 Here we are in our QuickBooks online test company file using the account view as opposed to the business view. You can toggle between the two views by going to the cog up top and switching the view down below, duplicating some tabs to put reports in like we do every time. Right click in the tab up top to duplicate it. Right click in the duplicated tab to duplicate it. Back to the middle tab, reports on the left. We want that balance sheet report. Go into the tab to the right, reports on the left. This time we want the P and L, the profit and loss report. Let's scroll up, close the hamburger, change the range. This time let's go from 0401 and let's go to 24 to 053124 and then we'll run that one. Nothing's in it. That's thus far. That's what we want. Middle tab. On the hamburger, the same range. We're going to go from 0401 to 4 to 053124 and run that one. Let's tab to the left. Now we're going to imagine ourselves in that e-commerce situation selling inventory but not on ground in a store but rather online in the cloud with the help and use of third party applications. For example, being like a Shopify or an Amazon. Prior presentations, we talked about decoupling the sales side from the inventory side using a periodic instead of perpetual inventory system and we thought about how to pull in the revenue side of things. Now we're talking about the inventory and cost of goods sold side of things. Last practice problem, we did a cash based system where we're trying to just expense the inventory as we purchase it. Now we want to do a flow assumption and we're going to be using an external worksheet to help us with the flow assumption. In other words, the third party platform like the Shopify or like the Amazon will possibly help us out to know the number of units that we currently have on hand meaning the units will decrease by product as we sell them and we're going to have to increase and make sure to track the units on the store front in essence so that we can logistically meet the needs of having the inventory necessary to cover the future sales. However, usually we don't have the capacity here to then value it in terms of dollars and figure out the cost of goods sold and whatnot because that usually takes a flow assumption of some kind. And then on the QuickBooks side of things, we're not going to pull in all the data so that we can do a perpetual inventory system, but rather we're just going to adjust our inventory periodically possibly at the end of each month would be a common type of system. But to do that properly, we really would need to have a flow assumption like a first in first out or weighted average. We're going to start with a first in first out type of flow assumption and we'll just build it in our Excel worksheet. So here's going to be our Excel worksheet. We'll do a similar kind of set of processes where we purchase items that we did on the cashed based system, but then we'll periodically deal with the cost of goods sold at the end of the months. For example, all right, so let's format this worksheet. I'm going to put my cursor on the triangle, right click and format the sales and let's go to currency bracketed negative numbers. Let's go no dollar sign. Let's keep the decimals this time. So we'll be dealing with pennies this time. We'll close this out. I'm going to zoom in. I'll put my cursor up here to zoom in to make sure I'm still on a one. We're at 235. So that looks good on the zoom in. Now there's a couple of different ways you can kind of put together like a first in first out flow type of schedule. This is one method that I'll put together so that we can try to track it in a table format that hopefully we can sort quite easily and just add data to as we go. It's a little bit tedious. Most inventory methods are, but it works here. So let's check it out. I'm going to title it first in first out. And that's otherwise known as FIFO FIFO is the method that we will be using. And let's go ahead and make this black and white as is our headers typically. And then I'm going to put my headers up top date in. I'm going to call this the total dollars be bought. These aren't maybe not the best descriptions on some of them, but description let's call this product. And this is going to be the units in and unit price. All right, so that's going to be the amount of the items that are coming in. I'm going to color these like differently so we can see the difference between the two. So I'm going to select these and I'll make this a green, for example. Let's do it like this and maybe green and white. And then over here with the with the amounts that are going out when we make sales, we're going to call it the date out total number sold units out and then cost. And that's going to be when we're selling the items, which will figure out on a periodic system, not as of each sales item, which we'll talk about shortly. Let's make that a different color. Let's make that like this color is like brown or orange is brown. And then I'm going to call this the unit balance and ending inventory or something like that. Let's make these blue and I'll go here and make this like a dark blue, maybe something like that blue and white. Let's check the spelling on it and it's spelled correctly spelled check must be broken. That can't be right. Let's go ahead and highlight all of these. Let's wrap the text. So I'm going to go up top home tab and alignment, wrap it and then I'll center it so that we can see these items more clearly. So that looks pretty good for a starting point. So this first half is going to be on the purchasing side and then we're going to count our inventory periodically and record the cost of goods sold or sales of the decrease in the units and then we'll have our unit balance and our ending inventory in dollars is the general idea. So let's kind of build this worksheet as we go and we can kind of think through it as we go here. So if we go through the same thought process, we would be saying, okay, here's my Shopify store. I've got my products. I'm going to buy the products that I need. I'm going to look for the number of units that I think are going to be necessary in order to cover the sales. And let's say we start off with the number of units that we think are necessary at what did we say, product one, we're going to buy two of them to start off with. So this is going to happen on four one. I'm going to have to format this date sale in a date range again. So I'm going to put my cursor on the A column. I can go to the number group and format it with a short date this way. But I like to right click and I'm going to get rid of the year so I can make it a generic problem and format this. I'm in the date area and I have this three, four without the year. That's the one I'm going to use. And so I'm going to say this happened on four one. And let's say the total purchased, we're going to say two. I'm just referencing the total that was purchased because I'm going to put them on the books one at a time. But I think this kind of helps us to see the grouping of when the purchase has happened. So in other words, this is going to be the product, which is going to be, I'm just going to call it product one, very generic. And then I'm going to say that the units are always just going to be one. I'm just going to put them on the books one at a time. In other words, we're just going to put them on the books one at a time. And actually I don't think I need the decimals. Let's select the whole thing and remove the decimals. I think I've rounded everything. It won't let me do it anymore. Let's select these without the date range and remove the decimals that might clean it up a little bit. And then the unit price I'm going to say is 20. Now instead of multiplying out the 20 times the two units, I'm going to put them both on the books because that's going to help us to filter a little bit more easily. So I'm in essence just going to copy this and put it down here to show that we bought two of them at the 20. So we paid a total of the $40. So this will make more sense once we start to get into the sorting side of the problem.