 QuickBooks Online 2023. Cash payment for inventory linked to purchase order or PO created in the past. Get ready to start moving on up with QuickBooks Online 2023. Here we are in our get great guitars practice file. We started up in a prior presentation with the 30-day free trial. We also have the free QuickBooks Online sample company file open if you want to have these two things open at the same time. Support a counting 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. And we suggest using the incognito window or another browser to open the sample company. You can open the incognito window if using Google Chrome with the three dots in the browser and the new incognito window then search for QuickBooks Online test drive. We'll be using the sample company to compare and contrast the accounting view the view get great guitars will be in and the business view the view the sample company will be in. You can toggle back and forth between the two views by going to the cog drop down and toggle the views on down below. We're going to be opening up some reports now so we're going to go to the tab to the left right click and up and duplicate the tab as we do every time right click on the duplicated tab to duplicate it again back to the tab to the middle so we can go down to the reports on the left opening up the major financial statement report of the balance sheet as we do the every time by the way in the business view the reports are located in the business overview and then in the reports so you could find the reports there in the business view going to go to the tab to the right and then open up the reports again once again and then the P to the L the profit to the loss we're going to close up the boogie the hamburger and other words and do the changing of the range in from 010123 to 123123 run it to refresh it nothing's in it yet because we haven't done anything for the current period to the income statement yet we're getting there we're getting there though closing up the hand boogie on the balance sheet changing the range for that one too from a 10123 to 123123 run it to refresh it that's the setup process we do every time in prior presentations we have been putting together the beginning balances we put in the investments we bought our property plant and equipment and now we're in the process of buying inventory our scenario here being that we sell guitars so we're purchasing now guitars we're using a perpetual inventory system and we're using a purchase order which we did last time in order to request the guitars which is only a form that you would use if you have that capacity to request the guitars before you actually pay for them or whatever inventory that you are purchasing so in the prior presentation i'm going to go to the tab to the left we hit the new button and we made purchase orders the first step in the process to buying the inventory but one that doesn't actually have a financial transaction related to it so typically when tracking the purchase orders we do that internally so and that's normally done over here on the expenses side because that's kind of like the vendor cycle you've got your vendors down below and if you wanted to see that by the way in the business view that's going to be in the get paid and pay area and then you got your pay area down below and the vendors that's where it's located there and then if i close the hand boogie you can search by the open purchase order so there's five purchase orders so then i can see the vendors that have the purchase orders and you can see the number of purchase orders here another place often you can go to in order to see the purchase orders if i hit the hand boogie and we go down to the expenses and we go into the expenses tab this is located a little bit differently in the business view this item is in the bookkeeping area over here bookkeeping and then the transactions tab up top and then your expenses tab so it's a little bit little bit different in the business view then you might originally expect as you're switching between the two views so then in here you've got your expenses if i close this up you can filter then and possibly filter by your purchase orders so we go down to the purchase orders and then you can have all your purchase orders or we can filter by the open or closed purchase orders so if i go to the open purchase orders they're all open at this point in time now however step we do this the next thing the next item we expect to happen the next series of events that would happen as we can see in our flow chart over here would be that we had the purchase order now we're going to receive the inventory so at the point of receiving the inventory we could either enter a bill at that point which we can populate from the purchase order a bill is a specific form that increases accounts payable and then we can as in essence pay the bill or we can enter simply just a check for it at that point in time so we're going to imagine we receive a box of guitars which is our inventory from the vendor in this case we're going to start with epiphone that's who we buy our guitars from and in the box they have a bill with it so and and note that the bill might say invoice on it because to them if they were using quickbooks it would be an invoice but the bill from our perspective is is depending on what side of the table we're on when we think about the software so we might call it an invoice they invoiced us or they build us you can call it whatever you want but when you get into the quickbooks it's a very specific term even if it says bill on it i might not enter it into the system as a bill i might just pay the bill by writing a check or expense form at that point of time and that's what we'll start off doing this month and then next month we'll do more accrual transactions where we'll enter more bills rather than the exp then just writing the checks right now we're going to try to write the checks whenever we can for the first month and then we'll kind of switch it up when we do the second month so we could see all different kinds of transactions so that's going to be the general idea we're going to now go into these purchase orders either here searching for them here when we get the box of goods and then we're going to uh make make a bill or a check form out of it at this point in time now also just realize that if you had a larger company as the company gets bigger you might have someone counting the the inventory in like a warehouse or something like that oftentimes you would like them to be able to count the inventory without having access to the purchase order because then they'll actually physically count the inventory and they won't just know what the number is so that's one internal control you can kind of think about as you kind of as you scale up but typically we would expect the box of guitars to match the numbers that we had on the purchase order so over here we've got our options of sending we can send the purchase order again we can copy it to a bill but we're not going to make a bill this time we're going to make a check or expense type of form and so we're not going to do this step this time instead we're going to go to the plus button up top and we can go to an expense or check form remember these are two basically almost identical forms in that they decrease the checking account but the check form of course has a check number related to it imagining that we're actually physically writing a check or printing the check out of the system so we're going to make this for epiphone i'm going to say it's for epiphone there's our vendor and then as we do that notice quickbooks has this nice thing over here that says hey i'm paraphrasing we've got these two these two items and this bill down here we're just going to add these items in to connect it out so i'm going to say purchase order let's add the information from the purchase order that you entered last time and then i'm going to add this purchase order as well so we're going to add those now if i scroll down we could see the activity but let's just populate the the top of it here just to make sure i get everything the way we want it it's a cash and we're going to say okay mailing let's pay let's make it as of the 14th this time so let's that's good that's good date let's keep it there and then i'm going to make the check number now if i'm actually physically writing checks then i'm going to start with one oh i'm going to put 1004 in the check number here to try to match our bank reconciliations that we'll do at the end of this in our practice problem if you're actually writing the check then uh you could print it later meaning you'd have to actually buy physical checks put them into the printer and then use quickbooks to print the check or you might have a checkbook for example that you're manually writing the checks which already have a check number on it and you want to make sure that you're tying out the check numbers here to the physical checks that you're writing which you should only have to do the first time you enter the check because everyone after that should should automatically populate the check numbers now also notes you got the links up top so if you got two links that are indicated if you click on that you can actually go to the purchase orders that are used to and and to populate here that is a really good feature within quickbooks these links between the forms which if you've learned accounting from just debits and credits and like a classroom uh you might not have a full appreciation of uh so you want to kind of get an idea of how all these forms are tied together notice that we're not using the so if i scroll down here we've got the check number we're not using the category tag because we're not applying this check for something like the purchase of uh the telephone bill or something like that where we would just assign the category so i'm going to collapse that but instead we're using the items the inventory items that we set up and then we put them into the purchase order so the items are going to be what drives the transaction that will be impacted when we record this so we've got our list of items here that we populated directly from the purchase order and then we've got our amounts the amounts are the amounts at cost not the not the sales price this is what they put them on their at cost also note that we've got these two people here that we have the customer added because we imagined that we bought these items specifically for this customer and we want to turn around and make an invoice for them now that we have the items and this kind of gives us a reminder of that we also have the links over here that give us an indication that each of these lie items are linked we could add more to this check uh as well down here with items that are possibly not linked and so on and you could you could sort these two if you wanted to sort them uh notice that you have this billable option here that if you've used the desktop version this is one area where the desktop version I think has this kind of worked out a little bit better than the online version because you would think you can kind of check these off as billable items and then when you when you turn around to invoice Eric music I'll just test this out just to show you then then these items will pull over into the invoice but the problem is I believe they're going to pull over at cost instead of pulling over the sales price even though we're using an item so you might be used to that with the desktop version you got to be very careful of it here I'll just show you what I mean out right now but before I do that I'm going to go to the tab to the right right click duplicate another tab I'm going to pull that all the way to the left just so I can check out a couple things here so I want to go to the sales tab and just see where our products and services so if I go into a product and service here which if you were in the other the business view would be under the get paid and paid area and then under the get paid it would be under products and services so there it is under the business view if we looked at some of these inventory items notice we've got the cost and the sales price so those are different we're buying them now we're going to be buying them at the cost and then when we sell them with an invoice will be that that should populate with the sales price not the cost but oftentimes when we use this billable form in the online version it's not able to to pull over the fact that the item it's not pulling over the item it's pulling over the billable kind of component to it the cost kind of component to it so that that's a little bit a little bit wonky there or a little bit different than you might see on the desktop version if you're used to that so just be aware the other thing I want to point out is if I go to these options to turn that billable item on we went into the cog up top and we went into the account and settings then we went into the expenses and then we went into the bills and expenses and right here you see it says make expenses and items billable and then down here it says track billable expenses and items as income that means when I pull it over it's going to put it into hopefully an income account instead instead of like reimbursing like an expense type of account but it still may not pull over the actual sales price but rather the cost even though it's going to put it into an income account what we would like it to do is be driven by the item to determine where it's going to go in terms of the account that will be impacted but that's the feature that kind of tells you that that that billable thing is there okay let's close out this whole tab now I'm going to close out this whole tab and then go back to our check form the check form looks good what's this going to do well it's a check form it's going to decrease the checking account and the other side is going to be going to driven by these items the inventory account putting them on the books and then it's also going to have a sub ledger effect in that it's going to also be tracking the units of inventory because we have a perpetual inventory system set up so let's check that out so at the bottom we have the option cancel clear we can print the check we can order checks we can make this reoccurring and we can void and so on so I'm going to go ahead and say okay let's save and close it down below and then just to let you know what happens on the invoice we're not going to actually populate the the invoice yet or record it but let's hit the plus button and just imagine that we turned around and sold this to that customer which was Eric music so if I go to Eric music tab we've got this item to pull in but notice that if I pull this item in if I add this item in it puts it on there at four hundred dollars which I believe is the cost because if I was to type this in ELP it should pull in the sales price which is five hundred dollars per per unit that's the problem so we could kind of use this to to show when I put in Eric music that the billable items going to pull over but it's not like a perfect link right there because again it's not really using the item to record it it's kind of using that billable feature and so that kind of that'll mess things up a bit so be quite careful of that we'll talk more about some of the issues with that billable item later and we'll record this in the future and just show how that'll work so do you want to leave without saving I'm going to say yes I'm not going to save this yet we'll do that in the future let's go to the balance sheet now and run the report I'm going to hold control scroll up a bit we should see then the checking account is going to go down so if I go into the checking account we could check out the checking there's the check form number other side go into the split account because there's multiple line items that's why it goes to the split even though all of the other one went to the income or the inventory account there it is closing that back out and then I'm going to go back to the form the other side's also on the balance sheet under inventory so if we go into inventory then we should see that that check there it is there it is looks good movie B to the end and so notice it put it in here these are all the same check and it put it in here in multiple line items matching the line items that are in the on the the form for the check let's also go to the tab to the right right click on it and duplicate the tab so I can look at the inventory report just make sure that that ties out because we're using a perpetual inventory system so that's going to be on the reports on the left hand side and I'm going to close the bookie and I could just type in here inventory let's look at the inventory valuation summary and range to the change from 010123 let's just do as of 12 3123 I'll just say the end of the year even though we're at the beginning of the year but this is the year to date so we're at the 39976 here's our units of inventory thus far that should tie out that 39976 to what's on the balance sheet and it does that's good news if I go back to the tab to the left and I was to sort and look for my open purchase orders I'm now in the expenses tab and the expense items and we can see we have a lesser amount of open purchase orders if I look at my closed purchase orders we could see the ones that have now closed let's go to closed and then apply there's the two that I just closed you can also see those two if I went to the expenses tab vendors and then now we only have three purchase orders open if I wanted to just look at at clear the filters and I went into epiphone down here then I can I can look at the activity for the purchase orders and then the checks that is related to them if I went into a purchase order here for example I can see it's linked to the check and I can see that it is closed so that'll give me some nice activity for my facilitation of transactions with the vendors again this is stuff that is not having an impact on the financial statements so if you don't work in bookkeeping and you learned accounting from debits and credits in a textbook you might again not have an appreciation for some of this linkages within the forms but you need to get an appreciation for it because it's important on just you know the bookkeeping side to facilitate your transactions with the customer's clients employees okay let's do another one for epiphone so if I hit the plus button here and if I went into the expenses and we went to the vendors the next one is Gibson we want to do one for Gibson so I can say okay if I go into Gibson here here's our our open purchase orders let's do it the same way so I'm not going to create I'm not going to create a bill from it here I'm just going to enter a check and then it should pull that information into the check so we're going to pay it directly with the check we'll do the bills next time so we got a box of guitars that we we we requested with a purchase order from Gibson USA so if I type in Gibson USA QuickBooks is going to say hey there's two purchase orders that we have here do you want to use those we could add them one at a time like we did last time I could just add all of them just put all of them in there at once that's what we're going to do and then we can tap through this thing so that looks good I think we can keep the date the same check number is now populating automatically now for writing a check with it let's actually bring the date up to like the 15th I think that'll bring it up to the 15th and then the categories no categories because we're using the items the items of the inventory items that pulled in they're pulling in at cost we've got this one item here that we purchased specifically for our customer I'm going to click it off as billable again just so I can point out that billable item when we pull it into the invoices and look at the benefits and costs of that and so how we're going to work around that and so there is that one so let's let's going to do the same thing and what's going to increase the the it's going to decrease the checking account increase inventory and the sub ledger should be increased for the units as well so let's save it and close it check it out if we go back to the tab to the right and we've run it again to refresh it we only work with fresh stuff here just like the produce department at the local trade place Gibson I don't know what I'm talking about here it is there it is boom and we have that one there movie B to the end and then I'm going to close that out and then scroll up and go back and then the other side is in the inventory so inventory we've got two line items on the check form two line items here and so that looks good and then if we go to our report on the right the inventory valuation summary run it again we are now at the 46 868 this is the units of the guitars that we have that 46 868 should tie out to what we have here looks good if I go to the tab to the left then we can see that now in Gibson we've got the check which is now the next thing that after we got the purchase order purchase order request we paid for it with a check that looks good you can also kind of check out check that out by going to the expenses and go into the expenses up top and then I could say I'm gonna filter now by the items that are open still and now we only have the one that's still open the ukuleles diamond head one more round one more round why because I didn't hear no bell I only stop recording stuff when bells happen in my head so I'm gonna hit the plus button again and we're gonna go to the check form another time this time for diamond head diamond head your head looks like a diamond man what's wrong with you that's just how it's how it is so once again it says we're gonna add it so we're gonna add it there it is and then there that looks good so we'll keep the check number on that and then no category because the item pulled in so we've got the ukuleles now so and we're rounding it out with the ukes no one ordered the ukuleles here so no billable items we just like having some in the shop who doesn't like to have some ukuleles around laying around from time to time so what's it's going to do same thing it's going to be decreased in the checking account other side going to inventory driven by the item here and the the uh sub ledger is going to be impacted as well for the units of inventory let's save it let's close it let's check it out one more time because we've got that one more round you know run it you got to go strong through the last round go into the cash here diamond head there it is let's go back and then we're gonna go down to the inventory and once again we've got the gipson so that's we're looking for diamond there it is diamond head it's out of order it's out of order you're out of order okay okay just finish things up here you got you got to finish things up okay so then we also have over here on this side i'm going to run up the the valuation on the inventory we're now at the 469 40 for the the four ukuleles 469 40 tying out to what's on the the inventory that looks good if i go to the first tab then we can see that there's nothing open still because we've now received all the stuff from the purchase order so we only have closed purchase orders now at this point in time that is good because we've got all this we've got all our inventory we're ready to sell stuff now we haven't sold anything yet but we're on our way now that this is where the money's gonna start rolling in we're set to start selling stuff but hey on your income statement nothing's there yet you haven't sold anything not a thing and you didn't even record an expense for all the stuff you purchased because we're gonna expense them when we sell them uh in the future that's how inventory works we're gonna we're gonna put it on the books as an asset when are we gonna expense it we're gonna expense it with the invoice forms and the sales receipts forms that we'll do in future presentations so that's what we'll do let's go to the tab to the right right click on it and duplicate it and just check our numbers on the trustee trial balance so you could follow if you're following along you can check your numbers i think the best report to do that is indeed the trustee trial balance closing the boogie trial balance trustee tb not tuberculosis it's trial balance it's a good thing oh one oh one two three to twelve three one two three we're gonna run it here's our numbers if you're matching up to what we have great if not try to change the range expand the range if there's a change when you expand the range then try to drill down on it and if it's a date problem change the date that's troublesome to do in practice but it's good to do in a practice problem and uh we'll be doing the transaction detail reports at the end of the month of data input and that often helps to find any any issues at that time as well