 Here we are in our custom zero home page going into the new company file we set up in a prior presentation that being get great guitars we're going to duplicate some tabs to put some reports in like we do every time right click in the tab up top to duplicate it right click in the tab up top again to duplicate it again let's go back to the tab to the middle I counting drop down up top we want to be opening up our balance sheet report as it is thinking I'm going to tab to the right I counting drop down again this time open up the income statement or profit and loss back to the middle tab hitting the drop down on the range we're going to have a custom range we're going to go to the drop down we want to have our own custom home on the range over here we're going to have it on December 31st 2023 and have it up to date up to date home on the range tab and to the right this one looks good for the income statement let's go to the first tab now and now we're going to imagine we're receiving payments for invoices that were issued in a prior presentation so remember the flow here I'm going to jump over to a flow chart this is a QuickBooks desktop flow chart but we're just looking at the normal flow of an accounting cycle and in essence the sales cycle which is this middle area remember that it depends on the industry that you are in so if you had a very basic industry like you just collect money from YouTube or something then you'd probably just have a deposit coming through the bank feeds that you would record as revenue once you receive it using the deposit form to record the revenue however if you have a cash register or something it gets more complex because although still on a cashed based system you now have to collect the cash most likely group it or the credit cards receipts and whatnot in such a way that you can deposit into the bank so that you have the internal controls of checking your cash register to your sales receipts and whatnot and that the deposits going into the bank in the same format that it will be on the bank statements so you can reconcile if you're in an industry like a bookkeeping firm a law firm where you do the work first and then invoice the client then of course we're going to enter the invoice and a lot of e-business is is going to need an invoice these days because that often is the form to facilitate the sales transaction when we email out the invoice so we've sent out the invoice now we're going to be receiving the payment so you can think of that as a deposit type of form that is going to be happening when we receive the payment now usually if you're in a system where you're getting one payment per invoice then it's usually fairly easy for us to then receive the payment and deposit it directly into the checking account so for example if you send out an invoice and you would expect some kind of electronic transfer or something like that and you receive the payment for that dollar amount of the invoice that goes into your bank account then we can record the receive payment as basically a deposit at that point in time however we could imagine more complex situations where we're we're going to get paid on the invoice or multiple invoices get paid for example or maybe they pay us through some other kind of payment platform like a payment port or a credit card or something like that and then the credit card company is going to be the intermediary receiving the payments and when they group the payments that actually hit our bank account they might have multiple invoices that they've received payment on and put one lump sum into the bank account so that's one of the common issues that come into play with our receivables in our sale cycle is the grouping of the money that's going to go into our bank account on our books in the same grouping in format on the bank statement so that we can do bank uh wrecks and reconciliations so in order to deal with that issue sometimes you might create an intermediary clearing account which you might set up another checking account for example to have a holding account that you can put your money in and then when it gets grouped either cash grouped together or credit card payments grouped together to actually go into your checking account you can then take it out of the clearing account and put it into the checking account in the format that matches what's on the bank statement so we're going to practice that middle step which can be a little bit confusing of a step and something you have to think through to see whether or not you need to have that middle step or not when you're at when you're at a cash register you can clearly see why that might be the case if you're collecting cash payments and or credit card payments right because if you're selling five dollar items all day long you're going to be collecting the cash when you go to the bank you're going to deposit not a hundred five dollar transactions but one lump sum transaction for the sum of the day's sales so that means that the bank statement's going to show that one lump sum and you would like your books to reflect the same thing so you're going to have this clearing account that can help you to facilitate that that process so let me show you let's see this in zero let's go on over what i'm going to do first is go to the accounting drop down and let's look at our chart of accounts and i'd like to add a clearing account which i'm going to set up as basically a bank type of account and it's the money that's just going to go in and out of the clearing account so that we can then group it if we need to into the checking account when it hits the checking account one other thing i just want to mention before we dive into that is the bank feeds you might think about how the bank feeds are going to fit into this you could try to wait till something clears the bank you invoice someone if they're going to pay you electronically you could try to wait till it clears the bank to then to then match the bank feed deposit to the invoice you could you could kind of test that out but again that will be difficult to do if for example you receive multiple invoices and whatever whatever platform is facilitating the sale like a credit card or something groups the payments together you won't be able to do that as easily so you're going to want to think how the bank feeds are going to fit into your system if you're invoicing clients because the invoice is a non-cash kind of transaction so we'll talk more about that when we get to the bank feeds uh course or section but just want to point that out all right so we're going to add a bank account here i'm going to add a bank account now it's going to make me try to connect it i don't really want to connect it i just want to add it so i'm going to say this is going to be let's just say chase i'm just going to type in an account but it's really just going to be a clearing account chase uh chase us all right that's just a bank so i'm just going to put something there so and then i'm going to skip the the check-in because i don't want to put up uh an account there account name is going to be the cash clearing clearing account you could come up with a more creative name like undeposited funds or funds to be deposited or whatever you want to call it and we're going to call it uh every day okay and then account number they're going to make me put something here so i'll put something there i don't know the code i want to use yet so maybe i'll just see if they let me post it without it and then i'll put it in in a second us dollars good save it and continue at poor five or so there we have it now i can look at the code which is the account number here so the checking account is one one zero zero so it should probably be under that so let's say one one one zero let's say i'm going to edit this and put a code one one one zero for the account number code and i will say uh let's save it and this it's i put the day to day i think it's good there okay let's save it so there we have it all right so now we're ready to go we can now collect on the invoices so we entered invoices last time we could track the invoices by hitting the drop down uh up top and i go to invoices we can also track the invoices under the contacts but this is kind of our list of invoices if i go to this tab these are the invoices that are awaiting payment so we expect to be paid in whatever format we're expecting payment now this is the format we expect payment gets a little confusing these days because you might be expecting electronic payment they might send you a check you might give them multiple options to pay you you might be using other platforms to help to facilitate the payment so whatever the process is you're going to need to make sure that you're able to track the receipt of the payment obviously and then when it's going to be hitting you know the checking account and then we're going to record the received payment here which will decrease the accounts receivable and the other side is going to go into the in our case the clearing account and then we'll put it into the checking account from the clearing account so we're going to choose the payment here now we're going to be picking uh mr anderson so we want to make sure that we're in the awaiting payment you could actually go into it here if you just have a payment on one of them and then down below where it says receive payment you got the amount paid the date uh the paid to and we're going to put it into our clearing account where you can put it into the checking account and reference number so that's one way that we can do it the other way is possibly a little bit faster and if you had multiple amounts you were receiving for example if I had multiple