 QuickBooks Online 2023. Progress invoicing example 2. Recognize revenue for month number 3 and invoice client for month number 4. Get ready to earn the skills needed to boost your bank books on up with QuickBooks Online. Support Accounting Instruction by clicking the link below giving you a free month membership to all of the content on our website broken out by category further broken out by course. Each course then organized in a logical reasonable fashion making it much more easy to find what you need than can be done on a YouTube page. We also include added resources such as excel practice problems PDF files and more like QuickBooks backup files when applicable. So once again click the link below for a free month membership to our website and all the content on it. 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 and switching the view down below we're going to duplicate some tabs to put reports in by right clicking the tab up top to duplicate right clicking the tab up top again to duplicate again back to the tab to the middle reports on the left hand side we want to open up the balance sheet as that's thinking tab to the right reports on the left this time the profit and loss closing the hand buggy changing the range we want to go from 010125 to 0632 5 i want to see it on a month by month side by side for the month by month and run it that's what we have thus far tapping to the left we're going to close the hand buggy changing the range in 010125 to 0632 5 and let's see this by a class is breaking out a lot of we want a classy report a lot of class happening here okay then we're going to go to the first tab we're going to then go down to the projects on the left hand side and let's go into the projects so we're within the projects so let's recap what we've done thus far in our excel worksheet because it's a little bit easier to tell the story so we started with an estimate we gave out the estimate total of the estimate was the 100,000 when the job was accepted we wanted a $10,000 down payment so we didn't record revenue but build the client for the 10,000 and then we recorded expenses for the month of operation that actually started on month two uh and these were actual expenses that we recorded we recorded expenses for month number three and we recorded the related revenue not not in alignment with our billing structure but rather in alignment with the percentage completion concept that we did with this calculation here and then on month number three we did the same thing we we basically calculated our actual expenses and then we had this percentage of completion and now we want to be calculating or recording the revenue so let's just recap by the way I I did not record this last bit in our excel worksheet although we did do it in QuickBooks so we'll record that here now when we did the work here and we'll record that on I'm going to say 331 and it's going to be cost a good sold for all the stuff that we did material labor overhead I'm going to put in a cost to get sold for the 19 total 19 527 the other side let's add some more blue space I'm going to need some more blue spaces and let's say let's just add one more for now to and then we'll add some more after after after okay and then the other side's going to cost a good sold we just paid cash cash went out the door for to get it done all right and then if I record that over here I'm just going to say cost a good sold is right here I'm going to say f2 plus f2 f2 and that's going to be 19 527 and then the checking f2 plus f2 and there we go and so now we're back in balance and notice here when I do this in like a little worksheet format we can only see this we know we can't break it out by month so that's why in in in QuickBooks it's nice that we have this revenue that can be broken out over here on a month by month so we kind of add a dimension in like the database program the total still coming out to the 16 uh 15 621 for that time frame that we could see in our little worksheet 15 but it gives us some more dimensions in QuickBooks although it adds complexity to do so because we have to deal with these forms and whatnot in order to calculate these journal entries all right so now we're going to recognize the revenue so I recorded this on our side if I go to this first tab and we look at these the costs for example as we can go into the costs of good sold and we had these expenses that we entered and when I entered this expense item I made it billable now when I say billable and I did a 30 markup we're not going to actually give the bill to the client because we're billing the client based on our billing structure here that we came up with uh that we came up with in accordance with our estimate so but we are going to make it billable so that we can then record the revenue with an invoice because the invoice is typically the form used to record revenue so now we're going to pull this into an invoice not so we can give it to the client but so we can record the revenue in our QuickBooks system so let's go back to our projects project number two close the hamburger and then I'm going to say we're just going to make an invoice and the invoice is not going to come from the estimate because that's what I'm using when I actually want to give the invoice to the client but rather I'm going to pull in these billable items which is going to help me to calculate the actual revenue on a percentage of completion kind of concept so if I go through this thing here and say okay that's good and this is going to happen on we'll say 331 okay and so now it pulled in the materials labor and overhead and put it into and then it did the markup over here and so that looks good now the invoice is typically going to be increasing the accounts receivable and the other side is going to be assigned by these line items revenue for our purpose is what do we want to have happen we want the revenue to be going up but we want the other side to go to work in process so if I see that on this side on on our excel sheet we're going to let's do this on our excel sheet so I had my 19 527 the percent completion is that divided by my total estimated cost not including the markup that I'm going to say here and then we're going to say if I multiply that percent times the total revenue then the revenue that I should be recognizing related to that cost should be 25 385 so if I was to do a journal entry down here let's add a little bit more blue so I can do it and then I'll we'll make another area to enter because I'm getting too far down but one more one more transactions down here just one more 331 we're going to say I'm going to put the revenue on top even though it's a credit because that's the first thing I think about right so I'm going to say the revenue is a credit of that 19 of not 19 of the 25 385 and then the other side I don't want it going to to accounts receivable but rather work in process which is easy to do from a journal entry standpoint but we have to do a little bit more fun agling a little bit more fun nesting on the quick book side if I want to use an invoice instead of a journal entry which I do and so that's what we will do so well let's go back up top and record this I'm going to go into the revenue say f2 plus f2 and go down 25 385 and the other side was going to work in process the whip account f2 plus f2 and work in process boom so that puts us back in balance here that's what we do want to do but if I record this in quick books again you could do it with a journal entry to just record a journal entry but I'd like to have my revenue typically recorded within voices because that's the form so sometimes when I look at my reports and and track the revenue recording the journal entries are useful for that and it's also easier sometimes to assign it to the classes and the projects and and be able to sort the information also by project and customer so we have our our invoice laid out here but I needed to make it go to work in process so all I'm going to do is tweak this bottom bit the bottom bit needs to be a tweaked and then we're going to say this is going to be negative 25 385.1 and this is going to go to class 2 so now the invoice usually increases accounts receivable but it's zeroed out so we're not going to increase the accounts receivable all of this stuff is going to increase a revenue account because that's what the items do and then the other side is is instead of going to AR is going to go to work in process so we just made a journal entry in essence with an invoice all right so let's save and close it so then if I go back to my reports we can see then then what happened k posseau the work in process is impacted here which is what we want to have happening and I can see it broken out by class because I assigned classes to it so it's a classy report which gives us a little bit more information if there are multiple accounts with work in process in it that's useful tab to the right and we can say okay now over here I've got my revenue broken out this way in March so it's it's applied to the proper timeframe now because I'm saying this is the costs that we incurred in order to generate that revenue and that's that's basically what we want that's kind of what we're looking for we can also do if I duplicate this our profit and loss by class we can do a classy profit loss let's take this for the whole year 12 3125 and do this for the whole year because then I can see the multiple classes so now you've got the multiple classes that add up that's quite useful when we're trying to analyze like our full job report that's why the classes I think add another level that is useful all right so now let's let's go to the next step and we'll since we'll just continue on here we're gonna build the client now so now we're over here this has been done dishes are done dude sorry that's in some movie I can't even remember what movie that is but I think it had anyway what am I on over here I'm on the I'm on we're gonna build we're gonna build now for the for the next month for the 30 000 so this was done and now I'm on this one boom so let's do that we're gonna build them I don't have much room on my worksheet over here because I don't want to keep going down so I'm gonna add another worksheet to the side so to do that I'm gonna put my cursor let's put it on P and I need like one two three four so I'm gonna put it on P one two three four and then I'm gonna right click on those columns and insert boom and then what I'd like to do is format them like these ones so I'm gonna put my cursor on K over to over to N K to N and then format paint and I'll put that right here so it widens out those cells okay one two three four home tab format painter one two three four okay so that looks good looks good okay so then I might be able to hide these ones so do I need to hide it maybe I'll just keep them there I don't really need to hide it I don't think it's not gonna throw us off we can see what's happening so then we're gonna say accounts receivable is gonna go up because we're just gonna build a client this is gonna be an invoice that actually goes out but the other side I don't want it to go to revenue this time because this is just one that I want to get paid on and and not and not one that I want to record the revenue because I've record the revenue with the other format according to the revenue recognition thing so this is just gonna be paid according to our payment schedule of 30 000 because that's what we told the client that we were going to pay them and we're going to stick to that this isn't a government job that we completely underestimated because that's what you do with those ones we have clients that are actually want competent work done it's not we didn't we didn't get it because we know we know some politician or something and that's how we got the job any case we're going to say f2 plus f2 is going to be 30 000 all right and then the billing down here is going to be f2 plus f2 and 30 000 so there we have it let's go and do that over on in uh quickbooks and so we'll just build the client so now we're going to actually send out the next bill for the following month in accordance with our payment structure so I'm going to send out another invoice but this is the invoice that's actually going to go out to the client and I'm going to base this one on the estimate that we originally made using our progress invoicing this time the percent will be 30 that 30 percent 30 percent pulls it in boom nicely structured this is going to be date of four one and you've got this beautiful uh structure down here of our of our uh items that we're going to be invoicing for okay so that looks good this would increase the accounts receivable for that 30 000 and the other side would be going to the revenue accounts and in this case we want accounts receivable to go up so I need a 30 000 down here but I don't want the other side to go to revenue so all of these I could like replace these with one line item that doesn't go to revenue but I kind of like the detail of having these line items here so I'm just going to say reverse that back out with just like a little journal entry at the bottom here reduce the revenue for the total amount of negative 30 000 and this is going to be class number two and then I'm going to put the other side into where I want it to go which is the billings account the billings account boom and that's going to be for 30 000 and job number two so now it's still going to increase accounts receivable because I have a balance down here of the 30 000 but the revenue is still going to go up by these amounts but also right back down so the detail will have this and then minus this and then back down to zero and then the other side will go where we want it to go which is into the billings account so let's that's the plan at least let's save and close it and see if that is indeed what happens let's go to the balance sheet to check it out and we know that then the accounts receivable is up to the 30 000 that looks like it should right and then the other side went into the billings account which is here sorted by class which is nice because because now if I had multiple items in the billings account I could sort it by class here or I could go into it and sort it by customer in the detail report if I wasn't using class tracking and I can sort it this way in order to sort it this way by the way you need a customer name field and if you're using journal entries you might not have a customer name field and you won't be able to sort this quite as easily likely okay so I'm going to go back on over go to the go to the revenue so we didn't recognize revenue with that one because we didn't want to recognize revenue based on that we want to recognize revenue based on when we when we earn it in like a percentage of completion kind of conceptual concept all right now let's just assume that they pay us the accounts receivable that's why we sent them an invoice in that format because it's easy for them to turn around and pay us with it and that would just simply be cash goes up and accounts receivable goes down and that would be for the 30,000 so let's do that I'm going to say f2 f2 f2 and then this one is going to be f2 plus f2 30,000 we record that one out accounts receivable goes back down goes into the checking account that's a straightforward transaction no no funny business happening here straightforward so we're going to go back on over and say we just received a payment 15 days later for that invoice we just sent out to the client let's bring it up 15 days and we'll say it goes into the checking account this is a received payment so it's going to be increasing the checking account and the other side it's going to decrease the accounts receivable save it close it check it out tab into the right scrolling up running running it accounts receivable goes down and the checking account uh goes up that is it I think that is it all right so what's if I go over here and I say okay 30 let's just check our numbers this time because I didn't do that last time 32455 working process 42309 4230850 rounding difference cool with that and 65,000 over here 65 and the net income 9763 9763 rounding difference I believe and the revenues at in total the 42 308 and cost of goods 32 545 42 308 32 545 9746 97497 6497 you got to read left left to right left to right that's how we do that's how we read in English what are you okay profit if I look at the profit and loss by job then we can see it kind of broken out by job here which is nice and we're looking here at job number two and I can see it in by my month here so notice we've got our nice allocation based on kind of like a percentage of completion kind of concept and if I go to the first tab on the balance sheet and I bring this out to 123125 if I have multiple items and these work in process accounts for most multiple jobs I can break it out this way or I can break it out by going into the job and sorting it by customer which I can only do if I'm using something that has items in the name fields which might not be the case if you're trying to use journal entries instead of the actual forms like like the invoices and then on the first tab we also of course have our progress income statement from a project perspective I can look at the project reports here and but they're basically job by job progress reports or project by project and it would be nice it's nice to be able to run the project reports by class two on the income statement because then you can get all the projects on one sheet you do have the full project report over here you'll remember but it's not quite as comprehensive project project summary report from 010125 123125 so there's that report but it's not quite as comprehensive as breaking it out by class that we saw in the income statement over here and again the classes give you that breakout of the work in process and and and the billions on the balance sheet which the projects at this time doesn't seem to give you that breakout which is helpful okay