 In this presentation, we will apply direct labor to our jobs. Let's get into it with Intuit's QuickBooks Online. Here we are in our job costing dashboard to get a concept of our objective. We're going to go to our Excel worksheet. Within the Excel worksheet, we're going to be now on the EX1.12 tab. If you want to record the journal entry, you can be in the blue item. I'm going to be here in the green one for the example of it. We have the next item, which is going to be typically increasing the jobs that cost a good sold account in our practice problem. That's going to be the direct labor. We have the direct labor, which is going to be totaling up to 218,000. That's going to be applied out to Job 14, 15, and 16. When you think about the labor component, whenever we think of jobs, note that it's going to consist of basically materials, labor, and overhead. When you think about the labor component, then you could think about, well, what's the format of our labor? Is our format in the form of contract labor, in which case we just pay someone in 1099 at the end of the year that we can apply that information to the job? Or are they employees, which is going to be a bit more complicated because then we have to process the payroll and think about how we're going to allocate the payroll to basically the jobs. Now, if you want to run the payroll within QuickBooks and use payroll in order to allocate, then you can use the time sheets in order to do that. We may get into that at a later point in time. We're not going to get into that at this point. We do have a bit of a... We're going to talk at this point about if it was a contractor that you're having, that you're going to contract out so we could see the transaction. And we'll discuss a bit of a workaround if you want to enter the payroll, but don't want to go through the kind of tedium of entering the time sheets as the method that you're going to be using to allocate the time to the jobs through the actual payroll processing. So let's think about that now. We're going to go in same kind of journal entry, first of all. If you didn't have any kind of payroll issues and if it was just basically same process here, we would be paying the employees, meaning cash would go down or if it's a contractor, we would be paying the contractors. Then we would be debiting the cost of good sold account for the job. So they'd be going into the cost of good sold account. Then we got to think about the cost of good sold account and break that out to the actual jobs to allocate them to the jobs. We have to track in some way which jobs these would be allocated to. So for example, we said that we're going to allocate 30,000 to 14, 15 and 15 is going to be 68,000 and then 16 is going to be the 120,000. Those three then, of course, adding up to the total of the total of... So I got distracted. I had an irresistible scratch or itch in my ear. But in any case, that's going to be the 218,000. So those are the 218,000. So we're going to do a similar process when we go over to our QuickBooks file. So let's go into QuickBooks, how we're going to enter this into the QuickBooks. We're going to use a similar process. We're going to go to the plus button up top. I'm going to enter an expense. Now remember, we're thinking about it as a contractor, but you can also think, well, what if we processed payroll and what if I just wanted to process payroll and then use some other method like a billable type of method to allocate the time that is spent for employees to the jobs. Well, here's how we can think about that as well. We're going to use the expenses in a similar type of way. If we're actually paying the contractors at this point in time, then of course the cash would be going down. If we're not paying the contractors, we could use a similar method. In other words, if we processed payroll and then want to do an allocation, we could use a similar method that we did with the material. So let's first, I'm going to close the categories or item here and we're going to go down to the items. Now we could do this like one item at a time. If we so chose or we can put them all into one item and also note that if you had different kind of labor, different kind of contractors doing different types of things, then you might set up different items for those different contractors as well. And then you could set those items up to go to different kind of costs to good sold accounts in a similar fashion as we had done with the materials accounts. But we're just going to put everything into direct labor here. So it's a broad category for direct labor. So I'm going to say direct labor and we're going to be picking that up. And the first job was for 30,000, I believe. So that's the full amount that's going to be going to job number 14. I'm going to make it billable. We're going to say that's the full amount for job number 14. We could do this with three separate expense accounts like we did with the materials, but we can also use the one expense account and just simply apply them to two different jobs as we will do. So I'm going to say direct labor again, but this time applying it and this one's going to be for 68,000. That's different. That's different as well. And then I'm going to make it billable. That's the same. But this one's going to be going to job number 15, job number 15. And we'll pick that up. And then we're going to do this again one more time. As you could probably guess for the direct labor, it's going to be going for 120,000. And that is going to be billable. And this is going to be job number 16, job number 16. So we've got the 30,000, the 68,000, the 120,000, those three tying out to the 30,000, the 68,000, the 120,000 in our job sheet. If we were to add them all up, they add up to that 218,000, the 218,000 being the bottom line number on our expense item here. Now note, if we're paying, if we're actually writing a check to a contractor, someone outside, then we would simply see the checking account go down by that 218,000. That's what we will do here. What if, however, what if you had processed this through the payroll account and now you just want to allocate this information to the job? Well, these items would be going to wherever you want to go, the direct labor. And then you can do the same kind of method. You could say, well, wherever you allocated the payroll before, you could basically make a negative amount here. So if you put it into wages expense, you could make a negative wages expense. You could pick the payroll account, the payroll expense here, salaries and wages, if they went into salaries and wages, I can then make a negative amount to the negative 218,000. And what that'll do is it'll basically, these items will take this amount out and record it as an expense, right? It'll record it as an expense under the cost of good sold for basically labor. And then this item will reduce the expense that was recorded in wages when you process the payroll. So the net expense account will not be changed from when you process the payroll, you're just reallocating some of the expense. So that's what you might want. That's one kind of workaround you could think about with the payroll. It might actually be a little bit easier than trying to allocate every item within payroll because then you have to deal with the other muddying of the water with the things like withholdings and then the benefits that go in there, workers' compensation, all that kind of thing. So in any case, I'm not going to do that now. I'm going to say as if we were paying a contractor that we're allocating out. So I'm going to remove that. And so there we have this. So there's the 218,000. I didn't put in the payee and the date and whatnot. This is going to be on the 12th, it looks like. So let's make this the 12th. So I'm going to go plus, plus, plus, plus, and that brings it up to the 12th and then I could have put in contractor one. That's going to be the contractor. That's their name. It's kind of obviously somewhat of a generic name. And it's going to be coming out of the clearing account. No, it's not coming out of the clearing account this time. This one's actually a check that will be coming out of the checking account. So this will be coming out of the checking account this time. And the method then is going to be, let's just say cash. Probably it would be a check. Actually, should probably have a check and then we would need. All right. So in any case, there we have it. If we had a check, we'd probably have a reference check number. So, okay, that's it. That's all I'm going to do. So what's going to happen? Then the labor down here is going to be applying it out to the expense account. And then the other side is going to be coming out of the actual checking account as we would expect. And then it'll be applying to the job or project 14, 15 and 16 and these amounts respectively. Let's save and close and then take a look at the reports. So save and close reports on the left hand side. We'll open those reports up. We're going into our standards. That being the balance sheet first, let's open up the balance sheet. We're going to be in 2020. So as long as you're up in 2020, the dates should be okay. You can see the checking account went down this time. Was that, well, now it's at 82,000. I'm going to close the hamburger. And there's our transaction. There's the 218,000. It's a expense type of transaction. If we were to go into that transaction by zooming on the transaction, there it is. There's the activity. Going to close this back out. And do you want to leave without saying? I didn't change anything, I hope. So I'm going to leave without saving it. I'm going to go back to the balance sheet. It got me worried. I'm like a little worried now that I messed something up, but I don't think I did. So then if I go back down, it looks good. Now let's look at the other side. So I'm going to right click on the tab. Let's go to the tab so we can duplicate it. Right click on the tab up top and then duplicate it. So now we've got like the balance sheet on the right and we could do stuff on the left. So we're going to go back on the left, open up the hamburger. We're going to go on down to the reports on the left side, open up the P&L, the profit and loss, otherwise known as the income statement. Let's open that up and then close the old hamburger again. And then I'm going to hold down control. I'll make this one a little bit larger. I like to see it at that 125, the 125 zoom. And this is going to be, we're in 2020, so that should be good. So now we can see all this in just cost of goods sold, now adding up to that 568,000. And you can see this is the same thing we had on our Excel sheet. Now the cost of goods sold, adding up to that 568. So there's the 568. If I minimize that, that looks normal. And then if I was to break that cost of goods sold out, we could then see it by our major categories, that being the labor and the materials at this point. But that's not all the labor and materials because this is only for the current time period 2020. Labor we only put into one account. Notice we could have done the same thing as we did with the materials. We could have broken out the labor into various components of the labor so that we can have different cost of goods sold expense accounts breaking out the different components of labor if we so choose. So that is an option for you. If we then go down, we're at the 568,000. So there's the 568,000. If we go to the balance sheet and we check out the old balance sheet over here and scroll down, let's close the hamburger here too. There's no reason for that burger to be open. Then we see the 568,000 in the net income here as well. There's the 568,000. Now if we go back to the income statement, we also note that that's just for the current period. But these jobs crossed over the current period. So we could then see, let's take a look at the old dropdown here instead of totals. I want to see this by customer. Let's check it out by customer and then run the report again. And then we got 14, 15 and 16. And these are going to be our open jobs now. And we can see they're at 130,000, the 238,000 and the 200,000. So if I go back on over here, note that would just be the current activity. So the 130,000 for job number 14 would be these items, the 100 and the 30. So that's going to give us job number 14 for the 130,000. The 238,000 would just be the current items that happened in the current period, which is going to be the 170 and the 68,000 adding up to that 238,000. So that adds up over here for the 238,000 job. 16 only happened in 2000 in the year 2000 and after and therefore it's all this, it'll be there. It's all there. Now, if we wanted to see the full job, then I could bring this back to 2019. So let's make it 10119. Then we can take a look at our open jobs and see the lifespan of the job. And then if we scroll on down, we could say, okay, here's job number 14. If I bring it on down, we're at the 171,000. So if I go back on over here, there's the 171,000 and there's the 280,000. There's the 280,000. And here is the final item being, it won't let me go back the 200 and then the 200,000. 200,000 down here for the total of the 651. So the 651, if I go back on over here, the 651 is going to be here. So that's going to give us the full job. Remember that reconciliation of being able to take a look at the full open jobs and then breaking out what's in the beginning balance. It's going to be a tool that can help us if we need to do some kind of conversion at the end of the year to a completed contract method or a percentage of completion method if we needed to record the work in process account or something of that nature. So that could help us out with that process as we go. And we can also then track by the project. So let's right click on the tab up top again, right click on the tab up top, duplicate that tab, go back to the tab to the left. Then I'm going to open up the hamburger. I'm going to hold control and scroll back down to get us back down to like 100%. So QuickBooks doesn't do anything like weird when I go into the reporting. Then I'm going to go into the projects and then we can close up the hamburger once we're in the projects to give us a little bit more room. And then down here, I'm going to hold down control and go even a little lower than the 100% down here so I could see my projects a little bit better just the way my screen manipulates. Then I can go into any one of the projects. Let's look at 16 this time. I don't think we've done that yet. So we look at number 16 and there we have our materials and we've got now our labor item, which is our new item. And of course, this will give us another kind of breakdown of our items. Now also note that if you were to be doing this information with the timesheet information through payroll and using timesheets, then you can get added information of time tracking type of information within there. You might use T sheets as well within that process. So we're not going to get into that at this point in time, but just be aware of that. So then you've got your reports, of course, on the right hand side for that tab. So we're going to go back to the balance sheet. We will be printing out the trial balance whenever we remember at the end of these so that you can then use them and go back to them as a reference. That's going to be it for now though. Let's get out of here.