 QuickBooks Online 2023. Progress invoicing example number two, recording cost of goods sold and revenue for month number four and invoice customer for month number five. Get ready to earn the skills needed to boost your bank books on up with QuickBooks Online 2023. Here we are in our QuickBooks Online test company file. We started up in a prior presentation remembering we're in the accountant view as opposed to the business view you can toggle between the two views by going to the cog up top switching the view down below duplicating some tabs to put our reports in right click in the tab to do so duplicate right click in the duplicated tab to duplicate back to the tab to the middle going to the reports on the left hand side we're going to open the balance sheet report and then tap to the right reports on the left hand side this time the profit and loss report closing the hamburger changing the range 010125 to 0632 5 and let's see this on a month by month side by side running it there we have it let's go back to the tab to the middle close up the hamburger change the range 010125 to 0632 5 and let's see this by classes give it a classy look to it run it there we have support accounting instruction by clicking the link below giving you a free month membership to all of the content on our website broken 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sold calculations as they happen and then we've been using this calculation for a percentage of completion type of method to calculate the revenue so we can record the revenue based on the percentage of completion concept rather than based on our billing cycle that we're going to have for the clients let's go ahead and un-green that one all right so now we're moving on to month number four and we're going to say that we're going to do another have our actual expenses the material labor overhead that we are expending this month i'm just going to do the same thing making up basically some numbers here for our expenses let's say we have 10 let's say let's say 11,000 this time so it's a little bit different 11,000 3000 for the labor 201 for the overhead i'm going to sum that up sum it up that comes out to the 14201 and then we're going to use that to figure basically what we should recognize based on our percent completion but first let's just record this so i'm going to say all right let's record that and record it over here so i'm going to say all right that means we're on we're on number 415 now cost of good sold is going to be going up by the total of our material labor and overhead 14201 and the other side we're just going to say we're paying with it paying for it and that's going to go to the checking account let's record this out i'm going to go to my cost of good sold in v9 f2 plus f2 we'll pick up that 14201 and then go on up to the checking account checking account f2 plus f2 and we'll pick up that 14201 on the negative side puts us back in balance here and now we've recorded our cost we have not yet recorded the revenue therefore on the net income we have a loss at this point in time let's do that that same thing over here in uh in quickbooks so if i go to quickbooks when when these actual expenses happen i'm in project two i'm going to enter and expense i'm just going to record all of them in one lump sum obviously they would probably be happening you know throughout the month and so on but this is going to happen on 415 that looks good i'm going to use the items to record these because that allows us to pull them over to the billable item side rather easily and i'm going to say that we have uh materials that's description over here materials which we said was did i say 10 000 again what did i say over here what did i say i said 11 000 to switch things up i remember i remember now now we're also going to make it billable now the billable items we marked up 30 percent and when i make it billable i'm going to pull it into an invoice but not so that i can give that invoice to a client so that we can record the revenue based on our percentage method here so in other words my markup over here was 30 so if this is my total cost i can take for this month i can take this cost divided by my total revenue and that would be the and i'm going to format paint this down hometown format paint that would be our percent that we would of the revenue we should recognize using this concept so i'm going to say all right then then i'm going to take the 100 000 of revenue hold on a second that's not quite right let me do that again this is going to be this 14 201 divided by not the revenue that we're going to have but the total cost that we then marked up to get to the 100 000 and that's the number we need all right now i can take the 100 000 revenue times that 18.461 so on that gives us our revenue that we would like to expend so i can or need to record now we can do that over here on our invoice on a line by line item marking them all up to the 30 percent we should get to the same number i'm going to say this is job number two then we're going to have my labor labor and it was for how much was it for 3000 on the labor 3000 billable 30 on the markup class number two and then we had the overhead overhead overhead that was at 201 201 and there it is class number two and then if i pull out the trusty calculator here trusty calculator boom always saves the day so we're going to say this is 14 300 plus 39 00 plus 261.3 and that should tie out to then our revenue 18 461 that we're going to bill from and we'll record that after this one so let's do that so i'm going to record this this is going to decrease the checking account the other side's going to go to the cost of good sold for the 14 201 driven by these items and these items then will be pulling into the invoice that we'll use to record the revenue side of things save it and close it and let's see it tab it to the right just show us what's going on quit the blabbin quit quit the you talk too much you talk too much what do you just like here in your own voice okay okay here here we go so this this decreased the checking account checking account goes down and then the other side's going to to the to the cost of good sold cost of good sold and there it is for april so we haven't recorded the revenue yet we've just recorded the cost the cost of good sold if i go back on over here and i do that same thing with like a journal entry we would say okay on i'm going to do it as a 430 on this end i should and so i'm going to think of revenue first because that's the first thing that comes to mind even though it's a credit to me so i'm going to say the negative of the revenue which is going to be that 18 461 and then the other side is going to go to the work in progress work in progress boom so that's what we're going to do that's what we're going to do now which is easy to do with a journal entry but in quick books we we're going to want to do it with a with an invoice form which makes it a little bit more tricky so let's do it here the revenue i'm in v8 f2 plus f2 the revenue is going to go up in the credit direction that brings us back in the green down below we're out of balance that's why this one's red we'll go to the work in process v5 f2 plus f2 and the work in process now at the 18 461 is that 6770 so that's where we stand now and so when we when we go into quick books we would like to use an invoice because that's the form usually used to record revenue but the other side we don't want to go into accounts receivable so if i go back on over and say well how are we going to do that if i go back on over here this is an internal invoice just for just for the revenue recognition part of things invoice and it's going to pull stuff in i don't want to pull in from the estimate this time because that's what i'm doing for the external invoices that i'm going to use and actually send to the client i'm going to pull in the billable items for the internal invoice that i'm going to use which would then calculate the 18 461 30 of revenue so that looks correct and so what would this do if i recorded it it would record it would increase accounts receivable by the total because it's an invoice and the other side would be going to revenue accounts driven by these line items i want these going to the revenue accounts but i don't want this going to accounts receivable instead i wanted to go to work in process account so what i'm going to do is just make this zero by putting a negative number up here with my journal entry and then say this is just going to go to my work in process account work in process and so i'm just going to put negative 18 461 30 class number two and so now nothing's going to accounts receivable because this is zero and the revenue is going to be recorded by these line items and then the part that was going to accounts receivable should now be going to work in process account all right let's save it and close it and see if that is indeed what happens let's go back to the balance sheet back to the balance sheet we're going to say that that's a work in process is affected here and it's nicely classified by class now so if i had multiple amounts for different jobs in work in process i can break that out and track it as with the billings using the class tracking tab into the right running the report over here we've got the revenue now recognized here at that at that 18 461 so i've got the revenue matching you know the cost to get sold using our kind of completed concept matching concept which is which is nice by the way if i compare this to like the first job at the end of the month that we did at the end of the month 0701 25 to 1231 25 you can see where the revenue recognition is a mess here because i recognize the revenue over here based on based on just when i build the client and then the expenses when we actually incurred the expenses so they're not matching they're not lining up like we would kind of like them to line up from a timing concept on a percentage completion kind of conceptual basis so i'm going to go 01012506 3125 let's run this again let me do 063025 there's not 31 days in uh june you have to stop at 30 okay i could do that let's go ahead and bill the client now so now we're gonna now we're gonna bill the client based on our billing schedule not based on the work that was done because we agreed to bill them and we're gonna stick to the billing process because we were we go by our word over here we told you the billing process we laid it out that's what we're gonna do no matter what happens in our because that's how we set it up so accounts receivables are gonna go up by what we build them for month number five now according to just our billing schedule that we agreed on at the beginning of this process and the other side i don't want to go to revenue because i'm recording the revenue based on this worksheet over here not based on the billing schedule because this is just for the billing side so i want the accounts receivable to go up the other side go into billings all right let's do that we're gonna go up top and say ar let's go into ar something's in it f2 plus f2 scrolling down 35 000 up to 35 000 may be to the end other side not going to revenue but rather to billings f2 plus f2 scrolling down to the billings 35 000 and that you'll you'll note is now up to 100 000 meaning we have now billed out or invoiced the invoices that go actually to the client for the whole 100 000 when i enter the invoice in quickbooks however i'm going to have to do a little bit of finagling to get that billing item there and i'd also like to get the detail on the invoice that i'm going to send to the client which i'll pull in from the estimate let's do it go into the first tab we're going to add another invoice ultra invoice i'm going to pull this one in from the estimate and this time i can choose either here or i could like i can make this 35 but i can just choose the remaining balance now because this is going to be it i'm going to close this thing out that's the remaining balance in our progress invoicing boom so now it's closed we have nothing over here to pull over anymore and this is going to be as of five one five one and then down here it pulls in nicely to what we want to give the client the 35 000 down here because it's an invoice will increase accounts receivable that's what we want but the other side is going to go to these revenue accounts i don't want it to go to revenue i want to go to billings i could replace all of these items with a line item for billings but i kind of like the detail that's being pulled in from the estimate and therefore i'm just going to do a little journal entry at the bottom here and i'm just going to say i'm going to reduce the revenue account that these are going into and just by the whole amount negative 35 000 and this will be class number two and i'm just going to put it into my billings account and notice notice these billings account isn't actually the account this is there is a billings account but these are the items that i set up which are going to the revenue account this is going to a revenue account reducing the revenue account these are all going to revenue accounts so this will cancel out all this and then we'll put it into the billings account with this one of 35 000 class number two so now what's this going to do it's an invoice that number is going to increase the accounts receivable that's uh uh hold on a second that number is going to increase the no i'm right why are you second guessing yourself yeah i'm right that increases the accounts receivable and then the other side would be going to revenue which is going to go up with these items but then back down with that item so it nets itself out and then it's going to go into the billing account which is where we actually want it to go this allows us to give the detail of the invoice to the client which is the you know a nice form for them to be able to finish the payment actually pay us on and it allows us to record you know the way we want to record it here so we're going to say okay save it and close it let's check it out and we're going to go run in run it jenai i was running and 35 000 up on the accounts receivable and the other side's going into the billings account which is broken out by class which is nice uh and it's now at the we have 100 000 on the billings account which once again means that we've completely you know build out this job because it was at 100 000 now note that if i had multiple jobs up top it would be hard for me to see that that matches out to the total of the job uh because it's a balance sheet account but the fact that we have this classes allows us to kind of break it out and so that's kind of nice if we didn't have the classes i could go into it and i could sort it by customer and that would also be a way that we can basically see it and if there were multiple customers but remember you want to have customer names in here that's another reason why using the invoice form instead of a journal entry is quite uh it could be helpful so i so i'd like to avoid the journal entries as much as possible because these other forms allow us to do the to do the job costing the project stuff and then the and then uh have the names that will be applicable and also be able to track things more easily on this project side of things as well as in the actual customers which are under sales and tracking customer number uh two and tracking all the detail of of the transactions that are happening here if these were all just journal entries then you know we wouldn't be able to see all the detail quite as nicely this way either okay so let's go back let's just check our numbers then if i may uh 18 254 so 18 254 35,067 69 35,067 70 60 yeah 60 that's right it's off that's right 100,000 and then 14 23 uh 100,000 14 24 rounding difference income statement side of things if we go to the income statement is at 67 69 and uh and uh 46 7 46 and and then 14 24 on the total all right movie b to the end so then if i then right click on this and duplicate this at this point in time we are uh i can check this out instead of by month by class and so now we've got that nice class report if i bring this to the end of the year 12 31 25 i could see the two classes that we have now this is a great report because again if i didn't record something to a class and everything in income accounts and the cost of goods sold should be recorded to a class then it'll have the non-class category pop up here so being able to see a whole report that gives it class by class and total uh can be a useful tool to kind of double check everything that's going on and we can do that with the project reports as well but the project report in total is not quite as detailed so let's just check that out reports on the left and go to the project report project summary and go from 0 1 0 1 2 5 12 3 1 2 5 and run it running and so you can see it's you know income cost profit and loss so there we have that we can also see things by project so if i go into by project and we can see the information by project this way and we can go into basically project number two and see in essence the income statement summary for project number two and more reports within here specifically for project number two but it's useful to see all the projects and this way sometimes or in a profit and loss format and the project's tool doesn't generally give us these balance sheet account breakouts which can be quite nice if we're trying to track the billing's account by job so so that's why I think the classes in conjunction or possibly even tags but but the classes I think break out on the balance sheet with the tags don't gives us that break out on the balance sheet okay so we're going to wrap this we're going to we're going to try to get close to wrapping this up next time we're going to receive uh the cash payment and record the cost of goods sold in revenue next time and that will bring the work in process up to around 100 000 and then we can basically kind of close the job out after that so that's what you that's what you have to look forward to and I know it's exciting and you're on the edge of the seat so uh we'll be back to do that soon