 QuickBooks Desktop 2024 unearned revenue monthly invoicing. Get ready and some coffee because we're locking into some non-stop QuickBooks Desktop 2024. Here we are in our QuickBooks Desktop sample company file. We set up in a prior presentation using the enterprise version of QuickBooks Desktop so we can focus in on the new unearned revenue feature. Under the view dropdown we have the hide icon bars selected and the open windows list selected. Open windows open on the left hand side and the company dropdown. We've got the home page open as well. Going to the reports dropdown as we do every time company and financial looking at that balance sheet standard. The balance sheet standard is going to be customized for the date range change. 010127 tab, 123127 tab. Let's go to those fonts, those numbers and change them. Bringing it up to 14 for a little bit more visibility. Is that okay? Yes. Alright then let's do it. Going to the reports dropdown again this time company and financial for the profit and loss otherwise known as the P&L. We're going to then change the range 010127. Let's go this time out to, let's go to, I think we're going to 103127. I think that'll be far enough because I want to see this one on a month by month breakout because we've been running our scenarios on a month by month. The current scenario was in June and then we'll do some of the payments going forward. So it'll be a few months out as I see it now. So we're going to customize this fonts and numbers. Let's bring it on up to 14 as well so it matches the balance sheet. We need matching reports. You can't be uneven. We have it all crazy unevenness. So there we have it. Let's go back to the homepage and recall what we did last time. We've been thinking about the new unearned revenue feature for a subscription type business with this type scenario that being a magazine type of business or a newspaper or more likely these days some online software business where we get paid upfront for like an annual service. In our case, we just did five months out because we don't want to take too much of our time here in the example problem to get the concept. So what we did last time is we had an estimate and then we had the sales order. So the sales order and the estimate aren't going to be recording anything from a financial statement perspective. The estimate being an estimate of like a job or whether we want to take the subscription the sales order basically finalizing that. We didn't have to go up to the vendor side because we're not going to be buying any inventory but we want to get paid upfront in our case for five months of a service like an application we're going to be providing if it was software. So we skipped over to the receive payment. Now normally when we enter a receipt payment and would be the case under the old method under the negative receivable method this would then create a negative receivable because we don't have an invoice to tie it out to but under the new method we basically tied out the receive payment to the sales order which is strange from a financial reporting purpose because the sales order doesn't record anything to the financial statements but it's a nice tool internally to then record the receive payment not to a negative receivable but rather to a positive liability. Now we did that for five months of our service that's going to be whatever our subscription is software let's say and then each month that passes we can now create the invoice the invoice now recording the revenue as we earn it as time passes and reducing the liability of the unearned revenue. That's the classic journal entry. Notice the other thing that we kind of want to see however is this information on the back end in the sub ledgers which we usually see in the sub ledger related to the accounts receivable which is a reason I think that QuickBooks uses a journal entry which will be an added thing. So let's go to the balance sheet and check it out here just so we can see what's going on. Here's the AR if I go to the reports to see the report related to the AR customers and receivable. Let's go to that customer balance detailed report and let's customize it so it's a little bit larger a little bit larger if we could fonts and numbers let's bring it up to 12 14 is a little too big for this one let's go on up to 12. Now notice this new one isn't here yet because we didn't do anything for the receivable side instead we created the new liability account which is down here under the liabilities unearned revenue. So there's going to be a separate report now related to unearned revenue for a liability even though it's a customer which is usually tied out to an asset of accounts receivable. So if I go to the customers and receivable and I look at the open prepayments by customer we can customize that report we can bring it up to 12 let's say okay okay okay so there it is the whole amount is in there as of this point in time to sub ledgers a little bit more complicated but on the plus side properly being reported as a liability as opposed to an asset. If I go into the company dropdown and we go in or customers dropdown and we go into the customer center where our customers hang out we see that here we're working on this five unearned revenue and recall from last time everything looks pretty much the same as the old method from an internal bookkeeping standpoint and the internal bookkeeping if you used a negative receivable was quite fine right because you can facilitate the transactions quite clearly in here here's the estimate then we have the sales order and now the payment the only difference is when I go into this payment here it's a fancy payment because payment usually means it's decreasing the accounts receivable but it's not here because it says prepayment which means it's going to be doing something to the unearned revenue being tied not to an invoice but a sales order so that's a little bit tricky but if that's your business model because all of your stuff is subscription based then you know that'll become fairly clear you might not even use the other payment format in the case so if I go to this other one this negative AR same kind of concept we have the estimate we have the sales order and then the payment but this payment was a normal payment without that added little tag which meant that it made a negative receivable instead of a positive liability but from an internal perspective looks pretty much the same and so if I go up top the next thing that's going to happen is we want to make the invoices as time passes so a month has passed we've done whatever we're supposed to do subscription model let's go into the sales order and the beauty of breaking out our sales order for five separate months is that now we can create invoices from it so let's create an invoice but I want to create the invoice for selected items not the entire thing so I'm going to go to this one and say okay and then I'm just going to say one month has passed and so let's just do that first month has passed boom and so there it is let's tab it out this is going to go into 080127 let's say and so one month has now passed for the invoice what is this going to do it's an invoice so you would think it would increase the accounts receivable and then the other side the other side is going to go to income for the 35 increase accounts receivable 3771 35 going to income and the 271 going to the payable but remember that we had that unearned revenue there as well so the invoice we would like to actually decrease the unearned revenue but the invoice is usually tied to the accounts receivable so you see the problem with these subletters so QuickBooks is going to create like another clearing account to facilitate this transaction so let's see it over here if I say now we're going to create the invoice what would typically happen normally what happens