 QuickBooks Online 2024. Bank feeds. Matching invoice to bank feed deposit. Get ready and some coffee because we're off to a quick start 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 this CPA thinking cap for example CPA thinking CAP you see what we did with like with the letters and this CPA thinking cap is not just for CPAs either anyone can and should have at least one possibly multiple CPA thinking caps. Why? Because based on our scientific survey of five people all of whom directly profit from the sale of these CPA thinking caps wearing this CPA thinking cap without a doubt according to the survey increases accounting productivity tenfold. Yeah at least. 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Here we are in our QuickBooks online bank feed practice file we set up in a prior presentation opening the major financial statement reports as done every time the reports on the left hand side within the favorites we're going to be right clicking on that balance sheet report open link in a new tab the same with the profit and loss otherwise known as the income statement and one more time for that trial balance the good old TV if you don't have that trial balance in the favorites you can search for it we're going to tab to the right close the hand buggy and then change the range we're going from 010124 tab 022924 tab dropping down for the month so we can see them side by side and running it tab it to the right repeat the process close the hamburger put the bun on the burger and we're going from 010124 tab 022924 tab drop down we want the months and run it to refresh it one more time uno vase mas por favor changing the range in 010124 tab 022924 tab drop down months and we will run to refresh once again let's go back to the balance sheet this time we want to be thinking about a system where we have to invoice a client and how how is the bank feeds going to fit into that kind of system because we'll have to deviate from the straight cash based system so let's go into our desktop flow chart which we're using for online purposes just to look at the flow of the forms looking at the customer cycle revenue cycle sale cycle or income cycle whatever you want to call it noting that the flow of the cycle at the end of the day should result in cash going up for goods and services that we provide but that flow will differ depending on industry so the simplest thing we talked about before is like if you get paid by youtube or something you're a gig worker they just deposit money into your account that's great it's beautiful i love it then we just wait till it comes through the deposit in the bank feeds we record it as revenue however sometimes you might be at a cash register in which case you might want an internal control to double check the money that you're receiving and not just wait till it clears the bank and therefore you might have to go through a clearing account which complicates the bank feeds we'll talk about that more in a future presentation or you might be in a situation where you have to invoice the client it's no it's no fun but that's what i've been in most of my life so that's what i have to do you've got like a cpa firm or a law firm you've got to do the work first invoice the client and then try to get the client to pay you after you did the work and then send them the thing so you want some trustworthy clients out there which are not always easy to find these days trust is in rare supply limited supply so now we have to create the invoice now if we create the invoice what's going to happen it's going to increase the accounts receivable the other side is going to go to revenue recognizing revenue when we enter the invoice then we're going to need to track the accounts receivable to try to collect on the receivable noting that cash has not yet been affected so so that means there's no bank feeds in the process the bank feeds can't record the invoice for me and then when we receive the payment then we could receive the payment and then put it possibly into a clearing account which is how the system is kind of designed to work and it works that way in the event that possibly we get multiple payments that we have to group together so that when we put them into the bank they will match the same format that goes into the bank same rationale as if we're at a cash register although at a cash register this is more likely to be a problem in other words if we invoice someone and then we receive payment in cash and we have multiple payments that we receive in cash then if we record it on our side as a receipt of each cash transaction into the checking account and then we go to the bank and deposit it into the bank as one lump sum instead of five individual transactions then our bank fee transaction which will help us to reconcile will not match we'll have to combine together multiple items to match what was deposited in the bank if you find yourself doing that then your flow system is probably not optimal by the time we go to the bank feeds it should either be easy to record the transaction or easy to match the transaction if it's not easy you probably need to adjust your system so or we could at this point in time when we receive the payment put it directly into the checking account and that could work in systems where for example we're getting paid by electronic transfer so if we invoice the client and then they pay us with electronic transfer or with us just a check instead of like cash for example or a credit card then it's going to directly go into our checking account at that same dollar amount and therefore that'll be fine because we don't have multiple transactions matching together and the bank feed will should be able to tie out to that transaction so the basic point here is there's there's three steps to the to the transaction possibly for an invoice we make the invoice we receive the payment and then possibly we make the deposit if we're using the clearing account and that means the bank feeds could feed into this at any of those points I could make the invoice increase in the accounts receivable and then wait till it clears the bank like get paid they pay us with an electronic transfer for example it clears the bank and then I try to tie that bank feed out to the invoice with the bank feeds or I create the invoice and then I receive the payment depositing it directly into the checking account and then I can use the bank feeds to tie in to basically this form which was used basically as a deposit or I could use this form to put it into undeposited funds and then I could try to connect the bank feeds to this form for undeposited funds to move it from undeposited or payments to deposit to the checking account or I could make the deposit myself and use the bank feed to tie out to the deposit so let's look at each of these let's first start off with an invoice and see what would happen if we tried to connect the bank feed to the invoice so let me show you we're going to go back on over here and let's imagine that we're going to create an invoice here so I'm going to say invoice create an invoice and let's say this is going to be for customer number five so we we already made the sale and we're going to bill the client for customer five and we'll just set that up boom let's actually put this in March 030124 so that we have a clean month that we can look at so that that's the invoice date the due date we're saying is 30 days later based on the net 30 up top and so we have tags no tags the product we set up a product before with inventory items so let's use that one because it'll be a little bit more complex so I set up an inventory item and let's say we sell one of those we sell them for 175 sales tax is applicable and then I'm going to then say okay and then let's see if I can go into see the math here see the math and then I'd like to calculate based on my generic 5% that we set up just for generic problem purposes because you might not be in the same location that I set up here so what's this going to do now it's an invoice is going to increase the accounts receivable for the full amount including the sales tax 18375 the other side is going to go to revenue for 175 not including the sales tax the difference of sales tax is going to go to a payable account of the 875 and the inventory is going to be going down by an amount not shown here but driven by the item of a hundred dollars in our case and the cost to get sold the expense for us selling the inventory is going to go up by the hundred the net impact on net income sales price 175 minus the cost to get sold 100 dollars and the sub ledger for the receivable will be impacted for customer number five so we can try to collect on the receivable and the sub ledger for the inventory will be impacted because we're using a perpetual inventory system decreasing not only the dollar amount but also the unit so let's go ahead and save and close it so I'm going to say save and close let's go to the to the balance sheet run it now we have something in accounts receivable so if I go in oh actually let's change the date I went up to February 03 31 to 4 run it so now in we had something activity in February in accounts receivable I'm sorry uh in March right so there's the 183 75 for the full amount included in the sales tax back let's go back to the income statement the other sides on the income statement change in the range to 03 31 24 tab run it so there's the 175 that doesn't include the sales tax the sales tax back on the balance sheet is down here was included in this California tax now up to 1780 the inventory is going to go down because we sold inventory and are using a perpetual inventory system by the $100 and the cost of goods sold over here on the income statement $100 net impact on net income $75 from that transaction now let's imagine that our system is they pay us with electronic transfers noting that you could set up electronic transfers basically uh by by having them in any format you want but if you set up quick books is checking account set up their payment system then when you send the invoice you might have more options to the ability to have them pay you electronically so if I go into this for example and look at this invoice and then go down here you can see customer payment options so if you edit the payment options and you use quick books basically checking account then then you can have them pay you directly into like the quick books checking account which would be one format where you know the transaction is going to hit your checking account in the same dollar amount as you invoiced for and therefore you possibly could wait till it clears the bank and it might be a little bit faster for quick books to kind of automate the process of matching up the payment that was received to the invoice automatically otherwise you could have them pay you in some other way they might pay you in cash which would complicate the system a little bit pay you by credit card which again could possibly complicate the system a little bit because the credit card might batch the transactions in a certain fashion before they hit your checking account and so those things will will make it a little bit more complicated sometimes but let's first think about a situation where it's going to deposit into our checking account in the same dollar amount that we charged here so then if I go back to my bank feeds first tab go into my transactions and I'm going to say bank transactions let's add one that we're going to imagine is going to what would flow through the bank that we would see flow through the bank I'm going to say date and then amount and description which I think I spelled right that time and let's say that this happens they're going to pay us when are they going to pay us let's go back on over here and say it was on three let's say three three they pay us so on three three two four they pay us the amount full amount that is due including the sales tax of the 183 75 so 183.75 and description customer three payment and then bank jargon right so I'll save that and then we're going to say save as and let's make it a CSV file save as a CSV file so we can upload it to the bank feed so this is what we imagine would come through the bank feeds going back to the first tab and adding that upload from a file upload the file the new one 440 which is the name of this presentation or the number of it so you could find it it's going to go into the checking account if you just want to use that for practice yes one column that's the format of the date date date description description amount amount movie B to the N BN so that's an increase that looks good let's continue and say yes boom done so okay so then if I look at that amount when this comes through the bank feeds so let's say we sent the invoice we told them to pay us electronically on the invoice in some way shape or form either using you know quick books checking or not we might have told them to pay us electronically to our checking account which we then connected to the bank feeds which isn't through quick books either way once it hits our our quick books if the dollar amount is the same as the invoice notice quick books should see it so now we're going to say okay it matched it out and when I record this quick book should record the rest of the transaction basically reducing the accounts receivable so before I do that let's first take a look at everything else that happened if I go into this first tab this accounts receivable let's go to the tab to the right right click and duplicate it and take a look at a sub ledger of the accounts receivable in the reports and then down in who owes you and we see the customer balance detail let's look at the customer balance detail as of all dates okay so customer number three owes us actually his customer number five I did this for 183 so this is breaking out the accounts receivable by who owes us the money two thousand three eighty three seventy five if I go back to the balance sheet two three eighty three seventy five if I track this internally whenever we invoice if I go to the first tab over here and we go into our sales transactions which you might call your customer center I can go into my all sales and I can track the invoices so here's the unbilled income we want open invoices so here's the invoices that we have not collected on yet and if we have invoices you're going to have to kind of follow up and collect and then try to get collected on them right and then we can also find that in the invoices tab which is probably the place that you would go first here and we can look into the unpaid invoices there's our unpaid invoices we can also take a look at it by customer it's much more important to manage the customers you're going to do more work here if you are invoicing because you have to track the invoices open invoices here's customer number five and boom so the next thing that we would expect to happen normally is we would receive a payment when we receive the payment if we recorded it on our side we would go into receive payment and then we'd have customer number five there's the invoice and we would record the receipt of the payment which would then we could deposit it into our checking account at this point or we could put it into the payments to deposit again if if we put it directly into our checking account then we would only do that if we have a system where we're the invoice is going to match the deposit in other words we don't have that grouping problem like you might have with credit cards or cash payments if it was an electronic transfer or a check you could put it directly into the checking account however if you do deal with credit cards that batch or cash payments or some kind of financial intermediary like a stripe or something that messes up sometimes your system then you probably don't want to be switching back and forth from the checking account to to undeposited funds you probably want to then always use the payments to deposit so that you have the same system all the way through all of your all of your transactions just just a point here but for now we're going to say if I was to record that it would record it on our side and then we can match it to the bank feeds however instead of doing that we're going to wait till it cleared the bank because they paid us with an electronic transfer so that means the bank might know to might see it before we do right so the bank is going to see it hit the electronic transfer and we can then go into the bank feeds as we saw here and say okay that's not the bank fees that's my dashboard and to the banking transactions and say okay it matched it and did it match it correctly it should be able to get it correct as long as the dollar amount matches up and the date is fairly close and so when it records this we suggest the invoice it should record the transaction so let's say if it wasn't right we could find another match I'm going to go ahead and say match it that will record the transaction let's go back into the hamburger and then go into the sales detail again so now if I look at that customer number five and we go into it now we have the payment right the received payment has been received so so if I look at the invoice now I can see it's been paid in this information in this format I can also edit the invoice to see it this way and you can see it's marked off as paid in full and then I can also see this way that it also has been deposited so the deposit you can't see in this in this screen but you can see the link of the payment so here's the payment that's been linked if I edit the payment or view to edit it created this form for us and then it linked it to the invoice so the invoice is now received the payment it put the other side into the checking account directly so it put it directly into the checking account so let's go into the balance sheet and say boom run it in March we have our payment so there it is now I'm going to change the date here and say this let's go from one over so so I the thing I want to point out here is that you see an increase this time with a payment form which is a little bit confusing not too bad but notice usually the increases are deposit forms so so if you're going to to to this is the the flow chart if you're going to record at the receipt payment point an increase to the checking account instead of going from received payment into the undeposited funds and then a deposit then you have to remember that when you sort your detail in here the transaction type for increases will be the payment forms as well as deposits so when you filter possibly filtering like this if I want to see all the increases I'd have to say add the transaction type and then I want it to be equals or not equal this is equals and then I have to pick up the deposits and the payments and possibly transfers right transfers might be there as well and so okay close that out and so now I have the increases so not a big deal but the the fact that you have more variance in the transaction type which is often a key sorting field is just something I want to point out there so there it is so that works pretty good again if you have a system where they're paying you with electronic transfers now if you have a system where they're paying you with cash or they're paying you with credit cards or it's going through some financial intermediary like a stripe or a paypal or something then you might not be able to do that because because you won't be able to match up the amount that clears the bank with the invoice why because that it'll be different because the credit card company is going to batch multiple payments together it's going to hit your credit it's going to hit your checking account uh over here on the bank feeds in one lump sum which will be which will be a combination of multiple invoices or payments that you've received so then you'll if you try to do that you'll have to match up to multiple transactions that are invoices to one deposit that gets messy you don't want to do that it's easier it's better to come up with some kind of system where you are utilizing the undeposited funds account and so that you can actually figure that out on the accounting side of things not when you're doing basically the bank feeds or reconciliation side of things so we'll talk more about uh that in future presentations but for now let's take a look at the trial balance this is where we stand at this point if you're following along uh you don't have to follow on really exactly with what we're doing with this practice problem but if you are this is that would be the best but so uh here's where we stand at this point in time I'll go up to to march so we've included march so this is our information if if your information ties out to this if great if not then it might be a date issue you can change the date range and uh and then drill down to the source document and change the date of the source document