 In this presentation, we will allocate raw materials to jobs. Let's get into it with Intuit's QuickBooks Online. Here we are in our job costing company dashboard. We're gonna take a look at our Excel file and consider what our project will be. We're currently in the tab 1.7. You can go to 1.7 in the blue area if you wanna actually post it out. We're looking at this journal entry that being the second journal entry. If we look at our discussion over here, it says the direct materials transferred from raw materials. So it's gonna go out of raw materials into the direct materials. Why? Because we can now apply it to the job. So that's what we're gonna do now. Now, in terms of the journal entry, the way we're processing the job cost system, that it's gonna go directly to the cost of goods sold rather than go into the work in process account here. And the journal entry is simply gonna be for the full amount, the 350,000 is how much we're gonna take out of raw materials and put it into the cost of goods sold. And then the raw materials is gonna go down by that 350,000. So from a journal entry standpoint, then all we see are these two accounts, straightforward, easy thing from a journal entry standpoint in terms of the master or the general ledger type of accounts. More complex once we get to the jobs, but from this standpoint, we could see the raw materials was at 400,000. It's gonna go down by 350,000 to 50,000. And then the cost of goods sold is gonna go from zero up in this period because we're in 2020. This doesn't recognize just open jobs. This is just for the items on the income statement in the current period, 2020, even though there were open jobs in the prior time period. And that's gonna be increasing to the 350,000. Now the more complex thing is of course, we need to allocate this out to the jobs. The allocation then is broken out over here. So we just said we're gonna allocate out 100,000 to 14, 170 to 15 and 80 to 16. So in our Excel sheet, then in our job cost system, we're gonna say, all right, there's gonna be the 100,000. So the 100,000 to job number 14, the 170,000 to job number 15, and then the 80,000 to job number 16. So these three jobs are in progress and we're buying materials for all of them at the same point. If I was to highlight or select those, I'm holding down control to select them. That adds up of course to the 350,000. Now we also wanna be able to reconcile this to what's on the general ledger accounts. So that 350 reconciles out, but if we take total of all the jobs, they're gonna add up here's the totals to the 433. Now the beginning balances, however, are already in equity. They're already in the equity. So I have to pull out the beginning balances. So this is the amount on the trial balance, right? I have to pull out the beginning balances, which are these items. These were there before the current time period in order to, that's kind of like our reconciliation to tie up the total jobs to what's on the financial statements. So you can see you can kind of tie that out and if you know how to tie that out, then you can jump back and forth and make adjusting entries if you need to at the end of the time period to record this information into a work and process account or tie it out to a completed contract or a percentage of completion type of method if necessary. All right, now when we put it into our system, we're gonna give a little bit more detail than that. We're gonna take it out and we're gonna record the direct materials, but we're also gonna give that more detail in terms of the types of materials. So we'll break this out into different types of materials, which will give us more detail in our system as we track the jobs. So it'll all be materials in essence, well, it will, but it'll be more detailed types of material. Okay, so then I think I've said that a few times now. So we're gonna go back on over here. We're gonna use the document to do this is not gonna be a journal entry. And you might think, you know, it would make sense. We're taking it from one accounts to another. Is there a form for that? There's not like a standard form that we can use to do that because it's coming out of, it's not a cash account isn't affected. We're not paying anyone. We're taking it out of one asset account and putting it to another asset account. So you might think, well, why don't I do that with a journal entry? That's what we did in Excel, for example. Why don't we do that with a journal entry? Because we're not, by the way, we're not gonna do that with a journal entry. Why? Because we don't have the items over here. I can't assign an item. I can get the accounts correct, but I can't assign the items. And I need the items to get the projects and everything and the billable items and all that, correct. So I can't use a journal entry. So what I'm gonna do is I'm gonna use a form and this seems unusual, but it works well. We're gonna use a form that we're just gonna make a journal entry with in essence. And we can use a form, for example, if I select the dropdown, if I use something like an expense type form, check type form is basically the same thing. I'm gonna use an expense type of form, but I'm not actually gonna take any money out of the checking account. It's just gonna be a zero transaction. It's a zero transaction type of form. Now to do this, you might wanna set up another checking account, even though it's gonna be a zero, you might wanna put it into another checking account just to show, just to make sure that those, because they're still gonna show up at zeros, just to make sure that they don't confuse anything. So you could put it into the checking account, but I'm gonna make another account over here and I'd like to make a new account. And I'm gonna call it a bank account, but it's just gonna be the cash. I'm gonna call it a cash on hand, that's fine. I'm gonna make it the clearing account, a cash clearing account. And that way we can track it in here and the balance should always be zero because it's just a clearing account for money to go in and out of it. And if there's any balance in it, we could see that there's something wrong with it. So I'm gonna say save and close. So we're gonna be putting this to the clearing account, the payee, I can choose just miscellaneous again for these purposes and I'm gonna minimize this tab. I'm gonna go back down and we're gonna put the date. I'm gonna keep it on the first, should we keep it on the first? We put this transaction in on the seventh. Let's make it the seventh. So I'll bring this on up to the seventh. So I'm just gonna put my cursor here and say plus, plus, plus, plus, plus. And then I'm gonna go over here and I'm gonna just say cash, it's fine. Now what we're gonna do is we're gonna use both the category field and the items field. I'll use the items field first and by using both fields, we'll basically nullify the recording so that you'll still end up with a zero balance up top and we'll just basically be recording a journal entry but we'll be using expense field to do that. Why? Because that allows us to have the billable item and the customer item as well as the accounts that will be affected. Okay, so let's see how this will work. It'll make more sense if we just do it. So I'm gonna put in our items over here. So we're gonna say we have cement and we're gonna enter items that basically just add up to the dollar amount that we need, which was the 350,000 or we'll do this one at a time for the 100,000 and then the 170 and apply it out to the correct jobs and then get up to that 350,000. Okay, so I'm gonna go back over and we're gonna say that this is going to be for the amount of 14,000 and it's gonna be for job number 14. So job number 14 is where we start. I'm gonna make that billable. So we'll make it billable as well. I can do that if it lets me check that off. There we go. And then we're gonna go to the wood. We're gonna call it, we need some wood finishing. So I'm gonna pick up the wood finishing. Tab, tab, tab, that's gonna be for 8,000. 8,000 on the wood finishing. I'm gonna say that that is going to be billable as well. It's gonna be for number 14, project number 14, job, project, job, project. And then we've got the wall covering wallpaper. Another kind of things that cover walls. 10,000 and we're gonna make that billable and we're gonna make that job or project number 14 as well. Next we have the stucco, which is gonna be other stuff that covers walls, I think, but I mean, it's different kind of covering all together, it's in its own category with the stucco and that's gonna be the 16,000. 16,000 on the stucco, I'm gonna say, and obviously I'm kind of making this up. So if there's numbers sound a little off or weird for what kind of job are you doing over there? We're gonna make it add up to our totals, so here we go. Next we're gonna have the paint, so I'm gonna say paint, wood and so on and that is going to be for 12,000, not 120, not 120, I'm doing that extra zero thing again and then I'm gonna select the item there and that's gonna be for job number 14. So job number 14 and then I'm gonna be picking up the marble, marble, gotta have some marble in there and that's gonna be for job number, it's gonna be for 25,000, wow, it's kind of a lot and then we're gonna be okay and then check that off. That's gonna be for job number 14 as well, job number 14 and then next we're gonna have finally, this is gonna be it for this one component, this is gonna be the flooring, this is gonna be the flooring and we'll pick that up, that's that white plank floor, it's really nice, 14,000 and that's, I'm gonna check that off as well, billable and that's gonna be job number 14, job number 14 and then if we see that, that should add up then, let's see, adds up to the 99,000, I thought it was gonna be 100, hold on a second, I'm gonna change the first one up here to 15,000, let's make this one 15 and that should do it. So if I go to 15, then we're at the 100,000 down below, so that looks good. Everything lines up there, so that should line up then if I go back to our job, job number 14 is what we're doing right now, then we'll do 15 and 16, let's do those separately to not confuse things. We could keep going down here and assign the jobs to number 15 below and just do it with a one expense, but we're not gonna do that, we're gonna do them separately that'll probably make things a bit easy. Okay, now we know what this would do if we recorded this, it would decrease the cash by 100,000 and the other side would be driven by the items to go to those expense accounts, basically the cost of good sold accounts, but we don't want cash to go down by 100,000, so these items are right, but we don't want this to be the other side, where do we want the other side going, we want it to go out of the raw materials inventory. So what we're gonna do is then use this top category, which basically is just the accounts, doesn't include the items, just the accounts and we wanna choose that raw materials accounts. I'm gonna go up to raw materials and we're gonna say, where was that raw materials? Oh, it's this expenses first, it's gonna be an asset type of accounts. Raw materials, other current assets, that's the one we want and we're gonna put this in here for a negative, it's gotta be a negative 100,000, so there's a negative 100,000, we're not gonna make it billable or anything on this side, that's all gonna be on the item side of things and you'll notice now that the check amount went down to zero. So what's gonna happen now, well it's gonna do the same kind of thing that would typically be done with the items, recording the expense side of things and then the other side, instead of decreasing the cash account, we'll now be decreasing the raw materials account, that's what we wanna happen. All right, let's save it and check it out. I'm gonna say save and close, so we're gonna save and close. And let's open up some reports. So I'm gonna go down to the reports on the left-hand side, we're gonna open up our favorite reports, that being, of course, the balance sheet report. Let's take a look at the balance sheet report, gonna be opening that up and we're testing. I'm gonna close up the hamburger up top, we're gonna hold down control and scroll up just a bit, we'll scroll up just a bit so we can see it a little bit more clearly. And so what we were expecting, if we entered all four of these things to happen, would be the 350 decreasing the materials and being recorded on the other side in the cost of goods sold. However, we're only doing 100 of it at this point in time, applying it out to job number 14 and then we'll do the following or other jobs in a future presentation. So here we have now then, notice the clearing account is up top, but nothing is in it, right? We recorded this transaction, but nothing went into that account because we wrote a check kind of form, which is an expense type of form, but there's no transaction related to it because we just used it in order to record, in essence, a journal entry, which includes the items. Going back to our balance sheet then, what happened then is the raw materials went down, not by the 350 yet, but by what we've entered the one time, which was gonna be that 100,000. So there's the 100,000 decreasing the raw materials. If we were to click on that, we'd go to our expense. So there's our expense. Gonna close this back out and close this one back out. If we go back up top then to the balance sheet, let's go ahead and duplicate this tab. So I'm gonna go to the tab up top, right click on it to duplicate it and then go back to the tab to the left because I wanna open up the hamburger so that I can then open up the reports where our second favorite report is and that is the profit and loss, the income statement report. So I'm gonna go to the reports down below, looking for that income statement. So I'm gonna hold down control and scroll down a little bit because it seems like funny things are happening. It's not working right. And we're gonna go to the profit and loss. So see, I'm back at a hundred percent and it seemed to work good. And then I'm back in the reports and that's when I close up the hamburger and then scroll back in to like a one, I like it at one, two, five. And then in our income statement, we now have the materials. You can break out, we have within the cost of good souls. I can shrink up the materials here to just show that 100,000 or we can expand the materials and show the detail that we had entered in for the cement, the render and so on and so forth. If we were to open this up then, we're gonna see the more detailed information for any of the material items. And of course that would then take us to that expense account as well. These items being driven by the jaw or the items and these accounts driven by the items that we set up, the items then applying to these particular accounts to cost a good sold account and then the materials account. If we then take a look at the full cost of good sold, we're now at that 100,000, which of course ties out to the 100,000 basically in job 14 that we wanted to apply out for the current time period for 2020, not including the beginning balance. If I was then to break this out and say let's not look at it by total, but let's look at it by customer and then it'll give us that detail. I'm gonna say review or run that report. Then we could see the detail for job number 14 currently in the current period for the 100,000 because that's what we have in the current period breaking out to that 100,000 applied to job number 14. Now that doesn't include the beginning balances. What if we take this back to 2019 so we can include all the open jobs at this point in time? So I'm gonna try to bring back the beginning balance and take it across that end of your period, which is December. I'm gonna say run that report and let's see what we have down here. Then now we got job number 14 and 15. And if I get down to the bottom line number for job number 14, we're at the 141,000, right? 141,000, which ties out to the total for the job. So it's still open. This is the lifetime, not just in the current time period. And so there we have that and we haven't entered of course for job 15 and 16, the materials that happened in 2020 yet. Let's go ahead and right click on this tab. Again, let's duplicate this tab. I'm gonna right click on it and duplicate it. Let's go back to the tab to the left and just consider the hamburger. Let's open the hamburger up here. I'm not considering the hamburger. I'm kind of hungry, but I'm gonna, I'm wanting to open the hamburger and then I'm gonna scroll back down to get it back to 100% so that we can then consider the projects tab. We're gonna go to the projects tab over here. And obviously we can see similar detail within the projects tab. Let's close that hamburger up, get it out of the way, doesn't tempt us. And then we're going to go into job number 14. And we then have our information. Now we're at the costs of the 141 and the profit. So now you've got our cost of goods sold information, the breakout of the materials in this format as well. If we wanted to see the actual transactions that are just applied to this particular job, we can do so here. And we can also run reports specifically related to this job. So in the next presentations, we're gonna be moving on doing similar process for job number 14 or job number 15 and 16. That's it for now, let's get out of here. We will change the dates or the date should be 2020, somewhere within 2020. We could see on the balance sheet that the raw materials.