 QuickBooks Online 2024, invoice created from check, created from a purchase order form otherwise known as a PO form. Get ready and some coffee because the accounting team is on hand 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 that's okay whatever because our merchandise is better than their stupid stuff anyways. Like our CPA six pack shirts, a must have for any pool or beach time mixing money with muscle, always sure to attract attention. Yeah, even if you're not a CPA, you need this shirt so you can like pull in that iconic CPA six pack stomach muscle vibe, man. You know that CPA six pack everyone envisions in their mind when they think CPA. Yeah, as a CPA, I actually and unusually don't have tremendous abs. However, I was blessed with a whole lot of belly hair. Yeah, allowing me to sculpt the hair into a nice CPA six pack like shape, which is highly attractive. Yeah, maybe the shirt will help you generate some belly hair too. And if it does, make sure to let me know. Maybe I'll try wearing it on my head. 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. Here we are in our Get Great 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 located on the left hand side. Within the favorites, we're going to right click on the balance sheet to open the link in a new tab. Right click the P&L, the profit and loss, the income statement, open link in new tab. Trial balance, same thing. If that trial balance is not in your favorites, you can search for it. We're going to tab to the right where the balance sheet is located to close up the hamburger. And then we'll change that range for the first month of 2024. Oh, one, oh, one, two, four tab. Oh, one, 31, two, four tab running to refresh it. Tabbing to the right, the hamburger. We're going to close that thing again. Would you eat the hamburger if it's not closed? Oh, one, oh, one, two, four, two, oh, one, 31, two, four, and run it to refresh it. Tabbing to the right, closing the hamburger. Some people open the hamburger to eat it because they're on like no bread diet. I guess if you're just going to try to eat the meat, you need to open the hamburger to eat it. But in any case, oh, one, oh, one, two, four tab, oh, one, 31, two, four, and we're going to be running it to refresh it. The carnivore diet is really popular apparently these days. I don't know about where you're at, but I see like that things all over the place. In any case, let's go to the balance sheet tab. This time we're going to be entering another invoice. We've done that before. We've seen the invoice form. That's the sales type form that's going to be increasing the accounts receivable that we then need to track and collect the receivable at some future point in time. But this time it's a little bit different, a little bit of a twist, a different story happening because we're going to imagine that we knew from the start who we wanted to sell the inventory to even before we bought the inventory and therefore even on the purchase forms such as the purchase order, the bill, or in our case the check form, we included the customer, not just simply the vendor so we can track who we are purchasing the inventory for. We even made it a billable item so we can easily create the invoice, although we note that QuickBooks Online System is not actually perfect using that billable item in this way. The desktop version actually does it better. So we pointed that out when we paid for the inventory last time. We'll point it out again this time. Let's do a quick recap of the flow chart going on over here. This is a desktop flow chart, but it's just looking at the flow of the forms. That's why we're going to use it for the online version here. We're just looking at the process remembering that with inventory, we have both the purchasing side of the equation as well as inventory being involved in the sales cycle. So we're imagining this time the story being that someone comes into the shop and says, hey, I would like a particular type of guitar. I want it to be plaid colored or something like that. We're like, we don't have that. It needs to be pink plaid with some crazy colors. It's like, well, that sounds ugly. We don't want that in the shop, really. But if you want to buy that yourself, then we'll order that custom for you. And so we then are going to go to our vendor and order it directly for the customers. That means when we purchase it using the purchase order, which is a form that doesn't actually record anything in terms of the financial statements, but is an internal document that goes to our vendor for the request of the guitars, the inventory in our case, then we actually put the customer on the form. The vendor doesn't care about the customer. We put the customer on the form for our purposes so that when I create the bill or check from the purchase order, it will show me the customer reminding me that I bought that piece of inventory for that particular customer. So then when we get the inventory with the bill, then we can enter it as the bill in our system, increase in accounts payable, or just simply pay it off as we did this time with a check or expense form. And we would see the customer on it and know that we might want to turn around or should turn around and sell that gaudy, ugly plaid, funny colored pink guitar to whoever wanted to buy it. I don't know. It wasn't my thing. It wasn't my color. I'm not trying to be rude or anything. But in any case, and we could try to do that with the billable items. So we made it billable, but it's not a perfect link to make it billable. And so we'll show that shortly. But then we're going to turn around and create the invoice, of course, which will be on the sales side of things, which is where the inventory will basically go back down when we make the sale. That's where we're at at this point in time. So let's go back on over here and recap it this way. Let's go back to the first tab and let's remember, let's go into the sales items over here and close up the hand boogie. We're going to go into the customers. And then we're going to go into Eric music and let's recap what we did here. And you can see down here, we have the billable expense charge that's currently in here. And that means that we basically charged something on a bill and made it billable. So that'll give us an indication that we should be making an invoice that again, that part of the system works great. You may also be able to find that if we go to the sales items here and we select the drop down and we look for the unbilled income. So that once again gives us these items and that'll give us an indication of what has happened. What has happened. And that's great. So now let's go on to the purchase side of things and we're going to say, okay, if for example, if I went into this billable item, it would give me the information for billable expense charged. I'm going to close this out. If I go into Eric music here and edit it, then it takes me to the billable expense gives us the information. The description is an epiphone semi hollow body. So I can see then that's the vendor that we dealt with. So let's go on to the expense side of things. Let's open this up and go to the vendors, which is in the expense area. And then I can go to the vendors and I'm going to clear the filter so I can see all the vendors go into epiphone here. And within epiphone, we have these couple purchase orders. So let's open up some of these purchase orders. Let's open up this one. And so there's our purchase order. And then here's the two for that we assigned to Eric music. So remember the purchase order is going to the vendor epiphone. That's who we buy the guitars from. They don't care about our customers. But we noted that we wanted to buy these guitars in particular. We bought a bunch of them. This is kind of a, you know, weird example. We bought 50 and 10 of the epiphone. Les Paul's, all of them were that plaid ugly plaid pink color or something. And then the epiphone semi hollow body. So we bought all of these guitars specifically for Eric music. And then when we receive the box of guitars, this is the purchase order requesting guitars doesn't actually record anything. But then we've got the bill. So here's the bill related to it. And we entered the bill. Hold on a second. We didn't enter a bill. We paid it off with a check, a check form. We paid it off with a check. So I'm getting a little confused. Sorry about that. So here's the epiphone, paid it off with simply a check. We got the bill with the box of guitars, paid it off with a check. We paid off both of the purchase orders with it. So, and then we made them billable. Now here's the questionable step. Note that if this pulled into the check form, I would still see that Eric music was the customer. And I don't have to make it billable because I could just turn around and say, now I'm simply going to create an invoice for Eric music because I can see that in this field. That might be the best way to go. But I just want to note that you could make it billable. So there's a problem with that, however, in that when, when this pulls into the invoice, we'll see that it pulls in at cost. So let me just show you why that would be like how this works in QuickBooks. Note that if you had, if you had a category up here and you had a job cost system and you put in up top that you wanted something to, to go for your gas or auto expense. And then you wanted to turn around and charge the customer for that because you're going to make an invoice based on the costs that you incurred and then possibly have a markup. Then it would make sense for the customer side over here to add the customer and make it billable. It would then pull into the invoice at cost. Now the problem with that is from QuickBooks standpoint is there's no item. See, there's no item that's being made. Usually when I pull something into the invoice, it's, there's an item. The item is the thing that tells it which account it should go to. What's the price of it? Typically. And what's the income account here? I can pull in the amount, but it doesn't really tell me the account that it should go to. Right. So that's why it goes to a generic billable income account basically is the general idea. So when you have an item down here, if we sell inventory, there's two costs to it. There's the sales costs or the sales price and then there is the cost. So it would be great if QuickBooks would, would be able to identify this as a item. And then when I pull it into the invoice, it doesn't treat it as like a billable gasoline expense and just record it as cost. But rather it records the sales price here. So that it's funny that it doesn't do that. Now I think it does actually record it to the proper income account driven by the item, but for some reason they don't have it. So it pulls in the sales price. It pulls in the cost. So that's kind of the issue. So there's a workaround for that, but I just, we just want to point that out. Let's close this out and just a recap on how to turn on that billable item. If you go into the cog up top and you go into the account and settings, then under the expenses. We have the bill and expenses here. So we have the make expenses and items billable. We have that checked off markup with default rate. So in other words, if you had like gas that you wanted to pull into the invoice and you want to mark it up 30% because you have a 30% markup. You can put the percent markup. I think it's better like not to do that typically and then simply put on the invoice your total markup in another line item. Because I think that's more transparent and easy to see. But if you want each line marked up, then you can do that and then track billable expenses and items in income. So in a single account. In other words, if there wasn't any item that tells QuickBooks what sales account it should go to, then QuickBooks is just going to dump it into one income account. So you won't be able to say should I go into service income or should I go into the product income or any other accounts that you want that are income because there's no item to tell it that. That's why you end up with this just give it to one income account. Now, if you didn't check this out, it would actually decrease the expense like auto expense would go down. We'll talk about that possibly more later. You don't typically want that to be the case. So you typically want that checked off. Okay, let's close that out. And so so now so so now if I create an invoice for what was it for? Who did we have this for again? I'm getting confused. We're creating an invoice for Eric music. I knew that. So let's go ahead and hit the plus button and say we want to make an invoice. And I'm going to type in here Eric Eric music Eric boom. And so there we have it. And so now we have the billable items so billable charges so we can pull those in. I'm going to add it. There's the 20. There's the three that three thousand two. Let's close this back out and X this back out. And so there it is. So now we've got this. There's the bill. There's the the 1005. Okay, we'll make the date. The date will be as of the 23rd. Let's say and so 30 days later, we're going to add 30 days later. I'm going to close this out. Why is it doing that? I didn't want you to open that up again. I already added those. So then so there's that so that looks good. And then tags. Okay. And then it pulled in the products and services. So here's the ELP that was pulled in. Here's the problem. It pulled it in at the cost. See so it's linked. You can see it's linked over here. That's great. Pulled it in as taxable. That's great. I think it's still going to go to the income account driven by the item as opposed to billable income if I recorded it but it doesn't have the right price on it. So I can then say well let me tab through here and add another line just to see what the real cost is ELP. I'm going to send ELP should be there for a rate of $500. See. So so what you could do is just change it. I'm just going to type in here and then change this to 500. And and now it's still got the link and everything pulls in properly. And then here's the EPSH. And then that should be 400 instead of 320. So I'll change that to 400. And now the link is still there. Everything looks good there. And I'm going to close this back out. So that's a workaround that you can do. I'm going to trash this one. Okay. So now so so that's the that's the workaround that you could do but it's not like a perfect a perfect workaround. Right. So it's kind of a kind of a little ugly. So I'll just say be careful to use that billable item when you're selling inventory. Make sure you know what you're doing with that. So I'm going to edit the tax to try to put it back to the generic five hitting the drop down generic 5% on the sales tax close it up. And so now we have the same process that the same invoice that we have seen in the past which is a fairly complex form. So let's review what's this going to do again. Well it's an invoice. Invoice means accounts receivable is going to go up. It's going to go up by the thirty thousand five four fifty that includes the sales tax. The other side is going to increase the income of twenty nine thousand not including the sales tax. The sales tax is going to go up. That's a payable account liability one thousand four hundred fifty and inventory is going to go down by the amounts that were here before we changed them the four hundred and the three whatever times what times the five fifteen to ten but but now it's not on the invoice but it's known by the system because of the items and the cost of goods sold will also be impacted. That's the expense for us selling the inventory. The net impact on net income twenty nine thousand sales price minus the cost of goods sold and the accounts receivable will have an impact to the sub ledger broken out by customer which will be Eric music tracking that and the inventory will have a sub ledger broken out by units decrease in the units of inventory in a perpetual inventory system hitting the drop down. Let's save it includes hit the saving close over here saving clothes. Let's go to the balance sheet and check out that transaction running the report we're going into the AR going into the AR hold on to your hats. There it is the thirty thousand four hundred for the full amount back. Let's go to the income statement the other side running it is in the product and service income going into that we can see it's here to do and it went in invoice two line items twenty five and four that doesn't include the sales tax sales tax back on the balance sheet liability it's under these two or one of these three these two tax lines for the sales tax and then inventory went down going into inventory went down by these items. I think there's multiple of them because it's dealing with the first in first out inventory method but in the case of these amounts are not on the actual invoice those are the cost now going back and then on the income statement we also have a good sold that is the cost of the inventory the expense related to the inventory these items and then if I go back the net impact on net income is the sales price minus the cost of goods sold if we go back to the balance sheet the accounts receivable has a sub ledger breaking it out by customer let's check that out let's go to the tab to the right right click on it duplicated and then we will open up the reports on the sub ledger closing the hand boogie and we're going to scroll down and we've got who owes you so we've got the customer balance let's do the detail customer balance detail so now we've got Anderson there's the Eric music there's the 30,000 for the total of the AR 38671 50 going back to the balance sheet 38671 50 we're also have a sub ledger for the accounts receivable 15,678 let's check that out tab into the right right click duplicate the tab and then we're going to go in to the reports on the left hand side let's just type in inventory valuation summary closing the boogie changing the range in 013124 run it this is the quantities we currently have on hand it's at cost of 15678 which should tie out to the balance sheet 15678 if we go to the internal documentation opening this up and we go to the sales side of things now we can close up the hand boogie and we're in the all sales items we were looking up those billable items before which are now we consume that one billable item so the billable item has been removed now so so it's so this is the only one we have left and then if I and then if I search it by invoice I could search this by invoice and so there we have that searching by invoice all let's say so here's all of our invoices we might search by the open invoices there's our open invoices we can search the invoices over here as well where we might be looking at simply the unpaid invoices there's Eric music we can search those in the customer tab too so we can say we want the open invoices there's Eric music if I go into that one we can see there that we have the invoice and these this is what's nice here that that billable thing says it's been converted so that's what that link does quite nicely so it's okay it's been converted here's the invoice number you see the connection if I view and edit it you get a little bit more detail that's great the problem is that when you do that with with inventory is that is that issue that it doesn't pull over the proper the proper amount that you have to change but I really like that it's connected here all that works good I would think that the that they could change that they could they could fix that because I again the desktop version does it correct correctly and we're using items so you would think and it actually takes it to the right income account so I don't see why they can't make it so it picks up the income line and not the expense line like the desktop version does but that's where it is that's where we're at at this point you know stop changing stuff like I don't mean I hate to be critical but stop trying to change the names on the left hand side to sales instead of customers and then to get paid instead of sales and and then the business view versus and fix that thing developer team that's my and work on the chart of accounts to okay that's my little ran all right let's do the other one so we again we can look at this I can go into the sales area over here and I can say let me let me check this out by the unbilled items again so here's the unbilled item this one's for music stuff store so I can also see that if I went into my customers over here and I see the unbilled item here so that's another way we can sort for it and that's really neat that's great I love that you can also run a report for it but you don't really need to because it's internal so there it is love it then so let's just remember what happened then on the vendor side this is Gibson so we're going to go in and say okay this is going to be in here and we're going to say that if we go into Gibson we had a purchase order so we made a purchase order if I go into the purchase order then we've got music stuff store that we assigned it to so we knew who we were purchasing these ones to that this one another one came in the other guy Eric music told this customer music stuff store about this cool plaid pink guitar but they wanted to see if you can get it in the Gibson and it's like okay now you guys are making us look weird all of our vendors think that we're that we're weird because we order these weird colored guitars but whatever that's what the people want then then we'll do that so then we got the inventory and the check so we went into the check and then there it is and so down here we said that guitar we made it billable again so even if I did so the system would be do you not want to do that you don't check it off you don't make it billable but you just turn around and make an invoice for that guitar matching this out that might be one way to go or you make it billable which has that cool link to it but it's going to pull it in at cost right now until QuickBooks listens to me nobody listens to turtle anyways whatever so so you can do it so we just going to show you what that does here so then we're going to say let's close this out and then say let's go back to the sales side this time and we're going to go into the customers and this was a now I forgot who we were dealing with again this was music stuff store right or I could search up here by the unbilled item and then we can go in here and then we can say there it is and now I can create an invoice directly that's what I wanted that's why I wanted to do this so I'm going to create an invoice from it directly super cool so it pulls that in and that's great suggested we found one or more transactions linked to the ok so I'm going to say filter transactions no so it pulled it in there's no way I can change to get the proper to get it to do it right but there it is so music stuff store let's say this happens on the 24th on the invoice and this keeps on popping up so I turned you off before for a reason okay so there it is but it pulled it in I think at the cost so let's check out what they really cost G that's the sale that's the cost this is the this is the sales price we need here so the sales price is 777 so the link everything is great but I just need to change that to 777 777 and there it is and then I'm going to remove the second one so remove this one and then that should work so that works for a workaround but it's a little bit it's a little bit risky all right so then we can just say I want to do I want to change the sales tax to the to the generic five for a practice problem purposes you can do it manually if you need to do it manually you just have to give a reason to quick books and you just tell you just tell me I do what I want to do here this is my business this is my thing don't I don't need to tell you why okay okay so then let's so what's this going to do it's an invoice that means it's going to increase the accounts receivable by the 815850 the other side is going to go to revenue or sales for the 777 sales tax the payable is going to go up by the difference of the 388 and then the caught the caught inventory is going to go down by the amount that was the rate before the cost and and the cost of goods sold the expense account is going to go up by that amount the net impact on net income being the sales 777 zero minus the cost of goods sold and the accounts receivable is going to have the sub ledger which will be by customer music stuff store and the inventory will have a sub ledger that will be impacted on the account of inventory as well so let's say if we can let's say if we can save and close it save and close okay so we did it we did it let's go to the balance sheet and check it out and if we go into the AR AR the pirate account so we should have I have pirates over here they should work in the AR instead of doing what they're doing there be a pirate a useful pirate for crying out lot any case there's the 8 there's the 815850 and so that's for the full amount if I go back on over and then we go to the profit and loss and run that one we're going to go into the sales and so we see this one's another invoice boom for the 7 7 7 0 that's the sales price not including the sales tax back on over to the balance sheet we know that the difference is going to go into this sales tax payable account and the inventory is going to go down inventories up top because we're using a perpetual inventory system here because we're high tech and sophisticated not that you not that I'm looking down you don't have to use the perpetual but we're going to use the perpetual but this is deep decrease in here and then we're going back on over to the profit and loss cost of goods sold that's the other side so that's the expense of us consuming the inventory to generate revenue in the same period that we generated the revenue the impact on net income revenue minus the cost of goods sold is the impact on net income if I go back to the balance sheet looking at the aid to the customer a to the r run it is broken out by customer and so so so see if that the pirates can work in a r and they can instead of stealing stuff they could they could actually try to collect legitimate debts on accounts receivable and they can turn their piracy into good so in any case that's my that's what I feel like but this is that forty six eight thirty that ties into the balance sheet forty six eight thirty and then we have the inventory has a sub ledger breaking out by unit so if we look at the sub ledger for inventory and we run it we have a negative inventory so that's kind of messed up because I didn't you know we kind of messed that up to get a negative one there but you shouldn't have negative inventory something went wrong but that's okay we're got nine six nine eight so I want to point that out in case someone point because if I don't someone will point it out for us and so I just want to recognize I'm going to beat people to the punch let's go back to the first tab over here and just if I go back to my all sales area note that if I search by the unbilled items we don't have any anymore because we've now processed them if I look at the invoices we now have our open invoices so if I go into open invoices so we've got these this all invoices open invoices so we have our open invoices if I go into my invoices here once again we can search by the unpaid invoices and we see our unpaid invoices that we have created and then if I go into the customers we no longer have any unbilled income because we have billed them for it and we can now have we now have the bills out we haven't received payment on it we have four open invoices so let's check those out and then our open invoices are within here we just worked on the music stuff store and if I go into that once again I really like the billable item here that's been converted it's linked up if I click on it it shows that it's connected to that invoice that's great and then and then I have the invoice within here and if I look at the invoice I can track the invoice information here obviously everything works great only problem is it's not using this I've talked about it maybe you know what the problem is it's not pulling in the sales price for the invoice thick fix that somebody if somebody if somebody out there's hearing me I just like just talking into the ether like I'm at no one but whatever no one listens I feel like they could fix that and that would be the best thing they could do I'm going to go back to the to the I need to be running things over at the into it people at the into it place things would be much okay maybe that's not true I don't know but it well here's the trial balance this is where we stand at this point in time so if your numbers tie out to these numbers great if not try changing the date range might be a date issue increase the date if your numbers change drill down to the source document change the date range then I will we will do a whole date range report transaction detailed by date which might help after the month of data input but we got the balance on top of the income statement remember checking account asset accounts receivable asset inventory asset investment asset payments to deposit asset accumulated depreciation contra asset the funny asset the one that's an outlier the strange one the other look at that weird asset over there's your credit weirdo and then that's not nice don't be rude to that to the other to the outlier of it any case then you've got who this the assets represent who what the company has and then the liabilities and equity represent who has claimed to it just two sides of the same coin so who has claimed to those assets the accounts payable the vendors that she bought stuff the visa credit card company the institution the government wants the piece right the loan the loan the loan payable current portion liability for the loan you took out and then who your claim your part of the business that you have claimed to your own business assets owner investment the owner's equity this is the equity section and the whole income statement is part of equity which we we recall we can scrunch down to one number four six eight seven seven plus the five one eight oh minus the three seven two four two net income now at the fourteen eight fifteen which ties out to what's on the balance sheet fourteen eight fifteen and if I was to bring this up to the next period it would be the fourteen eight fifteen plus what's in owner's equity seven seven eight nine six and we would just have the balance sheet accounts oh one oh one two five to twelve thirty one two five just to recognize so there it is ninety two seven one one nothing would be on the income statement next year because quick books rolls it in doing the closing process for it not on a monthly basis though it only does it on like a yearly basis something to keep in mind