 QuickBooks Online 2024. Record receipt of inventory with a bill form which is linked to the Purchase Order or PO form. Get ready and some coffee because we're doing some quick thinking with QuickBooks Online 2024. Here we are in our Drake Guitars 2024 QuickBooks Online Sample Company file. We set up in a prior presentation, opening up the major financial statement reports like we do every time. The reports on the left hand side in the favorites, right-clicking that balance sheet report to open a link in a new tab, right-clicking the profit and loss to open a link in a new tab, and right-clicking the trial balance to open a link in a new tab. Let's tab to the right to see what we opened. We have an open hamburger. We're going to close up that hamburger, close it up, and then we'll do a range change. We're going from 01.01.2.4 tab, 02.28.2.4 tab, running to refreshing, tabbing to the right, once again, hamburger, closed. First, a word from our sponsor. 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And yes, I know six-pack isn't spelled right, but three letters is more efficient than four. So I trimmed it down a bit, okay? It's an improvement. If you would like a commercial-free experience, consider subscribing to our website at accountinginstruction.com or accountinginstruction.thinkific.com. I feel like I'm working at a fast food place here, closing hamburgers. 010124 TAB, 022824 TAB and run it to refresh it. Tapping to the right, closing the third hamburger. The three hamburger happy meal is ready to go, people. They're all closed up and ready to go. 010124 TAB, 022824 TAB and refresh. Now, I also want to look at it month by month, so I didn't do that. Hold on a second. Let's do a month by month breakout for all of these and run it again, and then tab to the left, and then do a month by month breakout, and then run it again, and then tab to the left. I'm getting hungry. The hamburgers are on my mind. I've got the order wrong. You've got the order wrong at the fast food restaurant. I got in trouble again. All right, so now we're going to be entering a bill form. So we're going to go back to our story where we were ordering inventory for a specific customer from our new vendor fender. Someone came into our store and they're like, I want a fender guitar. And we were saying we don't have fender guitars, but they really want one. And so we thought that we would add the new vendor fender and give a purchase order possibly to them requesting the guitars that we're going to purchase specifically for this particular customer. And they were okay with that. And they accepted the purchase order. And now they're going to send us the guitar, which we got in the mail and we have our new delivery system. There's a lock box in it. And the lock box, honestly, the lock box is so secure. No one's ever gotten into the lock box. Not even the delivery person because he'd rather just leave it on the floor in front of the lock box. But we got him to put the stuff in the lock box this time. Your money in the bank is 99% secure once in the vault. However, there's only a 2% chance we put the stuff in it. Okay, let's go to the first tab over here and we're going to say what happened last time if I go down to the expenses tab on the left hand side. So within the expenses or vendors center, we see if we go to the expenses tab, I'm going to close up the hamburger and we hit the drop down. We were looking at the purchase orders. And if I hit the filter, we're looking at the open purchase orders. And we have then our open purchase order for vendor, which is of course the new vendor that we set up last time. We can also track the purchase order in the vendor center and we can look for the open purchase orders. And so this is the one vendor that has an open purchase order. If I go into it, there it is once again. If I select that purchase order, we can recall what we did last time. We set up the purchase order. It is currently in the status of open and we're going to ship it to our address using our new lock box system. So we're going to and then we're going to say that we ordered a squire guitar and we ordered it specifically for our new client of new music stuff. Remembering that fender up here, the new vendor doesn't care about our customer new music stuff. Why am I putting the customer on the purchase order when this is a form for the purchase of the guitar, not the selling of the guitar? Because we want to remind ourselves once we get the box with the guitars in it that we need to turn around and then make an invoice and contact the customer, the new music stuff customer. So if I close this back out, remember that this purchase order doesn't have any impact on the financial statements. No, no debits and credits happening completely internal form. So we would expect once we get the stuff, then we're going to have a bill in the box. So we imagine we got our box of fender guitars, the squires, and there's a bill in it. Now note that the bill has a different terminology for normal accounting terminology than with QuickBooks. Because I'm going to jump on over to our flow chart over here. If I say that someone billed me, and this is a desktop flow chart, we're using it for online just so we can see the flow of the forms, which is going to be the same for just about any accounting system. If I say that someone billed me, then that's going to be pretty universally meaning that someone charged me for goods and services generally. But I could say that someone invoiced me, and I would expect it to be the same thing, right? Because it would be someone charged me for goods and services, just the other side of the table. And also just realize that if I say someone billed me, then if I have the physical bill that came in the box of the guitars, I could just pay the bill with a check or expense form. In which case, even though I got a bill, which might say invoice on it, the bill might say invoice because in the other guy's system, Fender's system, our vendor, to him or to them, we are a customer and they would be invoicing us, right? So it might say invoice on it because when we bill someone it says invoice, right? But we're going to say it's a bill to us, and then when we enter it into the system, I just pay it off. If I just pay it off, then I didn't enter a bill form into our system. I just paid off the bill with an expense or check form. If I enter a bill form into the system, and we did that last month, by the way, we just paid off the bill with a check form. Now we're going to do more accrual stuff in the second month, and this time I'm going to enter an actual bill form. A bill form within QuickBooks is very specific. It means accounts payable is going up. That's what a bill form does. All right, so that's what's going to happen. Now we could, if I hit the dropdown, this would be the easiest way to do this. We can then basically create our copy to a bill from the purchase order. So I could just go boom, copy it to a bill, and it's going to create the bill automatically with our item. I'm going to close this out just to show the other way to do it. I'm going to say, do you want to leave without saving? I'm going to say yes. We can hit the plus button and say we entered a purchase order. Now we got the box and we're going to enter the bill that's in the box as a bill, increasing the accounts payable instead of paying it off directly. And this is going to be for Fender, which as you will recall was our new vendor that we did last time. So then there's going to be our bill and we'll say that the date of it, let's say is on the 22nd. And so then, now over here it says that we have this purchase order. So there's the purchase order and do we want to add it? That's, I'm paraphrasing what QuickBooks is asking. And I'm going to say, yes, I do QuickBooks. That is very nice of you to request that. It's like you've read my mind. My mind has been read. Okay. It didn't take long to read it. There wasn't a whole less like a, like a half a page or something, quarter of a page with large text, large font size. But then down here it pulled in, you know, the Squire guitar. We have the quantity pulls in the rate. And then we have the customer pulls in as well. Now that is great. The bill is similar to the expense form we entered before. It looks similar except accounts payable is going to go up instead of us paying it out of either the checking it. I basically the checking account or possibly a credit card. So now I could just use this information to enter the bill. Now that I have the physical guitars and then create an invoice with it. But I'm going to do the same thing we did before, which is to make it billable. So recall that this is not a perfect system with regards to inventory. We've tested this billable thing out multiple different ways now because we saw it when we add a bill or an expense form that has just an account that it goes to. If you just have an account like supplies expense and then you wanted to make it billable. The problem with that is that there's no item. There's no item to tell it when I pull it into the invoice or sales receipt, the sales document, what income account it should go to. The system solves that. QuickBooks solves that by saying that I'm just going to charge all of the billable items that you charge to an account to one income account that has been assigned. Now, so that's kind of a workaround with that one. But this one we sell inventory. So now we do have an item. So you would think that I can make it billable. And because it's an item, it'll pull into the invoice properly and record it to the proper income account, which it does. It does that correctly. However, it doesn't pull in the proper amount because it doesn't. It can't recognize that I should be pulling into the invoice the sales price rather than the cost. So that's where you have to be careful. I want to keep pointing that out as we test out this billable item. So you can either just not do the billable item with inventory and just simply make an invoice that matches basically the information on the bill in terms of what you're going to be given to the customer. Not that the dollar amount is going to be different, but the 20-squire guitars. Or you can pull it in as billable as we will do here and then adjust the invoice and make sure that you pick up the sales price and not the cost when you sell it. All right, so then on the bottom here, we of course have a memo. We've got attachments. We can cancel clear. We can make it reoccurring. We can save. We can save in clothes. We can save in new and save in schedule a payment if we wanted to schedule a payment. So meaning we're going to pay off the bill, schedule the payment of the bill. So what's the bill going to do? The bill looks like an expense form or a check form, but instead of decreasing the checking account, it's going to increase the liability. Instead of decreasing the asset, it increases the liability of accounts payable for the amount of $3,360. The other side is going to go into the inventory because we're using a perpetual inventory system and we're purchasing inventory here. And the sub ledger for the bill will also be impacted by the vendor tracking the accounts payable by vendor. And then also the inventory will be impacted in units for the sub account tracking the units of inventory, not just a dollar amount of inventory. Let's save it and close it and then check that out and see if that is indeed the case or if I'm lying to you. I'm not lying. I am not lying. Okay. So then if we go into then the accounts payable, let's check the accounts payable and go into that. You're the one that does the line. You're the one that. Okay. So here's the bill. So here's the bill. If we go into the bill, we can then of course see the activity and there it is. So the bill form and accounts payable AP going back. The other side is going to go not to an expense account, but because this time we bought inventory. So in a future presentation, we'll do our expenses with bill forms like the telephone expense and so on. But this time we bought inventory with an item. So we're going to go into the inventory items and so there we have that. So now we have the inventory is going up because we bought it with a bill, although we haven't actually paid the cash yet as of this point in time. All right. So let's go back and then we can also see in the if I look at this liability account, we should also have a sub ledger account breaking that out by vendor. Let's go to the tab to the right, right click on that tab and duplicate it so that we can open up the sub ledger report just to see how that works. And we go to the reports on the left hand side, close up the hand boogie. And if I scroll down, we're looking for the section of what you owe that these basically support the accounts payable account for the most part. The classic and just normal just sub ledger is the vendor balance detail or summary. Let's open up the detail vendor balance detail right clicking on it. Open link in new tab and let's check it out. Closing up the hand boogie. I'm going to change to a custom date because I'm working in the future going from 022824. And so there's our bill. So there it is just we only have one in there. So it's a pretty basic report at this time. But if you had a lot of bills in there, then it would show all of the vendors that you owe in the total then 3360 ties out to what's on the balance sheet of the 3360. We're also going to have a sub ledger for the inventory. So we bought inventory now. So inventory went up. We should have a sub ledger tracking that by unit as well as cost. Let's go back to the tab to the left. This time I'm just going to search for it and call inventory valuations summary. And let's change the date because I'm working in the future 0202 824. I'm so on top of things that I'll work in the future. And so that gives us our units of inventory. We're at the 9626. So if we go back to the left, the balance sheet 9626. So that looks good. And then the accounts payable is something that we can track internally because now we have the added burden like with the accounts receivable of the payable as something that we need to pay in the future. Making sure that we track it and then we pay it on time. Recalling that if you're looking at a small business, oftentimes you might not be dealing with accounts payable as much because you're just going to pay the bill when you get the bill. Oftentimes because the difference of paying today versus 15 days from now might not be a big deal in terms of the time value of money. But or you might just pay it off with a credit card if you don't have the cash flow. And again, it possibly is not going to be a big deal either way in terms of that 15 day holding on to the money for an extra 15 days. But if you had large sales or a lot of sales in volume, you have thousands of, I'm sorry, purchases, expenses or whatever you're buying in the accounts payable. Then that becomes important to hold. If you can hold on to all of those payments before the cash goes out for another 15 days for large dollar amount payments or for thousands of transactions, then it becomes important. And that's why larger businesses are going to spend a lot more time trying to manage their accounts payable possibly than small businesses where it might not be where it's worth spending your time. Because it'd be better to spend your time in other places than trying to pay at the last day of every bill that comes due. So let's go to the tab to the left and check it out internally. If I open up the hamburger, we're in the expenses tab. If I go into the expenses, we can then track it this way instead of purchase order this time. We want, well, if I look at the purchase order, what happened is it's closed now. So if I filter here, I can see that the purchase order if I go to closed is now closed. So purchase order gone for Fender, the new vendor. That's good. If I select the dropdown and look at my bills, then I can track the bill that is outstanding. If I filter the bills, if I need to status dropdown, I just want the open ones. Okay, there's our open bill. I can also go to my bills tab, which will be something that we'll possibly go to most often for if we're tracking bills. And this will give us our sortable field on the unpaid bills, which we only have this one for Fender. And then we can pay off our bills from here. And we can also track them by vendor section and then go to our filters up top looking at the open bills. And I'm going to close this out and there's our open bill for this one. Let's go into Fender here and check out that what we've done thus far. Here is our purchase order. If I go into the purchase order, we can see now it's closed. So we can see it's closed and we have a link to the bill. If I click on the bill, it shows us the bill. If I go into the bill, it links everything up beautifully. That's just wonderful. I'm going to close this back up. And then if I go into, of course, the bill here, you can see the bill going into here. Here's the bill. And once again, that's linked back to the purchase order, which is nice. So I'm going to close this back out. The next thing that we would expect to do is schedule payments if you have the ability to schedule payments, which might be something that you would have if you had like the checking, possibly needing QuickBooks checking to do that so that you could schedule the payment. But the next thing that you would do is, of course, you would think that you're going to make a payment on it. So if I went to the plus button up top, we have our bills at a future point. We will pay the bills and this will give us another list of all the bills, noting that this is another form, but it's a little bit different than other forms in that it's going to show all of the open bills so that we can basically see which ones we want to pay at one point in time. There's only one outstanding bill at this point, but at the end of the month, we'll enter all of our bills that we usually pay at the end of the month, telephone utilities and whatnot, and then we'll see more items in here with multiple bills. So that's the general process for the bill. We've got our guitar now. We're going to turn around and sell it, which we'll do in a future presentation, but remember the issue with that. If I go into my invoice here, I'm not going to record it this time, but I just want to show you the issue. So this was for, who was it for? I think it was Music Stuff Store. So if I type in Music Stuff Store, it has my billable item over here. I'm going to add it now, but again, I'm not going to record it. I'm just going to add it to show you. And then if I add that in and I scroll down, I could see, let's close this out, that it pulled it in, but it pulled it in basically at cost. So if I go to another line, for example, and I put in an SQ again, you can see it should be a sales price of 244. That's what the problem is. So I've got to make sure to change that. That is something I feel like QuickBooks should be able to fix that, but it's been that way basically for some time now. So that's something I still think they should be able to figure out because you would think it would pull in and be able to recognize the sales price because we're using items. But in any case, I'm going to close that out. I'm not going to record it this time. We'll do it in a future presentation. I'll leave without saving, and so we'll see that. This is just a precursor of things that will happen later, which of course are extremely exciting, and so stay tuned. And so here we have our balance sheet. This is where we stand at this point in time. Here's our profit and loss. I'll run that. So here's where we stand here, and nothing's happened to it because we just entered a bill and purchased inventory. And then we've got our trial balance. Just take a look at the trial balance. This is where we stand. If your numbers tie out to these numbers, great. If not, try changing the dates because it's often a date range issue. Recalling once again, balance sheet on top of the income statement. Assets, cash, asset, accounts receivable asset, inventory asset, investments asset, payments to deposit asset, prepaid insurance asset, accumulated depreciation, contra asset, connected to the property, plants and equipment, which is represented by the furniture and equipment. There's our accounts payable, the liability that has claimed to the assets. This is who has claimed to the assets. These people do because we purchased the guitars from them. And then we've got the visa liability, the sales tax liabilities, then the loan liabilities, the government again with the payroll taxes liabilities and then our claim to the assets represented by the equity accounts, these two, and the entire income statement. Remembering that the entire income statement can be squished down from here to here to net income, which can further be part of the balance sheet by squishing this from here to here down to one number, credits minus the debits. And we can do that, and we can see that automatically because QuickBooks does it on a yearly basis, 010125 to 010125 and run it. And you can see, boom, it squishes it down to that one number on the balance sheet. The income statement just giving us more detail about the accounting equation when you think of it in the format of assets minus liabilities equals equity, equity being then the bottom line, the net value in essence on a book value at least of the company and the income statement representing the activity that got us there from the prior period, which typically is represented for QuickBooks on a yearly basis.