 QuickBooks Online 2023 Progress Invoicing Example Number 2 Close Project Zero-Out Work-In Process and Billions Account. Get ready to earn the skills needed to boost your bank books on up with QuickBooks Online 2023. Here we are in our QuickBooks Online Test Company file. We started up in a prior presentation noting that we're in the accountant view as opposed to the business view. You can toggle between the two views by going to the cog up top. Switch the view on down below. Duplicating some tabs to put some reports in. Right-click on the tab up top to duplicate it. Right-click on the duplicated tab to duplicate it again. Back to the tab to the middle. We're going to go to the reports on the left-hand side. Open up the balance sheet report. Tab to the right as it's thinking. Reports on the left. This time we want the P to the L. The profit to the loss. Closing up the hamburger and changing the range. 0-1-0-1-2-5 to 0-6-3-2-5. And let's see this at a month by month break out so we can see those timing differences we've been focused on. And they are beautifully timed with regards to the revenue and the expenses and the proper time periods. Let's 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. Go to the tab to the left and close up the hamburger and change the range. 0-1-0-1-2-5 to 0-6-3-2-5. And let's see this one on a class breakout. It's okay without the classes. But it's just leveling it up when you have classiness involved in it as well. And so let's go to the tab to the left and we're down to the projects on the left. We're in project number two. Recap in an Excel format of what has been done. We started out with an estimate. Based on that estimate we came out with a billing structure. The billing structure is not according to what actually happens but according to the pre-assigned billing structure we're going to be charging the client. We charged them a starting point of the 10,000 basically deposit. And then we had the actual items that took place broken out between materials, labor and overhead for what we did. And we recorded those in the format of cost of goods sold and figured out what our revenues should be on more of a complete percentage of completion type of basis. So that we can then record our revenue based on these items as opposed to on our billing items. And we did that through our whole process here and now the job is done. And we can see that because our revenue is now at the 2377 which was our starting kind of projection for our revenue. And we have then our working process and our billing's account tying out here for the most part it being off by rounding a difference of a rounding. So now all we need to do is close this job out at this point in time. And from a journal entry perspective that's quite easy. I could just zero these accounts out. When we look at this same thing on the QuickBooks side of things. Note if we had multiple jobs in play it becomes quite nice on the balance sheet that we have it broken out by class this way. Because the classes give us that nice breakout. So if I if I change this to 1231 25 for example and I had multiple classes and then I can see this working process broken out. So I could see you know that quite clearly that they you know that we're done with it. And if I go into it if I didn't use the classes I could do it this way as well. Here's my detailed report that I could break out by customer. But remember that if you do it this way you would need to make sure that you have the customer names which is another reason that the invoice is a nice form. It's nice to use an invoice as opposed to a journal entry because the journal entry might limit the kind of naming structure over here and we'll take a look at that shortly with this last bit. So I'm going to go back on over and so let's record it with a journal entry and then we'll go over and do it in QuickBooks. So I'm going to make another blue section for that last journal entry down here. And it was so even before but now I got this one last bit hanging down here whatever. And this is going to be on five five thirty one we're going to close this thing out. And I'm just going to say that working. Let's do the billings needs to be debited did did did did did did did debited by one hundred thousand. And the whip the work in the process is off by like a rounding difference one oh oh oh one needs to be a negative for the credit side of things. And that'll basically balance take this balance down to zero donut it out at the zero. So let's go into the billings first I'm going to say F2 plus F2 and just zero this thing out. No effect on the income statement billions down to zero movie B to the end and then in the work in process the other side of things F2 plus F2 and roll it on down. Work in process and it goes to zero so that so now that everything's closed out and basically the job's done. There's our our checking account which matches the the net income we're off by rounding difference here so that's OK. That's why we gave that rounding range for our greenness down here and then the twenty three seventy seven which is our profit matching. What's in our checking account because we've only been recording transactions for this one particular job which of course matches our estimate that we had over here because we made it all work out. Perfectly in that our expenses matched exactly to what the estimate is now in practice you might have a difference of course between the actual expenses that you'd have to adjust for kind of like at the end or as you go. But we don't want to get into I just want to look at the revenue recognition at this point in time maybe we'll get into more detail with that in a future problem or something. But so let's do that over here now we now naturally you might say the first form to use would be a would be a journal entry and you could use a journal entry. However like if you're trying to sort like we saw with this account by by by internally by name it can cause a bit of an issue and it might not be as easy to see if I go over here in customer number two and look at the detail. These these these items are usually going to be populated when I use forms. So let's do it with a journal entry and then I'll delete it most likely and I'll do it with like an invoice so we can see kind of the difference. So I'm going to say it would be most natural to someone like me who is I learned accounting before software to say I'm just going to do everything with a journal entry right. Even though that's not usually the best practice because there's a reason that the software is designed to do stuff with the forms. So so I'm going to say in any case if I did it with a journal entry I would just go OK. There's a debit here this this Billings needs to be debited just like we did Billings debited by 100,000 and to close out close out out job number one number two. And then the name I do have a name field here which I could put the customer and output project to and hopefully that will show up in the name field but I have some doubts that it'll do what exactly what we want. And I do have the class tracking ability which is nice so I could still assign each line item to a class which will be helpful with the journal entry. And then the other side is going to go to with work in process work in process work in process and that's going to be 100001.2 100001.2 and the name also is going to be project to and the class is going to be project to to close out this thing. So that should do it in terms of of the journal entry but let's see if it does everything we would like. So please balance it's not in balance. Okay I'm off by that and so the difference I'm just going to put the cost of goods sold of the two of the 110 because it's in material. I want to put it to an income statement account so that it'll close out and wash out in the closing process. Instead of being on a balance sheet account where it'll hang around right I wanted to disappear because it's in material let it wash out to retain earnings or capital account or equity or whatever. So save it and close it and then we're going to go to the tab to the right and run it and so now it's nice and closed out and the billings account is closed and the billings and work in process. So if I go into the work in process however and I try to sort this by name notice that name field isn't there. So so so it's I still if I have the class tracking that might not be a problem because I can kind of break it out by class up here. But but if I go in if I'm trying to sort in here then I don't have that name field so I can't really sort it by customer which is kind of like I might want to do that because because there's no there's no customer name here although it did still sort by the project I think for customer too. So that might not be a problem so that that could work I'm going to go back and then the other side goes into the work in process same kind of thing. So now it's in here as a journal entry no name if I wanted to sort this way by customer then I think it's still pulling in there by by customer even though there's not a name there. So that might that might be OK I'm going to go back on over if I go to the first tab. The other thing to kind of test out is if I go to the left side over here and I look at my sales information for customer number two. And I look at all my all my transactions the the journal entry doesn't really show up here so I don't like if I'm looking in this area I don't really see the journal entry that closes out that job and maybe I want to see that over here so that might be a reason why I might want to use a form. So let's just do that I could I could use a form to do that so I could go back I'm going to go back into where I was I was in the sales are kind of jumped around off screen here. So so I could go like I could go back in here and let's delete what we did and just try to do it with an invoice because all of this stuff that are in these two accounts are done with an invoice. So I can do this journal entry with basically an invoice just like we did with the other stuff. So I'm going to say let's close this out and I'm going to delete it delete it get out here thing we're going to do it a different way and then go back on up. And so now it's back is reappeared is reappeared has reappeared just like that pimple that I've got on my nose anyways. Now we're going to let's do it now let's do the same thing but with an invoice we're going to say it's an invoice. And let's say that this is going to be for project number two and it's going to be 530. And so if it was an invoice I'm just going to use this like a journal entry now. So usually accounts receivable would go up and the other side would be going to to revenue driven by the items over here. But what I want to do what I want to have happen is I want the work in process to go down the billions account. So if I think about it we're going to say accounts receivable would normally be debited. And so the credit I'm going to say is going to work in process. So this is going to be my work in process thing. And that'll be the positive number of just the straight or 1,0001.2 1,0001.2. This is going to go to class number two again and then the other side is going to go to the billions. Hopefully I went the right way. If not, then I'll just go back in and fix it. It's not a big deal. Don't have to stress out about it or anything. Don't get crazy if I'm doing it backwards because I'll just go back and fix it. So there it is. And this should be negative. So now what's this going to do? Well accounts receivable is not going to happen. And then I got that two cost of goods sold. I got to take something to cost of goods sold. So let's make another item. Let's make it a service item. It's going to be close out to cost of goods sold item. Just to zero this thing down. It needs to go to the cost of goods sold account. Just to zero it out because it's immaterial. This is immaterial. It's not significant. So we're going to say OK. And that needs to be for the 1.2 class two. I went the wrong way with that. This needs to be negative. OK. So that should do it right. Right. All right. Let's save it and close it and see what happens if I go to my report over here running. Now it closed it out again. And then if I go into this worksheet everything is being recorded basically with an invoice. But I used like this invoice to just record a journal entry. But the reason I thought that might be useful is because then if I sort this by customer then the customer name is exactly the same. So if you filtered by name or something like that then it'll all be the same even though the journal entries seem to still pull in by customer. But everything kind of matches in this account. So if you sorted by any of these line items it should you would think it would be easier to filter for different options I would think. The other side billing same thing. Billings over here is now I zeroed it out with an invoice so it kind of matches everything else. And then if I went to my internal stuff over here and I could see the invoice and I might want to put in the memo of course this is the close to close out to close out like close out in transaction or something like that. So I'm going to save it and close it so that I can see that this so I've got all these invoices in here that aren't actually going to the customer. But any invoice that has a zero balance I can I can safely assume is an internal invoice and as opposed to the ones that have balances and so that works pretty well and I get to see all the detail of everything that's happening in this screen as opposed to if I had a journal entry where I can't really see everything in this screen. Now the last thing you can do to close this thing out is we can go to the project over here and we can say that I want to close out this project because we're done dude dishes are done dude and so I'm going to say this is going to be completed completed. All right so then it's done and so if I go back on over here now we've got the project has disappeared it's gone if I go back to my reports then I can run the reports by class I can run it for the full year here if I go to the tab to the right I can see it and a profit and loss format if I duplicate that I can also see the income statement. Let's do the whole year 123125 and break it out by class because I did the class thing as well so we can have a classy report as well as a monthly report the last one was too monthly I prefer to have more class in less months less monthiness and more classiness so in any case then it breaks out by class and it gives us that nice total at the end and I can duplicate this again and we can see reports on the left-hand side and we can check out the reports for the pro for the project project summary report and I can make that 123125 and run it so there's our information by project and this one's nice because I can I can filter it right so I could say I just want the open projects for example so I've got my nice filtering field over here where I can say that I have the project status of if I just want the the open project so in progress projects so that's the number one because number two has been closed at this point in time so that's a nice kind of feature if you look at the if you look at the projects in this format the classes are going to be pulling up all the projects that are within the class now you could go into the class field and indicate that this project is closed with a with something you know you can mark it off to indicate that that class is closed and this class is open or something put a C after it or oh after it in your in your class fields or something like that if you wanted to track that here we also tagged some stuff so if I duplicate this again and if I go into my reports on the on the left you've got your tags and that we have the tag profit and loss report and the tags by transaction so if I change the date 010125 to 123125 and run it by tag then you've got your your your your project one tagged stuff that we have here I don't think we probably didn't tag the second project but if you had another project it might it'll probably give you the two projects but the tags don't give you that total so tags to me are like a like a less a little bit are fairly less sophisticated use of the classes but can still give you this breakout on an income statement and that could be quite useful especially if you're already using the classes for something else and and you can't use the location tracking because you want to do it line by line and and or you're not you're not using QuickBooks Pro Plus or using some prior some lesser costly version which doesn't have classes and then you can use kind of like the tags to do a similar kind of double check type of thing also note that all of this stuff whether we're talking tags whether we're talking class tracking over here or location tracking to some degree or the the well location tracking maybe not so much but the the the projects are usually breaking out the income statement into categories and it could be useful to break out some of those accounts on the balance sheet that we need to track such as in this case like a work and process account in a billing account which the classes are could could help to do that or you want to be able to sort this detailed report by something you know like customer so you can kind of see the detail of the of what is in working process in the billing account by you know project and then of course on the project side over here we have our projects that we can sort by in progress completed projects or you know all status projects and then obviously when we go into these particular projects we get in essence again another kind of income statement and we can run reports from here but these are going to be the project reports that are going to be for one specific project right so I can see the detail for that project I don't get to see the whole all of the projects together as we do when we when we run this this report if I could run it by by class or or like this projects report which is a little bit more summarized over here so that's that's the general idea again our focus has been on mainly the process costing tool but again when you use that tool it's usually when you're in this kind of system where you have this revenue recognition kind of issue because of these longer projects