 we're going to invoice and the invoices are going to be then lowering the accounts receivable which has a negative balance in it because we'll apply the credits out to it and the other side is going to go to revenue recording revenue as we earn it which so that's going to be what we'll do here so let's do that we'll go to the customer centers probably probably where we would go that not that one customer center and then I'm going to create the invoices from the sales order so I'm going to open the sales order and then I'm going to piece out these one at a time these monthly chunks one at a time so I'm going to say okay let's go up top and say we're going to create an invoice from it and then it says create invoice for all the sales orders I'm going to say create invoice for selected items we only want the selected items because I'm going to be pulling in one of these items at a time so we'll say okay so and if I'm on the first month I'm going to unselect all these and just select the first month and then you see how see how that works that's why we created these items imagining that this subscription was for five months in our case so that we can recognize revenue one month at a time so I'm going to go okay let's do it so now we have our invoice so our invoice tab and through it tab and through it we got oh three let's say oh seven two seven tab tab tab tab it pulled in just that first item of the subscription model for for month number one that's what that one stands for we probably could have named it a little bit better but it's for $35 because we said the total was going to add up to whatever the total that we thought it should add up to so it came out to 35 I think it was what did we do let's what is this whatever stuff you're the one doing the problem can't you tell us it was 175 divided by five months $35 okay and then and then we had the sales tax not you might not have a sales tax if it's a service item depending on where you're located but that complicates it a little bit so we'll add the sales tax just to make it a little bit more complex in case that's the thing that's going to be 271 and that's going to give us the 37 71 now no this probably wouldn't happen till the month after that we issued it so it probably should better be in like 040127 let's say and then so then there's the 3771 if I so what's that good what's that going to do it's an invoice is going to increase accounts receivable which for this customer has a negative balance right so we'll decrease the negative balance and accounts receivable for that customer in the sub ledger and then the other side is going to be going to revenue and we don't have to deal with inventory or cost of goods sold in this case because we're not tracking that in here so if we did that over here on just journal entries we would say okay ar is going up but then we have to deal with the sales tax because we have a sales tax thing happening and then the sales and then we have sales or income so the amount is going to be uh the amount is going to be equal to the sales is going to be going to say negative 175 divided by five or 35 credit and then the sales wait that was the sales let's put that down here and then the sales tax I'd rather on reverse these two sorry about this I apologize I'm going to reverse those two I think it looks better that way I think it looks better that way okay and then the sales tax we said was 0.075 so I'm going to say this is going to be equal to this times 0.075 and then that means the receivable oh now now this is all in the wrong thing this should be over here this is just you're just messing do it over no I'm not doing it over invoice number one let's say month one and then this is going to be negative sum of these two okay it makes sense we know what's happening so now this negative receivable is going to go down so if I double click on this and say plus negative receivable goes down and so then so now I have five months left of the receivable right and then or four months left because it was five total and then we have the income is is going up by 35 and then we have the sales tax payable is going up so now we're recognizing the revenue of the 35 that's an increase that's income that's why it's green of the revenue as we earn it let's do that over here and say record it and check it out on the side save it and close it and see if that is indeed what happens so we're going to go to the balance sheet and we'll go into the a to the r and we're going to say that this happened on the a to the r don't day I think I had the date I should have put the date as a four and I put it as a one so I'm going to double click on it let's go back into it you really just a mess today you just is just everybody's going to be confused get ready to hear about this in the comments so I'm going to save that okay so there it is there so so now so there's that I'm going to close that back out and then the other side is going to the revenue on the profit and loss and so I'm going to bring this out to oh four uh 32 7 let's say so now we have the income that was recognized over here no income recognized in March because we're collecting it on a month by month basis and we'll say that we collected it or we earned it in April I probably should have said I earned it like at the end of March or part of March and part of April if it was over let's actually bring it back to March here I'm going to go back into it are you kidding me are you kidding me right now no it's not that bad I'm going to go because then it gives me more room so we can see it and then I'm going to say save it there so then okay so now we recognize it in March and then when the next one will recognize in April so we'll just get an idea of how this kind of how this works because okay so that's going to be what we do and then if I go to the balance sheet and we go to the cusp if I go to the customer balance detail report and scroll up to the top we've got the payment and notice how these fit together nicely that's what's good about this report or this method even though I still have a negative receivable which is technically wrong it's really easy to see what is happening on one subletcher that's the benefit of it's like oh okay well there's the payment and there's the invoice that mapped out right to the payment and then in the customer center you could see it pretty easily over here because here's the invoice and and we see the payment and it's netting out and here's the balance now if I go back into the invoice it hasn't been applied out I should have applied it out so I could apply the credits now I think there's if you have the certain settings on it'll do that automatically it like when you say close it'll say hey there's a credit that you can assign out here but that's not always good to have on all the time because you don't always want to apply that out so I can manually apply it so let me show you what I mean this amount right here for the the payment if I go