 QuickBooks Online 2024. Rental income invoice receive payment and deposit. Get ready and some coffee because the accounting team is on board with QuickBooks Online 2024. First a word from our sponsor. Yeah actually we're sponsoring ourselves on this one because apparently the merchandisers they don't want to be seen with us but but that's okay whatever because our merchandise is is better than their stupid stuff anyways. Like our crunching numbers is my cardio product line. Now I'm not saying that subscribing to this channel crunching numbers with us will make you thin fit and healthy or anything. However it does seem like it worked for her just saying so yeah subscribe hit the bell thing and buy some merchandise so you can make the world a better place by sharing your accounting instruction exercise routine. If you would like a commercial free experience consider subscribing to our website at accountinginstruction.com or accountinginstruction.thinkific.com. Here we are in our gig Ray Guitars 2024 QuickBooks Online sample company five 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 click in that balance sheet so we can open link in a new tab right click in the P&L profit loss open link in a new tab one more time for the trusty trial balance. Let's tab to the right close up that hamburger we're going to change the range for the first two months of 2024 010124 tab 022824 tab we want to see it on a month by month side by side and then we will run it so we can refresh it tabbing to the right repeating the process closing the boogie and changing the ranging 010124 tab 022824 month by month broken out run it to refresh it tabbing to the right closing the hand boogie changing the range 010124 tab 022824 tab month by month break out and run it to refresh it let's go back to the balance sheet let's review our story we have the guitar shop here that we have set up originally thinking that we're going to make most of our income selling the guitars and then we tacked on some guitar lessons that we're going to be providing but now the the neighborhood has gone down a bit we had to put bars on the on the windows and whatnot because people keep on walking out of our store stealing stuff because the california doesn't care or whatever and if we stop them we might get sued for hurting them or something so now we're like oh man we need another revenue source so now we're thinking that we have this equipment we can rent it possibly so we started a new revenue source of renting the equipment we're going to rent out a band set and that was the idea so quick recap of the process if i look at the flow chart over here this is a desktop flow chart we're using for online purposes noting that in the revenue cycle typically by the end of the cycle we would expect money to be coming in for goods and services provided the arrow going this way left to right but in our case now we have a situation where we're going from right to left because we're going to receive a payment and we already have received the payment before we actually do the work so how did that work in our system here we had an estimate estimate was made someone comes into the shop they're going to ask for the rental of the equipment or they're going to call it in the the person that works at our store gets woken up and it's like no not again i'm being robbed oh no it's going to be they just it's just someone that wants rental property okay and so then they take down the estimate for the the rental property and to see how much it's going to cost and then they took a deposit down in order for us to hold on to the equipment for them and so they did that with a receive payment form so the receive payment form by definition generally will always basically reduce the accounts receivable however we didn't tie it to an invoice because we didn't have an invoice because we received the payment before we invoice that's why it's backwards that's the issue resulting in what we might call a credit balance which means a negative income or negative accounts receivable account that we can then apply to the invoice once it's ready for us to basically invoice them and so that's what we're going to do this time now we're going to complete this process we're going to take that negative amount that credit and apply it out to the invoice let's go back on over and recap that situation internally we'll go to the first tab here and within the first tab we can remember in the sales over here we have the sales tab and we're going to go into all sales and we will recall if we look at the estimates we go into the estimates that we had the estimate that we made for customer number five wait a sec that's not the estimate I want the estimates there it is I unfiltered and it was it was accepted so the estimate had been accepted and then we received a payment for it we can also check that out by going to the estimates tab over here if we wanted to track our estimates and look at the estimates that are currently accepted I think we have the accepted estimate so there it is here and if we go into the customers we can also filter by estimate as well so we're going to imagine customer number five now contacts us and that there's a new guy or the same guy let's just say the same guy's under the desk and he's like he can't even remember what happened the day before he's like oh yeah I don't even know what happens from day to day but let me just look in here and see they can go into the customer five oh your name is customer five so we have the estimate that was made oh I see what happened yesterday there was an estimate that was made and then it was accepted and then we collected a payment which was which was the down payment basically and I can see now you have a negative $200 which has been unapplied basically a credit balance which we can now apply to the invoice we can also see that in the sub ledger so let's go to the tab to the right right click on it and duplicate that tab so we can see kind of the issue from a financial statement standpoint go into the to the reports on the left hand side closing the hand boogie scrolling down to who owes you money we go to the customer balance details to the customer balance detail and so you can see from an internal perspective it looked good even that even that guy that can't even remember what happened yesterday could kind of figure out what happened by looking at the internal books but the issue here is of course that we have this negative amount which isn't exactly proper because it's basically lower in the accounts receivable when instead it should be a positive liability so not really an issue from the bookkeeping standpoint but kind of an issue when we do the external reporting types of things we've also looked at a different method to deal with this negative receivable in prior presentations if you want to look at an alternative method but we'll we'll do an adjusting entry to clear out these negative amounts as of the end of the period which you might not always need if you're a small business and you're just trying to get your income statement correct for tax preparation at the end of the year because this is a balance sheet adjustment that the accounts receivable understated and the the liability understated all right so that's going to be the the general scenario so if I go back on over to this first tab here we're going to imagine that we're going to complete the sale at this point in time so now we have the estimate we're going to say okay now we're going to we're going to imagine that the process has been completed and we're going to convert the estimate to an invoice in charge the rest of the money that the two thousand two hundred and sixty now obviously note that if this was real life and we were doing renting of the equipment we would possibly want another down we may want another down payment when they're holding on to the equipment right to make sure that they're going to return the equipment this down payment we imagined was so that we hold on to the equipment for when they show up and then when we actually give them the equipment we might want another down payment or something you know their first child or something that we hold on to or something like so that they return the equipment right because you can't trust anyone these days we're so we're going to say okay so let's but but in any case we're going to convert this to an invoice we'll convert the estimate to an invoice and it pulls in the invoice i'm going to close this back out and then we're going to say this is going to be customer number five and we're going to say the date let's go on 022824 so we'll say 022824 i'm going to remove this again and then it pulls in this information to the invoice so now we have the information in the invoice so note what it did not do however it didn't automatically apply the credit so the credit would be down here on the bottom we would like to say hey look this is the amount that we're charging but we recognize that you already gave us $200 so the difference is how much you owe us at this point in time now note that i'm going to save this and then apply the credit but i just want to point out now that whether the credit is down here or not the journal entry will be the same what will the journal entry be well we have the income which is going to go up by 2260 driven by the items here it's going to be rental income because we applied it to another area and the accounts receivable it's going to go up by 2260 the sub ledger for accounts receivable is going to go up we don't have any sales tax because we're imagining that we didn't sell the equipment and therefore not subject to the sales tax which is great because again that california keeps on hitting us with the sales tax when we were selling the guitars and it was getting ridiculous just ridiculous and then they don't and then they don't provide the protection money because they say like you didn't pay the sales tax as if the customer paid the sales tax but still i'm the one that had to charge the sales tax and then pay it to him it kind of feels like i'm the one that said anyways whatever so we we don't have to deal with the sales tax we're going to imagine in this case so so and we don't have to deal with the inventory adjustment as well so it's a pretty straightforward journal entry but let's save it and then before i give it to the client i'm not going to send it to them because i want to close it save and close it first and then i'll apply out the credit so then i can go down here and say okay so now i have the two hundred dollars which is unapplied and by the way in the in the settings you might be able to set it up so it applies automatically but i kind of like that it's not applied because then i can see how these two things are linked together by manually doing it right so here now we have this payment that isn't applied to anything and i have this invoice which now is outstanding which i can apply the outstanding credit to how to do that well i can go into the this credit let's do it this way let's go into edit the credit and we're going to say that i'm going to apply it to this invoice this invoice wasn't there before now it is there so we can tie it out to that invoice so it matches it out so i'm going to save and close and so now the the the credit has been closed and now we have the invoice here which has been partially paid so i can see that the original invoice was two thousand two sixty the new amount that is due two thousand sixty and now if i was to edit this invoice i can print it and send it if i wanted to send it out now i can review and send it because now the bottom line will be showing that two hundred dollar prepayment so you would think maybe that if this two hundred dollar had something down here it would adjust the journal entry but remember it doesn't why because that two hundred dollars was already in accounts receivable as a negative number we don't need to record it again we're going to record the invoice for the full amount and then it'll net out in our in our trial balance against the two hundred that's already in the accounts receivable tied to this particular customer as a negative amount resulting in the balance to be properly two thousand sixty so we're not going to record anything for the two hundred again but we can send this to the client if needed all right so let's close this back out look at the journal entry if i go to the to the uh balance sheet we're going to say balance sheet let's check it out if i go into the ar the ar pirate account ar and we see it down here we're going to go this is going to be the accounts receivable invoice went to customer number five so it looks like uh this one this is the one there's the invoice so that's the one all right and then the other side if i go back went to the income account go into the income account on the income statement the p&l the profit and loss we made a new income line item for the equipment rental income which has finally been executed it wasn't we didn't have anything in here before when we collected the security deposit because we hadn't yet provided the work now we're going to imagine that we have and we got the two thousand two hundred and sixty in there and of course if we go to the sub ledge and notice right now it's in there as a as a negative right there but now now we don't have that problem anymore because if i run the report it should now be a positive and look normal now so so now uh what what k passo run the report oh i was looking at the wrong one that's that's for eric music still has a 200 so this one this is the one we were looking at so the 2002 60 for customer number five uh is the and then 2002 60 or 2000 60 is the opening balance the total in accounts receivable 24 236 50 ties out to what's on the balance sheet 24 236 50 so that looks movie b to the end all right let's continue with the process here i'm going to go to the first tab and so so now if we track this here we've got we've got the payment and now we've got the invoice if i select the invoice boom we're going to imagine now that we're going to get paid now on the invoice so we're going to say okay now we're going to receive the payment i can make the receive payment from that invoice and we're going to say that happens on the 28th we're going to say it's cash let's imagine once again and we're going to put it into the payments to deposit like normal whether it be cash or credit card or whatever that might be a good thing to do if we have a system where we're going to get some payments that aren't going to be deposited directly into the bank account in the same amount we're going to have to group them together so we're going to collect the rest of it this is the original amount of the invoice this is the open balance we're going to collect the open balance 2060 it links or ties to the invoice the receive payment the same form we use to get the deposit as we know decreases the accounts receivable but this time we have the invoice of course to tie it out to we have the invoice when last time when we when we made the but that when we first collected the deposit remember we use the same form but there was no invoice resulting in the credit balance or negative receivable now of course we have the invoice and we're going to receive the rest of the payment on it decrease in the accounts receivable but also tying it to the invoice that is outstanding in the sub ledger and then we're going to put the other side into cash for the payments to deposit instead of the checking account let's save it and close it so there it is so now the invoice is marked off as paid so that looks good if i select it you can track it the the payment has been received it has not been deposited so that's pretty cool that it has that last bit there so we will deposit it and then kind of check that if i remember to check it so everything's i can see the whole process here that has happened very pretty clearly even though it's kind of a confusing and kind of reverse or out of order process to normal accounting cycle in that we had the estimate and then we received the payment before we had the invoice and then and then we made the invoice and we got the rest of the payment and everything's kind of tied together and linked together so we can kind of figure out what's going on because it has a nice audit trail that's that's put together very neatly let's go to the balance sheet run it and check out what happened we know that the accounts receivable went down let's go into the ar the our account and we can see to that the ar account is this the ar account should have gone down shouldn't it have of k the heck posso it's my spanish half spanish half english hey k the k the heck posso k for crying out loud posso a key i think i did a date a wrong date thing so let's go back to the first tab and i could see here yeah i wanted to put it on 228 so let's see if i can edit this one and i'm going to change the date on 228 change the date to 228 okay and then i'll save it and close it and this transaction you're editing is linked that's cool i think it'll be okay and then let's go to the balance sheet and run it again and hopefully now it's correct don't day for crying out loud a star law coat transaction okay so there's the payment boom okay that looks good let's go back and then the other side is in the payment to deposit so now it's in the payment to deposit 2060 so that is good and now of course we can make the deposit taking it out of the payment to deposit put it into the good old checking account at the end of the night because that's a good amount of money we don't want to be holding on to that here one of those people that keep on taking our guitars and looting our guitars might actually try to rob the cash register so let's make that final transaction let's go to the first tab and we'll just make a deposit now so i'm going to hit the plus button we'll say we're going to the bank we've got our armed escort we're going to the bank going through the the ghetto we're going to say this is on 0 228 24 but that's okay we're we've done this a hundred times we've been down so we're going to say there's our 2060 cash deposit now obviously if we had multiple payments of cash we would be combining to them together that's the point of this form so that you can put it in the bank as of what lump sum so you can reconcile if you had credit card payments then you might have another account that you'd have to charge fees to remember which might be bank service charges or something like that and you have to come up with a system maybe it's like five dollars so that when you deposit the money it's going to hit the bank account in the same format on your books as on the banks books so you can reconcile your books to the banks books possibly with the help on the use of the bank feeds but we're not going to do that we're going to close this out we're just we've got a straightforward transaction increasing the checking account the other side is going to be decreasing undeposited funds increasing the checking account that is if we can make it down the block through the hood with our security force so let's do this so we're going to record that we're going to go into the balance sheet run it check out the checking account let's go in there and see what happens so there we made it and so there's the 2060s in the in the checking account safely in the in the vault and so we're going to say then the other side is decreasing the payments to deposit back down to zero as a clearing account should be this is not a temporary account by the way like the income statement accounts it's a clearing account and therefore it should go to zero typically more often than the income statement accounts over here like these ones go to zero after the month or a year we close them out right but this is where we stand we're on the balance sheet this time let's check it out this is where we're at as of now this is the p&l let's refresh it this is where we stand there and let's check our numbers with the trustee trial balance run in the trial balance if your numbers tie out to these numbers great if not try changing the the date range it's often a date issue as i demonstrated i believe in this problem purposefully it minds you just to show you that often it is a date issue and then remember that we have the balance sheet on top of the income statement accounts starting with the assets these are all assets cash accounts receivable inventory investment payment to deposit prepaid insurance accumulated depreciation contra asset tied to the ppne property plant and equipment which is the furniture and equipment that's what the company owns represented in dollars not in units and the claim to the value of those assets are the liabilities and equity the other side of the coin starting with liabilities accounts payable visa the bank in other words and then the government for sales tax and then the bank again because we got a loan from them and then the government again for payroll taxes and then unearned revenue if we had any of that because we owe the clients for payments that they made to us that we haven't done the work for yet and then we've got our claim that being the equity portion assets minus liabilities equaling the book value of the company represented by equity the owner investment similar to what the common stock would be for a corporation owner's equity similar to retained earnings for a corporation and the income statement having income as credits minus the expenses as debits resulting in the bottom line of the income statement net income which is part of the equity section is just showing us the detail on the equity section we can roll it into the equity section which QuickBooks does automatically called the closing process once a year so we can go up to the next year 010125 010125 run it and we can see down here now we've got inequity everything squished in there this representing the ownership not or the the earnings not for one year back but for the life of the organization which have not yet been distributed to the owners in the form of draws if a if a sole proprietorship like it is here or in the form of dividends if it was a corporation