookkeeping company, a law firm or something like that. And then in our, if we're in a shop and someone picked something up from our shop, for example, then we might have a cash register and that would be more like the form for the sales receipt, the cash based form where the sale happens at that point in time. Remember also, however, you might think why don't I use a deposit form in some cases because if they're giving me cash, then I sell it at that point in time. I'm going to get the money at that point in time. However, you don't typically use the deposit form for the sales transactions for a few different reasons. One is that if you do get money at the cash register or a credit card company or something like that, a payment from the cash register might not go directly into your bank for that same lump sum because it's going to go through an intermediary, either the cash that's in the check register that you'll have to physically take to the bank or if it's a credit card or some other kind of payment, there's likely going to be fees and whatnot and multiple transactions put together that will then be put into your bank account in some format or some amount that is different than the sales amount, possibly due to some fees or charges that the credit card company or whatever charged and because they might be grouping sales together. So that's one reason that a lot of times you'll have to use these two forms. The other reason is that the bank deposit doesn't typically have the ability to track the items on the sales documents within QuickBooks. QuickBooks wants us to use these two forms if we're tracking inventory. So if we're not tracking inventory within QuickBooks and if you had like gig work because you're like a YouTuber or something, then it might be fine to just use the deposit form that clears the bank. You wait till it clears the bank and then you just record it when it clears basically the bank. But if you're selling actual inventory then and if you want to track the customers and the inventory and you would like to break out your sales by customer and sales by inventory and sub ledger reports, then you want to use these two forms. All right, let's do the invoice form first. Take a look at what that looks like. This is the new format of the invoice form by the way. It's the same kind of data as the prior invoice form. They're just testing out this new look and feel to it. So I'm still kind of getting used to it. If you want to go to the old format, you can do this up here, but they seem to be indicating that they're going to stick with this one. You never know. We'll see. I thought they would stick. They seem to be indicating that they were going to stick with the whole business view thing up top on the view thing, which they stepped away from it looked like. So you never know. But that's why we update the course from time to time. So we're going to, if we hit the dropdown, we have our customer set up. We're going to be working with Anderson guitars, which we already set up because they had a beginning balance, an outstanding invoice when we set up our accounts receivable. If not, we could of course add the new customers as we go remembering that depending on the industry that you're in, you might have more or less tracking of your customers. If you sell something in like a Shopify store or something like that, you probably don't have a lot of detailed information about your customers because you just have one off sales to a whole lot of different people. But if you have a business where you work intimately with a particular set of customers, then you're going to want a lot more information about those customers. Just something to keep in mind. We're going to go into Anderson guitars here tab through it. And the invoice is going to populate the numbers automatically. So I'll keep the invoice numbers, the terms. What does the terms mean? Well, the terms mean that they're going to pay us within 30 days or that's when the period that we expect payment within. So if I send them like an email of this invoice, we want them to pay us in 30 days. Therefore, let's say the start date was the 16th. Let's say we sent out the invoice on the 16th. We expect payment by two 1524. If they don't pay us by that time, we assume the invoice is late at that point in time. You could change your terms. This is basically the default term that is basically set up. You can add more complex terms if you so choose. We're going to keep the default net 30. All right. And then let's keep tabbing through this thing tab, tab, tab. We're not going to edit the customer tab manage tags. We're not going to add any tags, product and service. All right. So what does this person want? Anderson wants an ELP and so I'm going to imagine that if you had someone doing the data input, hopefully our invoice is easy enough now that you can have someone, you can have somebody that doesn't know anything about anything about the bookkeeping or about the guitars even to be able to still be able to populate the information into the invoice and everything should calculate properly. That's what we would like. This is an Epiphone Less Paul. We're going to say that we sell five of those, we're going to say. And notice it gives us that units on hand, which is nice because there's 71 units. So it gives us that little thing up there. So we know we have some on hand. The rate is $500. That's what we sell them for, not the cost. That gives us amount by five times 500, 2,500. It's taxable. Notice it's taxable. It popped up as taxable because the item is indicated that it's taxable because we set up the sales tax, which would be similar to a usage tax if you're outside of the United States. And the customer is not exempt from sales tax. So everything populates automatically. And then we're going to say this one is an ERP. There's an ERP. It's not an E. What is going on here? This is an EPR. Oh my gosh. You can't. The letters are the other way. Idiot. Okay. Whatever. I thought sometimes I see it backwards. Okay. Leave me alone. One times 500 and 50. That's going to be 550. And it's going to be taxable as well. And then we have, we have an EPSH. And so an epiphone semi hollow body. One of those and we sell those for the $400. So there we have it. All right. Down below. What do we have down below? We've got the subtotal. That's the 2,500 plus the 550 plus the 400 gets us to the 3,450. We've got the sales tax. So the sales tax is being calculated. Once again, we set up the sales tax. We told the items, which items are subject to sales tax and the sales tax is based on location in general. So it's populating that automatically. And so, and in the United States, the sales tax is on a state by state level. So, so I want to manage this to be a generic problem. However, so I'd like it to calculate just based on the 5%. We set up a 5% sales tax just as a generic, but it's basing this on the location. So if I select this item here, note that I could actually change. So here's what it's calculating based on my location in 90210 Beverly Hills. You got the California State tax, the Los Angeles County and the Los Angeles County District. Everyone wants a piece of you over here in California. And they ain't done either. They're trying to add like a wealth tax as far as I could. I can tell. So I mean, or, you know, like on your assets, which is anyways, I don't want getting into that. So we added up top another one in the dropdown. So this is the 5% tax. So I'm just going to use the generic five because I want to make it a generic problem. Also note that if you wanted to manually adjust the tax, you can do so here. You just have to give it a reason. Just adjust the tax to the generic 5% if you want to follow along with the practice problem and you don't have that 5% up top for whatever reason. And then just say other reason and we'll do the generic five. So let's go ahead and save that. Do you want to leave without, do you want to leave without saving? No, I want to, I want to save it. Okay. I left and it still saved it. So there it is. Now note, I just want to give you a quick look at where that sales tax is at. So if I right click on this tab and duplicate it and I pull this to the right. And I'm going to close out the form and the sales tax you'll recall was into the taxes tab on the left hand side. And we set up our sales tax over here and then we set it up by location. And then we also added another one that was just the generic five that we set up. So we have the sales tax settings that we went in here. And this is the generic five that we set up. So if you don't have, you can set that up in here if you want, or you can just manually put it in there at 5% until QuickBooks. What if they ask you why you're doing it? It's because I said so. QuickBooks, right? That's why I don't need to explain. I don't need to explain myself to you. I'm the one doing the thing here. So anyways, now if we look at this, this is going to be 3450 times 0.05%. That's going to be 0.05 or 5% 172.50. So the total then is that plus the 3450. Okay. So what else do we have? We've got the customer payment options. So these are payment options. Note that this is the major reason why you might set up like the QuickBooks checking account and whatnot, because then you can send them the invoice and possibly give them more of their preferred payment options. Give them more payment options that they can just link to in the invoice. We have a whole nother course or section on that if you want to check that out. You can also give them information down here. So that if you wanted to give them some kind of kind of in custom information about your payment methods, then you can give them a note down here or something like that. Note to customer memo on the statement. This memo will not show up on your invoice, but will appear on the statement. So if you want like a hidden note for internal purposes and then you have your attachments, if you need any attachments down below, we have to save, save a new save and close. And then we've got review and send, print and download, print, packing slip and share link. So I'm going to close this up and scroll back up. Now what is this going to do? This invoice is actually fairly confusing, a pretty long transaction, even though the data input as you can see is pretty easy to do. What's it going to do? Well, it's an invoice. Invoice means it's going to increase the accounts receivable. Remember that invoice from a broad standpoint could mean that you got an invoice. Like I got billed, I got invoiced from the telephone company or something like that. But from QuickBooks standpoint, it means the particular side of the table. We are invoicing a customer. So that means it has to do with us selling things. And it's more specific than that in that it means that we are going to increase the accounts receivable. So an invoice means we're going to increase the accounts receivable for the data input form in QuickBooks. How much are we going to increase it? Five, four, the $3,622.50 including the sales tax. Where's the other side of the transaction going to go? Well, it's going to go to sales generally, but it's only going to increase sales by $3,450.00. Why doesn't it increase by the whole amount? Well, because $172.50 was for sales tax. And that is going to go to a liability account of sales tax payable or something like that. Why don't we just put that in sales and then record the related expense when we pay the sales tax? And the general rationale for that is that the government is saying the tax isn't on you. The tax isn't on us as the business owner. We're just being used as the collection agent. The tax is supposed to be on the customer. So that means it's not something that should be recorded in revenue and then expense. Because in theory, it's not a business expense, but rather we're just helping out. We're just collecting the money and the tax is actually on the customer. Therefore, it's off of the income statement. It goes to the balance sheet 172.50 and then we pay that and that'll decrease the balance sheet. That's important to bookkeepers to know because a lot of times the client will ask you, hey, look, I'm paying all this money in sales tax. Why isn't it on the income statement? Because I have to then do my taxes and I should have a deduction for sales tax expense. Well, you don't have a deduction if you didn't record the income for sales tax that you collected because the income is also not on the balance sheet. You could imagine it being on the balance sheet if it was a business expense and you counted as revenue. But the whole thing, both the increase and the decrease is on the balance sheet, not on the income statement is what I'm trying to say. So there's that. And then also what is happening, we're going to decrease the inventory, not by the amounts that are on the form but rather by the cost, which the system knows because we entered it in as an item. So just like when you check out something at the grocery store, you only see the sales price, but the system is actually recording the cost at the same time and it's going to record the cost of goods sold, which is going to be the expense of us selling the inventory, the net impact on net income being the $3,450 minus the cost. And we also know that there's going to be a sub ledger tracking the accounts receivable by who we sold it to, in this case, Anderson Guitars. And we know there's going to be a sub ledger for the inventory tracking the units of inventory as well as the dollar amount of inventory. Great, let's check all that out. So if we hit the drop down, I'm not going to send it out. We would normally do if we were sending it out. Let's do it this way. Let's save and close it. All right, so let's check it out. If we go to the balance sheet right hand side, we run to refresh it. The accounts receivable should be going up. The AR, let's go into the AR or the pirate account. And we see that we have the accounts receivable going up by 3,622.50. If I go into that, it takes us to the invoice. That's the full amount, including the sales tax, 3,450. Close that out. Wait a second. Let me do that again. If I go into this one and scroll down, we got the 3,622.50. That's what I meant to say. Close that out. Let's go back the other sides on the income statement. Finally, income running it. So there's the other side, but it's only for 3,450, which doesn't include, notice it's in here for the three different line items. I think that has to do with the system trying to track the inventory in a first in, first out. But the total of those invoices adds up to the 3,450. Let's close that out. Not including, the point is it doesn't include the sales tax. I'm going to close that out and then go back to the balance sheet. The difference is on the balance sheet and the liability. It's under these accounts. So there's the 138 and this one, these are the two people that we pay sales tax to. Notice it doesn't say sales tax payable because QuickBooks is trying to identify here who you owe the sales tax to. So it's a little bit ugly that way. But you know, you get the idea. So if you could make a sub ledger, a sub account, if you wanted to like hide those into just one account that's called sales tax payable possibly might look nicer. But in any case, there it is. There's the 172.50 between those two closing that back out back to the balance sheet. Then we have inventory going down. So if I go into the inventory, then it's going to be going down. So notice we have four invoices because again, it's putting it on there by basically line item, but none of these items are actually on none of these numbers are actually on the invoice. Because the invoice is recording the sales price. So that 400, we saw 400, but that number is related to the cost of this one I think is the idea. But these are the sales prices, not the cost. And here the inventory, we're dealing with the cost side of things decreasing for the cost side. And then if I go to the profit and loss again, we can see we have the cost of goods sold the expense of us consuming the inventory that we now sold once again broken out in these items. Let's go back the net impact on net income then is the sales price, not including sales tax minus the cost of goods sold net impact on net income the 690. If I go back to the balance sheet, we can also see in the accounts receivable that we would be tracking the that accounts receivable now. We can see that in a sub ledger which would need to break this out by account rather than just by date as would be the case. If you drill down into this right if you drill down into this you get to the detail by date transaction detail report by date, but I want to get it by customer. Let's go to the tab to the right right click on it and duplicate it so I can open up a new report. So we can see that sub report that we're tracking now by the customers reports on the left closing up the hand boogie and we'll scroll on down just scrolling down who owes you. So let's just do the customer balance detail report and all dates. I think that's okay. So then we've got Anderson guitars. So there's the one that we just added and then we have those three other invoices from the beginning balances we put together 24 122 50. That's what should be on the balance sheet 22 122 50 and we have the inventory, which we should also be able to track in a sub ledger report that would be breaking it out by unit of inventory as well as dollar amount. Let's go to the tab to the right right click on it again, duplicate it again so that we can see another sub ledger report reports on the left. Closing up the boogie and I'll just type in here inventory valuations summary summary summary end of 013124 013124 running so we can refreshing. And there we have it. So there's the quantity we have on hand now. This is the 44 840 and cost that is not sales price 44 840. Okay, I just totally meant 44 180 and that's over here 44 180 on the internal side of things. We're going to be tracking the AR. Let's go to the first tab to do that and we would be down here in the sales area, which I would call the customer center. And we can see here in the all sales forms. If we wanted to look at it that way, I can select the dropdown and say I just want to look at the invoices. For example, there are our invoices three of those we put on the books as our opening balance. Here's the new one. We could go to the invoices tab and close this out get out of here thing. And then I could say that we want to take a look at the overdue not do not deposited. Let's just say unpaid invoices. So there we have unpaid invoices and then we can go into the customers of course. And we can look at them this way and we want to see the ones that are overdue invoices open invoices. Let's filter it that way. Get this out of here. See your money sooner. Got here trying to upsell me on stuff. So there we have our open invoices. And then if I go into Anderson guitar, if they contacted us, we can go into their information and we could say, yeah, we've got these two outstanding invoices. We're looking to get payments on it. The next thing that would happen hopefully is we've received the payment, which would be the next flow of the forms. Or we can send out the invoice again, sending a reminder or possibly sending them a statement or is that way? A statement, which we could do this way. We can send a statement which will give them that like one statement, which will show which will be a reminder for the two outstanding invoices. All right. All right, let's do it again. Altra vez, pero más rápido, faster, faster this time. Let's hit the dropdown and let's hit another invoice. And we're going to say this one is going to go to Jones guitars, which we already have. So I just type it in there. There's our customer already set up boom and invoice number populates automatically net 30. That looks good. We're going to say the date. Let's bring it up. I'm hitting the plus button to do so to the 17th. That means it's going to be due on to 16 because we have a net 30 30 days later tab, tab, tab, tab. And then we'll put up the products and services. So let's add this time. We're going to have a G. U. G. A. U. S. A. What is it? A G. I. U. S. A. And those are going to be for 380 taxable. Okay. And we want one of those. And then let's say there's an ELP, which is our standard, the epiphone less. Paul, we're going to say that we have eight of those. There's 66 on hand. We're going to sell eight of them currently here. Those are taxable. So the sum of those 380 plus 4000 comes out to 4380 and we're going to send out the invoice. Again, you can look into the different payment options and so on and so forth on that. But we're going to email the invoice here and then we have the subtotal and the tax. So I'm once again going to change the tax to the generic five. I'll hit the tax here. I've got the hiccups. Sorry. I'm going to hit the tax dropping it down generic five for or you can enter your tax manually if you so choose. And so that brings it to 219. So if we're selling 4380 times 0.05, the generic five sales tax, the 219 plus the 4380. That means we're going to bill them that 4599. Okay. So what's the journal entry? Well, it's an invoice. That means that we're going to increase accounts receivable. That's what it means. We're going to increase the whole amount 4599, which includes the sales tax, the sales tax not being ours. However, that's we're just being used by the fat Tony that wants to for protection money. I mean, the government and then the other side's going to go to income. And so it's going to go to 4380. And then the difference and then the difference of the sales tax is going to go to the sales tax payable account. And then we're also going to have the the inventory that's going to go down, not by the amounts that are on the form, but rather by the cost instead of the sales price and the cost of goods sold. The expense related to us consuming the inventory in order to generate this revenue will go up the net impact on net income being the sales price minus the cost of goods sold. And the accounts receivable will have a sub ledger that will be broken out by customer and the inventory will have a sub ledger that will be showing the units of inventory as well. So let's let's go ahead and just save that we're going to save and close it and check it out. So I'll go to the balance sheet and we'll run it and we'll do the same thing. I'll just look at it more quickly this time. I'm not in the checking account. Why am I going into the checking account? We didn't get cash yet. It's in the AR accounts receivable the pirate account our account are and then we're going to go there. It is the invoice for the full amount for five nine nine and boom full amount and then closing that out. The other side went to the profit and loss of the wise notice the income statement which we need to refresh with a nice brisk run. And then we're going to go into the sales here and we can see that we have multiple lines for this one invoice because it's kind of trying to track the inventory. I believe is the is the idea of it. But you can see that the total should be coming out to not this amount but that amount before three eighty. So if I go close that back out just to double check that you can see that it would be the well four thousand plus three eighty. I don't even need the calculator to calculate that you can see it ties out do that math in my head even though I've never lived without a calculator and I don't plan to. Okay. Okay. What it was and the other sides on the balance sheet and then down here the other sides going into the payable account. So now which are the taxes payable that we owe to the mafia. I mean the government and then so that's going to increase and then we're going to go back and then up top we've got inventory. Inventory is going down. So if I go into the inventory and we see that the inventory is going down for these two on both of these amounts though aren't on the invoice because this is the cost and the invoice shows the sales price. But the system knows about it because we enter the items and the items know just like the check register people know when you check out your groceries. Even though the person that's helping you doesn't know know the cost. The system knows it's the AI knows man. Everyone's watching you. They have all the information that you don't have any case. Then here's the invoice on this side the impact on net income is going to be the sales price minus the cost to get sold and then back to the balance sheet. The sub ledger for the accounts receivable is AR over here. I'm going to run it again. So now we've got Jones guitars where we have this. This is the new invoice the total in the AR 28 721 50 ties out to what's on the balance sheet 28 721 50 and the inventory has a sub ledger breaking out by unit over here. Inventory valuation son summary brisk run to refresh ourselves and we can see that these are the units on hand. This is the total cost not sales price forty thousand six seven six and that should tie out over here forty seven six seven six. And if I go to the internal documentation we can go back to the customers and this time or we can do it multiple ways right. We can go to the all sales items. We can look at the invoices now. We can look at there's all of our invoices. Here's the two we can go to the invoices tab and we can look at the all the invoices that are unpaid and we see it there. We can check it out by customer and look at the ones that have invoices. So we have open invoices and there's the Jones guitars. We can go into Jones guitar and we can see the two invoices there. The next step we would expect to be receiving the payment at some point in the future. Okay so let's go ahead and look at the trial balance. Now we had open over here running it for a nice refreshing of it. And then so this is a nice time to point out that the trial balance could be quite useful instead of having the balance sheet and the profit loss open as you check your work as you do the data input which I think is a really good practice to do. Because then you see the impact on the accounts impacted. If you just have the trial balance open instead you can just have this one open instead of these two and you can see how much tighter it is without all these subtotals. See here's the balance sheet and the income statement. This has all the balance sheet and income statement accounts without all the subtotals and both balance sheet and income statement accounts on one form. So if you if you could just see the difference between the assets liabilities and equity income and expense you could see that. So we've got the checking accounts and asset accounts receivables and assets inventories and asset investments are an asset account accumulated depreciation contra asset furniture and fixtures and asset. Here's where the liability start accounts payable visa credit card liability. These are the two sales tax which is our liabilities. Here's the loan payable liability and then the equity section owner's equity and investments from the owner and then the income statement. So this is the first time we've had income statement items here seven thousand eight thirty for the sales side and the cost of goods sold. Notice that the liabilities and equity are on the same side. You can kind of imagine the accounting equation here what is happening. You've got the assets which are all debits except that contra asset that's what throws it kind of off but they're all they're all debits. And then the liabilities and equity are basically all credits right is the idea why because the assets are what the company has. And the other side of the coin is who has claimed to the assets either third party the bank or accounts payable or the owner which is equity. How does income fit into that statement. How does the income statement fit into that analysis. Well the income statement is basically a credit but it's it's has a credit balance right. We can we can crunch the whole income statement into a credit because hopefully the income will typically be greater than the expenses right. It's the seven eight three zero minus the six two six four which is the one thousand five sixty six which is part of in part of equity that'll be in the equity section. So in other words if I looked at the balance sheet over here and we ran the balance sheet you could see that on the bottom of the balance sheet the net income there's the one five six six that is the profit and loss net income if I switched it down to one number that profit loss then is the performance on the balance sheet report here which really should be in retained earnings on the balance sheet because this isn't actually accounts just QuickBooks trying to show you the link between the two. You can see it roll into retained earnings or in our case equity if I go up to the next year will not roll over monthly because QuickBooks does the closing process automatic on a yearly basis and it should be seven seven eight ninety six plus one five six six once we go into the next year. So if I changed this to 010125 to 123125 run it then you get the same numbers but in total but the net income is now in the owner's equity if it was a corporation it would have rolled into retained earnings. It's just another name for the same process depending on the type of entity that we have. So if you do that on the on here the trial balance then if I bring this up 010125 to 123125 and run that you could see then we have no income statement accounts because they closed them out and they dumped the difference into owner's equity which is like retained earnings if it were a corporation. OK so let's bring it back down and just 010124 to 013124 and if your numbers match these numbers great if they do not try to change the date range increasing them drill down on the account that is off and if it's a date issue then you can drill down and change the date and to the source document and we'll take a look at a transaction detail report at the end of the section after after all the full month of data input you can double check your numbers that way as well because that's another way to see the detail of the reports as well.