 0. Accounting Software 2023 Envoys selling inventory created from a spend money form with assigned expenses to customer. 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to the tab to the middle accounting drop down take a look at the balance sheet report and then we're going to tab to the right accounting drop down and this time the income statement report let's go back to the middle tab and change the date range by hitting the date range drop down we're looking to the customize the report bringing it on up to 2023 the end of December and then make it up to date update in the report the income statement the date range looks good we're looking at 2023 so we'll go back to the first tab and let's jump on over to our flow chart this is a quickbooks desktop flow chart but we're just looking at it to see the flow and the cycles involved here as we trace the inventory we are imagining in this case that we purchase we had we're going to imagine a client came into our shop and said I want these particular types of guitars in our guitar shop we said well we don't have those in stock we don't have the color you want or whatever but we can order it for you from our vendor so then we went and made a custom order for the vendor for this particular customer so that we can get the guitars that they want and turn around and sell them to them so we made a purchase order in the past and then when the guitars came in we we imagined the guitars came in with a bill connected to the box of guitars and we could have at that point entered the bill into the system the physical bill we could have entered into our bill in zero which would have increased the accounts payable but instead of doing that we just paid it at that point in time with basically a check type form a money out form as we did that as we wrote basically a check type of form paying for the inventory we assigned these couple items as like a billable type of expense something that i want to pull into the invoice now this is a tricky this is where it gets a little bit messy because oftentimes when we think about that billable kind of functionality we're not thinking about it with inventory oftentimes but rather with other things like gas and stuff like that that we want to pull on over into the invoice so because we're using inventory and items are related to inventories we have to be careful when we now turn around and go to the sales side of things to pull that inventory item into our invoice and now that we're going to we're going to actually sell those guitars that we purchased for the customer so to see this let's hit the let's go to the zero let's go to the tab to the right i'm going to right click on this tab and duplicate it again and i would like to run another report for the billable items so i'm going to hit the accounting drop down and go into reports and then we're going to type in up top billable billable expenses so we're going to go into that report and we want to see them for 2023 that should be good on the date so we have these three items so we've got eric music and music stuff store which have these billable items that are connected to them so when i make an invoice for these items it should give me a reference to pull in these to the invoice now the way we created these if i drill down on this item and just take a look at it we've got a spend money type of form a spend money form and if i go up top and say options up top and i want to edit the transaction just to take a look at it in its edited form we then assigned some of these items assigned to a customer so we assign some of these items to a customer this way and that's how we created i'm going back these or these billable settings when usually we just have an expense form and we don't have actually inventory items in this case we assigned these inventory items so now when i pull it into the the invoice i should get a reference trying to pull these two in but it might try to pull them in at cost as opposed to try to pull them in at the sales price and that's where this thing you have to be quite careful when you're using this tool so and we'll touch on this tool again when we see it for other kind of billable things possibly for like gasoline or other expenses that you have that you want to pull into an invoice to charge a client for so let's go back to the first tab and i'm going to hit the drop down and say let's say we're going to make an invoice another invoice and this is going to be for eric music we'll say eric music tabbing over and notice what popped up these two billable expenses can be added so that pop up comes in because it's connected as we saw on this report up top i'm going to change the date and let's bring the date back on down to jan uh 23 let's say jan 23 and i'll say the due date is going to be uh a month later on uh feb 23 about and then we'll say it's an invoice uh standard okay okay okay and then let's take in let's pull in this billable stuff so here's the two items i can select one at a time if i wanted to just pull in one of them but i'm going to pull them both in so i'm going to select them both so add as one item or add items so i don't want to combine them together typically so i'm going to add them as two line items i would like them to show up as two line items down here i'm going to add them and uh so there we have it now notice that everything looks basically normal here because you have the items that are populated as we pulled in these expenses remember that if you did this with something that didn't have items like inventory items meaning you paid for just gasoline and you charged it to automobile expense and then you wanted to pull those into the invoice then then you wouldn't really have the items that would be pulling up it would be just pulling in that that expense item so so these items look like they're doing the right thing but it's still pulling in the cost it didn't switch it over to the sales price so it connected them but it doesn't have the right price amount on it so what i'm going to do i'm going to say okay everything looks good i'm going to have to adjust this by saying this is going to be the e p s h if i do e p s h here i can see that it should actually be four hundred dollars and i'm going to change that up top to four hundred dollars so you can see it's not like a perfect system so you have to be very careful if you're gonna and then this is an elp an elp and i can see that that is five hundred dollars on on the sales price so the elp is five hundred and then i'm going to delete this transaction here it also didn't pull in the sales tax so i'm going to make them both taxable uh tax tax on the sales and then tax on the sales so uh so so you can see you can kind of do that with the inventory and it pulls it in but it's not a perfect type of system so you want to be kind of careful with those uh billable items and we'll take a look there's other kind of issues with it when you use the billable items for other things like like other expenses that you're paying for to pull them into an invoice that we'll talk about in future presentations but we want to point out some of the pros and cons of the tool okay so now what's going to happen when we record this well it's an invoice so it's going to increase accounts receivable for the full thirty thousand four fifty and then the other side is going to go to the revenue account hopefully it's going to properly assign it to the revenue account because we're we still have the items that pulled over so that should give it the indication of where it should go but that's only for the four thousand and the twenty five thousand not including the sales tax one thousand four fifty the sales tax should be pulling into the liability account of the taxes payable and inventory should be going down hopefully it can still track the inventory properly for the amount that was there before because that was the cost that was pulled in from when we paid for the inventory and because we're using the item it should be able to decrease the inventory by the cost amounts and then the other side should go to the cost of goods sold the expense related to a sell in the inventory the net impact on net income should be the sales amount minus the cost of goods sold and we should have the sub ledger for accounts receivable impacted because it's going to be going for Eric music uh is going to have the accounts receivable and the inventory sub ledger tracking by units should also be impacted by this as well and the billable report should go back down because we pulled these billable items uh in and have used them now so let's go ahead and approve it and see if that is indeed what happens so we'll save and approve uh complete account field uh it's not and notice it didn't even pull in the account field even though i had the item here so that's interesting so it's going to button in the case it's going to go to the sales we're going to go to sales and sales so hopefully it's still pulled in the inventory tracking properly and uh the cost of goods sold and and so and so on so we'll check it out and so we'll say save it and it's good to go balance sheet and update it and let's check out what happened here if i go into the accounts receivable and drill down to the source documents or the general ledger report type thing there it is here's our receivables for the full 30 thousand uh 450 and so that's for the full amount including the sales tax back to the balance sheet going to the income statement updating the income statement we should have the sales in here but only for the amount we charged not including the sales tax so we have these two line items for that uh eric music that pulled in i think those look correct they went to the proper sales account so that is good going back the other side back to the balance sheet should be in a liability account sales tax liability because we're gonna have to pay that that's our basically like a use our usage type of tax for the eric music one so i think that uh is correct i think uh yeah and then we're going to go back on over and then check out the inventory here's where we want to we're uh we want to make sure this is pulling in properly the inventory going into the inventory report and scrolling on down and we're going to see we have the inventory that's pulling in for these two amounts which are the cost you'll recall and not actually this the amount on the sales price that 20 000 for example if i drill down on the source document we charged 25 000 that's the cost so it looks like it did that properly so that looks good going back and back going to the income statement updating the income statement we should see the other side in cost of goods sold cost of the goods sold that one has to think cost good sold so there's those two they look correct the impact on the income statement is the revenue the sales minus uh the cost of goods sold so that's good and then if i go back to the income statement we also have the accounts receivable broken out by sub ledger by customers let's open up another report tab to the right right click and duplicate that tab and let's just take out look at the sub ledger report by going to the accounting drop down reports and scroll on down to the aged receivable summary report if we may and so now this is broken out by our customers and so now we've got eric music so the total comes out to 38 671 50 which should be on the balance sheet 38 671 50 in practice we would track that over here in our open invoices when we're trying to collect on it most likely where we have our eric music invoice here awaiting payments some of the awaiting payments we can also see it in customers in the contacts and then we want to check out the inventory making sure that our sub ledger for inventory ties out let's go to the tab to the right right click on it duplicate it again and then go to the reports again and let's do it this way this time and then i'm going to just type in inventory inventory item list let's check that one out and see if it ties out to what it should it's in 2023 it should be good so now we've got our inventory broken out by item and the cost line 15 678 should tie out to the balance sheet 15 678 movie b to the end and we note that the billable items report these two should go away because we did those so update in this report those two are gone no longer have the billable items there so again not a perfect system with these billable items to use them for inventory but it kind of works and again we'll see more of this of the pros and cons of these billable items in other ways that we can use them in the future but let's let's do it one more time for the second one so we'll just repeat the process and just to see it now that we have an idea of what is going on here what is going on a lot of crazy stuff a lot of crazy stuff going on that's what i'm talking about but not as much crazy stuff as this is still crazy but any case this is going into jan jan 24 jan 24 and let's imagine this goes to feb 24 for the due date feb 24 invoice reference standard boom boom the billable item pops up now so we're going to say yeah pull that in poor father that's the one we want and so we're just going to add that in boom and so it does it looks beautiful that it has the item and everything but once again that the price pulled in the cost and then it also didn't bring in the account or the tax code so still a little bit a little bit weird you might try to change it here and like reselect it and it pulls in the thing i'm a little bit skeptical so that works quite well the thing i'm a little bit skeptical when i did that however is whether or not when i record that it will take it out of this report for the billable expenses so notice all i did right there is i said okay i'm just gonna i'm gonna select the same item right here after i already pulled it in and then and then it updated everything beautifully so that might be a way that you can use this properly you have to make sure to do that which you couldn't forget to do that because if you did then it wouldn't record because you there wouldn't be populated fields in the account or the tax code or anything but but then we just i'll test this one out and just make sure that if you were to do that that it properly removes the item from the billable report over here all right let's check it out so that what is this what is this going to do then this is an invoice so it's going to increase the accounts receivable by the uh 8 15 85 but i'm also skeptical of this because notice that it also changed the quantity when i did that so i don't think that's i don't think that's the best way to go so i'm gonna i'm gonna refresh this i'm gonna go back to my dashboard and not record it and then do it again so i'm gonna hit the drop down and then say we want the invoice and then i'm gonna say this is going to be going to who did who is this for again this is going to go to our music stuff store so we'll say music stuff store there's our billable item i'll pull in the billable item again and i'll fix it the way we did before so i'm gonna say the date is going to be uh 1 jan 24 let's say due date feb uh feb 20 feb 24 let's say and then i'm just going to put down here i'm just going to type it in again gsb just to see the actual price because that's the cost so there's the price 777 and then i'm going to put the sales code here which is 4000 and then the tax populates and then delete the second one so not a perfect kind of pullover but it gives you that kind of indication so now what's it gonna do well this is gonna increase the accounts receivable by the 815850 the other side uh then going to revenue for the 77770 and then the accounts table going up by the 38850 and then the inventory going down by the amount that was on there before because that was the cost and then the cost of goods sold going up that's the expense related to the to the purchase of the inventory the net impact and net income sales minus that cost to goods sold the sub ledger for accounts receivable broken out by customer also impacted for music stuff store the customer and the inventory sub ledger will be going down for the items that we sold as well and the billable report should be reduced for having for us having pulled over this billable item so let's approve it and then say all right let's check it out approved there's been an error just the only only nine items available to sell okay i'm going into negative territory on the inventory item so i'm going to add another inventory item i'm going to right click on the tab up top and duplicate it and they're not letting me duplicate it i'll go to the tab uh let's go to the tab to the right right click and duplicate that one and i'll bring that all the way over here to the left and let's go into our product so i'm going to go into the accounting drop down up top or the business drop down uh what was that business drop down that's the one i want products and services and i'm just going to add one more item so that we can record this properly so what am i on here we're on a GSB needs one more item so a GSB is this one and uh we have nine of them i need one more so i'm going to make an adjustment i'm going to make an adjustment and i'm going to say we want an increase in the quantity as of i'll just say the beginning of the year uh 2023 let's say the beginning of the year and the increase is going to be one uh increase quantity by one cost price i'm going to keep the cost there that brings the quantity up to 10 and then the adjustment account the other account i'm going to put it to i'm going to put it to i'm going to try to put it to another uh inventory account like a sub inventory account uh so that we tie out to our practice problem here so let's see if we can if they allow me to add another one i'm going to add another account as we go so i'm going to go to the tab to the right again sorry about this i'm going to duplicate a tab and i'm going to go into our chart of accounts up top accounting and we'll go into our chart of accounts because i have a negative inventory item in my practice problem that i would like to tie out to so i'm going to try to make another inventory account calling it 14 01 to have this amount go to the inventory so it'll be a negative amount in it so i'm going to say add 14 01 add account and the code is going to be 14 01 14 01 and the type of account is going to be could i call it inventory or i'd rather say just current asset because i'm not tracking the inventory in this account name i'm going to call it inventory adj account description tax exempt okay let's save it and then i'm going to go back to this tab and see if it lets me populate it this is going to be inventory and inventory no let me i'm going to go out of it and then back in so i'm going to x out and then go into the new adjustment it's going to be an increase and we're going to say this happens on let's just say january january first and quantity increase one the other side go into inventory okay i had to refresh the screen but there it is it's going to be adjusted to inventory so it's going to be basically increasing our inventory item uh adjusting to the sub ledger and then i'm putting the other side to inventory because in my worksheet i have actually a negative inventory amount there so hopefully that'll work out was save it and check it out the reference i'm going to be adj inventory and okay so post adjustment so let's see what that does if i go to the balance sheet then and adjust it now we've got the uh inventory which is tying out to the sub ledger and this inventory adjustment which has that negative amount in it so that i have 10 inventory items that i can record with this one now so i'm gonna go back to the first tab this is all because i messed up uh the practice problem of course uh so then i'm going to update this and say all right let's refresh the screen on this one or let's see if i could just approve it now and see if it can indicate that i have 10 there it goes so now i have the inventory there all right so it posted it so now let's go on to the balance sheet i'm going to delete this screen and update it and so now it was able to record the inventory so there's the uh inventory item and then if i tab to the right well let's check it out let's do the whole thing so we've got the accounts receivable went up so if i go into the accounts receivable and we scroll on down we're gonna say all right this one was music stuff store uh for the full amount here and then if i go back we're gonna go back and then the other side went to the income statement updating the income statement into the sales tab so if i go into the sales tab and scroll down and we're gonna say okay there's the invoice on this side but it's only for the sales price not including the sales tax back to the balance sheet the sales tax is going to be recorded in this account and then inventory the one i wanted to get into inventory is impacted for this account and then i have that negative inventory item because in my practice problem i actually recorded a negative inventory right so i'm going to go into the inventory and then check it out and so if we scroll down the inventory is going down by uh the cost music stuff store not the sales price scrolling back up the other side's going into cost of goods sold on the income statement and the cost of goods sold going into it and scrolling down we've got the music stuff store uh this one for the cost the net impact on the income statement is uh the rent the sales minus the cost of goods sold and then on the balance sheet we also note that the sub ledger for accounts receivable should tie out to this now so where did i put that aged accounts receivable updating that we've got uh anderson and music stuff store is now added so if we break it out by who owes us money these are the four people that owe us the 468 30 which ties out to what's on the balance sheet that looks good and then the sub ledger for inventory is going to tie out to this number hopefully so if i go on to the inventory update that report now we have sold all those out and notice in my practice problem the problem was i these are the ones we sold right i think i went negative i actually had a negative number on my practice problem and zero correctly is telling me i can't do that i can't have a negative number and that's why we had to make the adjustment so this 10296 ties out to uh the 10296 here and then in my practice problem i had a negative the inventory went negative which is like impossible to do and that's why we have that adjustment right there so there is uh so there is that one so that is it so let's go ahead and run a trial balance and see where we stand so we're going to go back up top and i'll go to the tab to the right and then open up a trial balance this was quite a trial of a of a practice exercise here with the inventory adjustments and stuff so let's go to the trial balance and uh let's run that one let's change the range customize in it 2023 end of it update it there we have it so if your numbers tie out to these numbers great if not the things we changed a lot of things changed here right we changed the accounts receivable we changed the inventory we had this inventory adjustment account which is kind of funny right and then we had the sales tax because we dealt with invoices and we had the sales line items and the cost of good sold line items change so if you had if you tied out last time and something is off this time it was probably one of those items you can then double check it by seeing if it's a date issue increasing the date range if something changes drill down on the change see where that date range is off and then change the range on the transaction