 So now I'm going to go back on up and say invoice and Say let's say this is customer number two again And so this is actually a fairly complex transaction that this records now And so what's this going to do when we when we record the sales tax? It's gonna there's inventory involved. So there's a lot going on. It's an invoice. It's going to increase the Accounts receivable it's going to increase the accounts receivable by the full amount including the sales tax Let's make it the generic five generic five Including the the sales tax to 130 125 revenue is going to go up by the 125 The difference is going to go into the to the sales tax payable of 625 It's not going to hit the income statement. That's kind of weird because you can see you can imagine it Why don't I just record income as 131 25 and then when I pay the sales tax I record a sales tax expense because the sales tax is not in theory subject to you your your business It's it's you're just a collection agency. It's not part of your revenue And it's not going to be part of your expenses. That's the idea It's going to go on the it's going to go on the on on up a balance sheet account and then also Inventory is going to go down by I think we said $50 the amount that was driven by the item here for the cost and We're going to have the cost of goods sold go up the net impact on net income will be 125 minus the cost of goods sold at Which I believe was the 50 and we also have a sub ledger for for the customer to Which will track the accounts receivable that will need to collect in the future and a sub ledger for the inventory item Now because we're tracking it on a perpetual inventory system tracking it by unit So let's save it close it and check all that out and see if that is indeed the case going to the to the balance sheet Running it and then scroll down. So now we've got the accounts receivable. So if I go into the AR There it is and that's for the full amount of Hold on a second. That doesn't look like the right one. That's not the right one at all Let me change the range up here. Did I put it in for 2023? 2023 Boom There it is. Let's bring that back to 2022. I'm gonna change the date going into that one Let's bring this back. You're too far in the future. You're too far in the future. We're working in the past man So there let's do that. Let's save it All right, so there it is 131 25 going back the other sides on the income statement Running it. So now we've got the sale of product going into it There is the 125 scrolling back up the other side is in The sales tax and this is where our focus is of course where they put this long account name California Department, that's because you might have multiple sales tax You would think you would just call it sales tax payable a liability because you owe it in the future But they put this long name because you might have multiple people that you might be paying the sales tax to you there's the 625 and Inventory is going down So inventory went up when when I added like the beginning balance of inventory and then it went back down by I believe this 50 this one right here that one right there So scrolling back up and then the cost of good sold over here on the income statement is Affected and we're also tracking the inventory and the sub ledger for the customer So the point is the main point We're looking at of course is the fact that I had to enter an invoice or sales receipt and the item in order for me to get this This payable to track the payable that I'm in the future going to then pay With the sales tax widget so we can imagine after a month or after a quarter or after a year We're gonna have to take the money that we collected from the sales tax Which is going to accumulate in the liability account. We'll use the sales tax widget over here, which is going to be in the sales tax area to then pay the sales tax using using the pay the sales tax which is a little bit difficult to kind of view in real-time because I Mean it's difficult when you're trying to do it like in the past in a practice problem because a sales tax Runs kind of real-time, but it'll generate a check when you have an amount that you owe here You can generate a sales tax check based on you know, what you owe and that will decrease the sales tax Here when you pay it so the point is if I if I look at my flow chart over here I have to then Enter my sales tax if I'm gonna use that widget method the whole cool little widget thing within quickbooks I have to enter my sales using items using Invoices and sales receipts because those are the things that help me to track the sales tax So I can't really just wait till something clears the bank if I want to use that cool little tool