 QuickBooks Online 2023 Progress Invoicing Example Number One, Enter Project Expenses and Progress Invoices. Get ready to earn the skills needed to boost your bank books on up with QuickBooks Online. Here we are in our QuickBooks Online Test Company file. We started up in a prior presentation. We also have open in and incognito window the free sample company file. If you want the two open at the same time, we suggest using incognito window, which you can open if using Google Chrome by selecting three dots in the browser. New incognito window typing into the search engine. QuickBooks Online Test Drive looking for the result that has Intuit.com in the URL. Intuit being the owner of QuickBooks. The sample company being useful, allowing you to enter data into the sample company to test without having to put that into our test company file on the left hand side. And it allows us to look at the differences between the accounting view, the one that our test company file is in, and the accounting view, the one that the sample company is in. If you want to be toggling back and forth between those two views, go to the cog up top and then switch the view down below. Now I'm also going to be opening up a few tabs to put our financial statement reports in. Now that we have data in them, I generally do this every time I right click up top, duplicate the tab so that we can open one of the 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 favorites. Then I'm going to right click on it again, duplicate it again. I would like to open up the balance sheet and the income statement back to the tab to the left reports on the left hand side and then I'm going to go to the balance sheet and then I'm going to put this from let's say 070125 to 123125 running it. And then on the right hand side, I'm going to go to the reports again. This time the income statement or profit and loss report close the hand boogie change the range 070125 to 123125. I would like to see this by month. So I'm going to break it out by month and then run it. By the way, if you're in the business view, the reports are located in the business overview on the left hand side. And then the reports on the left hand side balance sheet and the profit and loss reports located there. So last time we said that we have our project that we set up. We made an estimate for the $100,000 project. And then we basically sent out the prepayment that we used the process billing for at the 10% or $10,000, even though we hadn't done any work at that point in time. So now we're going to continue with this process and we're just going to be billing as we schedule as we told the client that we're going to be billing. And we're going to be recognizing the costs on the job as the cost of the job come up. And we're not going to worry about the revenue recognition kind of a disconnect type of thing between the two, although we'll point it out. And then we'll in a second presentation, we'll get into some more detail on what we might do to remedy that situation. All right, so let's go back on over. We're going to say, okay, I'm going to go back to the first tab. And we've been working within our projects over here. So we set up our project number one. Let's go into project number one. And then let's pretend that our first, our second month has happened. So we're going to say in month two, that's when the job actually starts. And we're going to say that let's not highlight this side. We're going to say that we have 1318 in actual costs. So let's put those into the system. So we're going to say, all right, normally that would be like an expense type of form that we would be paying for stuff. Usually we would have multiple expense forms that we would be paying to multiple vendors that would basically be grouped or categorized under our main buckets when we have a project or job of overhead materials and labor. But I'm just going to kind of group it into one. I'm going to make a generic vendor that's who we're paying. And I'm going to say that the payment account. I don't have my cash account set up. So I'm going to set up a cash account. So if you don't have a cash account here, I'm going to say add account. And this is going to be a bank account. And I'm going to make it my checking account. So I'm just going to call it checking. And then I might just put like the last four digits of a of the checking account number or something like that. If I had multiple accounts for internal accounting purposes, but I'll keep it at that. So I'm going to then save it. So there's our payment account. I'm going to put say that this happened on the second month. So I'm going to say 081525 because we're working in 2025. I'm not going to put a tag. I'll put project one on all of them to track the tags. And then I'm going to say that we could do it by category now. And this would assign the expense to a category, which if it was for a project, you would expect it to be going to like a cost of goods sold category or a work in process kind of category. But oftentimes we assign them by items because the items can can help us to assign things out, help us to purchase things like the material and possibly allow us to pull the items over to an invoice if we're using that billable component. So we've already set up the items. I'm going to put in the generic items of materials. I remember you normally you would have multiple kinds of materials you might be purchasing that would then be going to the account of, you know, materials as a general bucket of expenses, which would be a cost of goods sold type of account or something like that. But I'm going to group it into the generic bucket of materials. I'm just going to make three items that add up to that 13 amount. So let's say that this was 6000. I'm not going to make it billable. So I'm not going to make it billable. This customer job would be there if we made it billable, but I'm not going to this time. We'll see that later. I will assign a class to it, allowing me to break out the income statement by class, which is nice. And then I'm going to say that we want labor. This is another item that we set up, which will be basically going to the cost of goods sold account for the labor. I'll make this at 4000. I'm not going to make it billable. Therefore, we don't need a customer or project. We'll talk about that later. This also going to job number one. And then I'm going to say overhead, which is the item we set up before the three main buckets. And I'm going to say that this is going to be for the difference, which is 3018. So 3018. Not going to make it billable. Also going to job or class number one. So the total adds up to the 1318. This is an expense form, decreasing the checking account. The other side being assigned by these items, which are going to basically going to go to cost of goods sold. So I'm going to say, all right, let's save it and close it and check it out. So now we have the costs assigned to our project in our project summary over here, net profit. So basically a little income statement within our project, which is great for that individual project. But I would also often like to see the projects kind of together or an income statement broken out kind of by project. So I could then go up here and say, let's look at my balance sheet. I'm going to run it again. Notice if I could hit the total here and run this by classes. And it gives me a breakout of the class over here, but not all the balance sheet accounts will be broken out by class right now. We just have basically the net income that's being broke out by class. So then if I go over here and then I say run this again. So now we didn't recognize revenue, but we have the expense, which is now being happened. The expense happened in August and we just assigned it to cost of goods sold because those are going to be expenses for the job. Now notice if you're doing a percentage of completion type of thing or you might put the traditionally you would put the costs into like work in process on the balance sheet. And then, you know, expense them. But if we're doing a percentage of completion, we might basically expense them as they happen and then recognize kind of a percentage of the revenue. Also, you might break out the cost of goods sold through multiple categories of cost goods sold cost goods sold for labor cost goods sold for overhead cost goods sold for materials. But we're just going to group everything into cost of goods sold here. So there's going to be our revenue that has been recognized. Now note that I'm going to right click and do another. I'm going to duplicate this again. Right click and duplicate. I'm going to close up the hamburger over here and note that we can also hit this dropdown and break it out by class. So if I break it out by class, run it. Now I've got only one class right now. But if I had multiple classes, this could be quite useful because it's going to it's going to give me not only the information per class, but also the total on the right hand side, which so that those classes are redundant because we already have it in projects. But the ability to break everything out by class can give me a double check on the numbers and can run a nice report that breaks everything out by classes. Now if you don't have the capacity to use classes or you're using classes for something else already, you could do a similar thing with the tags. So I can go to the tags over here. And so now I've got my project here, but it doesn't give you that nice total at the end. So it's kind of similar tags are like a little bit let a tear down from from doing similar functionality as the classes. So so if you don't have capacity because you're in a lower software that doesn't have the classes, you can try to use the tags in kind of a similar format. Or if you're already using classes and location tracking, then you might use tags for like a similar kind of thing. All right, so then I'm going to go back to the first tab and let's imagine now now note that if we recap things here, the way we got that 100,000 estimate was probably something like we estimated the cost of the job. And then our profit on the job, which we said was another 30% of the cost right another 30% and that's where we got the 30 that gets us to the 100,000. So if we were trying to recognize revenue kind of as we go on the job recognizing, you know, the progress in terms of costs, then we could we would do a ratio or some of something like this. This is what we've actually paid for at this point in time the costs we've incurred divided by the total estimate that would mean that we had more basically 16.92% done. So that would mean the revenue that I would recognize if I was on like a trying to recognize a percentage of completion recognize as we go would be something more like the 16.923 times the 100,000 right. But what we've recognized in revenue so far is the 10,000 just based on the billing schedule and we recognize that before we even you know paid for anything yet right so that you can see the disconnect between the billing and when you might recognize revenue on a and a revenue recognition. So we're going to continue with with the separation between the two and then we'll take a look at the differences later. So let's take a look at the next billing item is going to be in next month. So I'm going to say let's say that happens in month three, let's actually record the billing. So I'm going to go over here and we'll say okay let's go back and we're going to go into our projects. Now let's actually record the receipt of the payment and then we'll record the next the next billing that happened. So I'm going to say okay let's go drop down and let's say we received a payment. So now we're going to say project number one and let's say this happened on we let's say this happened actually on 707 1525 and we got paid by the client for that original deposit that we sent out and it's going to go into the account for this invoice and so let's go ahead and say okay save and close. And if I go back over here to the balance sheet what happened goes out of accounts receivable and and into the checking accounts if I look at the checking account. So now we see the payment that we received we have negative still because the expenses were greater thus far. Next thing we're going to be back in our projects over here on the left and we're going to say now we had another bill invoice that we're going to be sending out just according to our invoicing schedule. We can pull that in from our estimate using the progress invoicing and we're just going to say hey look next time the next estimate we had was the 25% 25 so I'm going to pull in 25%. And then it's going to pull in nicely like per line item so it gives us a nice breakout between materials labor and overhead that we just kind of made up so that we can see those different line items. And then I'm going to say this happened on 080125 for the invoice it's going to go into project one all the classes are going to be lined up. This is going to increase accounts receivable and the other side is going to go to revenue of the 25,000. Let's go ahead and save and close it. And so now we've got income at the 35,000 if I go to my reports here run it. So so now we've got accounts receivable went up for the 25,000 and the other side went to revenue if I run the profit and loss by date. Now I've got 25,000 recognized in August the second month. Now note again over here, you would think if I had revenue recognition, I should recognize something like 16 and then 25 instead of instead of, you know, instead of by the billing process 10 and 25 here. So then I'm going to say, OK, let's go back on over. Let's say that we received we're going to receive and if I look at my breakout by class. So now we've got our breakout by class here. We only have one class so far, but you can see the idea. So if I go then to the first tab, let's say we've received payment on that one. I'm going to hit the drop down and say we're going to receive payment. And on project one, let's say this happens 15 days later at 15 they pay us time is passing time is flying. So we're going to receive that payment. This is going to reduce the accounts receivable and increase cash. So I'm going to save and close and then go over here and say, OK, balance sheet. The accounts receivable goes back down and it goes into the checking account. All right. And then let's say that we're going to have expenses for for month number three of 19 527. So let's record those expenses. Next project happens. I'm just going to do it with one expense form again. And we'll say this goes to vendor one. These are expenses for the job on this is going to be on nine one. Let's say actually wait a second. This needs to be on the same date. Let's bring it back down to eight 15 that were the job that we're OK. So these are the expenses for that time frame. Now it pulled over the same stuff from the last time, but now I've got new numbers. So what I'm going to do is I'm just going to change this to be something like 10. Let's say this is 10,000. I'm not going to make it billable. And then this is going to be, let's say 10,000 not billable. That gets me up to 20. And actually, let's say this is let's say this is 9,000 9,090. That gets me to the 19 and then in the overhead will say 527. So 527 overhead, not billable, not billable, not billable. OK, so this is an expense. It's going to decrease the checking account. The other side is going to go into the cost of goods sold because these items are telling it to go to cost of goods sold. So let's save it and close it. And then I go back on over here. We can run it. So checking account goes down. The other side's going into the expense and the expense here for August. So I should have done it. So that's, yeah, I should have done it for the next month. I think my expenses are off. I had two in here for August. Let's go back in here. Check it out. Yeah. So this one, let's let's change the date to the next month here. I'm going to go back and drill down on this one. And let's bring it up to 915. All right. Then I save it and close it. So now if I go back to my reports. Hold on. I don't want to save it. Exit and run it. So now my expenses are in the next month as they've been incurred. Right? OK. But so that would mean that you would think I would, if I was doing my percentage of revenue recognition that I might recognize something like 25385, but I'm only recognizing revenue basically as the billing is taking place. Let's continue on with the last two, just so we can see this play out and see that, see what that difference looks like. I'm going to go, OK, let's do the fourth one. And we're going to, we're going to bill for it on the next month. Back on over and say, boom, invoice for the next month. And I'm going to pull that in from here. This one's going to be 30 percent, 30 percent. And I'll pull that in. Pulls in nicely. And I'll say this is as of nine, one, let's say. And then 090125. I just did that and then it did that. All right. And so then that pulls in nicely for the 30,000 increase in accounts receivable. Other side going to revenue. So I'm going to save and close. Check it out. So we've got then the balance sheet accounts receivable going up. Other side going to the profit and loss revenue being recognized in September because that's when we build it. And then if I look at it by class, there's our breakout basically by class. All right. Back to the first tab. You know, actually, if I tie this out to my little worksheet here, I should have recognized the 25 and the 30 a month later. This 25 I should have recognized in September and the 30 in October. I'm going to go ahead and just adjust that. I'm going to August and I'll go in here and say this needs to be a say September. So we'll bring that up to line this up and then I'll save that save it. And then I'll go back on over here and then in September. The second one here needs to be, which I'm going to click on one of the $30,000 one needs to be the next month over in October. October. Let's bring that up. So there we have it. And then I'm going to say save and close. All right. I think that lines up. So let's say exit run it. And now we had our billing schedule was July month one. And then we didn't have any. And then September, October, I think that kind of matches our billing schedule over here. And then the expenses happened in month two and month three, which is August and September. So you could see some mismatching between revenue and the expenses, which is kind of the issue from like a, like a revenue recognition principle, because we've kind of disconnected these two things. Okay. So then let's go back on over. I'm going to recognize my next expenses at this 14201. So let's go back on over. And that's going to be for October. Let's go back to the first one. See if I can line this up properly. And we'll just do this again. Let's make this October. I'll put this now so I don't forget October, October 15. Let's say, and then this is going to go to project. And we'll do the same thing down here. I'm just going to say this is going to be materials. Boom, boom. And we'll make up a number that'll line up to that. Let's say, let's say 10 for the materials. Boom. I'm not going to make it billable. Class is going to be class one. And then I'm going to say labor is going to be for the four, four thousand, four thousand, not billable class one. And then we'll say we've got the overhead overhead and wait, not 40,000, four thousand. All right. And then that's going to be for the 201. We'll say 201. And again, not billable, not billable class. Boom. And this will, this will decrease the cash account. The other side going to cost a good sold. Save it and close it project. We can see here cash account goes down next tab over running it. Now we've got October. Our cost of goods sold 14201. If I look at the income statement by project, it's all lined up in this one project. Okay. So then let's do the last one. Month number five, I'm going to bill out for the next month in November, 35,000, which is just the end of our billing process. So I'm going to say, all right. This is going to increase. Coming from the estimate this time. Instead of putting a percent, I could just take the remaining amount, which of course is the 35,000 and just pull that in. And we'll say, okay, boom, boom. This is as of 11, 11, one, let's say. And so there we have that 35,000. This is going to increase accounts receivable. The other side going to go into the revenue, save it, close it, tab over running it. So now we've got accounts receivable going up. The other side going to revenue or run the revenue. There's the revenue and we don't have any expenses yet tab to the right and run it on our class by class. And then let's do the last expenses just to match everything out expenses. This is going to be for November, let's say November 15th or so. November 15th. It's going to go to vendor one. Do you want to pre fill? Sure. Vendor one and this time it's going to be adding to the 30,000. So let's say that it's going to be 15,000. 15,000 and then 178. We'll say 178. Make it unbillable, unbillable, unbillable. Class is applied. Cash goes down. Cost of goods sold is the other side assigned by these items. And then if I go to the test company, run it. There we have this and tab to the right. Run this. Something went wrong with that one altogether. Let's go back in there. 150. That's not right. There's an extra zero. Should add up to 30,178. All right. Now let's save it and close it back. Run it. Okay. So there's our 35. There's our 31 78. And here's our issue here with again the revenue. Not really lining up to a recognition concept. So, so, so to deal with that, you could run basically your projects like this, for example, and bill as things happen and possibly make adjusting entries to your jobs report so that you can kind of separate the, the stuff that the bookkeeping department does to external reporting, possibly for taxes or whatever. And we might just have to make a year end adjustment or something like that to properly recognize the revenue on the open jobs and have your beginning jobs kind of line up. So that's one option, or you can, of course, adjust your process to be more on a, on whatever method you're using, like a percentage of completion method as you do the data input. So once again, here's what we've got on the balance sheet. Let's go ahead and just receive the accounts receivable just to close out the AR. So I'm going to say, let's say receive payments. And I'm going to say that we're going to do that on 1117. That's five. I'll receive these two invoices, reducing the accounts receivable, the other side going into the cash account, save and close. So at the end of the day, we can kind of see here that on the balance sheet, we don't get this real breakout between the class tracking because the checking account and the accounts receivable don't really break out unless you're in a versions advanced of pro plus, but that's okay. We might see it in other balance sheet accounts. We'll take a look at later. The income statement breaks out here and we can see our totals for the checking and the accounts receivable with the profit and loss by, by month. You can see the issue with the revenue recognition being different than like a percentage of completion or complete a contract kind of concept, which isn't an issue. Once the job is closed, it's a timing issue, which is usually the biggest problem at the cutoff dates, which for small companies might only be at the end of the year at the end of the year when they do taxes or something like that. But for large companies, you might have to report monthly and quarterly, which means you've got these cutoff dates where you have to make sure that everything's properly reported on whatever method you're using, you know, more, more often. And so, so, so you might adjust this using a, using an adjusting entry into the period method for smaller companies that might be easier. Or again, you can adjust it by using a different concept, which we'll talk about later. You can run it by a job here so that you could see each job. We only have one job, but it gives you a nice little income statement, which kind of sums up over here similarly in the project where you've got income minus the cost and the profit. You can also run the project reports. So if I go to report by project, I can see profitability by project. And you might say, look, this is redundant. This here to the profit and loss by class because the classes are being assigned per job in essence. That redundancy, though, can give us a double check. And the fact that we can run this by class and it gives us a total at the end for all classes and not just for the one particular project can be useful when we're trying to figure out our total job cost kind of system. You have some other project reports that you can kind of do that with, but they're not quite as comprehensive sometimes. So if I duplicate this over here, for example, and I go into my reports, you do have a project, project profitability summary report, but you can see it's not quite as robust 25 to 12, 312, 3125 as the classes report. So those are some of the options in our issues. So now we're going to do some alterations with a similar kind of problem and try to see if we can address some of these timing issues basically as we do the data input.