 QuickBooks Desktop 2023 Invoice Selling Inventory Let's do it! With and to it! QuickBooks Desktop 2023 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 QuickBooks Get Great Guitars Practice File. We started up in a prior presentation going through the setup process. We do every time maximize in the home page to the gray area view drop-down noting we got the hide icon bar open windows list checked off open windows open on the left hand side. Going to the reports drop-down company and financial profit and loss standard changing the range up top from 010123 to 123123. Nothing's there on the income statement yet but I think that's going to change this time. So this time let's customize this report fonts and numbers bring the font on up to 12 because we expect to see something worth 12 size font to check out in the future. Okay, let's go to the reports drop-down again company and financial this time the big balance sheet and we'll customize it range and changing it 0101223 to 123123 and then fonts and numbers to change the size to 12. Is that okay? It is. Yes. Okay. So in prior presentations we imagined we had a prior accounting system that we wanted to move into QuickBooks. We put in the beginning balances as of 1231 2022 so that we can add more content or start the new system after January 1st 2023. We then imagined some transactions typically taking place when you start a new business that being the funding the capital generation that you need in order to buy the property plant and equipment as well as inventory. We transferred money in that we imagined came from the owner as well as a loan into the checking account. We put some of that money into short term investments we then bought our fixed assets equipment property plants and equipment furniture that we're going to use to generate revenue in the future. We then bought our inventory if you're in a situation or a company that sells inventory clearly we're going to need the inventory before we can sell the inventory and we had purchase orders entered to do that in the past over here. And then we received some of them recording the right checks item. So now we have the inventory we've got hopefully our location at this point in time we've got our fixed assets that we need we can actually make some sales at this point in time. Now note that when we had some of these purchase orders we made some of them billable and that means we can link those billable items to the sales documents the invoice and the sales receipts. We will do that in a future or we'll do that a little bit later. We want to first focus on just a normal kind of sales transaction a normal invoice transaction that we could then populate. So we're imagining we're selling guitars we're going to sell the inventory of guitars and we're going to do so with an invoice which means we're going to get paid in the future for the inventory that we're going to be selling at this point. So if we go into the invoice we're going to say let's say we're going to sell it to Anderson Anderson guitars we already have that set up because we added that customer when we started the company file. We're going to say I'm tapping through this is going to happen as of the 16th we're going to build to there's the billing location the PO and the terms. Now you might set the terms here commonly like net 30 for example meaning if this is the date of the invoice then we expect to be paid in 30 days because it's an invoice as opposed to a sales receipt if we have any kind of discounts meaning pay us earlier. We could have a discount that's what this percent item would be that'd be a little bit more complex payment structure we're going to say net 30 here. Then we're going to choose the inventory items that Mr. Anderson wants to purchase they're going to purchase an ELP we are imagining. Notice how easy it is for us to populate the invoice because we have set up the prior things necessary to do so that includes in the lists drop down the item lists. So we set up our items which have if I go into one the cost and the sales price. So this is what we bought it for this is what we sold it for we have the sales tax which should be applicable based on the item information and so the data input is as you know pretty easy to make an invoice now. So we're going to say the quantity is five we're going to sell five of those to Mr. Anderson and so that comes out to five hundred dollars times five two thousand five hundred it is taxable. We're going to say we have an EPR which is going to be an epiphone Riviera one of those we're going to sell five thousand five fifty times one is five thousand five fifty it is taxable and an EPSH we're going to sell one of those. That's an epiphone semi hollow body four hundred dollars and four hundred dollars. Now I note it kind of looks like we're selling these to to other people that are instead of the end user we're selling them to other people that might be reselling them again because we're selling you know higher quantities or units of these guitars. And in that case you might think well maybe they wouldn't be subject to the sales tax and so on. So these particular customers you could say well it would be sales tax subject to them if it was going to the end customer driven by the item here but possibly the customer if they're not subject to sales tax. You can then turn the sales tax offer that particular customer but for purposes of the practice problem we want to calculate and practice with the sales tax calculation so we're going to say they are subject to sales tax driven. The system knows about that due to the item down here. We put in a generic sales tax as you recall from the prior presentation when we turned it on of just the five percent that's not the actual sales tax for this location. That's just a generic five percent to show you to demonstrate how sales tax works. Now let's think about what's going to happen to the financial statements and sub ledgers when we record this because there's actually a lot going on even though the data input is pretty easy. The invoice means accounts receivables going up so we have not yet got paid. It's an invoice rather than a sales receipt. It's going to go up by the full amount that we're charging plus the sales tax three thousand six twenty two fifty. The other side is income. So it's a revenue account whichever revenue account that these items are assigned to which I believe is sales. It's going to go up but only by the sales amount not including the sales tax of the one seventy two fifty. We're not going to put the sales tax as revenue because in theory the tax is charged to the person purchasing it and we're not charging the tax tax isn't imposed in theory on us as the owner of the business. It's supposed to be imposed on the customer and we're being forced to simply be the tax collector. Therefore we're not going to include it in income and we're not going to have an expense of sales tax expense but rather we're going to put it directly into a payable account or a QuickBooks will on the balance sheet and then pay it off directly from the balance sheet so it never really hits the income statement on the collection side when we get the sales tax as revenue. It won't be revenue and it won't be an expense when we pay it it'll just decrease the payable account. So that's going to be that and then the other side is going to be inventory is going to be going down not by these amounts not by any amount that you can see on the invoice because the invoice will be given to the customer and we don't want to show the cost amounts but we know what they are and the system knows what they are because they're in the items here. So if I click on a particular item there's the cost for that particular item. So that's going to be happening if I go back to the invoice then also the cost of goods sold the expense related to us consuming the inventory in order to generate revenue will be going up. The net impact on the income statement then will be an increase for the income minus the expense of cost of goods sold. Also there's going to be a sub ledger for Anderson guitars which will track accounts receivable by customer there will also be a sub ledger for inventory tracking the decrease of all these inventory items that will then tie out to the balance sheet. So a lot going on here so let's save it and click now also note that when you actually give this to someone you might print it and you might email it or you might save it as a PDF and then email it in that way when you're giving this information to a client for example. So let's save it and close it and then check it out. So we'll say save and close and you change Anderson's terms that's going to be the net 30 that's going to be our default term. So I'm going to say yes let's keep that and then let's go to the balance sheet and let's check it out. So accounts receivable would have gone up double clicking on that drilling back to the source document. There's the invoice double clicking on it. That's for the full amount three thousand six twenty two fifty closing that back out the other side closing this back out other side profit and loss finally something should be happening there. Sales go up but they go up by the three thousand four fifty double clicking on that notice they break it out by the three items because there were three different inventory items we input into the system even though these are all the same invoice number double clicking on any one of them. We're not including the sales tax here but just the calculation of these three items closing that back out in order to be in balance for the double entry accounting system. The sales tax has got to be recorded somewhere where is it going to go balance sheet and then we've got a liability account which is a sales tax payable account double clicking on that. There's the sales tax we had two different departments in the group of sales tax making up the five percent sales tax because we had to pay the state and the city even though we just charged it one time at that five percent. We broke it out to these two items because there's two items that make up this group of the sales tax. Okay it goes up for the payable then we've also got inventory is going to have to go down because it's a perpetual inventory system double clicking on the inventory. We can see that there's the invoice. These are all the same invoice. There's three different items. So it listed the same invoice out three times for the three different items that we sold inventory went down by amounts not showing on the invoice but known by the system because of the items that we set up. Closing this back out closing this back out the other side of that is on the profit loss again under cost of good sold double clicking cost of good sold. There's the cost of the inventory in essence the expense that we had to incur in order to generate the revenue. The net impact then on the income statement is sales for that sale minus the cost of good sold. This is the best time to really understand this concept because notice this is the only transaction on the income statement. Right now so you can see exactly what happened on the income statement that cost a good sold transaction and inventory often being complex especially since they're not actually seen on the invoice. But we know how they're generated because of the items we set up to record them. If I go back to the balance sheet. We can also see in the accounts receivable. We can break that number out by customer couple reports to do that. I can go to the reports drop down. We can go to the customers and receivables. Many of these are related to the receivable. Let's go to the customer balance summary or let's go to the customer balance detail report. And so there we have it. Mr. Anderson right there. There's the increase to Mr. Anderson for that invoice. The total is now at the twenty four one twenty two fifty for our AR accounts receivable twenty four one twenty two fifty time out here. We can also and most likely would track that internally on the customer center customer customer center where we have Mr. Anderson here. So there's the invoice. Make sure you got all in all dates that you can see. And you can see the invoice. There's the invoice. And then we can go to the transactions and we can check by invoice if we so choose. Here's our invoices. Here's our open invoices. Let's look at all of them again because I'm working in the future. And there's our added invoice that we have there back to the balance sheet. And we see that we have inventory was impacted. So that has a sub ledger as well reports drop down. This is going to be an inventory inventory valuation summary. And let's change the date to twelve thirty one two three. Let's customize it fonts and numbers. Let's change the font up to like eleven maybe. OK. Yes. OK. And so now it's readjusted our inventory count by unit not just by amount based on different unit amounts. Forty four one eighty we're using a a weighted average methods you'll recall but we have we've had no change in the price. So it's so it's you know the flow assumption isn't really you can't see it in full effect. But in any case forty four one eighty if I go back on over here forty four one eighty. There it is a lot going on with one invoice even even though the data input is quite straightforward. OK. Let's do another one. We'll do this one a little bit faster. Let's go back home. And let's say we make another invoice create an invoice we made a sale. Someone wants some guitars are they're going to order some guitars we're imagining over the phone or something like that. This is going to be for Jones guitars. So we already have that customer set up. We're now selling the guitars the sales side of the transaction as opposed to the purchasing side. I'm going to hit the plus button to bring it up one date to one seventeen twenty three invoice number two populating automatically because it's it's populating through the system. Let's do it net thirty again. That's going to be a standard thing meaning this is when we build the client and we expect to be paid in 30 days from that time frame after that it will then be late. We're going to say we sold them a G. I. G. I. S. U. A. Gibson U. S. A. one of those three eighty times one is taxable and then we have an E. L. P. once again and we sold eight of those at five hundred times eight or four thousand dollars. What so note the system picked everything up just by the item. So to do the data input all we need to know is who were who the customer is and what the item is that they're purchasing and the system will help us to generate the transaction help to calculate the sales tax record all this information on to the financial statements. What will be the transaction. It's an invoice therefore accounts receivables going to go up by the full amount including the sales tax four thousand five ninety nine the other side's going to go into revenue the revenue account assigned to it by the item not including the sales tax though it would be for the four thousand three eighty then the sales tax is going to go to a payable account which is a liability account increase in the payable which we're going to have to then pay in the future to the state and to the locality or whatever and then inventory is going to go down by amounts that are not on the invoice but the system knows them because we set up those amounts in the item when we created the item that being the cost and the other side's going to go to cost a good sold which is the expense account that's going to go up that we needed to consume in order to generate the revenue the expense account related to us extending the inventory to generate revenue. We also have sub ledgers for the accounts receivable which will change for Mr. Jones here or Jones guitars and we have a sub ledger for the inventory that will decrease the the units there for the for the Gibson USA and the Epiphone. Okay let's save it and close it and check it out so I don't want to I'm not going to actually email it save it and close it you've changed the terms okay because that was the terms over here balance sheet. We've got then accounts receivable double clicking it it's going to increase right there by the full amount four thousand five ninety nine that includes the sales tax closing it back out the other side goes to the P to the L the profit loss the income statement. Sales double clicking it notice we had two different items so it broke them out separately but they got charged four thousand three eighty total doesn't include the sales tax. Where does the sales tax go closing this out closing this out it goes to the balance sheet and it goes under the sales tax payable the liability because we call it we're going to collect it but we're going to have to pay it later so it doesn't hit the income statement at all because we're just a tax collector. We're being used by the state to collect their taxes. Why don't you go collect your own taxes from the from the customer state any case whatever that's okay close that out and then the other side is going to be inventories going down inventory double clicking on the inventory. And so it's going down here so we have the two items by amounts that are not on the invoice but driven by the invoice driven by the known by or because of the items we set up closing this back out. The other side goes to the P to the L the profit to the loss cost a good sold double clicking on it. There's the cost of the inventory that we consumed in order to generate the revenue matching the expense in the same time frame as it was used in order to generate the revenue as opposed to. Expensing it when we bought the inventory right that's the difference between that's why inventory has an accrual component to it typically if we're doing a perpetual inventory system or even a periodic inventory system. So between those two sales here's the net impact on the net income sales minus cost a good sold if I go back to the balance sheet. We also see that the accounts receivable is going to be tracked in the sub ledger which was reports customers receivables customer balance detail let's say and we're going to say this is going to be Jones. So there's the invoice for Jones that we just set up I believe closing it back out we can also see that in the customer center. If I go to Jones here customer Jones guitars making sure that I've got all dates here there's the invoice there that that we're expecting payment on in the future. I can also go to the transactions if Jones has a question or something or whatever open invoices and I can see my open invoice there as well. Back to the balance sheet if I go to the inventory that also needs to be tracked by sub ledger by unit of inventory and other words. We've got the inventory valuation summary in the open windows which now has 103 total units broken down thusly the average cause because we're using an awaited average flow assumption as opposed to FIFO and LIFO. We've got the 40,676 left at this time which should tie out then to what's on the balance sheet 40,676 who lot of action with an invoice even though the data inputs pretty straightforward. You have a plethora of action which is like a lot I think I think that's what that means. So I'm going to go to the drop down let's just look at our trial balance up top. The trial balance can be quite useful for tracking this stuff internally when you're trying to go from your data input to the financial statements because once again the trial balance is the balance sheet on top of the income statement without all the subtotals therefore much shorter and link. So let's go from 010123 to 123123 let's customize it let's bring the fonts let's bring it up to like 14 way up we're going way up crank it up another notch like a whole another like notch on the volume dial. So there we have it so now you can go through these items and notice again as you're doing the data input you've got this you've got the income statement accounts right here and you don't even have to scroll down as far you don't have all the subtotals. But you can kind of see what's happening if you can see if you start to recognize assets liabilities equity income and expense balance sheet and income statement. If you can see the breakouts without the subtotals then you can see where the income statement starts right here and you can look at one report and drill down on the report with just a trial balance taking this deck to the source document and so on. Okay so if anything doesn't tie out then what you're going to want to do is change the date ranges typically it's usually a date issue. And then if you can locate the problem you drill down on that particular account and then you can change the source data if it's a date issue or something like that which is not something you usually want to do in practice unless you know exactly what you're doing because these reports could be linked to something else some of the forms but there's a lot of flexibility to adjust the date and that's a great tool for our practice problem here.