QuickBooks Online

1. QuickBooks Online Course Overview: Hello. If we are a business owner who would like to learn QuickBooks online in order to run our business or a business professional who would like to learn how accounting software works in order to advance our career? Or an accounting student who would like to know how accounting theory applies to real world application with applications such as QuickBooks, this course is a course for us. Why choose this course? This course will include current content for QuickBooks online, recorded recently. Important because QuickBooks online being an online software will change with time and have a different look and feel as more time passes. This course will also provide more than just the data input. We will learn the data input, including things like entering the data into an invoice entering the data into a bill entering the data into a new employees to set up that employees, however, will also ask the wide questions. Why are we entering this data? How do we get these forms set up so the data input is done properly, and what will be the effect of these forms on the end product? The financial statements being able to understand and explain the answers to these wide questions is what differentiates someone who really knows the accounting software from someone who does not. This is the knowledge that helps us to set up the system and see when there's problems within the system. They're also the questions that can peak our interest within the topic as well, because they satisfy our natural curiosity for any given topic. Who will we be learning from? We will be learning from a practicing, certified public accountant. Someone who has accounting experience has teaching experience with both business and accounting classes and has experienced putting together complex curriculum in such a way that students can get from that curriculum what they would like to learn from it in a systematic way. We're learning from someone who has a charter global management accountant designation, someone who has a master's of science and taxation, someone who is a certified post secondary instructor and someone who is a curriculum design expert, someone who has experience putting together complex courses in such a way that they fit together well, such a way that students can flow through the course and understand what is being taught and in such a way that we can go back to any concepts that we would like to at a later time , as well as jump forward to any concepts that we would like to learn. What will we learn? We're gonna learn QuickBooks online. Start to finish. We're going to review the software. We're gonna talk about who owns the software. Intuit how to download the software, how to set up the software. We're going to create a new company file within that company file. We're gonna enter two months worth of data doing a comprehensive problem and go through that data input process for those two months. Will then do the bank reconciliations. At the end of the months will do a Justin journal. Entries will talk about the closing process and reversing entries, and we will format, print and export reports to excel as we go through this process. How will we be taught through viewing and doing will have an instructional video that we can watch through and see how the concepts are being done, where they're going to go through a practice problem where we can apply the same concepts. What will be the presentation quality. This, in essence, will be the presentation quality. This is not a paid presentation for the demonstration of the course of a way higher quality . This, in essence, will be what you receive. Please join us and learning QuickBooks online. 2. QuickBooks Online Set Up (Copy): Lo. In this presentation, we will set up a QuickBooks online account for a new business within QuickBooks Online version. We're now at the Intuit website. Into it is the owner of QuickBooks. So we're at the quickbooks dot into it dot com. This is where we're going to register for the online version when I scroll down to the options and the products that QuickBooks has on this page note, as we scroll down that QuickBooks does has multiple versions of the software, including an on ground or desktop version that we would download and an online version. We're gonna be looking at the online version here. The QuickBooks Pro is the most popular desktop version. We're not gonna go over the pros and cons at this point. We could take a look that at a later time at this point, we're just gonna download or register for the online version. When considering the online version, there are still some options here. We have the simple start. We have the essentials, and we have t plus options. They all have their pros and cons. Obviously, the price is gonna be the major pro for the simple start. If you just want to invoice and get used Teoh QuickBooks online and see what it's like then that would be a good way to go. You can then increase or upgrade to the essential or plus at a later time if you need to do it. More functionality such as pay bills, which, if you're doing the full service items within QuickBooks you would most likely need and therefore the essentials. Probably the most common used at least for service companies. We're gonna be using the plus plan, and that's mainly gonna have the difference here of tracking inventory. So if you're having inventory, you're gonna wanna have that, you gonna need the plus plan and it has the added benefit of tracking the 10 99. Those are things you're gonna need to pay at the end of the year, of course. And so if we could track that for you, that makes the 10 99 process easier at the end of the day. So we're gonna go for the plus plan mainly because of the inventory option. If you already have an account set up with into it with some of their products that have different products such as TurboTax QuickBooks Pro connect. Then you already have the I d hear. If not, then you go ahead and just sign up and create a new account. Once that set up, you can say yes, that's correct. We have the account set up. Then, of course, we have the billing information that we will have to input. Once you have completed that process, it'll go through the quick thinking and setting up your accounts. We will then set up our business name here and how long we have been in business. It's important to set up the correct business name here. That's what they're going to set the business account up as if you have worked with the on ground version or the desktop version. You know that you can't set up multiple files there, but when we're using the online version, we would, in essence, need different accounts in order to run multiple different client files or multiple different business files. So we need to make sure that we're having one business at a time that will be running through the online version. We're gonna select less than a year. Well, we are gonna have this be our first month of operations or we're gonna put in up beginning business, a business starting out. If you are input in data from a prior QuickBooks file or if then you could go through a process. There is a process that we can look at at a later time on how to do that. And if that is an option, you're gonna want to select this. I've been using QuickBooks desktop and want to bring my data over. We're going to start a new business in this presentation started from scratch. Next, this screen is gonna give some options in terms of what we want to emphasize here. Praise, Basically just telling you kind of what QuickBooks can do and what you want to emphasize within QuickBooks. We're just gonna select all set and go forward from there That will basically be it for setting up the account we're now in QuickBooks online. We have a new account set up, and we can go forward and enter the data from this process. This first page doesn't look very interesting yet because we don't have any data populated . We will be looking at a file shortly that has data populated and go through the components of this page, but we want to look at it with nothing in it first, so it looks like as it would in essence, when we go into the program. The layout could change from time to time because QuickBooks is going to be updating the layout as it goes, so it may look a little bit different, but the features will remain the same. If you're used to using the desktop version, you'll note that it looks a lot different because the desktop version usually will open to a home page. Now experienced users probably don't need that home page. They can probably navigate without the home page, and new users are aren't gonna care because they've never seen the home page. I have noticed, however, that the home page is really useful for experienced users Teoh coach or help out new users because it gives that flow chart of how the process works. So we don't really see that, However, we do get a nice little summary page of the activities that are happening, the activities that are often most youthful or um most wanted to see by business owners, including a quick profit loss expense and the bank information here, invoice sales and tips. So that's what the first page is gonna look like. All the functionality. Obviously, it's going to be a database program that will be able to do pretty much the same type of stuff at the online and the on ground can dio. However, the layout is different rather than having the drop downs, which you may remember, or maybe similar to people that used Microsoft office products way back before they changed to the ribbon with. That's basically the format of the desktop version within the online version. We're gonna have this item here so this item will open or close the menus on the left hand side. So you want to get used to this item and be able Teoh Click that that'll give you just some more real estate off some more space on the screen. And then if we click that, we'll get our items over here. We are currently in the dashboard that's going to give us this quick look of what is going on. Not too much activity here. We don't have any activity until we have something going on. Then we've got the banking tab. And we'll go through these tabs a bit more in depth as we start entering data and look through a file that has more data. But we have the sales tab. And once you go into these, you want to check the tabs up top and see how to navigate through this. We got the customers up top here. We can inter new customers, products and services and then we've got the expenses. So expenses here and then the vendors. That's who we owe that we can enter there. We have the employees, of course, and enter our employees, employees there, reports Tab is gonna wear, be where we navigate around and get to the reports. Here's our tabs up top my customer reports and what not taxes. And then we have accounting. Ah, reconcile of chart of accounts. No activity at this time. And then my account and APS. We also have this information over here. You're gonna want to select this plus item. This will have most of the functionality in a nice quick area here. So when we want to create an invoice or receive payment ah, check bills. Most of the normal thing process payrolls. This is a way we can go into that and do that pretty quickly. You also have this cog over here, and this will give you some or company information, how to set up your lists and other tools. So we're gonna go through these as we set up the company and will also take another look at this as we have some data that will be populated. So it'll look a bit more interesting and we can navigate around and see how to use this information. 3. 1.15 Vendor Section: Hello. In this presentation, we will be talking about the Avengers section, the vendor cycle within QuickBooks online. Here we are with the QuickBooks online dashboard. We will be continuing with the get great guitars problem. We're gonna be talking about the accounts payable or the vendors section those items that would be involved in the cycle of accounts payable, including entering bills and paying bills. In order to do that before looking at these areas within QuickBooks online, we'll take a quick look at the QuickBooks, a desktop version for a couple different reasons. One is it's gonna have. The homepage gets a nice flow chart of the cycle of the activities in the order of that activity and to if you're used to the desktop version, we'll be able to look at those components and see the flow chart and then apply where those same items are found. Here in the online version, this is QuickBooks desktop version were at the home page. So if you're used to the desktop version, you probably started out. At least. Using this type of homepage gives you good floor really nice flow of how these different cycles will work in overviews of the cycle, including the vendor cycle or the accounts payable cycle typically known as the customer cycle or sales cycle or receivable cycle, and in the employee cycle. And it really puts the components of what we're gonna do into a nice flow chart. All of these areas are also on the online version, however, the form that's gonna be a little bit different, and I think it's good to kind of conversion over from this flow chart analysis and then see where those same components will be found in the online version. We're here focusing in on the vendor section and the vendor section. Typically, vendors mean who we buy from, so when we say vendor, we mean like a store vendor who were who we are purchasing from. So we are the purchaser rather than the seller of the transactions win. Considering vendors, vendors, then being those who we purchase from the most simplified purchase will, of course be just us pain for the goods that we receive. And that would just be us writing a check. The vendor section, however, typically is trying to see who Rio and list out those components of those people who we owe money to. In other words, we buy stuff it more. We get services on accounts and then have to track who we owe in an account like accounts payable. When that's the case, there's two main components to the vendor section, and that's gonna be the Inter bill, and then they pay Bill. So within the flow chart, it gives us a nice flow of what's gonna happen. Obviously, we will enter the bill, and then we will pay the bill. And when we enter the bill, it could be anything from the utility bill or or supplies that we purchase anything that we're gonna put into the system. It's nice for us to be able to put it in the system, even if we're not gonna pay it at the point in time that we get the bill. Reason being is that that's usually closer to the point time that we actually consume the work that was used, that we actually got the service that was gotten or purchased the item that was purchased and therefore closer to the time that we should be recording it into the system. Not exactly shouldn't be waiting. In other words, to record those services or those expenses until we actually pay them. And two, it gives us all this information within the system and allows us to events. See them in the pay bill section in a nice, orderly way, so that then we can pick and choose and and sort which ones we want to pay When And so that's the system that we're gonna have to enter the bills here. You could think of the normal month in bills that were just gonna list out. And then we're going to select this Adam pay bills, which will actually pay the bills. But it will also give us that opportunity to pick and choose which bills we want to pay and which not to pay. Now the pay bills will, in essence, be just writing checks, but it allows us to write multiple checks at one time. That's really the whole vendor section then, well, that's the normal process of offender section. Now, if we are purchasing inventory, however, we have another component. If we're just a service company, that's really the whole story. Where if a company that has inventory, then we have a bit more complex, complex city in the vendor section in debt. We may have purchase orders, which means that we're going to actually, I want to buy something in our case guitars. So we're gonna ask the vendor for these guitars, and that's a little bit unusual of a form in that we don't actually have a journal entry related to it. Unlike if we were to purchase something as an individual from an Amazon or something like that, we typically make payment before we receive the goods purchase order. The purchaser actually often has more power in a transaction on a business to business transaction and therefore could actually request to be shipped the goods in our case guitars before we make a payment. So we can actually say, Hey, we would just want these guitars. Once you give them to us, then we'll pay you. And so, given that transaction, given that method, given the fact that the purchaser has that kind of power, then there's no actual journal entry with the purchase order. It's just it's just requesting inventory. We haven't gotten the inventory and therefore will not record it, and we haven't made a payment and therefore will not be recording any payment. So that's gonna be that. And then we have the receive inventory, typically often with a bill, at which point will record the fact that we received the inventory. Ah, and enter the bill, and then we might pay the payment at a later time. Then, of course, we've got the sales tax information and some other type of options in here, but those are gonna be a major components of the vendor section that will need to know how they flow through. Now the flow here is really nice. That's flow chart telling us exactly how we use these forms. Because these forms, then, are what QuickBooks uses to drive transactions. QuickBooks is not gonna drive. Most transit wallet is still driven by journal entries. So if you're thinking if you're from a journal entry background, every one of these forms, except for the purchase order, has a journal entry to it, and you really want to be able to say, Well, what of the debits and credits related to it? And I don't give you an idea of how to put the financial statements together. We won't be talking about debits and credits. Most of the time in this course, except for, like, the adjusting process. But we will go back and forth to the financial statements and see the effect. See the two accounts affected. See the double entry accounting system working as we enter all these transactions that driving components of these will be the forms, the forms, they're gonna have to be set up properly in order for them to work properly. And you will talk about how to set that up in order to set that up. Knowing debits and credits is helpful. Here's the QuickBooks online set up, and we're gonna go through some of these components a little bit different layout. We don't have the the home page up front to go through that flow chart. So there's a different areas where all those flows are at. However, many of them are gonna be up here in this little plus icon. So if we go to this plus icon and we go to the vendor section, we don't see a flow chart. But we see the same type of items that we're gonna be using same type of items that we saw in the home page. So typically the flow would then be that the normal flow would say that we're gonna enter Bill. This would be like you can think of these at the month and bills and the bills that we have to pay, which we are not yet going to bay. We got a bill, but we're not gonna pay it yet. At this point in time will enter the bill. And if we select that bill, it's gonna be looking something like this. It will have the ability looks kind of like a check input, but it's gonna have a bill instead of a check. We'll start to analyze what the's mean in this case. This you could think of the journal entry. You don't need to know debits credits, but to account will be affected. The bill means all the time that the accounts payable is affected and going up so we'd have the bill here. And then we have some accounts that will be the other side, probably like a utility bill or a phone bill. So the accounts payable would go up, and the expense in that case would go up, or we'd be purchasing an item such as an inventory item And that would mean that inventory would be at the the other side. I'm gonna close this back out. We're gonna x out of this, and we're gonna go back up, Tom. And we could say usually we would enter the bills and then pay the bills. So pay the bills is really just writing a check we would select to pay bills. Once all the bills have been entered, we can select them. If there was more than one, there'd be a bunch of bills in here. We get select more than one here. We only have the one and note that I'm using a populated worksheet here in terms of a QuickBooks file that always had already has some numbers in it. If you're new to this, if I mean, if this is the first time we've opened up the QuickBooks file, you may not have a whole lot of information in there. That's okay. We're just gonna basically take a look at this information and look through the different types of forms and get used to how to inter or where those components tie together. Then we'll go through the process of adding new information. So this would we would check this off. And the pay bill means we're gonna pay it typically with a check checking account. Going down then would be the transaction. Thea, Other side being affected in this, the other side always being accounts payable in this case, accounts payable related to EPA phone in this particular vendor. So the pay bills means we're gonna pay bill with it with it usually a check decreasing the checking account and the other side paying down the payable. Ah, that we owe after having entered the bill. And of course, this item here represents a bill that we had entered in the past and can now select for payment. We're gonna close this back out. That's gonna be the major cycle that will think of for a service company. If we have inventory, then we have a few more things we want to consider. Remember, we have the purchase order, so that typically means that will mean that we're gonna request for inventory. In our case, it will be guitars that we're gonna order. But no transaction is actually happening. So if we click on this, then this is gonna be the purchase order. Will select the vendor that we're gonna purchase in our case, a good dollar from and then we'll enter will populate this information and then, in essence, will select the item which in our case, will be a guitar. And it will give us the quantity, the rate and the amount for that guitar. Although we have the amount, however, we're not paying that amount. And we haven't yet received the guitar, and therefore there's no transaction that will actually happen from this purchase order. It's on Lee saying to the vendor, Hey, we would like this at once. We have it. Then we will record it in our system and enter the bill and eventually pay the bill for the inventory that has been received. We're gonna close this back out and see what else we have. We select the drop down here, we're in the vendors section, so then we have the purchase order. Once we have the purchase order, we will receive the information and typically we receive it and enter the bill after we get , um, that the information or the guitar in our case, the inventory from the vendor and then, of course, we have to check, Which would mean that we're going to pay something now. The check will typically mean that if we haven't already, if we entered a bunch of bills in other words, we typically would go to pay bills, which would generate checks but multiple checks if we wanted to. Just pay something straight right from one check. Ah, we would then just check the checks and we wouldn't go through the pay bills. We wouldn't go to pay Bill. We wouldn't go to entering the bill and then paying the bill. We would just simply pay the bill right there and then and there. So in that case, we could just go to the Czech looks, acts like a check. We're gonna enter the payee here, that vendor here, information. And then, of course, the account that will be affected if it was something like utility bill or whatnot and or items. If we were to purchase inventory items with check down here so we'll take a look at some of those in the future. Of course, the journal entry related to a check would be decreasing. Typically the checking account and the other side being for whatever we purchased if that be some type of expense utilities, telephone and what not expense accounts. If it be some type of inventory in our case guitars, it would be an inventory account, and we're gonna close this back out. Those are going to be the major components that we will be using if we select the drop down one more time. We also got some other items which will be an expense item. We'll take a look at that a few times as we work through the problem. I won't get no a lot of detail with this. We have the vendor credit, credit card credit and then the print checks. I will talk a little bit more about these in the future. I won't get into too much detail. That stuff we talked about right now is really what we want to know. Going through the vendor section, note that when we do print checks, we still have to buy the checks and then have pre printed cheques. That's a check number on it and then print them as or we can actually be doing some other checking system, writing the checks by hand and then not print of the check. So we kind of have that option of just tracking the checks that we have within the QuickBooks system or actually buying the checks and printing them through the QuickBooks system. If we do print the checks, it's not like we can put him just on a blank piece of paper because we still need those pre printed cheques with the pre numbered checks with them. So we're gonna close this back out. Note that we also have this side panel over here. And if we're thinking about the payables side, we usually look at this expenses area. So this is another area that could give us more detailed information for certain components of the vendors section. So if we look at the expense is here and we have some transactions that have taken place, then it will give us some information in terms of Here's a bill. Ah, here's an expense. Here. Here's the check that we've been entered, so this will give us some activity that has happened in terms of a transaction type date data kind of like a general ledger type of data through here, So obviously this has some information that has already been populated. We've been working a little bit here so we could have some information that is populated and go through it like this. So that's gonna be the expenses area here, and we'll work more with us as we enter data. No, you can also have some transactions from here's most of them we already saw. But if you take a look at the transactions the bill, the check, the expense to check the purchase order and vendor credit can also be accessed here as low as well as the print checks and pay bills items. So it just really depends on who you talk to you as to whether their default area to go to is here or to go to expenses and then the expenses tab and get to a lot of that same information here. We can also go to specific accounts in this fashion as well. Then we have the vendors tab on the second tab here. This will give us a quick summary of our vendors, the people we owe money to and again, this is populated cause we already have information here. If it's a new file for you, you won't have any vendors in there, but this will give us some information about the vendors. It'll give us a quick, open, balanced detail here, and it will give us some options for the venture vendors in particular event. And these all sins will really just help us to populate a little bit. So if we work, Teoh, create a purchase order, for example, for this particular vendor, fender, then it would basically select the Avenger as we create the purchase order. So it might save a little bit of time to pick that out there rather than creating a purchase order up here and then and train the vendor more than the purchase order. One more thing will take a look at for this quick overview of the vendor type transactions . That purchasing cycle would be the accounting down here. We're gonna go to the accounting. And if we look at the chart of accounts tab, we can look at the typical account that will be related. Teoh purchasing one being cash, but the other being accounts payable and we'll scroll down through here. It's an order, assets and liabilities and equity ah, than income and expenses. And we're looking for the AP which is right here and is another area where we can get to the register. So if we were to select the register, then we would see some information related Teoh basically the accounts payable, which is part of the purchasing cycle. And that'll typically include entering the bills here and then the payment of the bills. So we got pay bills and inter bills, and we should see the cycle such as that when we look at the accounts, payable should increase when we enter bill. And, of course, a decrease when we pay the bill. That's quick overview of the vendor cycle. It's really helpful to look through these things. Bi cycle to try to think through how the cycles work one. Because you'll be working in cycles a lot of times. If you're working in accounting apartment, he really often time gonna be working in accounts payable or accounts receivable or payroll and and two. There's a reason for that in that these cycles are gonna be more related to each other. So it's a lot easier to think through accounting processes rather than just by date of what's gonna happen in terms of a complete chronological order and more in terms of what's gonna happen by date and but within a cycle such as the vendor cycle, the payable cycle, the purchasing cycle. 4. 1.20 Customers Section: Hello. In this presentation, we're gonna take a look at the customer section, the sale section or the accounts receivable cycle within QuickBooks online. Here we are in the QuickBooks online dashboard. We will be continuing with the get great guitars problem. We're gonna go over the accounts receivable or the customers or the sales cycle. That is gonna be the process dealing with the sales to customers and those things that will be involved in that process. To do that, we will be going up here to this item and looking at the customer section as well as going over toothy sales item on the left side. Before we do that, however, we're gonna take a quick look at the QuickBooks desktop version for a couple different reasons. One is that some people might be used to seeing the home page on the desktop version and to whether you're used to that or not. It's a really good flow chart so we can see how these things fit together in a flow chart and then look for those same items here within QuickBooks online. The same items will be in both locations, but it's nice to see the flow chart to see how QuickBooks will put these things together and how these cycles typically work. So this is actually a QuickBooks online home page, and the home page is broken out by cycle, which could be very useful to us. So we're just really for the QuickBooks online course. We're just looking here at what the QuickBooks on ground or desktop version shows for the flow charts, and it breaks those up into relevant category C. We got vendors, customers and employees. When analyzing what is going on. It's nice to see this little flow chart and see what is happening. Once we get used to this flow chart, we don't really need it anymore. But when we're first visualize and things and seeing how the process is going to work, it's good to have a visual demonstration off that we hear gonna be. Concentrate on the customer section. And when you're thinking about the customer section, there are people working in the accounting department that worked pretty much all the time and just one of these cycles. So when you think about the accounting process, we don't really want to think of it. Too much is just totally chronologically, we could, but it's probably easier to remember things happening within cycles. So we looked at the vendor cycle before. Now we're looking at the customer cycle, which could also be the accounts receivable cycle or the sales cycle. These are gonna be the documents that are gonna be driving the sale cycle. Remember that, QuickBooks, Everything you enter into QuickBooks, typically, if it's a normal business transaction something that happens on a day to day basis, it's gonna be driven by form. So we're going to set up these forms. How do we put these forms together once they are set up, then we're gonna use these forms to drive through the process, and that data input over the forms at that point should be an easier process. So the difficult thing about QuickBooks is really getting it set up. Typically, to get the form set up in the correct way, you want to get it set up so that data input can be done by someone who doesn't need to know a whole lot about accounting or or the software they could put in the data and and then we'll generate reports and then, of course, interpreting that information. So for the customer section, we have the main things that happens, whether your service company or as company that sells inventory. Um, you've got the two things that are typically gonna happen. We got to create an invoice than a receive payment, then record deposit. That's typically the process that will happen in something like a service business. Now I know there's a couple different types of businesses that in terms of when we're going to get paid, we may get paid at the same time that we do the work. Or we typically might do the work before we get paid and something like a law firm or a c p , a firm or other type of like a landscaping or services. We might do the work, then have to charge the hours and then build a client and s O. That would be a typical case, and in some cases we might get paid before we do the work. And we won't go over that scenario here, but it's something like a we have concerts or something like that. We may get paid from getting ticket sales before we actually provide the concert, and that's That's a bit more of an unusual circumstance in terms of most businesses where we get paid either before we do the work or at the same time if we get paid. If we do the work before we get paid, we invoice the client and then we expect to get paid in the mail with a check or something like that, this would be the normal flow that we would have. We have an invoice that we would create. It's a we. This is the hours that we spent. If we're a law firm or c p a firm, here's the invoice that we're gonna mail to you based on these hours for the amounts that we are charging you, we would then expect to receive a payment in the mail. We're going to receive funds for that, and then we're gonna take those and we're gonna put him into the bank. So, no, the banking system here isn't really part of the customer section. But there's a little arrow that goes to the banking system because hopefully most of the deposits we make our from customers, not all of them. Well, they because we're gonna have, aren't we might put more money in the end of the system into our business, or we might get a loan or something like that. But hopefully, most of our deposits are part of the customer section, so it's gonna be the normal process will have here. We'll talk a little bit more about the journal entries when we make these items. When we when we go through this and when we actually do this in practice and we'll talk more about how the financial statements will be affected. Then if we get paid at the same time as the point in time we do the work, then we're gonna create a sales receipt, and it's it sounds just like what it is. Basically, we're going to say that we're creating a sales receipt, which you can think of something that we would give to the customer at the point in time that they check something out. For example, we're gonna be selling guitars if they were to bring in Qatar up to the front of the storms that I want this guitar. Here's the sticker price. Rather than create an invoice which would create an IOU, we would just create a sales receipt and note that that bypasses these two items. We wouldn't have to create an invoice. We wouldn't have to receive payment because we're going to record the sale and receive payment at the same point in time. That being the point time that we create the sales receipt and then that would go directly to the record deposit. Those are going to be the main kind of components that we're gonna be looking at within the customer section that flow that process. That's the main thing we want to get down or understand that when we take a look at these processes, let's take a look at those same items within QuickBooks online area with QuickBooks online . We don't have that same flow chart, but we do have all that same information. And typically one place to go is this little plus item up top, and that will give us a grouping of our activities. We saw by cutting by vendor before now by customer, so we can see these activities and we could see the same kind of think of that flow chart as we're entering these activities. We're just gonna go through the main ones here we're not gonna go through everything, But we're just gonna go to the main things that we're gonna use within this cycle. And that would be us billing clients, us receiving payment and then making the deposit. So typically, once again, if we were to build a client and for work that was done for which we had not yet been paid , we would then create an invoice. So here's the invoice under the customer section, If we select that item, we get to an in voice, the invoices gonna have the customer up top. We could email said, This is an optional field. If we want to email the envoys, the billing address, the terms of the invoice, that invoice date shipping if needed. And then we typically have the product. This is gonna be what we sell in our case. If we're selling guitars, it'll be a guitar that we sell. And if it is a service item, then it'll be a services. So if we have guitar lessons that we have a service item, it will be here. We have the sales tax and then the total amount due Now to actually populate this invoice, not too difficult. Typically, we want anybody to be able to populate the invoice, but we will go over what the invoice actually does. How to set up the invoice, which is a little bit more difficult, especially how to set up items and then how to interpret what the invoices doing, which again is a little bit more difficult. So we'll talk a little bit about that now. But as we go through the process, we'll get into more. What's the effect on the financial statement will create an invoice. How do you enter the items? You know? How do you set up the invoice so that it's ready to be data input by anybody who's basically working, working the staff, Alright, possibly at a store or whatever at a given point in time. So the invoice itself is gonna increase. It means it's gonna increase accounts receivable. So in invoices gonna increase accounts receivable. The other side is going to go to sales or revenue. So in our case will have revenue here. If we sell guitars, which is a service, I mean well, first, if we don't have guitars, if we're just selling a service item such as guitar lessons. That's basically it counts. Stable goes up, and we credit sales or revenue or income, and we expect to receive payment in the future in the mail. If we sell something like a guitar or something like that inventory, Um, then we're also gonna have sales tax, possibly depending on the region, that we are in our usage tax, some type of tax based on that sale, and therefore we'd have toe actually add that the sales tax for whatever region we're in. We'll talk a bit about that as we enter data, and that would give us the total amount. Do so this. So the debit to accounts receivable would include both the sales price and the sales tax. The credit, or the increase in sales would only be for the sales price, and the difference would go to a payable for the sales tax payable. So that would be to record the sale and then the other side would be a decrease in inventory. Um, because we sold inventory in this case of guitar and the related cost of goods sold so that journal entry could see it's a bit more complicated than you might think when just putting the data input. So there's two things we want to learn here. One how to just put the data and put into the system to how to set up the system. So data input can be done well, and three haven't interpret what is happening. When we put the data into the system to the financial statements to the end result of to decision making documents, we're gonna close this back out and then take a look at the next component. If we hit this plus item once again, we're gonna go back over here. So we have the invoice and then we're going to receive payments. And remember, the invoice increases accounts receivable, but we have not yet gotten paid. Then we'll go to receive payments. And if we go to receive payments, then we're gonna enter the customer once again that we have received the payment from and that will typically give us option of the invoices related to that customer, and we can then go in there and check off any invoices. I'm just gonna I've picked a customer just as a demonstration. If you don't have anything in here, of course, and that's OK It's just a demonstration. So if I pick a particular customer, typically it'll pull up the invoice. I'll say, Hey, this is an invoice you have for this customer. Do you want to connected this payment to this invoice? If we do so, then it'll put the payment here and it'll titles two things out. So if we got $950 in the mail and it was related to what we got it from Diana Martinez, and we assume, of course, it's for this invoice as the as the system just pulled up for us, then the system will apply these out. What will the effect be on the financial statements? It's going, Teoh, Increase the amount of money we got and it's gonna decrease the receivable that's owed to us by Diana Now, Typically, we you would think we put this into the cash account. If you're thinking about normal bookkeeping or normal like accounting Textbook problem. We put this into cash, and that still goes in the cash. But we might not put it into the checking account yet because we might want a group the checking account in accordance with with how we're gonna deposit into the bank. Meaning if we got more than one cash deposit today, more than one check, then we might want to group those together and go to the bank and put them all in the bank at the end of the day. And to do that, if we want to group him in the same format and put them all in the same grouping. So instead of just putting it directly into the bank now we're gonna put it into UN deposited funds and then at the end of the day will put all the all the checks into the bank at the same point in time and group them together in the format that they should be grouped. So this is actually increasing kind of a cash account is a cash account in a way, but UN deposited funds and not the checking account, which is our major cash accounts. This is in between step that you may not see in a lot of theory classes which just basically say cash is just this cash that picks up everything. Okay, so we're gonna close this back out, and then we'll take a look at the last component of that particular cycle and we're in the customer. So I hit the plus I count of here, we're in the customer section, so we have the invoice and then the receive payment and then we go over here and remember, when the flow chart have the make deposit, that's gonna be the next item here. But we don't see the deposit in the customer section. It's over here in the other section, in the desktop version in the in the home page it was in the banking section. And again, we hope this this deposit really is kind of related to the customers. Hopefully because that's going to be part of our normal process. We're gonna do work and we're gonna get money, and then we're gonna deposit that money. So hopefully this bank deposit is really part of a flow chart under the customer section. However, of course, there are other times when we might make deposits. We might put money into a bank from our personal checking account, which would be a deposit, or we might get a loan, which would be a deposit. But the majority of our deposits should be hopefully part of the accounts receivable or sales cycle. So then we're gonna say deposit here, and if we had any deposits outstanding, then we could check those off. They will actually say, Hey, you got this in in the UN deposited phones right here. Would you like to check that off? And is that going to be grouped together as you go to the bank and deposit this out? If there's more than one of these, if we have multiple checks that we received and recorded as received payments, then we can check multiple deposits off and then go to the bank and put him on the bank in the same grouping as will be shown on the bank. Statement went. And that will really help with our bank reconciliation. So the deposit then will deposit into our checking accounts and have actual checking account would be increasing and that independent between account, those UN deposited funds account that cash account that represents money. That chip we have cash or cheques, typically that we have not yet put into the bank. So that's gonna go down and the checking accounts gonna go up. That's the normal cycle for when we make sales on account of just close that out. I accept that out. Now that the other side that could happen is if we make, I'm gonna hit this plus size, um, one more time. Well, maybe not one more time. Another dime. If the other item we could have is that if we get paid at the same point time, remove that flow chart, remember the flow chart for the desktop version? If we got paid at the same point in time, if you bought the guitar and someone bought a guitar and they come up and want to write ringing out right at that point in time and pay us at that point in time, then we wouldn't do an invoice because that would go into accounts receivable. But a, um we would be doing a sales receipt, so then we'd have the sales receipt here, which is just what it sounds like. We're basically gonna process this transaction and provide a sales receipt at the point in time of the transaction. If we select that item, then we'll see the sales. You see, it looks very similar to the invoice. However, it will say sales receipt, and when it does so, it means that we're gonna increase some type of cash accounts. So in our case, it will be the UN deposited funds. We're gonna put the money into unknown deposited funds once again, rather than the checking account thinking that we're getting money either in the cash register, we're getting some check that will later deposit at the end of the day. So then we go through here, we have the customer. We have the billing process, that ship in the payments method because we're actually gonna get paid this time, typically cash or check. And then we'll put that in from and it could be obviously a credit card to, but then we wouldn't We may have to deal with the credit card a bit differently. We might not put it into the UN deposited funds because we could have a different type of grouping process. If we have cash or cheque, then we'll do the same process that we saw before on the received payments. Put it in the UN deposited funds so that it will then be grouped together as we go to the bank at the end of the day and deposit all the funds we have, Then we've got the product. That's gonna be our service item. If if we did something like, ah, the guitar lessons or the inventory items, if we sold something like a guitar for inventory, then of course we would have the sale would increase. We've got the sales tax that would be calculated. If we're subject to sales tax, depending on the region for our purposes, we're gonna use just a normal flat rate of 5%. The sales tax or usage tax is going to be something that wherever you're at, you know, whatever. The tax rate is pretty easy to calculate that the nice thing about sales tax and uses tax, it's all whatever the rate is, you just multiply it times the amount. So we're just going to use, ah, 5% for a general problem and then add that together to see how that tracks the usage tax, which is actually the more confusing component. How do you track it? How do you pay it out at a later time without getting in any trouble here? So we're gonna increase the sales tax. We're going to get the total amount here, and I don't give us a similar journal entry we got instead of accounts receivable. The similar journal entry as the invoice, I should say, except that instead of increasing accounts receivable, were increasing cash or, more specifically, the UN deposited funds wolf credit, then revenue income or sales off same type of account revenue type of accounts by the amount that we build, not including the sales tax. Then we'll actually increase in credit the, um sales tax payable account. And if you don't know debits and credits, we don't have to know debits credits. Really, if you do, we'll talk a little bit about the Democrats. But we're gonna try to talk more, increases and decreases and look at the financial statements. When we get to adjusting processes, we will talk about debits and credits to do adjusting entries. But if you can look at things in terms of debits and credits, that's great. If you if you can't, then we're going to talk in terms of plus and minus is too. So that will be OK. And then the other side of this will, of course, be that inventory will go down and that the cost of goods sold will go up so you can see once again this is something that the sales receipt is basically something that's created at the check register. And basically the machine pretty much does it most of time. And we're checking things out at a store and getting getting the receipt, however, that the calculation, what's happening? It's actually fairly complex. You see, this journal entry is not the most simple of journal entries that we're talking about when we create this simple sales receipt. What we going to do is think about how to set up the sales receipt, to have it be a simple process like that so anybody can do it and talk about what the sales receipt will be doing in terms of the effect on the financial statements as we make thes, because the financial statements are what we're going to use to make decisions. So then we're gonna close this back out, and then the Senate next process. Of course, if we select the drop down once again, we're in the customer section. We If we had a sales receipt, then of course we would go over to the deposit once again and deposit at the end of the day's that deposits then will include anything that we invoiced and then received payment for in a particular day, as well as any sales receipts we had for the particular day because those would result in cash and checks which have not yet going to the bank. And then we would take those, go to the bank and group them together and deposit them with the bank deposit. That's gonna be the typical process. Now, the other section that relates to this cycle is going to be the sale section on the left side. So we'd look at the sales section just to take a look at what we have included in here. The first tab. We have a few taps on top. It's gonna be all sales, and this will give us kind of the activity that will be related to this cycle, including invoices. Journal entries will talk about later, mainly invoices. We've cut payments here and then available. Expense will talk about how to have available expense and invoice your clients on that Ah, and then in sales receipts. So this is the activity that you'll basically see. It's kind of like a general ledger that they're giving us here. They're giving us all the transactions that are related. Teoh the sale cycle of the account receivable cycle over the customer cycle. However you want to see it, so this could be a useful field for us to go in. It gives us some options such as receive payment and what not for particular items and kind of adjust items we can get to the same information is basically kind of a general ledger type of activity. But it gives us all the activity related to the cycle rather than just one account, like the sales account for the receivables account. So that's gonna be that item. We have some filtering options and some some matching options that we can take a look at. I'm gonna go to the second area here to the invoices. So we saw that where we can create an invoice up top. If we select this plus item, we can create an invoice. We also have some items down here that we can create a new invoice here. And if we wanted to search through our invoices, this is a useful area that we can go through and search through our invoices and weaken tryto find these invoices by number bypass due by date. And we have, of course, some action items on there we can have here, including send prints and view and edit the items here. So another useful place for us to kind of get to an invoice a little bit more quickly than possibly going to the financial statements and looking at the General Ledger and trying to find the invoice in that format. And then we have the customers up top. If we scroll up top to the customers, that's going to give us information about our work customers. This is, of course, who we sell to. So it's gonna be an important list that we have here. Format it this way. We can go to these customers, and we can create something like an invoice to directly that customer. The benefit of created an invoice here, other than just hitting the plus item up here and created an invoice is basically that well , just generate the customer and we won't have to fill in that field, so it might be a little bit faster in that format to to do that, we can have the new item up here, which is basically ah, new customers that we can be setting up here if you wanted to add customers as we go, we can add customers as we create invoices as well, which is nice. So when we create the invoice weaken, we can put in a new customer in that process. And we'll, of course, have the customer balances here. So don't give us some detail, um, that we might otherwise would need to basically run a report in order to get that detail. So then we have the products and services tap up top in the sales area. We'll talk about how to set this up. This is probably one of the more confusing areas to set up. People that aren't aren't used. Teoh setting this up. This is what we need to set up in order to make those sales receipts and those invoices easy to use. So to do this, we're going to set up the inventory items were going to set up the guitars that we're gonna sell, and then whoever puts in the invoice of the sales receipt thing can just pick the guitar that we sold with the sticker price on it, and the system will know what the cost is and what the sales price. And it will be able to calculate everything that way. Same with service items. If we do guitar lessons or something like that, we'll set up the hourly rate for the guitar lessons. And then all we have to do to make the invoice is just to know how many hours we have and just pick that ah, service rate, and it'll create the invoice for us. So this is really one of the driving components that we need to get put together in order for the normal process, the data day. Just data input to run smoothly. So those are gonna be the major components of the customer process will go through how to set all these up, and we'll go through how Teoh run through recording these items within the customers or the accounts receivable or these sales cycle 5. 1.25 Other Section: Hello. In this presentation, we will talk about the others section within QuickBooks. In other words, those components that are not grouped in the normal cycle. The normal processes of the customer cycle or the sale cycle, or the accounts receivable cycle or the vendor cycle or the payable cycle. Those components that will be grouped that are important, that are used often but aren't grouped in those normal cycle processes within the QuickBooks online area or within the QuickBooks online dashboard. We will be continuing with the get great guitars problem. We're gonna be looking at those components which don't quite fit into the normal cycles. In other words, if we selected this item up top this plus item, we have a customer cycle, a vendor cycle and an employee's cycle, and then we have this other stuff that's grouped into other. And typically everything that's included here are gonna be normal types of transactions, things that happen normally within the accounting process, things that QuickBooks typically have forms to help us generate and drive the process to make the data entry easy. These are all gonna be things that we can think about and should think about will be easier to think about with in terms of their cycle, their processes in an order of them happening. These atoms over here are going to be things that happen often, but for whatever reason, don't be grouped or are were not grouped by QuickBooks into one of these cycles. So let's look at a few of those components and see why that is and how those items will be used within our accounting process. To do that, we're first going to look at the Quikbook desktop home page and get an idea of some of these components in terms of how they were grouped in terms of a flow chart within the home page. And then we'll go back over here to QuickBooks online and find it those same components and how they will be used within the online version. They'll be used in the same way between the two components, but the flow chart could help us to get a concept of how these things are put together for a couple different reasons. I like to look at the flow chart on the desktop version. One is that it gives you that picked oral presentation of how things will flow through, which, once we have that understanding in our minds, we probably don't need much anymore. But as we're understanding how to put them together, it is a useful thing to use. And two, If you're used to the desktop version in your moving to an online version, then you may be used. Teoh. This this type of format, this flow chart in the home page, and that could give you some more comfort. And, you know, with the process and the change as we see the new process over here. So this is the desktop version, and we're just looking at the home page of the desktop version, which gives us a little flow chart. And this is one area that we can think of the day to day processes as we go through these, and we've taken a look at the vendor process. That customer process and we have will take a look at the employees process and looking at the normal data. Transactions with QuickBooks typically has driven by forms so that the data input is as easy as possible. The more tricky thing for us, of course, is to set up those forms to set up the invoice to set up the receive payments so that the data input can be as easy as possible and then to interpret what these forms are doing in the format of the financial statements, because that's what we're going to use in order to make decisions. What we're looking at here is really this side of if we're gonna match up that QuickBooks online to the desktop version, these air items that QuickBooks thought were important, obviously because they put them on the home page, but they didn't include them in any particular cycle. So we're gonna go. It's not the exact same grouping here as well be on the QuickBooks online version in terms of the others section, and I think it's it's telling for us. And it's helpful to us as we enter this data to see what are the same in terms of the other section and say they banking section and what are different assed. We go through this what what might have been grouped differently and why that would be the case. The most obvious thing within this banking section, This other section that happens note there's no flow chart in this entire section, so these are just kind of things that QuickBooks said, Hey, that I don't know where to put him in the flow chart, but they're important, and we think they should be on the homepage because there's documentation for all these that you might want to go directly to these. The one of these, however, even though it's in the banking system which still has this arrow that has indicated, Hey, it's kind of part of this system. That customer six system is this item here, which is the deposit. And as we talked about in the customer section, even though the deposit will be in the others section, you really kind of want to think about it as typically part of the, um, customer section, even though it's in the others, or banking section. It's really kind of the customers process because we're hoping that most of the deposits will be from customers in the format of we invoice someone. And then we got a payment in the mail, which were now making a deposit with or we made it. We made a sale within the store and will later be depositing that sail into the bank at the end of the day. Now, of course, now the question then is wise it over here in the banking system or the other system, as it will be in the online version, rather than being in the customer's area. And that's because we could have some other types of deposits. We might have deposited money. We might have got alone so there could be other ways. We got deposits. But we're hoping that most of the deposits will be from customers, and therefore it's kind of an extension, as indicated by the arrow of the customer section. And then we've got some other items from reconcile ing items. Well, obviously the bank accounts gonna be a huge one. We want to reconcile. We've got the right checks here now, writing checks you might think it would be part of, and I think the online version will group this a bit differently. Is would be appear in the vendor section. So the version down here saying that we're going to write checks because we could write checks again. So basically, anyone that write checks could be used to decrease the bank account, so it's part of the banking system here, obviously, because we're writing checks. You can think of it as something other or not quite fitting into the flow of, say, the vendor section, because we could write a check, say to ourselves, Azaz a draw or something like that and use the check writing system in that format, which means we wouldn't typically be in the normal vendor section where we write a bill and we pay for things like expenses and what not So there's gonna be the check item that's in the banking here. It may be a bit different when we go Teoh the online version and then check register. That's gonna be something that a lot of people are used to seeing their checking account in terms of a check register. So I think they just kind of put that in there and said, Hey, you know, here's the check register if that's what you're used to. If you want to see things in that format, here it is the printing checks option again, not part of the normal flow, but you would think could be part of the vendors. Ah, section up here, put into the banking section down here. Clearly we can see why it would be in banking in online. We're gonna group it, possibly we're looking at the other section in comparison to the banking section. And then they gave us some other information, like the chart of accounts, major account areas there. That's gonna be something that we use a lot Items are things that are going to drive our inventory when we create the inventories. They were saying this is important enough for us to put on the home page. Uh, inventory activities. If we're dealing with the inventory, um, ordering checks and obviously they're kind of trying to sell more checks here in case because you have these yet the word checks from the bank. And then even if you're printing the checks out of the system so you might wanna easy area to order and buy more checks, and then we have the calendar option here. So let's compare and contrast this to the others section within. QuickBooks online. Here we are in QuickBooks online now, and we're gonna select this type item up here this little plus item and see what we have. So rumor we've got the same set up that we did in the home page. We have the customers, We got the vendors, we got the employees and we got the list of the normal transactions we will have for those items. Then we got the other over here, and once again, we've got these items. And the reason they're in this quick access area is because the writings were going to use all the time. They're items that we expect to be using fairly much almost on a day to day basis. But their items that for whatever reason, QuickBooks is not grouping into the normal cycles. The normal processes that customers or receivable cycle the vendors air payable cycle, the employee cycle or payroll cycle. We have them over here in other every as we've discussed the bank deposits gonna be something that we hope to use a lot. We woke. We have a lot of deposits, and we're going to the bank a lot and just they know us well over there were always deposited money in the bank and we and but And we would think that would be part of the customer cycle here. And it is in many ways just note that here it's gonna be grouped in the other items. So this is gonna be something that will use a lot transfers, eyes, something that we could transfer between different accounts that we can use possibly bank accounts that we can use fairly often in the transfer area journal entries. This is going to be something that is going to be used in terms of data input that another form is not. Therefore. So, as we said, most of the stuff here is gonna be the stuff that happens on a day to day process, meaning we invoice people. We receive payments, we make sales receipts and half of sales receipt rewrite checks. We inter bills, we pay payroll. All those things are gonna be things that happen so often that QuickBooks makes a data input form for us will basically do the journal entry for us with that simple data input form. And nobody needs to know much more than that. And must they're setting up the system in order to put the data input into the system. But transactions that aren't on a day to day basis. If we do something, that doesn't happen all the time, not things that are totally unusual to a business. But things that don't happen on a day to day process things like getting a loan things, things like purchasing ah, vehicle or purchasing equipment and then financing that equipment. Things like the adjusting process at the end of the month thes air things that aren't part of the data data data input from a day to day processing and therefore the default is not a form such as an invoice where sales receipt but a journal, a journal entry that will have to record. And that's when you really can't get around knowing deputies and credits all the stuff, has debits and credits in it to set it up to have the thing working. But with these types of things, with the things that aren't on a day to day process, those of where we really kind of have to know debits and credits and will touch more on that as we go. Then we've got the statements down here, and the inventory adjustments gonna be some of those items. Now, some of the things that aren't in this other section that which were put on the QuickBooks page were things like the chart of accounts. That's gonna be one that's over here in the accounting area. So if you went to the accounting area and you go up the chart of accounts Ah, it'll look very similar, but you have a little bit more option in terms of how to sort this. It typically is sorted by, not by the ah, just the alphabetical order of the name of the account. But typically, first by accounts type account types, you can think of the accounting equation first assets than liabilities than equity than income and expenses and then more specifically, within those account types. Meaning the bank account is a specific asset account type, which will be ordered first, then accounts receivable specific assets than other current assets and then fixed assets and then liabilities. More specifically accounts payable a particular liability credit card type accounts than all other current liabilities and then any long term liabilities than the equity of section . Anything that's grouped in the equity accounts than anything that's an income and then expenses more specifically, cost of goods sold if we have it. If we sell inventory and then all other expenses within the expense areas, it will then be grouped by alphabetical order within those expenses. Unless we have accounts numbers, if you want to group things differently than account numbers are useful. If you don't know how this grouping works, though, it's really easy not to use a count numbers correctly, which can look really funny. So if you know how to use account numbers than they're great, it will help you to order things. If not, you might want to stay away from him until you get someone. Teoh set up the initial process. Well, that's one thing that's gonna be over here, where they have the inventory items are something that was on the home page. Ah, in the company section that might that they felt was useful enough to be on the home page. So let's see where those inventory items are there under sales. And then if you go to products and services, here's where the inventory is. So if you sell things like Qatar's or what not like, that's what we sell inventory. Then you'll have those inventory items here if we have service items that what we have guitar lessons than the guitar lessons will also be here. These are gonna be used to create the invoices and the sales receipts. We also have checks that were recorded in the banking system on the home page. And that is up here. If we select this drop down, we see that checks is over here in the vendor section. So note that they made a little bit of adjustment there. They said this isn't the banking section, It's the other section and then they're going to say, Well, the checks, we're gonna put that in the vendor section. That's pretty much we're just going to hear this event. You could write a check to yourself. You could write a check, you know, to someone that that isn't particularly a vendor. You might be paying off a loan or something like that. But typically, we're saying, Hey, it's enough In the vendor section that are quick data input, we're just gonna put the Czechs within the vendor section. Ah, the check register. Another item that was on the home page that we confined here. That check register is if we go to the accounting down here again. Ah, accounting. And then we go to the chart of accounts. The check registers right here. Now Typically, we think of the check register as something that's just for the checking account. But we can see this register format for any balance sheet accounts. So any balance sheet account here we have this register, which will be kind of like your checkbook register that will have. If you click this, you register, then you'll have your register activity. And it's kind of like a general ledger looks kind of like a checkbook register. You got your date, you've got the person you're paying here, and then you have your amount, and then you have your other account, which is the in this case, accounts payable. Or if you're paying like a payroll liability here, um, accounts payable to split item we'll have will allow you to have multiple accounts bank service charges here. That's typically gonna be like the expense account that you're gonna have here is just to tell. Here's a normal one. Finally, Verizon telephone expense we got on expenses decrease in the balance here, and the other side's gonna go to the phone bill so they typically looks kind of like a checkbook. And it's really just your general ledgers. Your data, your back up for the particular account you're looking at, which, of course in this case is the checking account or the cash account. So those are the major components of the things that are kind of in the other section thinks we use overthought all the time that aren't always grouped in the same kind of cycles or categories. 6. 1.28 Employee Section: Hello. In this presentation, we will talk about the employees section or a payroll section within QuickBooks online. Here we are within the QuickBooks online dashboard. We will be continuing with the get great guitars problem. We're looking at the common cycles that we have here now, looking through the employee or payroll cycle. We're gonna select this icon up top little plus icon to see our common cycles. It's important to think of these things through cycles. Think of these processes thes normal items that we will be doing within the accounting process within cycles, because that allows us to think through and visualized picture what the processes will be doing. We've taken look at the customer cycle that could also be the accounts receivable or sale cycle. The purchases cycle or the vendors cycle the expense cycle. Possibly you can think of it as, and now we're looking at the employees cycles. This is obviously going to be the payroll cycle before we go into this, items here in QuickBooks online want to take a quick look at the QuickBooks desktop version in terms of the home page. For a couple different reasons, one will see that flow will see the flow of how things will be input in what documents will be seen in a pictorial fashion. And two, If you're used to the QuickBooks desktop version, then you may be used to that format end. It will be more familiar to you to kind of see that process, even if we don't need it necessarily, because once we convince you allies that process, then we're just gonna use these items and it's not necessary to have that visual processing anymore. But if we're just started, and even if we've done this a few times, it's nice to have that visual component at first. So let's take a look at that now. So this is actually the desktop version. We're just looking at the home page, and our goal here is just to get an idea of what the's flows look like, what the forms that we will be filling in, what the data input will be processed through in terms of a fluid chart. And we'll also just get a familiarity with the desktop version in terms of the flow chart, so that we can find those same items located in the online version. We've taken a look at the process is for the vendors that payable section, that customer section or the receivable or sale section. We're looking here at the employee section now. One reason it's it's nice to think about things in terms of these sections is this is really how you would be processing things through. And it's how, basically, you might be working if working in a larger accounting department within one of these particular areas of the accounting process. Payroll is in particular a very specialized field, more and more because payrolls become him more and more complex to deal with, especially if we have different locations and whatnot. So there's a lot of different options. We'll talk more about those different options in terms of how to process payroll within QuickBooks. But no matter what the process for payroll is, we typically will have a nice little flow chart here, which will be one we're gonna enter time in some way. Now, this time item we're not actually going to use in quickbooks here, Although it can be useful. What this will dio is track. It's kind of like you can think of it as punching a clock so If we had someone that we wanted to track their time directly, it would be nice for them to just enter their time. This and, you know, I clocked in at eight. And then I left a 12 or whatnot into this little section, and that could be automatically linked then to both the employee payment helping us to generate their paycheck. And it can be linked to an invoice helping us to take that time, record their billable hours and create an invoice related to the time worked by employees. So that could be a really useful set up. Some companies will use it within QuickBooks. Sometimes if you have a more complex system, other companies will have, ah, system outside of QuickBooks that will track that time by employees and let different employees track. That time. Some people might just ask their employees to fill out something like an excel sheet telling us, you know what, how much time you were coming at times you spent on a particular client and then enter that information into the system directly into the payroll processing, so I will not deal with that here. This prostate here isn't mandatory to process payroll, but it's one step that could be used to track time for employees that could then be used to process the payroll. Then we've got the pay employees. This is where we're actually going to process the payroll. So this happens in depending on how often we pay employees could be weekly, could be bi weekly, could be semi monthly, could be monthly that we pay employees. And when that happens, when we're gonna actually kind of generate the cheques, Typically we would select this icon and actually go through the process of recording if it was time here or salary based employees generate the checks, those checks would generate the check as well as any with holdings we have that we then need to pay Teoh anybody that were withheld for, including the government. So if we had taxes that we had to withhold for the government, or if we had other things that we had to withhold for 41 K plans for for health insurance and that kind of stuff, then we would have taken that out here as well. And then we're gonna pay the liabilities, and this will help us to not pay the paycheck, but now pay those liabilities if we withhold money for federal withholding and state withholding. If if we had our portion of the papal taxes, then we have to track all that, and this will give us a nice little set up for us, too. Pay that process here. So that's the normal kind of process we need for the employees we need. Toe Enter the time. Somehow we need to pay the employees based on the time if their hourly or if their salary. We need to process those paychecks and take the with holdings from the employees. Then we need to pay the liabilities the amounts that we took from the employees as well as our employer taxes to whoever we owe them, too, including, typically, government for payroll taxes. Let's take a look at some of these options in payroll online, and we'll just take a look at some of our options in terms of payroll. First, we'll take a look at this little plus icon up top, and you'll notice we looked at these by section, so it's similar to the home page and that we got customers, vendors and employees doesn't give us that nice flow chart quite the same, but we have a similar processing. So here we're gonna have some similar. I. We have the similar time tracking feature where once again employees can put in that time we can. If it's just us, we contract our time in here and say, Hey, this is how much time we build And it's really nice to put that directly into QuickBooks if you can, because then it will be something that you can tie it directly to payroll and or directly to invoices, and that's great. But if it's something, it's also possible for you to do it outside to track your time and your calendar or something like that, or an Excel or in some other, more fancy is a lot of software's that are fairly fancy in terms of tracking different times and allowing different people to log in. So you may or may not use that the time tracking, but it can. It has its pros and cons, like anything Els, especially within the payroll process. And then we've got the payroll item here, and we've got this little item here saying Hey, do you wanna purchase payroll? And there's different pit. The reason payroll is a little bit more unusual or a process that can call it problems or something that you may want to think about and talk. Teoh Ah, an outside firm about possibly most likely someone who is not who you're not paying for payroll because you want an unbiased opinion about how painful you know what's the best thing to do with payroll. And so I'm not saying that if if you're looking for apparel option to talk to a payroll company that does payroll, that's great. But obviously their opinion maybe a little bit by its because they're trying to sell your payroll service. QuickBooks is the same way. Of course, they are going to try to sell you their payroll service and have you process things within the QuickBooks system, which may work well for you. And it may be something that you want to do outside. So if you select this payroll option, then it's gonna go through. You know, some of the items that you could do if you were to purchase payroll from Intuit, the owner of QuickBooks, and we'll look at this a little bit more later. But there's different types of payroll options. These would be type of add on programs, so they would cost more. And if you get the higher version than it will doom or of the processing. So just note when you process payroll, you're gonna you're gonna have gets way more complex, depending on how many employees you have. And if we have different states, then that's going to get more complex or different regions than that gets more complex when we get to the decision as to whether we want to do this within QuickBooks or whether we want to have an outside C p A from dio the payroll. So our options are, too. Process it in payroll here and pay the extra fee for QuickBooks to help us generate that payroll. Or I'm gonna close this back out. We could get to another third party to help us to process the payroll and then enter that information into the system. That doesn't mean that payrolls, something we don't have to worry about anymore because we still need to put those paychecks in the systems that we have the check there. We have the activity there. We can process our reports as well. But an outside firm like like an 80 p or paychecks could help us to to make sure there were up to date on on with holdings and any kind of legal payroll requirements that we have. So those air some of her options, the left hand side. Over here, we have the workers. So this is where we would set up our payroll and whether we have payroll set up or not, we're in the employee section, workers, employees. We could set up our employees here and say here, you know, here are the employees and to set those up, we can add the employees here. And these would be, of course, part of the process for payroll to be set up and perils another one of those items that really is not too difficult to run on a cycle by cycle basis to actually process the checks . If everything is set up meaning and we'll go through this process if the employees air set up. If we've entered the correct information from the W Fours, if we've got their wages set up, if we've got the with Holdings and um, the time frame of when we process payroll in terms of weekly, biweekly, monthly, semi monthly. All that sort of correctly. The processing of payroll then becomes easy, easier. But setting up that process can be complex and understanding what the paycheck is actually doing in terms of these with holdings that we make will be a bit more complex. Will take a look at those type of activities. A zoo. We go through our problem. 7. 1.35 Forms: Hello. In this presentation we're gonna talk about forms such as bills, invoices and checks and how they are used within QuickBooks online. And we are within the QuickBooks online dashboard. We will be continuing with the get great guitars problem. We're gonna be talking about the major forms that will be used. We've touched on those forms. As we've looked through the cycles, including the sale cycle or customer cycle, the vendor cycle of the payable cycle and the employees cycle. We're gonna spend a little more time thinking about how QuickBooks puts together the information, the financial statements primarily using the input information which is generated through these types of forms. So we're going to select the item up here this little plus item, and we're to go through some of these major forms within these areas, including the invoice to receive payments, the, uh, checks and the bills and the pay bills, and see how those are used to generate financial statements. To do that, we will be using at a QuickBooks file that is already populated with the get great guitars information in it so that we can go to the financial statements and then jumped back to some of these forms later on. Of course, we will be creating this information from scratch from a new company. So if we have a new company file, we won't have the forms yet that have been created. We will construct that. Now, we're gonna look at basically the in product that has data input into the system already. And look at how these forms are used in order to make the financial statements. So do that. We're first going to go to the reports on the left side. So we're in reports on the left side. Now, some of our common reports that we open often will be down here, including typically the balance sheet in the income statement, because those are gonna be items that we are going to use many times. If they are not, we're gonna type up your balance sheet and we'll pick up our typical balance sheet. If we select that item, we can then check the date ranges. Now, we're gonna be working in a future problem. That's just the nature of working a practice problems. So we're gonna say the dates. Aero 101 to 1. Teoh Uh 02 28 to 1. So this is gonna be the years that we're gonna put information in a couple months that will be putting information in January 1st, 2021 to February 28th 2021 and then we will run that report. So here is gonna be our information. We've got our standard balance sheet information, including the checking account, the accounts receivable, the assets here, then the liabilities, then the equity accounts. So within these accounts, we can actually drill down and see what has been used in order to generate this information . So if we go to the checking account here, we can select this item. This will give us a zoom function, and this is more of an auditing type of function. So we're really looking at the end product now. What has been used would have been generated by QuickBooks, given the input information, typically that input information from forms and we'll see how this stuff is being constructed from the completed portion, the balance sheet, and then work it back. Teoh the input screens. So if we elect the checking account, we get a nice That's basically a general Ledger is gonna give us the transaction detail. It's an order. By date, we have our date range. This is the reason that we have the range on the balance sheet, that balance sheet being a point in time typically. But when we use this auto zoom function, it will go back to that range that we have selected. Now It also gives us a nice transaction type over here, and these, in essence, are the forms. So these are the forms that have been used. Each of these are going to be a data input form that has been used in order to generate this information. Now it is possible for us to use some form different than the data input form that QuickBooks will show because we'll use some different input settings. But then QuickBooks will still default to these typical forms for typical transactions transactions that happen on a day to day basis. The cash account is a great account to look through because there's gonna be more types of forms in the cash count than any other type of accounts, given the fact that cash is going to be involved in more cycles. So if we scroll through this. Of course, we got checks for the cash accounts. Any deposits for the cash accounts? That will have We have another check, but it's also a bill payment, which means that we wrote a check, but we've wrote it in order to pay off a bill. It rewrote it in order to clear out the accounts payable account. We have expenses and more deposits here. If we said if we select some of these items that we select this check, this is gonna be a vanguard Chicken lives. We're gonna goto Amazon, which selected this Amazon check. Then we're going to see the actual details. So we're selecting that check and we'll see the check number. This, then, is one of the forms that will be used. So we're going back to the data input screen. We saw these forms as we were going through the process to enter the data form. The check typically being kind of part of the vendor process. Often times way would be paying vendors. Um, and here's gonna be our furniture and fixture for this check number here. So we'll close this back out. And if we go to the deposits and we select a deposit. We have a steel alone deposit. This is alone that we got. Then we'll see a deposit screen. So here's the deposit screen. Now note that we could have used a deposit screen in a check register and entered it in a different format. And QuickBooks will still basically default. Often times do the deposit screen making a deposit from whatever data input function that we used. So that s so this is going back to that input screen. When it closes back out, we're gonna scroll back down. We've got the checks. We've got the deposit, this one again a check. But it was for a bill payment. So if we select that item, we're gonna get to our check here. It says to be printed has been a printed check yet, but it's also a bill payments, meaning we wrote this in response to a bill. So we had to enter the bill first and then have the check that will be printed at a later point, as opposed to just right in the Czech straight away. And that's a little bit of a differentiation between the two types of checks. They're both checks and put one was to pay a pill, and one would be not to give us that information. And that will mean that the check that's there to pay the bill is the other side of it will be accounts payable as opposed to just a check, which will be paying directly whatever we purchase. Then we have the expenses here and the pay bills as well. So let's go back to the data screen. If we scroll back up here and we look at these items from the side, we've of course looked at this data as we see it through cycles. So we've looked at the check. So if we select this check, this is how the data would be typically input that would then be used to create the check that we saw as we go through here as we go to the detail. Then we have the bill and remember that what we're seeing in the cash account is the pay bills. So we've we've seen the bill payments, uh, right here, and that is in response to first having a bill, we enter the bill that goes into accounts payable, and then we're gonna pay the bill, and that's gonna be the pay bills here. Then we have seen the bank deposit. So the bank deposit is going to be any time we go to the bank, we deposit that information. This will be the data input form. So note that if you're working with financial accounting typically and learning accounting , he'll typically would be learning the debits and credits. What the debit? What's a credit? Whether to accounts doing what's the effect on the accounting equation? When you work with accounting software, it'll typically use data input screens and try to put it in such a way that the day to day transactions will be in a format work. Just about anybody can put that information in, even if they have no idea of the accounting equation or debits and credits, or how it will affect the financial statement. That's the point. As we learned this stuff more, we want to get an idea of one of these forms doing how are they going affect the financial statements, one of the two accounts that are affected as we enter these forms. As we work with these forms and do the data input we will take a look at that. We'll take a look at one how to do the data input and then to how to set up the form in order for the data input to be used. And three, what will be the effect on the financial statements as we create these forms? Let's take a look at the profit and loss statement and we'll take a look at our major other financial statement and how it is created using the same data input. So we're gonna go to reports in the left side, and again, it's probably gonna be down. Here is a report. We run often, but we can also just run it up here. Profit and loss. This is basically the income statement What QuickBooks calls the income statements of profit and loss. We're gonna run it for that same date range 010121202 28 to 1 January 1st, 2021 to February 28th 2021 run that report. So here is our report. We're gonna have our income. We've got our cost of goods sold and expenses. If we select one of her income accounts. We're going to select one product income. This is going to be something that we're gonna use in order to have inventory as opposed to service fee income. Actually, let's look at the service fee income. First, it will actually be more simplified. So we'll look at these service fee income, select this item, and that's our zooming down. So we're really going from the end product of financial statements going back to those forms that are used to create it. And we saw those forms before by cycle, when dealing with income, we're dealing with the revenue cycle or the accounts receivable cycle. So we have here the sales receipts, and we have invoices. When we select, these items will see the are forms that will be created. So if we select the sales receipt, we'll go through. And here's our sales receipt. The difference between a sales receipt and an invoice will be one. They'll look pretty much ah, lot similar, but the difference is going to be that we got the cash. In this case. You can think of it as we got paid in the store. So this is a sale that happened that we already got the money for. We didn't put it in the checking account. We put it into un deposited funds and the other side of it will still remain the same in that we had service income. So we did work and we got paid at the same point in time. In this point, it's not inventory. We actually, they brought the guitar in and we did work on it and we tuned it or something. And then we got the money at that point in time and increased the cash check or cash that we got into UN deposited funds and the other side is going to sales. So it's gonna be this item. We close this back out, and the other thing we'll see in sales is gonna be invoice. So if we select any of these invoices gonna look like a very similar form, This is a form that somebody basically in a store could figure out as their as their entering this data. They can say, Oh, it's an invoice. They fill out this invoice. Here's the customer, Jenny Jones. They're gonna enter this data and say what was done. How many hours we have and it could just generate this form. Don't need to know what's going on. Don't need to even look at this profit loss that we are looking at at this point. But we want to see what what's going on here and later we'll talk about how to set up the invoice in order for this to be generated. So these forms of what what we're gonna end up using this will be the same thing, except that the invoice will increase accounts receivable. We have not yet gotten paid notice. There's no payment field here. This is an IOU. We're sending the bill out. We're sending the invoice, which is our bill to the client. That means that we hope to get a check in the mail and the other side is going to that revenue account. So we're gonna close this back out. Those will be the major accounts in thes sales item for a service item. We're gonna go back to their reports up top then I know the same thing is true if we have inventory, so we're gonna sell guitars here. So if we go to this item, which is ah revenue item related to inventory that we are selling. We'll have the same forms, the invoices and sales receipts. If we select one of those, it will be slightly different in that the name will be the same. Everything will be the same here. It's still gonna go to accounts receivable. But instead of having a service item, we're selecting an inventory item, something physical, tangible. Typically that we are selling in this case guitars. And the reason that's a little bit more complicated is because one count Siebel still going out. Two sales is still going up. But then we typically often have sales tax. Depending on our location will have to deal with which we'll talk about how to deal with that. And we also have the fact that we have a cost of goods sold, meaning the inventory is going down at this point, and the cost of goods sold is going upbringing net and come down by that cost of goods sold . So that's a This is actually a pretty complex journal entry. The person entering the date of the person that's just basically scanning the guitar probably does not understand the journal nature without what all the accounts that happen. It's actually fairly complex transaction that's happening when we create this invoice and will take more. Look at that. But just note the simplicity of the form. The point is to set the whole thing up so that you can run these day to day transactions. Have someone input that data. Who knows? Nothing other than I just need to collect whatever the invoice, you know, says here at the end of the day, because we have the guitar and hear perfectly and the the amounts going to show up as it should. And that's the point. So setting up the invoice so it does that and then knowing what's gonna happen on the financial statements once the data input is created. That's really theme or tricky, part of of setting all this up, we'll talk about that as we set up the company, gonna close this back out and we're gonna go back to the reports. I'm gonna scroll back up and we're gonna go back to our report summary Now, the cost of goods sold that's gonna be generated from that same information in terms of invoices. If we select this item for a cost of its old drilling down on that invoices and sales receipts. Tricky thing here, however, is that notice. We see that three or four there. But if we select this invoice, we won't see the three or four anywhere on the invoice. And that's gonna be one of those items that are driven by the invoice. The invoice is what is used to create that cost get sold. It's used by this item here, but we don't want the cost of the guitar on the invoice, so that's a little bit tricky. Will say how to set that up there. The obviously the invoices used Teoh help get payment from the customer. QuickBooks is also using it as the point in time to record the decrease in inventory and the related costs of goods sold to amounts. We don't want on the invoice but can use the invoice as like the triggering 0.4 quickbooks to do that transaction. So we'll close this back out and we'll scroll back to the reports that if we scroll down, we got our expenses. We've got the bank charges, we've got insurance, we've got interests. We've got Internet office supplies. If we select any of these items. Then we'll see the data here in this case, a check directly for the office supplies. So if we click on the check, it's going to show us that check. And the check clearly is going to be decreasing the checking account. And the other side in this case is going to an expense office supplies expense. So we using this form in order to generate this. This form also of course, can be used to print the checks as well. So we're gonna close this back out. Those are gonna be the major forms that will take a look at him and go back to the income statement. And so, no, we've looked at just some of the key components of the income statement. If we select this drop down item which has our normal forms on at this little plus up here , we've looked at basically some of the a lot of the information for the normal customer process, the normal vendor process. These are gonna be the things that happened on a day to day basis. If something happens on a day to day basis, QuickBooks will typically want to put something together to make that process as easy as possible. Those things will be forms. Those things are gonna be data input. Thank forms which should be as easy as possible so that we can have someone go in that doesn't know anything about QuickBooks. Traynham two, Input that data input form those transactions that happened on a daily basis very easily. And those include things like an invoices gonna happen all the time. They receive payments is something that's gonna happen all the time. We're gonna have the sales receipt, is gonna have something that's gonna be there that's gonna be happening a lot. And then we've got the expenses, the check, the bill, pay bills, all things that are gonna happen a lot. And then hopefully every night we have a deposit that's gonna happen a lot. Therefore, those things are gonna have transactions that will be running all the time. Those things are the things that QuickBooks are gonna youth forms for in order to generate the in product, the financial statements now, anything. That's not a day to day transaction. Anything that we have that is more uncommon. Like we take out alone, we purchase Ah, large equipment. We get a car or forklift or something like that. Those aren't day to day transactions, and therefore there could be a little bit more difficult because we don't have a set form to do those transactions that don't occur all the time. And therefore we might have to set some other process up. Typically, accountants would thank First thing would be the journal entry would be. If there's no other process to set up the information, we fall back. Teoh, entering a journal entry, note that all the forms we have gone through our in essence, a journal entry meaning to a council. The effective QuickBooks is debuting in crediting accounts, making some accounts go up and others go down in a balancing format. But we can look at it because of these forms in such a way that we don't need to know deputy credits, even from the data inputs point or jump into the financial statements. If we look at some of the more typical accounting documents such as the trial balance, then we'll see the debits and credits that will be created as we generate this information 8. 1.35 Lists: though. In this presentation, we're gonna talk about lists within QuickBooks online. Here we are in the QuickBooks online dashboard. We will be continuing with the get great guitars problem. We're gonna be talking about lists when talking about lists. For QuickBooks. It's kind of a specialized term. Accounting, of course, has a lot of terminology with in it, and QuickBooks actually has some slightly different terminology within the software. When people talk about lists within QuickBooks, they're often talking about a chart of accounts or item lists, and we'll take a look at. Those two components might not be so common to think of them in that format, within the online version as the desktop version. Because the desktop version had a drop down called lists and everything under then there would be what QuickBooks defines as their major accounting lists. But as we moved to the online version, we still see the terminology of lists, and it's probably gonna move over from people that have used the desktop version a lot. If there's as they move to more use in the online version, so the lists are going to be the things the major list of items that we are going to be used in that, then the chart of accounts and the item lists. So to find those in the online version, we can go down to the accounting section down here and will select that item. And then we have the chart of accounts up top, and then we can go back, Teoh the all the lists and see moralists here. The chart of accounts is going to be the major list that we would think of. It's gonna be, of course, the list of accounts that we will have and the chart of accounts is typically going to be an order by the account type rather than by name, although we could change the ordering of these items. But typically the default will be by account type, which makes sense because as we look at trial balance, it will be in order by account type meaning rather than being in alphabetical order or even order by account number, which is an option that we don't currently have here. And I don't recommend using account numbers unless you understand how the account numbers work. Otherwise the numbers will get messy. So if you do understand the account numbers. Then you can put those in there and make sure that they line up, in essence, with the ordering of, um, the accounts types over here. So the detail types, typically it's gonna be in order. It will be in order of assets and then liabilities than equity than income and expenses. Within those normal accounts, we have the asset of the checking account, the cash account, the bank account. We've got the account type of accounts receivable. Then we've got the other current assets. So here gonna be the other current assets, and then we could get they have more specific here with account type and then the account type details. This is the bank in the checking account. This is the accounts Ciba, which is just accounts receivable. Other accounts. We could have more specific type of other accounts here that don't fall into either checking or receivable, basically or just other current assets being the default in the other accounts and section . And then we have the fixed assets, and that could be furniture and fixture accumulated appreciation. Ah, and there's gonna be more long term assets. Then we got the liabilities, starting with the accounts payable and that specialize in accounts payable. Then we've got the credit card accounts. We've got the who we pay our sales tax to. But that's gonna be a type of other current liability in this case, sales tax payable other current liabilities which the generic thing would be other current liabilities within that category. Then we've got other current liabilities, loan payable and other current liabilities. Sales tax payable for other locations will talk about sales tax at a later point, Then we have payroll tax payable is a liability under in revenue. Other current liabilities. Long term liabilities then are gonna be after that in the ordering of the chart of accounts . These are things do after a year, then the equity sections. So then we're gonna have everything within the equity. Remember the overall order assets than liabilities. Now, equity, and then we're gonna have revenue or income type of accountants. So here's our income type of accounts, which are more specialized over here in the type of income. And then we're gonna scroll down and we have the expenses starting with the cost of goods sold and then all other expenses after that. So note that if you have a lot of cattle in categories such as expenses, then it will be it in order first by assets, liabilities, equity, incoming expense, then possibly by the alphabetical. So now, within the expense categories, for example, we have the advertising asset, you know, the A's and then the bees and then the seas within the expense category. But the advertising, of course, is not at the top of the list because we're first in order here by the type of account, this will be one of our driving lists. This will be one of the list that we will be using when we create every form every document because, well, in some way need to be recording to one of these accounts. Or two of these counts will be affected with just about every form that we've used because just about every form we use will have a financial transaction. Every financial transaction has at least two accounts that will be impacted in some way. Now, the other list we could find over here we could go to all lists on this side and look at the other list. The major lists are gonna be the chart of accounts and the products and services. We could go the products and services here. Or I think, the more standard way when you think about the products and services, that's what we sell. That's the inventory. And that's gonna be the type of service Adams on the end of the way that we sell. And I would think that most people probably go to the sales item to find that particular list. So we'll go to sales over here and then if you go up top, you see the items up top. We're gonna go to products and services. So you'll note that although the terminology of list is still down here, this particular list is probably gotten to without going through an item named List, although we still could go toe all lists over here. So the name of the differentiation of specialty of what the term list means in terms of QuickBooks may not be as defined as it would be with the QuickBooks desktop version desktop version having that dropped down. That's just lamed list, and it's probably the first place people go to when they go to the product list or the chart of accounts. Now, if we scroll through here, this is a little bit unknown. I'm or unknown to people that are just starting. Most people just don't understand how the chart of accounts that makes sense. We need a chart of accounts that the item lists are gonna be things that we're gonna use in order to generate the invoices. If you've gone through types of accounting on theory, type of accounting and the record a transaction that we sell inventory, we probably just go through the transaction. We say, Well, inventory went up and inventory went down and the sales went up and down. And what not? The thing that's going to drive that within QuickBooks is that we first set up those sales items we set up, for example, that could tar lesson a service item. So when we have an invoice, we picked this service item and in the service item will generate the bill in terms of the sales price. So there's the sales price. It will be generated by the service item. If we set these service items up before we generate the envoys than any anybody can then generate the invoice and just picked the selected service item and the invoice will be populated. So these air really, really important to help the data input process and important to get upset, right, set up correctly. So then we have the inventory items. So in our case, we're gonna sell guitars. So it's gonna be even more complex in that we have a sales price when we generate an invoice or sales received and we have the cost of goods sold or reduction and reduction in the inventory. That's a pretty complex journal entry when we make a sales receipt or on invoice, setting up thes service items, thes products and services. First is really the challenging part. In order to make the data input process as easy as possible. And in order to set up this correctly, we really need to understand what the impact is, what the journal entry is and what that then is affecting on the financial statements, the balance sheet and the income statement. So those are gonna be the major lists that we have. If we go back, Teoh the all lists, you can look at the other things that QuickBooks will put in terms of lists. But just note that if you see if you hear a term of the lists, you're probably not talking to someone that is just talking in terms of financial accounting. Taking financial accounting courses in the theory class, probably talking to someone working with accounting software, most likely QuickBooks, that has this more specialized defined a term of lists and when we hear lists were typically thinking chart of accounts as a major list or the products and services as two major components of lists. 9. 1.40 Help Options: Hello. In this presentation, we're gonna talk about the help options within QuickBooks online. Here we Arthuis QuickBooks online dashboard. We will be continuing with the get great guitars problem. We're gonna be talking about the help options available for QuickBooks online. There's a lot of options to look for help within the QuickBooks online system. One is to use the QuickBooks online help option here to search for items that weaken, get help with the others to look for options that are outside of QuickBooks. If you want to get help directly from QuickBooks directly from Intuit, we would typically have to pay for that extra support. However, because QuickBooks is used by so many people because it's one of the most used software's, there is a lot of help out there that can be searched just simply with a Google search or a YouTube search. And there are a lot of professionals that are bookkeepers and our accounting professionals , who often specialize within QuickBooks and spread to specific problems related to QuickBooks. So when you have a problem when you have a question, the first area to go to would probably be this help icon here, which will be within the QuickBooks program within QuickBooks online. You could go through these items down here or type in the area we we need help with. So we would type in, for example, payroll and select that item. We will then have the typical kind of help items here where we can select thes and it'll give us a hyperlink, Teoh what we're looking for. So we wanted to, for example, turn on payroll or explore the Pedro options available. We can go here, and it will go through some of the information in terms of turning on payroll within the U . S. And it go through and give us that information. So this is gonna be that the typical kind of search through it's pretty. It's got a lot of information within here is pretty well set up search engine to go through that information. If you want to find more help options, you could then, of course, do Ah, Google search. If you were to do that, then you do want to differentiate some of the different types of programs that you're having. So if you're in the QuickBooks online version, clearly you want to be mindful of that. And make sure that the information you're looking up is for the QuickBooks online version, which will be very different looking and format, then the desktop version. If you seek help within QuickBooks, there's different type of licensing project licensing programs for QuickBooks certification type process to get people that are specifically trained within QuickBooks. And or, of course, you can go Teoh CP firm T get help within QuickBooks as well. If you do a search for someone to help you out with your bookkeeping, you want to just make sure that they kind of have experience within QuickBooks and make sure that if you're using the QuickBooks online version that we're talking to, someone who does have the experience with the QuickBooks online version. Of course, YouTube is also another location. Now that, uh, has a lot of instructional video. Some of them are really old. Some of them are not up to date and not done well, but some are, and therefore you could find information there as well. Just note that you may not find everything that's totally correct there, but if you if you do some searching around, you can find some some relevant information there. So the first place you want to go is gonna be the help menu here. If you have a question and or your c p a firm or your tax professional, and then if it's not being found there or you'd like to see a demonstration of it, possibly more more demo in terms of pictorial demo, which might be found in a Google search, or some type of visual demonstration for video than YouTube or two areas we can go to their . And then, if you would like to look for professionals that are either counting professionals or Quikbook professionals, there's many of them out there just because of the, you know, the size of the software and how prevalent it is within small and mid sized businesses. So you can find many people that could help with that as well. Just make sure that you know what you're looking for in terms of what type of help they want in terms of your using. In this case of the online version, 10. 1.45 Pint & Export Reports: Hello. In this presentation we will talk about how to print it. Reports and export reports A two XL within QuickBooks online. Here we are in the QuickBooks online dashboard. We will be continuing with the get great guitars problem. We're going to be talking about how to print and export reports. To do that. We're gonna go to the reports on the left side, and we have this search item here. Now the most common searches will appear down here. If they're not there, we go to the search item. Now, note that all reports are going to be in this section, including what we would call the financial statements. So we're talking about the balance sheet and the profit loss, the major financial statements also in this case called reports within QuickBooks. We're gonna go to the report center to make that reports or the financial statements as well as other reports that will also be grouped in this area, including the customer balanced detail, the transaction list by date. We're gonna look at those main reports those main financial statements in this case of the balance sheet so we'll type in balance sheet here will select the balance sheet, and we're going to choose the dates of the balance sheet. Now note that if we don't have any data here yet, obviously there won't be any information because we're going to start a new company and enter that information. But we first want to look through here, and this will be a populated field so that we can see those financial statements. We could see the in goal of what we're creating and every report that we have. We convention used these functions in terms of the printing options and or the exporting options to excel to great features and things that we really want to know those options for how to manipulate that, how to get things printed on one page. And we'll talk more about that as we go through these reports. So we're gonna put the dates here 10121202 28 to 1. That's a January 1st 2021 to February 28th 2021 run that report. Then if we scroll down, we've got our balance sheet that three components of the balance sheet being assets of then liabilities, then equity within the balance sheet. Now, on this report, this is just gonna be an example. Just any report that we have. We have a few different options, and those will be up here. We can email the report, which is nice. We could go straight to the email. We can print the report. If we select the printing option, then we'll get, ah, the preview screen and a few different options over here in terms of work, whether we would want this to be printed as a portrait or in landscape. This is going to be important because note that in this printing screen it's not always going to fit possibly on one column one page wide in terms of the columns, and therefore, it could be useful for us to change the options here from the portrait option to landscape in an attempt. Do you get more of this to fit on one pay? We also have the option down here to save as a PDF file. That's gonna be very useful because the pdf file is going to be kind of like the standard printed file and digital formats. So that's gonna be the PdF file. You can save. Sometimes that pdf file gets, ah, a little messed up to to save it, adds the PdF. And if that does happen, or if you're looking at some other report, that doesn't give you for whatever reason, the safe PDS format, as sometimes happens, or in another program that doesn't have that note, you can still go to the printing option here. And when you select the printer, we could, of course, select an actual printer that we have. Or we could select some type of PdF writer. So I highly recommend having a program of a Pdf writer because it could be useful within some QuickBooks programs in a form that is not giving you the printing option or if that PdF option is not working properly for whatever reason, or if you're using some other program, which doesn't give you a PdF printing option but does give you a normal printing option. If you change the printer, then from a standard printer to a Pdf printer, then it's in essence. The same thing will basically print this, and it'll make a PdF form that we can then save to the desktop. So when and I'm not sponsored by these that by this point, I'm not sure in selling the software anything. But I use this cute pdf printer should be a free download. So that's one option that you can have here. Teoh, download your to have a printer setting so that you can then go. There is a default option to save as a pdf file. So if you go back here, then you just change the printer to the cute pdf printer, and then when you save it, it'll save it as that digital file is that digital printed file as a pdf file. So those are gonna be some of the options we have in terms of saving the information. Now, note that were kind of limited in the option. I close it, I'm gonna go back to the balance sheet here over the balance sheet bag up note that were kind of limited in terms of the formatting that we have. When we print in this way, we could form at the form here. I can adjust the columns and I could do some formatting there. But we have some limitations in terms of the formatting. If we export it to excel. However, We have a lot more options in terms of how we want to format something, and we may want to export it to excel as basically a starting point for us to then make a form that we're looking for to put these numbers in a format that we want for whatever reason, that we want it in that format. Exporting to Excel is a huge thing. Toe learn the basic sword. Enough dump of numbers and data within excel. Very important because every office job these days works with some kind of database program , whether it be financial database or some other informational database like client information, customer information, employee information. And most every database program has an export feature to excel and that is going to allow us to manipulate this data in many different ways that we could not do within just the normal report settings here. So within QuickBooks, weaken selected this item, and we could just say export two excel. This is the nice, easy link over to excel, and it will generate a new worksheet, typically with a tab and that information on the Excel document. So here it is. I'm gonna go ahead and enable the editing and there's gonna be our report. I'm gonna bring that up here, and it formats it a little bit different than you may be useful on the desktop version, for example, put the header up top here, and it's merging the cells that were in the home tab. I'm on cell a one, and you'll notice a one goes to be one as well. So if you go to the home tab in alignment, they've merged those two cells. So if I highlight, call him A. It only highlights half of that a one column. So it's really these two. Now that's are nice feature in that it shows here were, as in the desktop version, we would have to go to the layout of you. So I'm down here in the layout of you, and it would be up here in the header so both of them have the title. But the title is located slightly in a different area. If we go back to the normal view, I did click out of the header to go back to the normal view, but we're back to the normal view now. That is a great option But note that if you want to, like, say, the lead columns or something like that, you're gonna have problems that it'll delete the header sometimes. And you may have to reformat this header if you want to manipulate some of this data in some format. Ah, the rest of the information is going to be in here. Notice. Two deaths. It used some formulas up top. So here, this is just, ah, hard coded number. Whereas this is a formula and here's the form that down here. So you know, this is a useful tool. If you haven't used Excel before and you want to see how is the normal form formatted within excel using formulas, you can see this information, how it's populated. Go through these. Okay, that's adding up those three cells. You don't need all these parentheses, by the way, but that's how they're doing it here. And and that's because if you had more complex settings than you would need ordering of numbers. But in any case you could see the basic format of how they're exporting and the formulas to set up this information. Now within Excel, you have a lot of options that you can manipulate these numbers, and you can also go to the printing option over here and go to the print. It will give you the the layout, so we have a lot more options in terms of how to manipulate the layout. If it was on too many pages wide, we can train change it as we could in QuickBooks to a portrait loud and or we have some options down here to scale it down toe one page or even just one page wide. We'll talk more about those options as we go through and print reports and print different reports. This one clearly fits pretty good on one a few columns. Therefore we don't need Teoh, say one page wide. But some other reports that we will have will have many different columns and therefore will take different pages. And what you don't want tohave the page break, say, if it was right here and the other column would be in another page, that's the main thing we want Teoh avoid, and we'll work on different ways. We can do that and excel. Excel gives us a lot of options in order. Teoh solve problems like that those are the two options or the major options for printing. The reports formatting their reports within QuickBooks in terms of printing and exporting to excel. 11. 1.50 Backup Files: Lo in this presentation, we're gonna talk about that backing up data within QuickBooks online, every earthy QuickBooks online dashboard. We will be continuing with the get great guitars problem. We're gonna be talking about saving data and backing up data within the QuickBooks file. If we moved from the desktop version are talking to someone who has used the desktop version or anybody using any desktop version of accounting software, whether it be the QuickBooks desktop or some other version will get to the topic of saving data, backing up data and restoring data. There's a difference, of course, between the online version and the desktop version in Vet. The desktop version will generally be stored in some way that we will have control over it , most typically on our desktop or version or server. And therefore, we have direct control over that data file, which is great because we then conduce whatever we want with the data file. But it's also a concern because if anything happens to our server or fat file gets corrupted in some way, then we lose. The file will lose the data, therefore, in the desktop version or major goal, then is to save that information in some other location typically. And therefore if, for example, we have the data on our computer, we might want to save a backup version on an external hard drive and or on a cloud based software, so that if something happens to our server that our computer crashes or there's a fire or something like that, we have the back up in some other location and then can restore the data back to the program. That's one use for the backup data in a typical desktop version now, on the online version, we have a different scenario in that our data is actually being stored not on our server, but on into its servers somewhere. And therefore they have control of the data and that you think that we'd have the same concern in that the other server can can burn down or can be corrupted. But it's actually less likely that that's going to be the case, so that normal kind of backup option isn't there on the online version, which can be concerning in terms of losing data. But the typical way that we would lose data is probably not the same type of risk because of the fact that it's on the Intuit server and the Intuit server is most likely going to be backed up very well. So it's less likely that we're gonna have that problem where we just lose all of our data on the Intuit server now. There are some other concerns and some other things that are useful within the desktop version to have those backups that we typically don't have as much on theme the online version. We can talk about how to how to kind of simulate those that type of information in the online version. But for example, if we wanted to have a back up and back up something at some point time and have a static backup in the desktop version and then do something, that's a bit of a risky type of experiment within the software, and if it doesn't work, then restore our data to where it was prior to running some kind of scenario. That's an option that we have in the desktop version that is not there. Currently in the online version, we can't typically back up all of our data in the same way and restore it in the same way. So if we wanted to run something like that to be more of an issue, the online version also, of course, if we stop the subscription, the data typically will still be there. But we typically would need to restore our subscription in order to continue with the data . So those air ah, few differences between the online version the online version, as of now doesn't generally have that static backup. So the static backup shouldn't be a problem in that the into it will have the data. We won't typically lose the data because it's on the Intuit server but doesn't give us some of those other types of things that we can do, which is basically toe have that point in time frozen in time. That point back up so that there is a problem in the future we can restore, you know, to that point in time that we've have control over Now there are a couple things we could do in the QuickBooks file in order to get our data to it, a non ground version, and that, in essence, is just running reports so we could go down here and say, Hey, what reports would we need to run in order to get all the data that we want backed up in orderto basically be able to reconstruct what we have? Uh, if if something went down in terms of the Intuit server going down, which is unlikely to happen or if we wanted to try to transfer the data to some other software and do it in a in a manual process. How can we do that? Well, some of the reports we might wanna have one would be the transaction detail report, and we can go into the reports here and type in the transaction. Uh, list. Ah. List detailed report transaction list by date report. And if we run that reporting again, If you don't have any data in here, obviously, there will be nothing here. But if we run that report 0 to 0121202 28 to 1. And run that report. Then we'll get all of the activity. This this is going to be a nice report in vet. It gives us the amounts over here, and it gives us the transaction types that we have, so we can actually go in here and basically see not just by ah, the account. Meaning the balance sheet account in the income statement accounts. But by order of transaction, so we could go in here and actually see all the transactions that were input in a particular order. And we can save this information. And typically, if we wanted to reconstruct this month of information, weaken basically put this information into the system. So this is one report that we can say that basically backs up what we have done for a current per portion of time. If we were to run a report like this, we would probably want to run their financial statements, meaning the balance sheet and the income statement, probably prior to this time, then saved this report, which is the activity from that point in time. And then this activity and then a balance it in an income statement as of the end of this point time, the end of February in this case. And I don't give us the detail for this report. Ah, the other reports that would be useful in order to back up our data, get some of our information the core information that would be needed if there was a catastrophe. A crash, if we're moving the data somewhere, would typically be our customer list. And our vendor list customer. Possibly more important. So we're going to say the customer list customer contact list. We select that item, then it will give us all of our customers. Now, we don't have a lot of detail in terms of the phone number email address in the customers for our practice problem. But those would typically be the most important things. That this is the area where a lot of your contact information is going to be for the customer, which I would put in multiple areas. If we could any contact information, it probably gonna be in our email information. I would I would duplicated into our QuickBooks information and try to keep it as updated as possible. This is Mawr information that would mostly be useful in order to basically back up, and we could save it as a PdF or export it. And then, of course, the vendor list would be the other. So if we go to reports on the left side and we go to the vendor lists, uh, vendor list, and we have a D vendor contact list. We'll get the same thing in terms of who we pay our two now. We might have less information here, but we may still want to put to our vendors the phone number of the email and the address for the major vendors. We have obviously, the phone bill and stuff like Verizon and stuff we may not have all that detail to. But if we have typical vendors that we're purchasing our inventory from, so if we up, we sell guitars are the main vendors we buy their guitars from, and the contact within those companies are things that we would want to save and make sure that we have that information in terms of their contact information. So that's gonna be the other report that will be very important to so again. The major difference here between the online and desktop version is that the online version doesn't have that static backup that we can have on the desktop version. And on the one side, the online version is less likely because the server is very, um, is a high quality server on the cloud by into it and probably has a lot more backup functionality than we may have on on on the local desktop. So it's probably less likely that we completely lose all the data by the server going down on the Intuit side. However, we still don't have some of those other kind of options that are nice within the desktop version. In orderto have that static backup t freeze that information as of a point in time to have a backup file. You know, as as of a point time that we can go back to or to run tests with different types of backup files and transfer that backup file, possibly and give it to our c p a firm or what not so that they could work on the backup file. The online version. Of course, if we want to work with a c p A. From we could just give them access to the online version. They can go through the online version and work through the reports, but we can't give basically a static backup file as of a point in time that the C p A firm can work on without accessing our actual data in in real time that we're currently working on. So there's pros and cons to to the systems that we're gonna be using within the cloud based system. QuickBooks being on the cloud based system and the desktop version with regard to that saving data and that restoring data, it's one of one of the big, big differences in terms of of how we're going. I'm gonna restore data, how we're gonna back up our data and how we can basically manipulate our data within the system. 12. 2.10 Balance Sheet: Hello. In this presentation, we will discuss the balance sheet within QuickBooks online. Here we are within QuickBooks online dashboard. We will be continuing with the get great guitars problem. We're gonna talk about some of the major form some of the major financial statements, this time being the balance sheet. In order to do so, we're gonna go down to the reports on the left side. Most of the reports that are frequently used will be here in the frequently used section, including what is the balance sheet and the profit loss? Considering the fact that they will probably be the ones most used in most run, we can also look at the reports under the recommended tab, which will also generally include the balance sheet report. If those any report isn't there, we can also tab over here into the search area or select here in the search area and select the balance sheet or type in balance sheet. And it should auto populate so that we find the balance sheet. So we're gonna just run the standard here, the standard balance sheet. Then we have the information. Now, if we haven't started any data here, then we're not gonna have any data within the balance sheet, but we do want to go through this. So this is really gonna be the data at the end of our problem that we're gonna look through first here, I'm gonna show you at least first, and then we'll go through the problem and actually input this data, and then we'll basically be running forms again as we go. So this is gonna basically be the end point. Our balance sheet are forms are completed products, and then we're gonna enter the data, and then we're going to get back to this in point again. Within this information note, if you're working from a new company, that will, of course, be the process. If you're working at a company that is continuing, or if you get a new job but someplace and you become the new bookkeeper, then clearly there will be data. Typically, that's already there. So we will go through the starting of a company the entering of the first month and then the entering of the second month where we'll will have beginning numbers in the second month numbers. In any case, we're gonna be working here with the dates of 010121202 28 to 1. That's January 1st, 2021 to February 28th 2021. We are working a problem in the future. That's kind of like the way these types of problems have to work. You can usually work in real time because we're typically trying to enter all this data. Uh, as as of a point in time. So in practice, of course, everything would be run as of the current date. In a lot of problems when we're practicing, we're gonna have to be very careful of those dates because we're not working currently in the current date, we are then going Teoh, run that report. So here we go, running that report here and that will give us the balance sheet. Now, we're gonna go through the components of a balance sheet fairly quickly and then see how QuickBooks is in conformity, how they form at their balance sheet and how they differ than a little bit in terms of their financial statements in terms of their balance sheet. From what we may have learned in practice in ah standard accounting type theory class. First thing is, you might have saw it is unusual for a balance sheet is we enter two dates, and as you can see down here, it says as of February 28 2021. If if we learn when we learn about a balance, which is from a theory standpoint, we know that it's as of of point in time rather than a date range, rather than having a beginning date and an Indian date. So that is represented correctly here. But why would we need they beginning date in the ending date? There's a couple different reasons. One is that we're gonna use the auto zoom feature. And as we do that when we click on this information, it'll have to give us some detail what we would call in a theory class, kind of like a General ledger type account for the checking account. In this case, we're gonna call a transaction report in QuickBooks, and that'll give us a date range if we didn't put a date range. If we just put one date here, it would just give us one date of a general ledger by having two dates we can then click on this item and automatically go to given us two full months in this case or date range of data for transactions in a General Ledger type report Transaction detail report, as it's called in QuickBooks. If we scroll down to the bottom to the equity section will also notice a slight difference down here in that we have some more timing accounts down here. We've got the net income here, and we have the owners draws and investments. From a theory standpoint, we may have learned that whether we are so proprietor, we'd be breaking these out whether we're so proprietor, a partnership or a corporation. Whatever the type of entity, we typically break out the income, the net income on the income statement and then the statement of retained earnings of the statement of equity. And then we'll have. We don't have then the net income on the balance sheet. Often times, um, it's just it's just gonna be included in this case in retained earnings or in the total capital account. And the same is true for owner pay for personal expenses that could be called draws for a sole proprietor for a corporation would be more in the terms of dividends and would be found on the statement of equity or the statement of retained earnings not typically on the equity section of the balance sheet. So we have some more detail on the balance sheet, and that detail then reflects a timing statement, meaning the net income has to be over a certain time period. And if we do not, I mean, typically, quick picks will select the time period as, um of the year to date. So if we're a December 31st year end and we selected ah, February as as the month we're working with and then it would have net income for January and February that time period. So that's another little bit of a difference within QuickBooks. Now, if we scroll back up, of course, the three components of the balance sheet on just always will be. Whether we're talking theory or QuickBooks will be assets, liabilities and equity. And the balancing will be assets equally in liabilities and equity. And we could see this if we start looking at the these little arrows here that will, um, crunch the numbers up. So if I select this arrow. In other words, we'll see that it now just has total assets. If we say that we don't want to have the liabilities and equities and we select that arrow , then it'll change from that little triangle to the triangle going this way. And now this is our accounting equation. In its simplest form, this is the balance sheet. In balance, it's got the total assets Equalling the liabilities and equity. So let's open this up just piece by piece and break this balance sheet down so that we understand all of its components. And so if we select this triangle, we're gonna open this back up and I'm gonna close down as much as we can again. I'm gonna close down the current and we'll close down the fixed assets so you can see the next component within assets. The next sub component will be current assets and fixed assets. That's the two components we currently have. We might have current and long term assets or non current assets and fixed assets, but we may not have any non current assets that aren't to fixed assets now, So these are the major two categories. We will have If we open up the current assets, then we have within the current assets. Let's close these up. We've got the sub categories of the bank accounts, accounts, receivable type accounts and other current assets. So again, I just opened up current assets and then closed all the sub accounts within their within the bank accounts. This is the most liquid current asset, and that's gonna give us the checking account, of course. And that's and if we were to export this. So if you learn this in a theory cloud class, it wouldn't typically be called bank account or checking account. It would be called cash, and it would include, you know, okay, all cash type items, whether they be savings account or checking account within QuickBooks. If we have multiple cash accounts or multiple checking accounts, we will typically list them out here, even on the balance sheet. If we were to make financial statements, then we would typically combine those together and put them under basically a cash that would be the general format. So then, if we go down to accounts receivable another current asset and we select the triangle, then we have the accounts receivable stand alone account here. That's typically we typically have one accounts receivable account. It's a special account because it needs a subsidiary ledger that tracks this. This is what who owes us money, and it'll track who owes this money here. If we select this item by transaction by the General Ledger or transaction detail, we also need that information by customer who owes this money. And so that's why this is a bit of a special kind of account. It has that special need that special tracking need, and then we have other current assets. If we select that Adam, we have the inventory. We've got prepaid insurance, short term investments and UN deposited funds. We'll go over more of those items what they are as we construct our financial statements and enter data and won't go into each one of those. But that gives us the total current assets, the fairly liquid assets, the assets that will be consumed fairly soon in order to help us generate revenue. We then have the fixed assets, and if we selecting out fixed assets could be turned property, plant and equipment, sometimes they're referred as depreciate bill assets. They're gonna beam or long lived assets assets that typically we buy, we hold onto. We use them for a long period of time in order to help us generate revenue. Things like cars for cliffs equipment, building land is included as well, even though land will not be something that we typically depreciate over time. It's something that, uh, pretty much stays around in a human lifetime. It'll still be here. So we've got furniture and fixture Ah, and then we've got the depreciation, which is really accumulated depreciation here. And so we'll talk more about that as we go, and that gives us our total fixed assets. Noticed. Accumulated appreciation is going to be a negative number. And we have that front earned fixture Ah, here and the original cost. And so we're subtracting out the accumulated appreciation to give us the net amount. That then gives us the total assets, which will be the current assets. Plus the fixed assets gets dusty total assets, so it's close up the assets again will close that side up now. The other side is of course, equal to it. The assets represent what the company has the liabilities and equity represent. Who has claim to what the company has. In other words, we're going to reform at who. The company has not listing out the things that company has but who has claimed to those things that the company has either Ah, third party liabilities or the owner equity? So if we select, it was a little dry angle, and then I'm gonna make this smallest possible. Here's their sub categories Here. We've got liabilities and equity were first gonna talk about liabilities, so we'll go in the liabilities. This represents, of course, third party claims. So this is what the company has. 1 79,081 of it is claimed not by the owner. The owner wouldn't get it, in other words, if we closed the company if we sold all of her assets and we got exactly that amount for it , which we may not, because we don't know what we would sell, for example, the property equipment for um, even though it's on the books for what it's on the books for. But if we got that in cash, we would typically have to pay this to somebody else, and then we'd get to walk away from our business with the equity amount here. So the equity is kind of the book value of the company. Notice that the total liabilities and equity doesn't tell us anything other than we're in balance other than equals total assets. What the key number is that tells us what the company is worth on the balance sheet, as of a point in time is the equity number that represents assets minus liabilities. And that's that's what we in theory would walk away with if we were to sell all assets, pay off all liabilities. Then we're gonna open up our liabilities. Third party that we own, we've got current liabilities. I'm gonna make these Ah, smaller. And those include the accounts payable account. That's gonna be stuff that we owe on the short term. So we bought something for a short term and, oh, it back within like, 30 to 60 days. We've got the credit card, which is another type of liability, and then we've got the other current liabilities. What you're gonna include sales tax, interest payable, loan payable and payroll taxes under in revenue. We will go over these mawr in a later point as we enter the data. We then have the total current liabilities and then long term liabilities. Long term liabilities are different in that they're not due for over a year. Period of time is just an arbitrary number. So we basically say of the stuff that we owe to other people, how much of it is coming due soon and that due soon to us is gonna be a year, and we'll put that in the current liabilities. We're more concerned with that because we're going to pay that pretty soon pot most likely with some type of current assets in order to pay that. And then we've got the long term liabilities, which are a concern, but they're a little bit later. We can wait on that. We have some time to build up some money. Hopefully, before those become do so, it's gonna be the liabilities that gives us the total liabilities which will equal the current liabilities and the long term liabilities. If we close that back up, then way we can see the equity side would cause at the liabilities. And we see just the equity now and I'm gonna open up the equity and that gives us ah lot of different information, which again, we may think, is a little bit different than we might to see on a standard financial statement for financial accounting theory textbook type problem and that first we have opening balance equity, which wouldn't we would never see in theory problem. It's what QuickBooks uses in order to help for something toe work when we do something kind of unusual. For example, when we start a new company, we will use the opening balance equity not on purpose. But we will put the information in the system, as QuickBooks recommends us to dio. And then QuickBooks will use this as the default account. It's QuickBooks way of trying to get around knowing debits and credits, trying to be able to input the data into the system without using debits and credits without using a balancing process and QuickBooks then forcing the balancing process by creating an opening balance equity. We then moved it out of the opening balance equity and will show how to how to do that, how to set up a company and remove it from over the balance equity. If there's anything in opening balance that for equity, it's not necessarily wrong because it's part of the equity section. But it's not exactly right either, because there's no real account called Opening Balance Equity could make people think that are. You know, someone sees something that opening bounce back with that. Probably think the financials are not correct. And then we've got the owners investment That represents what the owner put into the company often times and theory problems that will be combined in the capital count or, in this case, in retained earnings. In this case, they're breaking it out in a similar way as breaking out draws. Then we've got the owners pay and personal expenses. That's kind of like the draws account for a sole proprietor of a similar to a dividend for a corporation. Again, these two accounts would probably be seen on a theory problem not on the equity section of the balance sheet but on this statement of owners equity or the statement of retained earnings. Then we've got the retained earnings, which again, if it was a sole proprietor, it would probably be called ah, capital account owner capital. If it's ah corporation, that's usually the term of retained earnings. So for QuickBooks Online is basically using owners investment, which sounds like a sole proprietor term. This is a sole proprietor here, and then it uses the owners pay for personal expenses, which sounds like draws, which is more of a sole proprietor term. Which dividends would be a corporation term. And then it uses the term here retained earnings, which sounds more like a corporation term. A capital account would sound more like a sole proprietor term, so the equity section terminology is a little is a little different, but in the whole, but thing is all the same. Then we have, of course, the net income, which again would typically be on the income statement and not included in the balance sheet. And then we've got the total equity. So if we were talking about a sole proprietor here, normally the difference between this balance sheet and kind of a normal balance sheet is that we would only have this one number, and if it was a sole proprietor, it would probably be just under an account kind like retained earnings. But the capital account we call it capital, typically for ah, sole proprietor, but the total is the same. So It's trying to give us some more links. It's trying to say, Hey, this this balance sheet is linked to the income statement trying to tell us how they're related, forcing us to see how they're related. It's trying to break out. Hey, look, this is the owner pay and this is the owner investment, these air, the components of equity that are not net income. And so it's I think QuickBooks goal here is to help small businesses or help people that may not be looking at financials all this time to see how the two main financial statements are related on this statement and to see the break out of what is included in equity, which is not part of net income. So those are gonna be the major components. I'm gonna make this a little bit large again. We'll make this large, and we'll see all of the components here. Note that we're this is gonna be the end statement. And as we've seen before, what we really are going to do when we start entering data is get to the end statement and then use the auto zoom feature to see the activity. And that's just gonna be a common practice. I recommend doing it pretty much every time you enter anything, Inter something. Make a bill making invoice, make a sales receipt and then go to the financial statements to balance sheet in the income statement and see what happened. By selecting the date range and then selecting this item or any item that you believe is gonna be involved, it will be at least 22 accounts affected. So if we select this little zoom in, it will give us our detail. This what you might call in theory, a General Ledger report. QuickBooks calls it a transaction report, so and you might call it a transaction by account. I mean, by date report. It really kind of depends on the software that software name, note now that when you're really depends who you're talking to and what things are going to be called, if you're talking to someone who came, who's a theory person who does accounting theory. This will, in essence, be a General ledger type account. If you're dealing with a bookkeeper that deals primarily with QuickBooks, this is going to be a transaction report. And if you deal with both which most people probably will it be best to know both terminologies if someone asked you for a general ledger. This is really the kind of thing they're looking for. This is the detail that's gets a detailed by date. I think it's actually more information than that because it gives you the transaction type . If you're dealing with someone that asks for acts for a transaction detailed report and and you're working somewhere else, it's similar to a general ledger. So what we have here is we're gonna have the transactions by date that are affecting cash. It also gives us the transaction type, which is really nine nice. It's a deposit or check or an expense. It gives us the number if we have it. Account numbers or check numbers. The name. If we have a customer or vendor at memo, if we were nice enough to write one the account and the split account, it tells us what other accounts is affected. There will be at least one other account each time, and it gives us the amount and a running balance that running balance here. We can always see what the balances its Here's the activity here is the balance started. 25,000 minus 12,000. 13,000 minus 16,000. The negative 3000 plus 65,000 to 62,000. So that's how it's gonna roll through. If we select any of these items, it'll go right back down to that data input detail, and we'll get to see what actually happened. This is the form. This is what someone actually input in order to generate this information. So when it closes back out and go back to this report, that's going to be really useful. T go back and forth, and it's something that we don't see in the theory classes because it's a lot more difficult for us to go. You were usually constructing, and if we're doing it by hand from the actual transaction to create in the financial statements, we often don't get to see the other side of things. If you work with software, you're always looking at the other side of trying to see what happened. The financial statements and you have that ability to quickly go back, so we'll go back to the summary. That's kind of quick. Zoom is available for all of the accounts here so we could do that for any of the accounts . If we go down to accounts payable, for example, and we select any number here, we'll see that same detail. By date, we got bills in the payments of the bills. In this case, we've got the amounts. And if we select any of these atoms, for example, this bill, we will then see the data input form. Note that most of the stuff will have a data input form related to it. I'm gonna close this back out. We'll go back to the balance sheet. Now we've taken to accounts that are normal transaction type account If we looked at something like furniture and Fixture, which we don't buy furniture and fixture that much So there's not gonna be a lot of activity compared to, of course, the cash account or the A R accounts, accounts receivable, the accounts payable accounts. If we select the furniture and fixture account, then you'll notice is a lot less activity. And so all we have is a check here and then we've got a journal entry down here. We paid these with cash, so we were able to write a check. This is more of an unusual transaction. This We bought furniture and we financed the whole thing, and so there was no cash affected. And there's no form notice. We just had to use a journal entry. In this case, we'll actually use some registers for something like this. But QuickBooks, when there's no form, even if we use the register, will default to a journal entry. So this is where we will see the debits and credits directly. And there's not really any way around the debits and credits here. Um, if you're working with your concern about the debits credits and you want to learn about the debits credits because QuickBooks is using debits and credits, you can go to the trial balance report and see this same activity and see all the accounts in one space and see how they're being affected with debits and credits. Someone close this back up. We're gonna go back to the balance sheet, and that's gonna be the major components of the balance sheet 13. 2.15 Balance Sheet General Options: I flew in this presentation, we will take a look at the general formatting options for a balance sheet within QuickBooks online. Here we are in the QuickBooks online dashboard. We will be continuing with the get great guitars problem. We're gonna take a look at the balance sheet once again, this time focusing in on those options for formatting. In order to do that, we're going to go back to the reports on the left side. And if we're infrequent, frequently run report, which will be the default most times we would see the balance sheet pretty soon, because the balance sheet is a report that we will probably be running most frequently. If it's not there, we can type it up here and put in the balance sheet, and it will then auto populate. We will select the balance sheet. We're gonna change that date range once again from a 101 to 1 Teoh 02 28 to 1. That's in January 1st, 2021 to February 28th 2021. It's not gonna work until we run that report. Now, note once again that we're gonna be working in a problem in the future. If we haven't yet put any data into the system, that's OK. We'll just go over that in component. This is what's gonna be there at the end of our process, and then we'll come back and we'll be able to run these reports again and we'll see that information populate. So we're really seeing what's gonna happen after we enter the data, then we'll enter the data. Then we'll run these reports again. All the formatting options will be very similar for all these reports. Note. We have a date range for the balance sheet, even though the balance sheet is as of a point in time, that is typically going to be so that we can select this item and drill down on this information for a transaction report, and it also affects the different type of customization options we will have for the report . Now, if you want to select and change some of the formatting of this report, then one place we can go. The main place we can go is to the customize option up here. No, we have some customizing that will be in the mostly in the general area as we will see in these this customized just this this outer section as well. So here, of course, we have the customized option here. That's gonna be if we want some other date range, then these will be the most common. If we just want the day this week this this week to date, this month, this month, the date. If we select these, that'll give us the current information in accordance with those items and just select that date range. Now, of course, because we are working with a problem that is not standard were working in some other date range rather than a current date. Then we have to customize every time. So we put in a customised range here, and any time you just start putting in the dates, it will then auto Ah, Phil to custom dates on the side. Then we have the display columns. If we select the drop down, we have days, weeks, months, quarters. This will actually within this report because it's a balance sheet showing just a point in time. If we select these different items, it'll often change it. Toso. If we select months, for example, then we often well, and we run that report with the months and then it'll often change the one month to two months. So what it did is we have two months selected here. So it's saying, Well, you must want the month end then of each of those months. So it took January's month end in February month, and so it took the range of data that we selected here, and it broke out in chunks in accordance with the timeframes we selected here in this case , those being months. If we select the weeks, then of course, it'll dio a similar type of activity. If we run that report, we should get it broken out by week. So, of course, we have a lot more data. We've got all every each week for the months of January and February. We can do some comparison. Each of these weeks is, as of a point in time as of the end of each week. So that's what that information is going to do to this particular report. We can do that, of course, Years quarters and and what not? We're gonna go back to the total and run that report. Then we have the active rows and columns. If we select this item, it's going to say show all roads that are active versus all Rose versus non zero. This is a really useful setting here because if there's any activity within the report, even if it's a zero balance and we say active, it will show us that activity. So, for example, if we scroll through here, we have the zero balance, typically in the desktop version that would not appear here, which would be gone. And the great thing is that when it does appear is that if there is activity because it's active over this date ranch, even though it zero weaken, select that item and we can see the data that's happening so we can get that transaction report very easily by showing that item when it's go back up top and go back to the report . And if we scroll back up, then if we select this item again, If we were to say all, then it's gonna pick up that the stuff that's active and the stuff that we haven't used it all for that date range, probably not when we want much, because it might have a lot of zeros. There are zero accounts that will be involved zero accounts that have no activity and are no use to us if we want to remove them all the zero accounts, which we probably would if we were to give the report to an outside user. We could say that we want everything that's non zero and, uh, and run that report. And then that should go down. And we shouldn't see any more zeros in this column. That's gonna be some useful features. It is Nice toe. Have this default toe have the actives when you're jumping back and forth from the report so that you can see the detail. Next, we have the select period item. If we select this will first take a look at these items down here and then we'll go down to the previous period and previous years. We have the percentage of rose because there's only we only have the singular rose here. That's not gonna be very interesting. So we'll look at that at a later report. If we take a look at the percentage of columns and run that report. Where to run that reports percentage of columns then we'll get. They will get our percentage column on the right side. And the percentages can give us a nice measurement when we're comparing to other types of companies that are similar in nature but different in size. For example, if we're talking about a different company, that's that does the same thing we do. We sell guitars, but they're a lot bigger than we are. Then we couldn't really compare our cash as related to how much cash they have, because the comparison might not be useful. But they're comparison of our total cash holdings in relation to the total assets could be something comparable. So in this case, if we were to say that we had our calculated here were saying that cash is 98 995.56 What percentage of that is our total? Is it of our total investment? I'm gonna scroll back down to the total assets down here, and so we're gonna say our total assets divided by 2 to 8389.56 and that's 43.43 threes form, which, if we move the decimal two places would be 43.35 And so that's gonna be our 43.35 So if we were to compared to some other company, we'd say, Yeah, you know, cash is about 43% are counter Cibeles is about 5% and see if that's comparable to other companies. So I'm gonna un select that I'm gonna un select this item and we'll run that report. It'll take us back here now. The other islands are a little tricky to toe. Look at If you say we want the previous period, What we're saying is we want a comparison to the previous period. In order to do that, we need to We need to select the current a current period of current like month in our case and then select the previous period. So I'm gonna change the date ranch here. I'm gonna make this for for the month will make it 0201 to 1. So it's February 1st, 2021 to February 28 2021. So we're gonna run that report. So this is as of February, running 4 February. Same dates down here, But now up here were telling it that its just for that month, that month of February and then and then and the reason is the same day down here because it's a point in time. But now we're really trying to tell QuickBooks to give us two time periods as a comparison and eso so we want. We want it toe not to just take this current months of data. Then we'll select this and we'll go to the previous period and we will run that report and it will give us as a February 28th and then as of January 31st gives us the current month first. So we get this comparison of the two date periods and again, the reason it does that is because it's were saying as of the end of the second month and ah and then we said pull into the prior period the previous period and that's gonna give us , um, January and February. If we continue with this, if we select this drop down again, if we want the change in dollar amount, we select the change in dollar amount and we run that report, then it's gonna take the difference between those two months and will give us what the differences in dollars. So now we've got the difference between February and January in terms of the checking account is 6 4054 In terms of the accounts receivable and so on, we have to change in dollars. Ah, we can also get that percentage change. So that's going to give us the change in dollars. If we select this one more time and we select the percentage change and run that report and Steve that once again jumps down there, sometimes, then we're gonna get the percentage change. And once again, the change in dollars is is really important for us. We could see up. That's, you know, a significant dollar change. But we might not be able to compare Teoh to a company of different size, even if it's the same interest industry. So what we could compare then is that the percentage change and that's calculated as we take the difference that we took 98 995.56 minus the 94 3 41.14 or 17 gives us the change the 6 4054 39 then we're gonna divide that by the first period. This number here, that's 94 94 341.17 And that's gonna be if we move the decibel two places to the right, A four points 93 4.93 increase from January to February. So that gives us our percentage change. That's really useful again comparing different companies. Different companies have different sizes, and especially so I'm gonna I'm gonna take this back off un. Select that and many of those types of options that we looked at our in the display option on the desktop version. Then we're gonna go back to this customized field here and see a couple more. 01 more thing here. We got the cash versus a cruel toggle. Now this gives us a quick jump between the cash and a cruel. It's not perfect, however, because QuickBooks is going to be run not by, you know, theory rules, meaning, you know, when you should revenue be recognized, it should be recognized when we earn the revenue. When can QuickBooks recognize revenue? It's going to do it by getting triggered in some way, uh, and that we have to tell it what point you're gonna recognize register at our revenue at and typically revenue will be recognized when we create an invoice. And that's gonna be basically the accrual method for QuickBooks. And if we select a cash method, then it's going. It's going to recognize revenue when cash is leaving or going into the company. So it's not a perfect transaction, but it gives us if we know how QuickBooks is is moving between these two items. We can go to these two items and will give us a quick change, which is which is really nice, because we can see kind of a cash flow statement versus a bob for a cruel and a cruel statement. Okay, now we're gonna look at the customized Adams. Is a few more items within the general area up top and the customized Adam? Some of them are going to be the same, including the date range. We saw this over here. So we have this Adam and the dates. So here's the drop down the custom dates. If it was the current time period, we can select the current month of the current year, or we can select a custom date range. We have our cash versus a cruel toggle, and then we have a couple of things we haven't seen before. We've got the divide by 1000. Why would you want to do that? Because if you're talking about a large numbers, if you're talking about millions or billions, if you're talking about millions or hundreds of thousands, you might want it's The ratio will be the same if we lose some some zeros. So it might be easier to look at a form by dividing by 1000 so we can select this and divide by 1000. If we divide by 1000 we probably don't want to see pennies. It makes no sense to have sense included. If we're looking at the report by thousands, so we probably want Teoh select that that item to Ah, and and then we can also represent the negative numbers. A lot of people like to see negative numbers with brackets. This is kind of unusual to me to see it like that. But brackets is is there a common for me to see negative numbers That way, we could also show them in red if we so choose to really let them stand out. And so if we select that, we're going to say, Run that report, then we'll see a lot smaller numbers and we'll just have to note here, of course, that these numbers are in thousands. And so then we have this items and the negative numbers are bracketed and in red. So those air some of our our items that we can change through the display. We've got pretty many a lot of options to really format this balance sheet in some customized ways. 14. 2.20 Balance Sheet Remove Date Time: I flew in this presentation. We will remove the date and time from the reports were then QuickBooks online. Here we are in the QuickBooks online dashboard. We will be continuing with the get great guitars problem. We're going to be looking at some or report options. We're gonna be looking through those report options with the balance sheets reports. Therefore, we're gonna open the balance sheet report going to the report on the left side. We will then be here. We could select this point of the balance sheet report as it should be a frequent report at this point. But if it's not there, weaken, scroll up here and type in the balance sheet and it should auto populates until we see the balance sheet. Then we're going to select the date range. The range that we will be working with will be, uh 0101212 to 28 to one. And ah, that's gonna be a 101 to 1, which will be january 1st, 2021 to February 28th 2021 then we will run that report. So here is gonna be the report of that has been run and note. Once again, we are selecting this date range, and that range is a range, although the report will be as of the end point in the range because the balance sheet is, as of a point in time rather than arranged. But the range does help us because if we select any item here to drill down and see the General Ledger and Lord Transaction report, it will give us more detail in accordance with this range of dates. Now we're going to take a look at some more options. Last time we looked at some of these general options, we're gonna go and see the option to remove the date and time. Now, if you worked with a desktop version, the default portion you will have noticed for the date and time is up here to the upper left will be a date in a time stamp. As of the point in time than that, the reports were generated. If we scroll here, we can see that by going to the printing options and will give us a printing preview. And here it's gonna be at the bottom if we scroll down to the bottom of the report. We have their cruel basis. It's Wednesday and here's the date in the time and what not. So that's where we can remove this. This information from this report, we're looking to remove that. So if we close that, we're gonna go to the customized up top customized up top and we're looking at the header in Footer. And this time it's gonna be a drop down rather than a tabular format so we could close the general. We're not in the general anymore. And of the four settings that we have, we're in the header and footer setting, and we have thes header and footer options here. Within this section we have within the footer, we've got the date prepared, time prepared and report bases. If we uninsulated those, then that should be removing them from our report. So we will run that report, and then we're gonna go ahead and look at the print preview and see if that is indeed the gave. So we'll look at the preview reports and then we will scroll down and at the bottom of each page. We don't have that header or footer any longer. That's a fairly common thing to want. Teoh. Remove eso. We could, uh uh, go through that and see that process. We'll talk later about memorizing the reports that that's something that we want tohave standard for that not to be there than we could memorize the report and therefore not have to choose that option every time we generate this report. 15. 2.30 Balance Sheet Header & Footer: Hello. In this presentation we will look at more header and footer options within the balance sheet within a QuickBooks online Here we earthy QuickBooks online dashboard. We will be continuing with the get great guitars problem. We're gonna look at some more formatting options that will be available for most forms. We will be exploring them using the balance sheet. We're gonna go to the reports once again on the left side. The balance sheet should be a frequent report at this time. But if it's not available at that time, we can cut, then balance sheet and then it should auto populate for us. We will be working with the date range that date range of a 10121 Let's do that one more time. It's gonna be 010121202 28 to 1. That's January 1st, 2021 to February 28th 2021. If this is the first time that you've run this report or if you're starting a new company, then you won't have any data. Here. We will be looking at this report. As of the completion time they saw the two months that we will be in putting, and then we'll go back. We'll actually input this data. So we're basically looking at what will happen once we complete this work. And then we will do the work, and then we'll see this again. We're gonna go ahead and to run that reboard. And here is our information. One more time we're gonna look at what, possibly more than one. We're gonna look at the customized fields up top and look some more of these options. We've looked at the options up front, the general options. We've looked at the removed, date and time options. Most of these options being there in most reports, although the timing type of information such as the dates and this information will differ slightly. And we'll look at those differences and we'll just look at the differences when we move Teoh timing reports such as the profit and loss or income statement tax account report. So we're gonna go to customize up top. We will customize this report. We've looked at the general, so I'm gonna go ahead and minimize this, and then we're gonna go back to the header and footer Tab now we looked last time that we can remove the date and time and reports, so we saw where that would be on. If you want to see what that removes, you could take a look at the prior presentation. Now we could have some options here and tomorrow. One, we could show the logo. So if we have the local selected, we could show the logo and then we've got the company name. So if he wanted to change the company, that is probably something that's gonna be there by default. But if for whatever reason, we have some slightly different names say we want to put company at the end, we can change the company name for this information within the header field. We can also have a report titled So if we wanted to change the report title, of course the balance sheet would be pretty standard. If I want to put a balance sheet report or whatever we want in the report title, we can do that as well. So then within the footers we can. We have removed these areas here, and we have the option in terms of where we want to align the headers and footers. So we have its central line right now. We can take it left, aligned or rightto lined. We'll select the left lined and see what happens with that and see the effect. And then we're just gonna say, Run that report and see these options that we have here. So we have a logo of our guitar. So now has shown up. We've got to get great guitars. We added the company we've left aligned. It didn't go all the way left because we put the logo there s o center would be the standard temp, typically, but that would be the information there. So if we looked at the preview, we go The preview, By the way, the preview. I went to this little printer here that'll take us to the printing option and the preview. Here it is. In the preview section. If we scroll down, we have removed the footer, and that was the date in the time. So I'm gonna close this print option back up, and that will be those options there. Once again, If this is something that you want to have all the time, then we could memorize this report will talk about how to do that later so that you don't have to change that option every time, Um, way want to generate this report? We can memorize these settings so that say, the logo and the alignment will automatically show up as well as the added name changed company and report if we so choose. 16. 2.30 Comparative Balance Sheet: Hello. In this presentation, we will create, analyze and export two Excel, a comparative balance sheet within QuickBooks online. Here we are in the QuickBooks online dashboard. We will be continuing with the get great guitars problems. We're going to be looking at a specific balance sheet. At this point, we're gonna be looking at a comparative balance sheet, one that compares one period to another in our case, one month to another that month of January and February. In order to do that, we're gonna go to the reports down here on the left side and within the report's section. We should have the balance sheet selected in the frequently run reports. But if it's not there weakened and type in to the search engine balance sheet metal type in balance sheets, it should auto populate. That's the one we want within the balance sheet. We're gonna change the date range to the two month time period. And that's gonna be no. One. No. 121202 28 to 1 this once again that being january 1st 2021 to February 28th 2021. This one skin is what the data will look like after we enter the information. So if you're falling along with his problem, you have no data at this point. We're just looking at these financial statements here. We're gonna show some of the options in terms of what the in product will look like and how to process these reports as we do so then will enter the data. Then we'll get to these reports again, and we'll print these reports and be looking at them as we go through them. So once we have the date range here, we're gonna say, Run that report And here is the report that is Run note once again that the report is as of February 28th 2021 1 date one time, one point in time. That is the nature of a balance sheet. We do have the date ranges, a couple different things. The date range will dio one good thing about a date ranges. It allows us to be able to auto, zoom on information and see a range of data from the transaction or General ledger type report. And it also has some functionality when we start to to look at the different display options. So in this case we have The balance sheet is a standard balance sheet here, just one time period. But we often want to have more than one time period we might wanna have in this case two months. We might want to have the month of January and February. Now, if we were looking at a profit and loss or income statement type of of statement, when we run this month of January and February, it would then combine the numbers. We would see an income for two month time, period, but the balance he only shows as of the end of the month. So when we change something for for comparison, we're really talking about what we would like to see is a report as of the end of January and report as of the end of February. The easiest way to do that is to just select in this icon here. We've got the total column. If we select and go through here and go to the months and run that so we have the months we have the date range, which runs a two month time period. Then we're gonna go ahead and run that report, and if we run that report, it will then break out the ends of the two months. So that might seem a little bit odd. It first on how, why, exactly that works or how that works. QuickBooks has seen a two month time period QuickBooks and saying, Hey, you know what? I only need to show what is as of the end of the month, because this is a point in time and therefore if we to select a two month time period and then say I want to show months instead of the total amounts, it's gonna Vince say, Well, we must mean then the point in time as of the end of January and then the point in time as of the end of February, and that's how it's going to draw out this report. So we need to have some understanding of you. What's a balance sheet with? Is it appointed time, or is it a time frame? And and then think about what the what the range of dates is going to do, as well as choosing some of these options, such as comparing it to months now if we select this item and we can use some of these other things. Of course, weeks would be a similar item. We've looked at some of those options before, so I won't go through them all here. But it's gonna be the similar kind of format will select the range, and it will select the endpoint of any range we look at, whether the month year week now, when we do this, it's it's interesting that we have that January and then February, meaning it goes from left to right in order of the oldest month first and then goes to newer months later, when we run some other types of comparison reports, as we'll see later, it will actually put the new month up front. So we want to be careful. Whenever you read in a report you want to be looking at and say, Well, what are we working with here? What did they put the most current month up front? Meaning In this case it would be February, which would make sense because often that's the most important month to us. Is the current month that we're looking at or do we put the oldest month up front which would also make sense because then we would be reading from left to right, oldest to newest, which would be a natural form of looking at a progression. So in this format, the way we're working at here we see it that it goes left right in order of progression, out of time, January and in February. We go through this, of course, we have the balance sheet accounts and we're gonna have the balance sheet Accounts are always gonna be in order assets than liabilities and equity than income and expenses. We're starting off with the assets in terms of the cash account comparing January and February than accounts receivable January February, other current assets, January February fixed assets, then the total fixed and then total assets down below, so we can compare the totals of the to that. Of course, we have the liabilities and equity, starting with the accounts payable and Devin Visa card, other current liabilities and long term liabilities. Total liabilities. Then we have the equity section that we compare out the liabilities and the equity gives us total liabilities and equity which will be equivalent Teoh the assets of this report as well. The one other thing we're gonna do just for formatting sake, is we're going to remove the date and time down here. So in order to do that, we're gonna scroll back up to the top and we're gonna go to the customized section and then we're gonna go to header and footer more in a select that's triangle for to see the drop down, and we're gonna remove the date, prepare time prepared and report bases, and that's what going to be it. Then we'll run that report, and I don't give us this information. If we scroll back down, we're gonna have the same information. And we have removed this down here now notes that as we look at this 22 months, obviously January when we work, this problem will be our first month of operation. February will be our second month, so February should be a more standard month, and January should be substantially different, considering it would be the first month of operations. As a business starts, it will have substantially different, um, points in time. And at some point you would think that it would been level out and have more consistency over time and So we're gonna go ahead and export this report now, so we're gonna export it to excel, practicing that process in order to export. All we do is selected this icon here and we're gonna go to export that we will export. And it should open up, excel automatically and export this information to it. Note that if you have worked with the desktop version, it's a little bit different in the exporting process where we can choose a sheet and and pick if we want a new existing sheet or not. This one's a bit quicker to do that, but we don't have a little a little less functionality. We're gonna enable the editing up here. It's also nice that we have the title of top, but it is merging the cells. And when we format thes, we may I want will have to adjust the fact that we have this merged cell meeting home tab alignment emerged. Sell this A one cell is really a one a B one and C one or C two a to see tune bto. Uh, and if we if we start to manipulate this report, it could kind of have some problems But note that once we have this information, we could do stuff like we could, you know, subtract thes two out If we wanted Teoh and we can run similar reports like this in QuickBooks and we could start manipulating the data here. And so that's one of the main use is one of the great benefits of having any kind of database program be able to export two Excel and having the functionality on our end to be able to manipulate data in pretty basic ways. Just, uh, sorting the data and doing some just plus minus and some function calculations. We're gonna go ahead and save this. Now it looks like it is printing the way we would like to see it mean it's all gonna fit on one page wide. And if it's more than one page long, that's okay with me. I just like to make sure it's on one page wide. So we're gonna go to the file tab, we're gonna scroll down. We're gonna save as they were gonna browse to the location where we would like to save this as to I'm gonna put it into this Excel docks one here. We're gonna put it into Excel docks one. And I'm gonna change the name to Let's make it. I'm gonna actually delete the whole thing. Just call it a comparative balance sheet. Comparative balance sheet. I'm going to save that here now. No, I might want to put that even here. Comparative balance sheet. And I could change that in excel here. I'm gonna go ahead and do that comparative balance sheet. That's one of the things we could do except in excel. Although we can do that in QuickBooks as well. I'm gonna go and save this item. We're gonna close this and we'll do the same thing here. I'm gonna put I'm gonna change this instead of just a balance sheet will make it a comparative balance sheet. So we're gonna go ahead and scroll back up to the customized and scroll back down, and we'll change just from this balance sheet. Will just put a comparative in front of it comparative and run that report and that will give us a bit more customized name here. I changed it one more time. It's comparative balance sheet. So if we go back up there again, if we go to customize and we scroll down of the header and footer section. This triangle should be open. Then we have type in here comparative bound sheet and then run that report. And then we'll have that comparative balance sheet and we will be able to see that title change. And that could be important when we run different types of different types of reports, different types of comparison reports such as this. 17. 2.40 Summary Balance Sheet: Lo. In this presentation, we will create, analyze and export two Excel, a summary balance sheet within QuickBooks online. Here we are in the QuickBooks online dashboard. We will be continuing with the get great guitars problem. We're gonna be looking this time at a balance sheet, but im or summarised balance sheet, a balance sheet that gives us less detail and more of the big picture type of format. That being the summary balance sheet? No, to do that, we're gonna go to the reports down here, and that's on the left side and we have the standard balance sheet here. What we're looking for is the summary balance sheet. Before we go there, However, let's just take one quick look at the balance sheet, that standard balance sheet, which we've seen in the past. And then we'll compare and contrast that to the summary balance sheets. So if we go here, I'm gonna type in balance sheet, although it's already down there because it should be in the frequently visited reports. But if it's not, will coach the balance sheet and we look at that two month timeframe again, we're gonna say we want the month of a 10121202 28 to 1. That's January 1st, 2021 to February 28th 2021 we will run that report. So here's our report. Here's the standard balance, and it gives us a lot of detail in that it gives us assets and then it gives us within the asset to give us a break out of the current assets and then a further breakdown between the checking account, the accounts receivable, other current assets. Then we've got the breakdown of the fixed assets and then the liabilities and equity and the further breaking down of the current liabilities, the credit card liabilities, the other current liabilities and in the long term liabilities. And then, of course, we have the equity section. So we have, ah, fair amount of detail in the standard balance sheet. We've got these different groupings, the balance sheet. In essence, we know if we scroll back up here can be broken down to just the accounting equation. If I select this little triangle next to assets and this little triangle next to liabilities and equity that's basically asked, simplified as the balance sheet gets assets equal, liabilities plus equity. We're gonna look at a standard type of format That's gonna be a little bit more detailed than what we see here in our standard balance sheet Nazi here. But if we were to expand these what we would see in our standard balance sheet but obviously has more detail than this, that being the summary of balance sheet. So to do that, we're gonna go back to the reports on the left side. We're gonna type in here balance sheet one more time. We're gonna say balance sheet and look at the options we have. One of those options then, will be the summary balance sheet. So we want these summary balance sheets and we're going to select that item and we will change those date ranges one more time. This is gonna be no. One. No. 121202 28 to 1. That's January 1st, 2021 to February 28th 2021 we will run that report now. Note once again that if you don't have any data, if you're working through the problem clearly you've just opened the file. We don't have any data there, but this just gonna give us an example of what we have, what we're going to do later and how we could format data with, ah, sheet that has populated information in it. And so if you're working with us, we don't have anything there. This will be the end result. Then we'll go back through this and see some of these reports as we dio. So if we scroll back down now, we see the same data. But within the assets, we have the current assets broken out. We didn't break out the banks as a separate category. The accounts receivables a separate category, and then all the other current assets you'll see are grouped together here in this 15. If we select that 15 we see the detail here, and we're gonna get, you know, the detail for all the other current assets we're gonna go back to and notices broken down . So we've got inventory acids here. Then we've got the total for and then we got prepaid insurance, short term investments. So, really, what it's given us is a transaction report or kind of like a General Ledger report for all the accounts that it grouped together in this summarised balance sheet report, we're gonna throw back up top. We're gonna go back to this report. So we have that that group in here now noticed this is closer. This bank accounts is closer to what we might see on a standard balance sheet that if we were preparing it for the bank or something, we would probably call it cash. And we were to include all bank accounts, the savings account, the checking account, cash and cash equivalents would all be included in cash accounts receivable typically is one account, but we could have multiple types of accountant within QuickBooks. It separates those two windows subcategory, so that it could easily group them into a subsidiary ledger by customer. And then the other current assets are gonna be there could be a lot of those. And as we've seen, there's gonna be a lot of grouping of those into just one account. That summary may be very useful. Really depends who were talking Teoh. If we're talking to somebody like an investor or possibly someone in a management position that just wants the overall picture, then this is probably what we want to show them we don't need to see all. They don't need to see all the detail for the other current assets they probably want to see. Well, how much cash do we got and what's our total assets here? How much do we owe down here? And what's our equity? What's the value of the company? In total, they don't need to see the total break out now. It's probably a good idea if you're printing, these reports are preparing to demonstrate them to, to somebody to first print this report out and prepare yourself to give this report first and then prepare for questions about more detail and have the more detailed report ready for upon more detail. So what you don't want to do is get the most detailed report and try to dig into the weeds and just totally lose people up front. What you probably want to dio is take the summary report, have the really big picture report really simplified report, get as much information Teoh, whoever you would like to without having their eyes glaze over with that report something like this. And then, as they add, ask more questions or as you are engaging them and seeing that they're they're engaged in what we're getting into, Then we could get into more of the more of the weeds and start to I get the more detailed reports and they're more likely toe be receptive to that. So it so that's gonna be this. And so then we've got the fixed assets be grouped together as well. That includes accumulated appreciation and all fixed assets like cars and equipment And what not Then we have the current liabilities. We've got the accounts payable group together. Typically, there's only one credit cards. All credit cards would be here. We only have one here but all credit cards here. And then, once again, the other current liabilities. This is probably gonna include a lot of different items. So if we were to select that, then we would get the detail for the property tax or sales tax payable here. And we've got the interest payable that loan payable. So this has given us a G l in essence, for all of these types of accounts, scroll back up top and we're gonna go back to the reports of the balance sheet and then in the equity section. We see what's really typical of most balance sheets. If it's a sole proprietor, we only see one account often times It was the sole proprietor. We would call it a capital account. They call it just equity, all of equity. So when we saw the standard balance sheet, it was the QuickBooks breaks it out into, ah, lot of detail, meaning it's gonna break out what they call the retained earnings for sole proprietor would probably be called capital in like a theory book, and they broke out investments from the owner and what draws, which they called something different than draws put. They broke out that draws with the owner, took out, and they also put even net income into the balance sheet to try to show us that link between the bounce sheet and the income statement. So I'm here. We just have the equity, which is probably a lot easier to show people when we want to say, What's the value of the company? Weaken just adds that one number. That's the equity that's our assets minus liability. If we were to sell the company, in other words and words, to get cash for all the assets in the exact amount the assets are reported for and pay off all the liabilities. This is what we would walk away from with the company in theory. So we're gonna remove this item, and then we're gonna export this to, uh, Excel. So when scroll back up top when you go to the customized reports up top, going to scroll back down to the header and footer and we're gonna scroll down and we will remove the date prepared that time prepared and their report bases. Then we're gonna go ahead and run that report once again. Now we're gonna export this report to excel. So all we have to do to do that is to select this drop down this export section and export two Excel should then open up excel automatically. Assuming we have excel set up on the computer and we will open up the Excel document in fact, format as it opens up, it will typically often have this enable editing future. And we want to enable editing. We will hopefully be able to trust the information we're getting, and we're gonna put that they're now remember that it does have the title of top looks really nice. It is merging those sales. So if we want a format that it's in the home tab alignment and merge cells, he might want toe. And just so you could see if I if I collect the merge cells it's in, it's in Cell A and B. If I said like merge settles, then it just goes to sell A and that really makes it difficult for some of the formatting. If you want to merge across A and B without merging the cells, by the way you can do that. I can highlight both A and B and right click and go toe format cells, and instead of merging that, we go to alignment and we want to go to the So I'm in. I'm in alignment tab and the horizontal. We want to center across the selection, so we're centering across what we selected. And if we do that, we get that nice centering without, um making this merge sell, which which can throw off problems when we start to highlight columns and do things like that. So it's an option if you want to manipulate some of these reports we're gonna go ahead and save this. We're gonna go to the file tap to the left. We're gonna save as, and we're gonna go to browse to where we want to save this as I'm gonna save it into the excel docks. One here gonna change the name to We're just gonna call it, um, summary balance sheet. We'll just call it a summary balance sheet. The date would probably be useful. We might wanna, you know, add the dates and you might want to put the dates up up top because in little sort by dates , So you could put 12 31 to 1. And you might want to think about how we're gonna sort that. If if you were going to sort have multiple years in one folder, you might want to put that the year first in some format. If you're gonna have only one month, aren't you know you could sort each folder by month? Then you just need the dates in there. But just think about your sorting options. There were going to save that, and that will be the summary balance sheet 18. 2.50 Memorize Report: Hello. In this presentation, we will memorize a custom report into a report group were then QuickBooks online. Here we are in the QuickBooks online dashboard. We will be continuing with the get great guitars problem. We're gonna be putting together a report and then memorizing that report the benefit of memorizing the report, being in part that we don't have to put those custom fields in there. We don't have to put the way. We want to see the report every time we will be able to go to the memorized report and the settings that we prefer will be already set up. So in order to do that, we're gonna go to the reports on the left side, and we're gonna start off with a balance sheet. We're going to customize the balance sheet, and then we will memorize the balance sheet and then see where that balance sheet has then been memorised. So we're gonna type in the balance sheet. It is in the, um, most used reports. But if it's not, then we'll type in here balance sheet. It should auto populate. We're gonna select that balance sheet. We're gonna change the date range to the range we will be working with which is 010121202 28 to 1. That's January 1st, 2021 to February 28th 2021. And run that report. Remember that this is the dates that we will be working on if you're working through the problem and we don't have any data yet, we're gonna go through some of these reporting options because this is really the end result. We're always gonna be jumping to this, then we'll enter the data. Then we will consider these reports as we go through the data so you can always review these options and look at some of these terms later. But for now, we just want to see how typical reports will be manipulated. So we've got this information here. We're gonna just change it a bit and then we'll memorize this report. So I'm gonna go ahead and change it this way we're gonna go to did Total Onley and change that two months. So I'm gonna change this two months and run that report. And now we have the two months I'm gonna scroll back down and the other thing we're going to remove is this information at the bottom. So I'm gonna scroll back up, We're gonna go to the customized and we'll go to the header and footer triangle down here until the triangle goes down like that. And then we're gonna select the date prepared, time prepared and report basis. Those are the things that we will be removing. We will then run that report. Now, if we scroll back down, we're going to see that information is now gone. So that's the report that we want. We want to be able to jump to this report at any given time and the date range. We We can easily change the date, but we can have the format of the reports remain the same in essence, having that footer removed and the months selected. So we're gonna do that by saying save customization and we're going to save customization. I'm gonna call it the balance sheet, and I'm going to say we'll make it a comparative balance sheet. We're gonna add this to a report group. I'm just gonna type in a new report group is gonna be my reports. Probably wanted more customized name but I'm just gonna add my reports to the report group , and then we're gonna go ahead and save that information. So the custom report is now saved, and we should be able to pull this custom type report back up if we so choose. So the next time we want to have a comparative balance sheet, we shouldn't have to select the months here. And we shouldn't have to go down and change the header and footer to remove the information there. We should be able to go then two reports on the left side and we're gonna go to my custom reports now. So we're gonna select my custom reports, and here we have the comparative balance sheet here in the my custom reports. So we're gonna select that item and that will give us our report once again. So it's gonna pull up as is now. Obviously, as time passes, thing will probably end up. Changing will be the dates, but the customization in terms of this selection and the header and footer in this case in any other format in would then be already set up and not something that we need to repeat the process for 19. 3.10 Profit & Loss: hello. In this presentation, we will generate a profit and loss statement and discuss its components and export be profit and loss statement to excel within QuickBooks online. Here are the QuickBooks online dashboard. We will be continuing with the get great guitarist problem. We're gonna be preparing the profit and loss statement, which is the income statement type of statement within QuickBooks will discuss its components and we'll compare and contrast it to the standard in constant we might see in financial accounting. To do that, we're gonna go down to the reports on the left side. And if we're in the frequent reports, it will probably be there as the profit loss is gonna be one of the major reports, one of the financial statement reports. It's also known as the income statement when we look at financial accounting. So it's really important by the way to know that difference. The profit loss statement. If you are talking to an auditor or someone from financial accounting background, they will be asking for an income statement. If you're talking with a bookkeeper, someone that works primarily with QuickBooks, then they will primarily use the word profit lost. Most likely We need to understand that to as we need to with many different things within the QuickBooks software, The terminology slightly different. We need to know the core terminology for financial accounting and the terminology that is related. Two quick books in order to bridge the gap between people that per possibly work in public accounting, like auditors and people that work primarily with QuickBooks on the data entry and General Ledger side. So we're gonna type in the profit and loss, and that's gonna be the profit loss. Should auto populate, we will select the profit and loss. We're gonna run that profit and loss. We will run it for the two month period. So we're going to run it for 0101 to 1 Teoh 02 28 to 1. That's January 1st, 2021 to February 28 2021. And run that report. Now. Note that we might not have the data yet. We're gonna run these reports before we put the data in. If you're working with this problem, you don't have any data yet. We will be working on the two months worth of data we're gonna look at that end result now , and as we enter the data, we're gonna be jumping back and forth to this report and then get Teoh this in results at the end of the process. But whatever data we're looking at, this is gonna be the standard format of it. Profit loss, Whether you're looking at this company or ah, different type of company, first thing we want to note that is that we have a date range down here says January February 2021. So we need to have some type of date range. That's what a profit loss is, as opposed to the balance sheet, which would, if we had the same date range, just give us one point in time. Even though we have the date of January through February, it would only give us February as the one point in time because the bounce it is as of a point time and will then just choose the endpoint of whatever range we put into the system here, it's gonna tell us this is a range. It starts. The beginning ends at the beginning, is January 1st and ends on February 28 and that's important to note, because every account within the balance sheet now only makes sense if we think of a range of dates. If we have a beginning point in any point, for example, if we're talking about our revenue accounts down here, they only make sense. If we say this revenue is over a certain time period, whether that be a month or two month time period in our case, 1/4 or a year, that's the only way this never makes sense. It doesn't make sense. As of a point in time, it doesn't make sense as of a balance sheet terminology. As of the end of February, if we were to look at a standard financial accounting statement, it would probably say usually the term would before the month ended. Now, this is a two month time period so it might say, for the two months ended of February 28th and we were typically have toe know that terminology and say, Well, that means if it's for the month ended that the beginning must be at the beginning of the month. The first and the end must be at the Indian of the month. Here we have this little dash, of course. Which means it's going from January January 1st to February, February 28th the full two month time period. As we scroll doing down here, we can see that we have the data here. It looks typically like a longer report. The standard income statement will be longer typically than, ah, lot of other point reports. Typically then the balance sheet, mainly because we often have a lot of groupings in terms of the expenses down here, we're gonna minimize this and look at each of its basic components, and then we'll go through and maximize and see what we have. So we're gonna minimize this Teoh its smallest components that we can have here. I'm just selecting all the triangle so that they're going this way. So we've minimized everything, and this is gonna be a nice function within QuickBooks that we could make this as as short as possible. If we're presenting something, This is a nice format to use because we can just say, Hey, there's the the bare bones of what we're talking about. This is the big picture, and we can say head, there's your net income or loss in this case and go from there as we want more detail now with the the kind of the most basic financial statement here is still a little bit more d detailed than we might see in just a single step. Financial statement. In essence, in financial statements, all we have are two types of counts. We have revenue accounts and we have expense accounts. Net income is going to be calculated as the difference between the two revenue minus expenses. In this case, we have a lost revenue being less than expenses. If more than QuickBooks, within this standard profit loss, the standard type of income, statement and note. Of course, compared to financial accounting, it would be called on income statement. We have a profit loss here. We have a multi step income statement. Typical. If we sell inventory, as we will be doing here, we're gonna sell guitars. So in that case, we often want mawr sub categories within our accounts. So first we've got the income accounts. Those are usually gonna be called. They could be called revenue accounts as well income accounts and eso. Usually we don't have as many of them, meaning we probably only do one or two things in order to generate revenue, and we pay for everything else. So typically, we have a lot more expenses than revenue. All the revenue can be grouped typically in ah, few different income or revenue accounts. Then we have the cost of goods sold. This is what we're going Teoh use in terms of inventory in order to help us generate revenue. So the cost of goods sold represents inventory consumption in order to help generate revenue. We didn't have the subcategory of gross profit. Now the subcategory is going to be there on Lee in this multi step income statement and really useful if we sell inventory because that subcategory will give us that relationship between the revenue and the inventory that were selling in order to generate that revenue. This relationship isn't a stark because we work showing demonstrations of multiple types of income, meaning we sell inventory and we have some service items. So this relationship is a little distorted because not all of our income, in other words, is from simply selling inventory. Then we have the expenses. This is gonna be the other types of expenses that we will be having typically operating expenses. Then we're gonna have another subcategory, and that's gonna be operating income. That's gonna be the gross profit minus the expenses. And the operating income is typically going to be the income were going to say it's from normal operations. This is right what we typically do in terms of revenue and expenses, and this then would be what can be expected or how we performed from our normal business operations. Then we've got the other income down here, and that could be other income and then other expenses. These are gonna be things that we're going to say, Hey, these air, these air expenses and income that we had during this time period. But we didn't put the income up here and we didn't put the expenses up here because they're not part of our normal operations. We're saying, Hey, these air kind of awful. If there were certain circumstances and that weren't the way they are, we wouldn't have these expenses. They're not part of our normal operations. There's something that happened to happen this time, but they're not part of normal operations, and that will give us our net income. Bottom line number being, of course, the net income in this case loss note. QuickBooks doesn't really have a thing where it says loss. It doesn't change the word in when we have a law. So in this case, it is a loss represented by negative number, and it's not being shown in the terminology. Now, we'll go through these and will expand each component and see what we have within each components. We're gonna start with the income. That's gonna be the first number that's gonna all speak. Consider revenue, and we're gonna select that item. Select the drop down. Now, Typically, we only have one or two accounts up here for most businesses because they only do one or two things. We're gonna have a few different sources of revenue so that we can demonstrate that the selling of products in our case guitars, inventory and the selling of service items were gonna rental service. We're gonna rent equipment, and we'll have also of other types of incomes will have for service in terms of maintenance of the guitar and lessons. So that's gonna give us three revenue sources here. We've got revenue in terms of Theo equipment rental revenue in terms of selling guitars and revenue in terms of other service income that will give us our total income Here. What we've earned now notes what we've earned here. If we select any of these icons, I'll select this item here. What we've learned is on an accrual basis, meaning it's being formatted. You'll note it's being driven by when we recognize revenue. It's being driven by the invoice and the sales receipts. So the invoice means we didn't get any money yet. It means that we processed the work and we did the work, and we haven't yet gotten the revenue. But the invoices, that thing that triggers the income because it should be at the point time or close to it when the work has been completed. The sales receipt means we did the work and we got paid at the same point in time. So these are the forms that trigger revenue in on an accrual basis in the financial statements. And so we're gonna go back to the report here. That's gonna be our income. I'm gonna minimize this back out. They were gonna go to our cost of goods sold will minimize all these first we'll go to the cost of goods sold. Here is our cost of goods sold. That's the selling of inventory. So this cost only relates to the inventory. It's typically the largest expense that we will have if we have our primary sales or revenue generation being the sale of inventory. Now, in our case, of course it's not. We have other things going on. So they cost of goods sold is not as as closely related to the revenue or income as it otherwise would be. If inventory was our primary source of revenue, the selling of inventory If we were to select this icon, it would be driven as well by sales receipts and invoices. Those are the things that are gonna gonna drive the recording of cost of goods sold as we'll see when we start to input this data. Then we've got the gross profit, which is gonna be income minus cost of goods sold. Its don't confuse this with net income. It's just a subcategory on the way down. Remember that the cost of goods sold is an expense. It's our most important expense. Although it doesn't have the word expense in it, it is something that we used up in order to help generate revenue. Then we have all of our other expenses. So if we select this drop down, we see all of our other expenses. Now we're gonna have mainly usually the most amount of expenses or items in this category because we usually only do a few things to earn revenue, and we usually pay for everything else. So everything that we don't actually do in order to generate revenue is something that will be an expense category so typically will have a lot of different expense categories. The expense categories are really up to the owner As to how Maney expense categories we want. We could just put everything into expense, but that wouldn't give us much detail in terms of what we're expending on, and not a lot of information to make decisions in terms of how can we cut back expenses or reduce them or manage them in some way? So here's gonna be our expense items. If we select any of these will note that they'll be checks related to the expense that will drive the recording of expenses, and there will be bills that will drive the recording of expenses, meaning we could have had something asking expense as something that we paid for at a point in time. Like we paid the phone bill and recorded the expense. Or it could be something that we incurred and put the bill into the system and have not yet paid it. And there's gonna be the items that will also be recorded as an expense on the cruel basis . We're recording the expense, trying to record it when we consumed it. And so the driving factor for QuickBooks is did you write a check that's not related to a bill? Then we'll record the expense at that time. Or did you enter a bill for work for something that needs to be built like a utility bill? But you haven't yet paid it. Then it's going to record the expense at that point in time, which should be closer to the point in time that the that the work was actually done, that we actually incurred the utility expense. So we're gonna minimize that. Then we've got the other income and the other expenses. So in this case, we've got the interest income and interest income is down here and not up here because it's something that's not part of our normal operations were not in the business of just investing and getting interest. We're in the business of guitar selling guitars, maintenance, Gintaras having guitar lessons. So we're basically saying, Yeah, we got some more revenue down here, but this isn't our principal revenue. It's just some other revenue that we happen to have. This is our business revenue. Appear this is other revenue and then we have depreciation and other miscellaneous down here. Same kind of concept as to why these would be down here. Now you may you may consider depreciation other miscellaneous expenses as part of, um, the normal expenses up here. The QuickBooks account has has preset these to be down here. And, you know, there may be some debate as to whether they should be here or not. But the concept is gonna be the same in terms of were saying these are part of our normal operating expenses, and they're gonna be down here in the other expenses, and then we're gonna have the total other other expenses, and that will give us the net other income, which is the income minus T expenses. And then we have the net income at the bottom. So I'm gonna maximize all these. We've got the income maximized three accounts. We've got the costs, get sold all the expenses, and then everything else is set up. This, of course, is our bottom line number. We will go ahead and export this to excel and save this report. So we're gonna get select this export item down here. We're gonna export two Excel. We should see an excel items pop up on the left side. We will open up the excel item that pops up on the left side will then form at this I'm going to say enable the editing so that we can format. It will then populate Gonna pull this back up. And it looks like the format is what we need it to be. So we're just gonna go ahead and save this items I'm gonna go to file. Tad, we're gonna go to save, as then we'll locate in the browse area where we would like to save this, too. We're gonna make a new document down here. We're gonna say new document, and I'm gonna call it Excel. docks to Ah, And so we're going to say I'm just gonna select that item, and I'm gonna change the name year. So we're going to call it and I'll give it the date first. So I'll say, uh, chan in February. Okay, process. Let's say give it the year 2021 profit on laws. Now know that Did the dates here is a little bit more tricky than a bouncy because, of course, we way we could just put the in date. Ah, but it's really for a range. We have a two month time period here. So we got Janu in February again. You probably want to consider how to save these in in terms of the of the ordering to see that it will order in the proper way and think about the kind of folders you want. How many folders do you want? You want it full to reach year a fuller each month, and that will help you kind of think about how you how you want to save these in order to go back to them in a relative format and a and a relevant format. So we'll say that and that's gonna be the profit and loss 20. 3.15 Income Statement Custom: Hello. In this presentation, we will generate, analyze and export Two Excel, a custom income statement from QuickBooks Online. We are in the QuickBooks online dashboard. We will be continuing with the get great guitars problem. We're gonna be creating a custom income statement. And yes, you heard that, right? We're gonna make it an income statement. Meaning we're gonna start with a profit loss report, Basically the same report as an income statement. And part of that custom ization process will be changing the name Teoh the income statement for those areas where it might be more appropriate depending on who were giving the statement to to change that name to an income statement rather than a profit and loss. To do that, we're gonna go to the reports on the left side, and we should probably see the profit loss. That's what When you will start off with within the frequently run reports. But if it is not there at this point, we can then type into the search field a profit and loss report which should auto populate . We'll select the profit and loss report. We're gonna change our date range to the range. We will be working with which will be a 10121202 28 to 1. That is January 1st, 2021 to February 28th 2021. And run that report. Remember that if we're working this problem with us, we haven't entered the data yet for here. So we're just gonna take a look at these reports how to customise them, and then we'll into the data and then we'll be able tow, run these reports as we go. So this is gonna be basically the end process for this problem. The same application would be applicable for any data that would be in a system. But if you're just starting, there would be no data within the system yet. So we're gonna scroll back down. This is going to be our standard profit and loss report. We're gonna make some adjustments to this, And the main adjustment we're gonna make is just changing the name. There may be to an income statement for my profit and loss to an income statement. It depends who you're dealing with as to whether they would prefer this. The name to be profit and loss or income statement. If you're dealing with anybody that deals with QuickBooks most of the time, they're going to be very comfortable with a profit loss. If you deal with someone in public accounting or on external auditor, they will probably ask for an income statement. And if you're presenting to them, then they might feel that it's more professional to have the profit loss that might make the presentation be better and presentation matters. So therefore, that's going to be one thing we can change, and we can memorize that change so that we can go to this report and not have to change it to an income statement every time. So that's gonna be the major thing we will take a look at to do that. We're going to go up to the customized field up top, so we're gonna customize and we then are gonna go down. We could go down to the header in foot or tab and instead of having the prophet in laws, so the for the report title. That's what we're gonna change. We're just gonna make it. The income state meant so we'll just call it an income statement. We'll try to make sure we spell that right Since we're gonna save this one here and then we're also going to remove what we typically remove we've been removing through. This is the date prepared time prepared report basis. We don't need that information stamped on the report. The one last thing we will do is we'll scroll back up top and we're gonna remove this sense . So we're gonna say there's no sense in this report meaning no pennies. They're gonna be no decimal in terms of sense and will say that the report still will make sense, but it will not report to the sense. And then we will run that report. So there we have it. We've removed the pennies and we have been the income statement to report, and that's gonna be some one of the major changes we could have. And then if we want to generate this every time, if we want someone to be able to pull up the income statement, we can say this and customize it. We could save this customize income statement, and then they have a pull it up at any point. So in order to do that, we're gonna go to save and we are going to call it the income statement. That will be an appropriate name here. And then we're gonna put that into We're just going to call that to be my reports. That's what We will save this, too. And so we're gonna go ahead and save this item so we'll save that and customized reports saved successfully. So now we're gonna go into the reports on the left side and say we can find that report. So when the left side, when reports we've got my custom reports were to go into my custom reports and we see our two reports, we got the compared to balance sheet we've made in a prior presentation and then we have the income statement as opposed to the profit and loss. If we select the income statement, then we see our income statement generated. We may have to change of course, the date range when we have different income statements. But the title will remain the same and the removal of the pennies will remain the same, which is nice. So now we're gonna go up and we're just going Teoh export this report. So we're gonna say export here and we're gonna export two Excel. And it should just open up excel as as it does here we are in chrome here. So you're seeing it, Papa Pierre for in a different browser. It will, of course, pop up. However it pops up in whatever browser we are using. If it doesn't do so, check the security settings to make sure that it is allowing the Excel document to be generated. We will enable the editing up top here is gonna be our excel report. It looks good. It all fits on one page, so we don't need to do much customization here. Although it is in a perfect format. If we wanted to make any changes within excel weaken manipulate this data in any way we want in order to make whatever whatever look we want or whatever information we need from this report, a lot more flexibility within Excel. Teoh put the data in the format. We'd like to see the data, So we're gonna go ahead and save this. We're gonna go to the file tab on the left side. We'll go down to save as we will browse the computer to see where we want to save this information. We're gonna put that into Excel docks, Excel docks to We're gonna open that up and I'm just gonna call it an income statement. We may want to put the date first again. It's a it's a date range. So we could select This is gonna be the same date range. But instead of calling it a profit and loss, we'll change it to and income statements. So income statement. Save that, and there will be our customized income statement. 21. 3.20 Comparateve Profit & Loss: Lo. In this presentation, we will generate, analyze and export two Excel, a comparative profit and loss from QuickBooks online. Hello. Here we are in the QuickBooks online dashboard. We will be continuing with the get great guitars problem. We're gonna be looking at a profit loss, a special profit and loss, a customized profit and loss, a comparative profit and loss. Comparing in this case two months, months of January and February. You know what to do that we're gonna go down to the reports on the left side. We're gonna start off with the standard profit loss. I'm gonna go to the frequently run reports, and we typically will have the profit and loss year, however, because it will be frequently run. But if it's not, we're gonna type it into the search area, and we just type in profit and loss. This is a standard financial statement report. So we should be looking at this a lot and we will hunt be looking at this a lot as we go forward will select the profit and loss, and then we will change this date. Range that date range of 0101 to 1 Teoh 2 28 to 1 that January 1st, 2021 to February 28th 2021 run that report. So here is our report. Remember that we are entering the day of this is going to be the in process, that this will be the end data set after we run this. If you're running this problem with us, we won't have any data yet. This is gonna be what we will end up with. This is how we can take a look at these reports and format the data that we will be constructing. We will look at these reports as we go. So we scroll down here. We have the the normal income statement here, or profit and loss statement. And our objective now in our customized report is to have the two month time period. So note we have January and February, and that's now we want Jen. We want the month of January, the month of February. Then we want to see the dollar change the difference between genuine February for each line item, and we want to see the percentage change. How much did it increase or decrease? In a percentage terminology. So in order to do that, we need to understand a few different things. One is that this date range here January through February, is means that something like every account, including the income, a revenue account represents revenue that has been accumulating for a two month time period . So we need to understand that being different than the balance sheet, which is really only showing the end date. If I put the same date into the balance sheet, it would only show numbers. The only relevant date unless we changed anything for most accounts, is this end date, because it's going to show us, for example, cash. As of 2 22 28 it's not going to show us cash that we earned through that time period on the balance sheet. It's only going to show us where we stand as of the end point of the range we select, However, here, this revenue account means that we have been accumulating dollars from January 1st to February 28. So when we make a comparative balance income statement, we need to kind of understand that because it's a little bit tricky for QuickBooks to understand what we want to dio when we're making this comparative profit and loss statement . So remember what we wanted to do. Is it accumulate revenue from January 1st through December 31st and make one column January's revenue and expenses and then accumulate February 1st to February 28th and make another column with those groupings? And then we'll and then we'll subtract the two out. So in order to do that, we're first going to tell QuickBooks. Hey, we want you to just have the end one month and then we're going to say we would like you to compare the prior month to it. So instead of having the full date range of January to February, we want just the second month, which is 0201 to 1. So we've got February 1st, 2021 to February 28th 2021 the second month that we will be working with comparing that once we're done to the first month January, we will run that report. So here's our information. Just given us the month of February, the next thing we're going to do is go toe this Adam here. What's to select the period we're going to select the period, and we're going to say that we want This is the current month and we want to have the previous period, which in this case is the previous month. We're not gonna choose the previous year because we clearly are are not using a year. We have the month of February. We want to compare that to the prior month, the month of January. So we're gonna select this icon. What? We will be checking these, but let's not do that yet. Gonna click off of this. It doesn't yet calculate unless we run that report. So here we then run the report and we see that we have February and January. Note the format here in that we have the current month first. So we're reading from left to right in generally importance level, meaning the latest month is probably the one that were most focused on, and therefore it becomes first. And then January is the prior period. It's going to be second a supposed to being reading from left to right in order off when things happen. Which means January would happen before February. So we've got the latest month first in most cases, the most important month. Now, of course, we're gonna line this up. We've got income, cost, get sold and expenses for the two month time period, this number and revenue, for example, representing the accumulation of revenue from February 1st to February 28. And this revenue there's there's no rent revenue. In January, this revenue account representing revenue generated from January 1st to January 31st. No, we also have January 4th through the 31st year. That's probably because this is our first month of operation. So we may have had, ah, partial period here. They're trying to indicate that it's a partial period. Possibly so. Then we have that information. Now. We also want to see the difference between the two. So we want to see the difference. Meaning, what's the difference between this income and that income in a dollar amount would be useful. So we're going to select the same dropped down here, and we want to see the dollar change so we'll select the dollar change. I'm gonna click off of that, let it let it think and then run that report and it will give us that change. So of course, the 4500 minus zero There was no rental income in January gives us the difference. With the change 4500. The later year 2500 minus the prior year of January means that there was an increase of 30 to 60. The later you don't hinder you. The later month of February, 9300 minus the prior month of January 508 gives us the difference or increase from January to February of 7 8092 Obviously, we go all the way through here and we can see that now. The changes we're going we're gonna have are going to be drastic because this is the first month of operation. February is really the first month that we have, Ah, full true data that it doesn't have, like the startup costs. So as the business moves on, you would have, you would think to have more conformity from month to month as we first start out there may speak some extremes, as as we get the business run and get the business going at the business set up so that now we also want to see the percentage change over here. This is a great change in terms of dollar amounts, but it doesn't help as much. If we're really comparing were a guitar seller and we do guitar lessons. If we're comparing our guitar shop to, Ah, large guitar shop, then we can't compare the dollar amounts or the dollar changes in revenue because they're gonna be much bigger in terms of the color changes and a changing dollar to them will be a lot larger than the dollar changes to us. However, we can look at the change from month to month in percentage changes, and that's a way that we can compare and benchmark Teoh companies of a similar industry of different size. So to do that, we're going to go to this drop down one more time. We're going to select the percentage change, and we're gonna click off of that toe. Let it think, then run that report. So here we have the percentage change. Now this this is often a little bit confusing for people to read, but it's not too bad once you do it a few times. So what we're saying is, if we do the full calculation here, we're going to say that we had in, Let's say, the second case here in this room we had to 500 minus 2467.4 February minus January means that there was 32.6 increase. Then we're gonna take that increase, and we're gonna divide by the prior year. We're gonna take that and divide by the priority of this number 2467.4. If we move the decimal two places over to make it a percent, we get 1.32% 1.32%. So the income here increased by $32 or 1.32%. This percentage changes really useful. And it's used not just in this type of data, any kind of data where we're tryingto compare things of different sizes but still should be relatively the same benchmarking in this case, differences and revenue generation from one month to another in similar industries. Then the percentage change is something that can be useful and give us some relevant information to to look at that type of data. That's gonna be it. We're going to go up here and customize this and I'm going to remove the stuff we generally remove down here. Then remove this information so we'll go back up top. We'll go to the customize. We're gonna go to the header and footer and select that triangle that's going right to the triangle. So it's going down, and then we're gonna uncheck the company name. Actually, we want the company name were kind of uncheck the date prepared the time prepared and then report basis. Then we will once again run that report. Then we have this report here Run. If we scroll back down all the way at the bottom, we see that that information has now been removed as we wanted. We will now export this to excel. We're gonna export this to excel, simply clicking the export option and export two Excel. We are in chrome and it should open on the side of its in chrome. If you're in some other browser, it will open in some other way. Just make sure that you have the options set up in the security sentences to allow excel to work when it closes. Gonna enable the editing. And there is our information. So we haven't run into any problems really in formatting in that it all fits on one page. Note that we can check that by clicking down here. This is the page layout, and that's one way we can see how it's gonna print. So if we scroll down saying at all fits on one page, I'm pretty happy as long as it fits on one page in terms of a column with, um, if it's more than one page long, I'm not. That's OK, but if there's a page break like right between here or something, that's a problem. So I'm gonna go back to the normal view over here. We will see problems like that in the future and what we will. Ah, adjust things and talk about how to how to adjust that toe ad when those problems turn up. Now, of course, we could change this a little bit. We could remove the total we could remove. This partial period, we might say, has two full month of January because that even though it's our first month of operation, we might want to remove that weaken, weaken, touch this up a bit in ways we may not be able to do as easily if we were working in QuickBooks alone. So let's go ahead and save this. We're gonna go to the file tab. We're gonna scroll down to the Save as well browse to where we want to put this on the computer. We're going to save this into the Excel docks to gonna save that them to change the name, to be a bit more customized. We're gonna call this a comparative profits and lost report. We may wanna have the dates of January and February of 2021. Something like that. You can you can work on your format and really where you really would just want to keep what what's been done before your working on it. If it's not you starting this from scratch us starting this from scratch, then you might want to obviously fall the convention of somebody else. If we're making it from scratch, then we really want to think about how this thing will be ordered so that we can go back to it in the easiest way possible. We really want to think to the future and say, Hey, when we when we have to go back to this information. What's the easiest way that we can see how to pull this up in the most relevant fashion? If there was, like a year, two years or five years worth of data that we're shuffling through, so we're going to save that, and that will be the comparative profit and loss. 22. 3.25 Vertical Analysis Profit & Loss: flow. In this presentation, we will prepare, analyze and export two Excel a profit and loss with a of vertical analysis within QuickBooks online. Here we are on the QuickBooks online dashboard. We will be continuing with the get great guitars problem. We're gonna be looking at a profit and loss statement, looking at the vertical analysis for a profit and loss, a useful tool win comparing a profit loss between different companies and different time periods. In order to do so, we're going to start off with the standard profit laws by first going to the reports on the left hand side within the reports. If we are in the freak freak, frequently a run reports we should have the profit loss, it being one of our major financial statement reports. However, if it is not there, we can type it into the window here, and it should. Auto populate. Here is the profit and loss reports that we will run Standard Report the main financial statement report similar, of course, to the income statement. Pretty much the same report different name. We are going to then put in the date range of Owen Owen to 102 28 to 1. That's gonna be January 1st, 2021 to February 28th 2021 run that report. So here's the report we will be running. Remember that if you're working along with this problem, we haven't entered the data yet. So all you have is a ah blink set up of the QuickBooks file. However, we will be putting in this data for this two month time period. This will be the in product. We're gonna take a look at what we have in terms of a completed product in terms of reports and then put the data in. Then we'll be working with these port reports as we go through the process of the data entry. Also note that the profit and loss reports similar to the income statement, which is the income statement with a different name. We'll have a date range. It have goes from January through February January 1st through February, meaning revenue represents the accumulation of money from January through February over that time period, What we would like to see now is a percentage we want to see a percentage on the right side that will give us a comparison, Teoh. The total income. So we're gonna have what percentage is each of these items within the profit loss statement when compared to the incomes of income is gonna be our baseline? And when looking at the revenue accounts, we're gonna take all the revenue divided by the income. And when looking at the expense accounts will take the expenses divided by the income, and that'll give us a ratio percentage of each line item to total income. So it'll give us a ratio of each line item as it's compared to the goal of the business, which is the generation of income. So in order to do that, we're gonna go up top and we're gonna go to this item, select a period so we're gonna select that drowned dropped down in the past. We had the previous period, and we checked the change and the percentage, and we looked at a horizontal analysis and what happened over time that changed in each account over time and the percentage change, how much did it go up or down in terms of a percent from period to period in our case, month to month, this time we want to change on more of a vertical analysis and therefore we're gonna compare everything to the income. So we want to see a percentage of income and this makes sense because the income is the goal of the company. So we want to see everything as it relates to the goal of the company, the generation of income or revenue. So we'll select that item, gonna click off of it and let it think. And then we will run that report. So here will be our report. We see our same income statement over here, a profit and loss. And then, of course, we have our percentages. Now just to get a new idea of what these percentages mean, If we pull out the calculator here, we'll see what we have in terms of calculations. So if we're taking a look at the revenue, we're comparing everything to total revenue. That's the goal. That's what we did. That's how we did in terms of revenue generation. So what we're gonna say then, is each line item in this case 4500 divided by the total 19275.4. That gives us if we move the decimal two places over 23.34% 23.35%. If we round up, that's gonna be our item here. So this mild item may not be comparable to, say, other businesses in the same industry. But we may be able to compare the percentage of revenue as that's related Teoh music rental of equipment as compared to the actual celibate selling of equipment or other types of income to related businesses, even if their dollar amounts are different. So that's the reason this could be a useful tool. Obviously, the 100% is here because it's 19 to 75 revenue or income 0.4, divided by 1980 75 14 or 100%. The cost of goods sold is often a very useful comparison. Now here is distorted because we have caused to get sold, and we're relating into not just a business that sells stuff. We've got other things going on in terms of service revenue. So it's It's not as clear a comparison, but it's going to be calculated as 3950 Divided by revenue 19275.4 And that gives us if we move the death well over two places, 20.49% 20.49%. So we're saying that of this income, the cost of the Qatar's that we sold is 20.49 of the revenue that we generate, generate. If all we do is sell guitars, then this proportion would be much higher. So if we scroll back down, we could look at our expenses and we have the same calculation, same type of calculation. You could see that the dollar amount is what it is. It could be very useful, especially when we're comparing it cos if you're looking at companies that have really large numbers and the dollar amount may not mean a whole lot to us, but the percentage of the relative expenses to revenue could could be more meaningful. So the payroll obviously stands out here on a percentage basis and a dollar amount basis, and we can compare that and say here is that comparable to other other businesses? So that's gonna be the the vertical analysis, everything being compared to income. We're gonna go ahead and ah, just the footer, as we have in most of these reports by going to customize and then we'll scroll down to the header and footer and we are going to remove the date prepared, the time prepared and the report basis. Then we will run that report. So here we have the report. Once again, we have removed the footer at the bottom and now we're gonna go ahead and export this to excel. To do that, we're just going to select this icon. You know, this is gonna be the exporting. I gone. We will export two Excel within Google Will or chrome. I should say we get the item here. And if it doesn't pop up, remember toe check your settings to make sure that the security settings are allowing Excel to be exported. I'm gonna close this out. We're gonna enable the editing. And here is our report. The format looks looks good. Looks like it all fits on a page. We are We could do some formatting in terms of we might want to leave the total here. We might want to change the headers a bit. We could get rid of this underlying right there if we wanted to, just to touch this up. All that stuff Very much more doable while we are in excel. Ah, lot of the types of changes changes we may want to adjust might not be as readily available in a database program such as QuickBooks. Once we're satisfied with what we have, then we can go ahead and save this. So we're gonna go the file tab up top in order to save it, we will save as we're gonna browse to the location on our computer where we want to say this and locate that I want to put that here in Excel docks to and I'm gonna rename it. We're gonna change the name and we'll call it a profit and loss. Teoh Coal on. Now, this is sure that's totally spelled right, But we're gonna say Jan and February two dozen 21 something like that. And then we will save that item and there will be our ratio are vertical analysis 23. 3.30 Percent of Expense Profit & Loss: Hello. In this presentation, we will generate, analyze and export two Excel a percentage of expense profit and loss report within QuickBooks online. Here we are, the QuickBooks online dashboard. We will be continuing with the get great guitars problem. We will be created another form of a profit and loss report with another type of percentage calculation so that we can analyze the data in another format. In order to do that, we're gonna go to the reports on the left side. If we are in free, frequently run reports, we should have the profit and loss there because we will most likely need running. It's frequently. However, if it's not there, we're gonna type into the window up top profit and loss, which will then populate the report within the date range. We're going to select the date range of 010121202202 28 to 1 that january 1st, 2021 to February 28th 2021. And then we will run that report once again. If you're starting with this problem, we don't have the data in yet. This is the two months we will be putting the data in place where? Look at these reports, how to format these reports. Then, as we generate the data, we will be going back and forth from these reports in order to see the effect of the data as we go completing with this data set. So if we look at the profit and loss statement, here's our standard profit loss. And this time we're going to see another comparison and we're gonna compare to the expenses . So rather than comparing everything to income, which is going to be the comparison to, like, the goal of the company, the goal is to generate revenue. Now we're gonna be comparing to the total expenses. This is not as common of a comparison, but it does give us an idea, especially when we're talking about the expenses down here Would expense The ratio is between the expenses that were spending compared to the total expenses rather than comparing them. Teoh. The total income. So, in order to do that, we're gonna go back up top, and we're going to select the select period item and we've taken a look at the previous period. Look at the change look at the percentage. That's the horizontal analysis. Meaning we're gonna go from left to right and or right to left. We're gonna go horizontal in any gays and calculate the change in the percentage change in that format. Then we looked at the percentage of income, which is, ah, form of vertical analysis. Now we're gonna look at a percent of expense, which is another kind of vertical analysis, but focusing here on the total expenses and comparing everything to those totals. So we're going to click on the percentage of expenses, click off of it so that it has time. Thank. And then we will run that report. So here are our percentages. So we have our percentages on the right side and eso. Our goal here once again is to have a dollar amount. But the dollar amount is not comparable as easily to say other companies of other sizes. Whereas a proportion a ratio, a percentage is more comparable. And this is applicable not just to financial statement looking at financials, this is that it's in everything. It's in a lot of different measurement. Everything in a lot of different types of measurements, what we have to use ratios in comparisons on a racial basis in order to get data that's relevant. That makes sense that as it's worth making decisions based on so now, rather than comparing these to the total income here we are comparing Teoh the total expenses. So that means that this line here is the 100% or 15 808.48 divided by 15 808.48 100%. And then all these other items, they're gonna be compared to it. So the revenue it doesn't make as much sense toe Look at the look at the revenue as it does to look at the proportion of expenses for for example, this for 4500 500 is being compared to, is being divided by the total expense of this amount here, and that's going to sell. That's gonna be divided by the 1588.48 And if we scroll back up, then we see that if we move the decimal two places over, we have 28.47 28.47 So that's where that percentage is coming from. We can compare that percentage to other companies that have different dollar amounts but should have similar ratios in our example. Other guitar companies that sell guitars and then if we go down to the expenses, it really makes more sense on the expenses, because we're really looking at the 100% and comparing these items to the total expenses. I also know that because we're comparing two expenses that total income we have a greater than 100% which we should, because the income is greater than the expenses, meaning the 19 to 75 is greater than the total expenses A. T East the operating expenses of 15 808 So then if if we scroll down here and we could do the same kind of comparison on the expense side, and so if we take for example, let's take this let's take the big one will take the payroll. 11562.48 divided by the 15 808.48 gives us if we move it over 73.14% 73.14 Now that's and that's something that we can then compare If this. This number right here may not be comparable to other companies, but it may be compared ball for us to say. Well, uh, our payroll is 73% of our total expenses here. What is it If we're talking about these other big music guitar stores, if they have music lessons that maybe that would be what we would expect If this is, this includes the owner and has payroll it for a pastor entity like an s corporation. Or now we'll see. Maybe that is something that we would expect weaken, been rationalize and try to make decisions based on that comparison. Whereas the dollar amount may not stand out to us. When we look at the comparison of dollar amounts two different companies, the ratio is often very, very useful for those cases. We're then gonna scroll back up top and we're going to adjust. Well, I'll throw back down, thrown back down this item down here. We've been custom in the custom of removing that. So we will continue with that custom by going to the top up top been. We're gonna customize this report and we're going to go to the header and footer and we're going to remove the date prepared, the time prepared and the report basis. Then we will go back and run that report, and if we scroll back down, we should see that those, um, footers are gone. Then we're gonna scroll back up, and we will export this to excel. So we are scrolling back up. We're going to select this exporting item and export two Excel. I'm in Google Chrome's What pops up on the bottom left here. If you're in some other browser, it may pop up in some other location. Just make sure that if it does not pop up that one, we have exam and two that it is allowing us in terms of the security settings for the browser for the pop up. Teoh, open up the program of Excel. I'm then going to enable editing Gonna pull this up to the top. Everything looks like it should be printing as it should. We may want to remove some things like the total here. We may want to change the formatting of the header. Com might be something we need. We might not need it all. We might want to just say I don't need that at all. You know, we're make our own headed. We could undo the the underlined whatever we want to do. Teoh Rather for Mathisen, a custom format can much more easily do so. And I highly recommend learning the formatting within excel. Basic formatting underlining, summing up, adding columns of numbers making columns fit the numbers that we need and printing options Very useful, even if you're not dealing with numbers but just sorting data, we're then gonna save this. We're gonna go to the file time. We're going to go to the save as to put it where we would like to save it as and then browse to the computer toe. Further. Fine. That location I'm going to save in the Excel docks to folder. So here it is. I'm going to rename, uh, our item here and it's gonna be and we're just gonna call it a profit and loss. Expense ratio reports might not be the best name, but that's what we'll go with January and February 2021. Something like that, and we will then save, and that is going to be our profit and loss and comparison to the expenses 24. 4.20 Sales by Customer Report: Hello. In this presentation, we will generate, analyze and export two Excel A sales by customer report within QuickBooks online. Here we are in the QuickBooks online and dashboard. We will be continuing with the get great guitars problem. We're gonna look at some other types of reports, some reports that aren't the financial statements, not the balance sheet or the profit loss or income statement, but reports that are useful this time being the sales by customer report in order to see that we're going to go to the reports on the left side. Then we're gonna type in here. We've got sales by customer, and then we have the sales by customer detail or the sales by customer summary. We this time I'm gonna be selecting the summary report. This, of course, as it describes, will give us the sales. But group those sales in accordance with the customers that we made those sales to sales being revenue. We're gonna select our date range of hope 10121 2/2. 28 to 1. That is january 1st, 2021 to february 28th 2021 run that report So here is our basic sales reports. And remember that we don't have any data. If you're working with this problem yet, we're just generating reports, looking at the types of reports that can be generated. Then we will enter this data for this two month time period and look at many of these reports and how they will be formatted. You can always go back to these these videos and take a look at any of these types of reports we want to see. This could be done, of course, with any any formation of data. So if you go to a new company that has data within the system, we can generate these reports. Most people don't always start from scratch if we're going to a new job or new location, will have some data in the system and actually manipulate manipulating reports and seeing what is there is one of the first things we end up doing when we're in that kind of situation. Now, this report's gonna be useful in that it gives us our sales by customers. So when we think about the sales that we have, that's our goal of the business. Are our goal is revenue generation sales is going to be the bottom line number on the income statement or not. The bottom line number. Our top line number on the income statement. If we then subtract all the expenses, we would get to net income. So all the expenses, that goal of those expenses, the goal of the assets that we have, the liabilities that we incur is to generate the revenue. So revenue generation. If we would look at this time period on the profit loss shoot to be this amount 7 18,075 40 it's useful for us to then go back and say, Well, who did we earn that revenue from? And then to do that, we can run a report like this, which will give us our revenue by customer. And that can really give us an idea of who our best customers are and two are the customer . Seven. Pop Possibility. It was just one time customers or the kind of customers that maybe we want Teoh pursue that have ah, don't don't have its high of the sales volume, but we think might be potentially have ah higher sales volume. If we select these atoms. Then we'll use that auto zoom feature and we'll see, in this case, the invoice that detail behind that information. So here's our invoice Scroll, Back up top back to this report. And if we select, let's say Jenny Jones, we see our invoice here scrolling back up top Teoh our report. We're also gonna make a bit of a change just just to adjust this and that will be Teoh. Want to see the sales by month for January and February. In order to do that one way we can do that. If to go to the total only column and change this two months, we're gonna change this two months. The goal being to have in January, February and then the total. So here's the months and then we will run that report. So here we have it. Now we've got Anderson. This what happened in January? This would happen to February. Here's the total. If we select the total, then we should see the cut. The activity for Anderson for the two month time period. One invoice in January 1 in February, Scrolling back up. We're gonna go back to the reports and so that will give us a little bit more detail gives us what we have earned in January and February. Once again, this total down here then should match a profit loss. The revenue section, if ran for the month of January, this would reflect flecked the revenue for the profit and loss if ran for the month of only February. This number then, should reflect the revenue or income on the profit loss if run for the two month period of January and February. Now we're just gonna remove this footer on the bottom, and then we will export this report to excel. Let's first remove that footer. We're gonna go up top. We will customize the report so we'll customize. We're gonna go to the header and footer option selecting this triangle scrolling down. We are gonna uncheck the date prepared time prepared and reported bases. Then we will run that report. So then, if we scroll back down, we'll see that we no longer have that footer scrolling back up. Then we can now export this to excel. So we're going to school over here. We're gonna go over here. And what kind of point, Teoh the export option quick on the export option and export Two Excel that will then open up here were in Google, where it opens up on the left side. Open up the Excel document. If it's not opening up, check your security settings to make sure that the Excel Document is able to open up its open up a bowl in accordance with the settings. We will then enable the editing, and here is our report. So once again, it's gonna be something that we can go in here and make any kind of formatting adjustments very easily highly recommend as you learn QuickBooks to also learn excel, learn the exporting and learn the formatting. And when you learn excel, remember, you don't need to know everything. Ah, lot of, um, Excel courses will go right into conditional formatting and all the different styles that you can use in the cell. And then, though, of course, jump over the formulas, which there are a massive amount of formulas that you can learn and excel. But in order to do what you need to dio in 99.9% of the time, that's just gonna be manipulating numbers, formatting the numbers using similar formats that you would inward, bold, underlined a Tallis. And then you have to format the cells copying and pasting cells and using basic math when within excel, which is going to be addition, subtraction and the some function of all the functions. Some function is the one that you want to do. And if you look through it here, you'll see that Excel actually shows you a lot of the formulas. So you can see how these these formats would, in essence, be constructed if they were done in excel, as opposed to being done in QuickBooks, QuickBooks tries t give all the formulas that would make the manipulation of this report more easily done. So we're gonna go ahead and save that. We're gonna go to the file time. We're gonna go to the save as. And then we will browse the computer, locating the location where we would like to save as we're going to create a folder called Excel Docks for we're gonna put their information, they're gonna rename this. We're going to name this. I'm gonna delete the name that we have here and just call it sales by customers. Summary probably would want to date, but I'm not going to at this time. And we're just gonna save that information, and there will be the sales by customer summary. 25. 4.25 Sales by Item Summary Report: Hello. In this presentation, we will generate, analyze and export two Excel, A sales by item report within QuickBooks online. Here we are with the QuickBooks online dashboard. We will be continuing with the get great guitars problem. We're looking at some of those other reports other than the financial statement reports of the balance sheet and income statement that could be useful when analyzing data and seeing how QuickBooks can organize this same data in many different formats that can be useful for decision makers. This time, we'll look at the sales data once again. But rather than sorting it by customer, as we saw in the past, we're going to sort that same data by item or product or service. So we're gonna go to the reports on the left side, and we are going to type in the report sales by now. If you were to see this in the desktop version, it typically says sales by item. And here we're going to say, sales by product or service detail. We're gonna have the summary sales by product or service summary. Now that's just gonna be a terminology. Difference on item. It's what QuickBooks uses as one of the formats. One of the item formats is service items and inventory items. One of the first things will do when we set up a new company. Eyes set up those items because those are the things that will be used to create the invoices and the sales receipts, and therefore the sales and the sales receipts and the invoices are used to generate revenue to generate sales in order to make the And that's what we're using to make this report the sales report. But there's also some other things that QuickBooks calls items as well, other than just inventory items. So QuickBooks online, I think, is actually a little bit more specifics. Rather than calling it a just, items were going to call it exactly what it is that the product service summary. So in essence, then that means that if someone says that we're looking for QuickBooks and we want a sales by item, then they're really talking about the inventory items. What we do we either sell inventory or we half services and those air driven by items those items that we enter into QuickBooks, which will be more apparent as we go through an input those items and in the online version . Then rather than calling it items, we're gonna have it sales by exactly what it is. Those sales broken out by the products that we sold in our case guitars, the inventory or the services. In our case, we have guitar lessons and maintenance on guitars, tune ups and whatnot. So we're gonna select this report, and then we're gonna change the date range that date range of a 10121202 28 to 1 that over January 1st, 2021 to February 28 2021 run that reports. So if we go back up top, remember that we haven't yet entered this data into this problem set. This is the data that we will be entering for these two months. As we go through this, we can go through and learn how to manipulate these reports and go back and forth to these reports to see how they will be formatted. So if we scroll back down, then we're gonna have our sales information, and it will be broken out by what we sell. So in this case, both We were going to sell both inventory in terms of guitars and will have service items meaning we don't sell physical things. We have some type of service, like guitar lessons. So here, in this case, we have to tour lessons where we have the quantity of the amount, the percentage of sales in the average price and so we can weaken. See that? And then we have the types of guitars and education e l p type of guitar. That's an abbreviation for the guitar. We've got three that we sold. Amount is 1500. The percentage of sales total sales as a percentage of total sales, 7.99%. The average price is 500 now the average price. You know, if if we charged, of course, a different price for thes E LP guitars than the average price would change, and we would take the average of whatever we filled the guitar for in our two month time period. We sold them all for $500. Therefore the average is $500. Of course, when we think about the sales of guitars, they're also including the gross, the cost of goods sold how much we paid for the guitars. So here's the amount of revenue. Here's the cost of goods sold. That's going to give us the gross margin of 300 or a mark up 20 gross margin percent, in other words, of 20%. So this is gonna be a sales by product or service, and it actually gives us a lot more detail than just the sales number. When we looked at the customer sales, all we had, of course, were the list of customers. So let's break down what happened in concern in terms of these two types of ways, we can see this. This number down here represents the total sales. So if we were to run an income statement for the month of January, February 2021 for this data said, we should see sales revenue of 7 18,075 40 That's what we made. That's the top line of the income statement. Income minus expenses is net income. This is the income. This is the revenue. We broke it out last time in terms of customers. Who did we sell these guitars to? Now we're breaking it down by what we did in order to earn that revenue. What we did is either we sold guitars or we had some kind service revenue such as guitar lessons, and it actually gives us a lot more report a lot more than just the, um, breakout by service item. It gives us also the cost of goods sold. So this would be the total cost of goods sold we should find on the income statement as well, and then it gives us our growth margin. So we have, ah, lot of you know, good detail when we're looking at the sales by item summary. And just remember that if if you're looking at the desktop version, it's probably just gonna be sales by item and we're gonna name it here in the online version, sales by product slash service summary. Probably a more accurate name, this one, but a little bit longer of a name as well. So we're gonna school atop. What we're gonna do now is we're gonna remove this report, as has been our custom of doing the date in the time. And they're cruel basis items down there in order to do that. Well, school up top. We will customize the reports and we will go to the header and footer and see that dropped down, strolling down to the footer We're gonna diese un selector uncheck the date prepared, the time prepared and the report bases. Then we're gonna go down and run that report once again. Check that it has done what we believe it should do. Removing the footer looks good. We're gonna scroll back up top then and we will export this report to excel so we'll select the export item export two Excel. We are in chrome here, so it should be popping up on the left side. If it's not popping up on the left side, then you want to check your your settings or if you're in a different browser, it might have obviously some other downloading function, but should download in some way. So we're gonna close this up. I'm gonna enable the editing. And here is our report. Looks like it's all fitting on one page. So that is good. It and so it's all it's all formatted. Okay, the header is is going Okay, now it's getting a little bit long here in terms of its going from a to H. So if we want to see if it's fading on one page, we could then go down here to the page layout and that'll show. It's kind of a page break. And normally, if we go to the page layout and then back to the normal view back to this little grid icon , then it'll give us this little dotted lines. And that's where the page break out is. If these little green icons air are bugging you, this this is basically kind of like a security setting that would be there if you were Teoh . Protect this worksheet. Um, so if you right click on any cell and you were too ah, format to the cell and mess with the protection settings here Ah, it's currently locked the cell is that locked? These these little green icons have to do with that. You could go to each of these icons and say ignore, and it would turn off the green. There's also a setting that you can use to to turn that off as well, but it shouldn't be in the printing section. In any case, if you go to file tab and you were to print this. It's not gonna show those little green icons. Okay, so now we're going to save this, so we're gonna I went back here, so probably that a little quickly, but we're back in the home tab. We're gonna go to the file tab, We're gonna save this. So we're gonna go the file time we're gonna scroll down to save as we're gonna browse to put it to where we want to save it as we will open up the Excel docks for that's where we're gonna put it. We're gonna rename this. I'm just going to change the name. I'm gonna delete the name we have here just calling it a sales by item summary and save that report. And that's gonna be the sales by item Summary. 26. 4.30 AR Aging Summary: Hello. In this presentation, we will generate, analyze and exports to Excel, a accounts receivable Aging report within QuickBooks online. Here we are in the QuickBooks online and dashboard. We will be continuing with the get great guitars problem. Well, in some of those other reports, those other reports other than the financial statements that balance sheet income, statement or profit and loss which are very common, very important reports this time the accounts receivable Aging report. In order to see that, we're gonna go down to the reports of left side and we are in the frequently run reports. If you are in the accounts receivable department, the aging report for accounts receivable will often be the one or one of the reports we see and use a lot. Ah, so it will be in frequently run for you. If we're in that department, we're gonna type it up here. And what is going to have a are instead of accounts table where it's gonna abbreviate to a R and that will give us the A R. Aging summary reports that this is a P and we're looking for a our accounts receivable aging summary reports. So obviously the a slash R stands for accounts receivable. So we will select that item then. And here is our report. We're going to change the dates. Well, this is a report that as of a point in time and therefore we just need the end dates that were going to shoot the end date for the time period. We will be working on. And that is 02 28 to 1. Or February 28th 2021 run that report. So if we scroll back up, remember, we haven't yet input the data in this problem set. So if you're working along with us, we won't have any data yet. This is what will be resulted after we into the data for that two month time period, January and February of 2000 and 21. So if we scroll back down here, then we're going to see our A Our aging reports. Now that the idea of the agent report is, it's going to break out the receivable items here. When we look at the balance sheet, we will have a receivable items. So if we run a balance sheet as of the same time period which is February 28 2021. We would see then hopefully we should see and $11,274 amount in accounts receivable Now, countless people is one of those accounts where you need a different type of backup format . Which is this one other than these, the normal backup, which is the accountant, the General Ledger or as quick work. QuickBooks calls it the transaction detail report. So in other words, if we thought about this in terms of our business or if we were the bookkeeper and someone was asking us questions like the owner, if we told the owner that if they asked us how much money people owe us, we're going to say the accounts receivable says that people owe us $11,274. We can get this amount on the balance sheets, probably the second account on the balance sheet. The next question, of course, though, is going to be well, who owes us that money and when are we going to get paid that money? And to do that, you would think we could go to some detail, report the standard detailed report would be to just drill down on or autos him in the balance sheet amount. And that would give us the transaction detail kind like the General Ledger. But that only gives us information by date of when it happens and we'll see money going in and out of the account receivable. What we really want to see is the information broken out by client or customer, and that is what this report does. It's gonna break it out by clients or customer and show who's just who owes us money. Now, not only does it break it out by client or customer, but it also tells us how old, how outstanding the debt is. So that's what these accounts up here are gonna be. So if its current, that means it hasn't gone past the date that we asked for. So if I was to select this item and look at this invoice, we're gonna select this invoice and this is the invoice. Clearly, that is making that information. This is the form that we will be working on and putting in place at a later time, and we could see that it was invoiced on to 28 it's not do according to the Net 30 terms and tell 30 days, which would be March 30th. Therefore, it's still current, and so we're not really worried about that when we expect to be paid on that one, and it's not past due date, so we think that it's still good. We don't really need to call Diana Martinez and and, um, you know, ask for our money at this point because the envoys already went out and it's not past the due date, so good. If we're if we're desperate for cash, we might do that. But it's not past the dear to hit, So, um, we're not gonna do that yet, so we're gonna close that out, We're gonna scroll back up, and we're gonna go back to our report. So that's gonna be all these are gonna be current. So we're pretty good on these. And then if we see this Adam for Jones guitars, it's a little past. Do so It's at 3 99 and that one. Then we're probably going to be if we're monitoring the accounts receivable more likely to call Jones and guitar and say, Hey, you know what it's past due or send a follow up request. So that's what this this type of report will dio. If we're in accounts receivable department with with a lot of clients, then we're going to scan over this report. All the time is gonna be one of the reports we deal with all the time. We might have even the detail report, which will show this information and a bit more detail in terms of the actual invoices within the report that would be do in this case to Jones and what not. Otherwise we can, of course, click on it and drill down on it. This reports also useful for us to try to estimate we can say who this is, how much people owe us. This is an asset. If we go to the bank were saying, Hey, people always 11,000 to 74 that's an asset. And we can use this report and say, Well, yeah, but some of its past due so we could try to say how much of that we actually don't believe we're going to collect. So this is a report that could give us an estimate or help us to come up with an estimate of, say, of a real number that we think is actually collectible. So this would be what we expect to receive based on the work we have done. And a certain amount of that is probably for many types of company, depending on the industry will not be collectible. And the fact that it's older, the older amounts that are past due for a longer period of time are more likely not to be something that we will collect on. And so we can We can make an adjustment for that or making a calculation that's called an allowance man. We won't get too much into the allowance method, but just to mention that this is one report we can use to create the allowance account. All right, so we're gonna go and customize this just a bit. All we're gonna do is remove the date time and ah, stamp down there. In order to do that, we're gonna go scrolling back up top. We're gonna go to the customization here, and we're gonna scroll down to the header and footer and have the triangle going right to the triangle, going down and scroll down. And we want Teoh uncheck the date prepared, Andy, Time prepared. Then we're gonna say, Run that report and then if we scroll back down, we have the same report. Except we don't have the date and time prepared at the bottom. Then we'll scroll back up and we will print or export this report. We're gonna export this report. So we're gonna go to this item here and export to the report to excel. It's gonna open up on the left side if you're in Google Chrome. If it doesn't open hope, then check your settings. Make sure that it's okay for QuickBooks to open up. Excel. Also make sure that we have the program of Excel. We will then have to enable editing in order. Teoh, open up the program and manipulate the numbers within the program. And here it is. And once we have this, we can adjust any adjustments we need much more easily within Excel. We do want to check if it fits on one page, I believe it will be. We can check that by going to the page layout view, which is this tap down here? We can do this a few different ways, but this way. I do it Check down here and then it's got that break right there. That looks good. And we're gonna go back to the normal view and we get then that dotted line and that's where the printing will take place. Eso Everything looks good to me. So we'll keep it like that and we're gonna go ahead and save this. Note the formulas here once again, you kind of see how they're constructing this. And you can use, uh, quickbooks to really piece together almost from a from a reverse standpoint that you would almost from unaudited standpoint. Then you would you can reverse build it. You can reverse construct it as opposed to what you really learn in accounting theory is you usually learn how to put the pieces together from from like if you're building a house from the bricks to the to the house. Well, accounting software will often data input makes the house, and we already have the house, the financial statements, thean reports in this case, and we can reverse constructed, kind of like taking apart the house to see how it how it works. So and so, if you've taken financial accounting. It's good. It's good to see things from both directions. That gives you a good understanding. The this gives you an understanding of these end reports. We can drill down both auto zoom on the reports to see what were the driving documents to make them. And when we exported to excel, we get to see these formulas that really kind of see how these are made. And obviously this is made from adding up the cells. Now, amore efficient formula here, you would think, would just be the some formula just summing up those cells. So I'm not sure exactly the benefit of having, um, these brackets or the pluses here, but still, it's a good formula. And you can you can go through here and see how this these things are being put together. So we're gonna go ahead and save this. So we're going to go to the file tab and save as we're gonna browse to the location where we want to say that as we're gonna put hours in a folder called Excel Docks for Excel Docks for and within that folder, I'm gonna rename this, uh, notice I have mind set up that we have an extension here, so obviously don't want toe delete the extension because that would change the file type. Possibly I'm gonna say are now we can't put a slash like this because if you're in Windows , you can't If you're a makable, if you can, because it thinks that that's some kind of computer code. So we're gonna put a are aging summary, and we probably should have the date which was 2 28 to 1. And again, I don't put dashes. I just put dots for the date. But you probably want to think about how you're gonna summarize or go back to these reports . And if you're turning these into a class or especially a client or the boss really matters if you have more than if you have, like, five reports, basically, how how they're ordered, because that's gonna save a lot of time for your client. Teoh, open up. The reports is that you want to name him as nicely as possible. Try to put him in a zip file if you can put them all in one area. So it's really important. Oh, really kind of think about those. Those details, which I may not spend as much time on here, so I'm gonna save that. And that will be the A R aging summary. 27. 4.35 Accounts Payable Aging Report: Lo. In this presentation, we will generate to analyze and export two excel and accounts payable agent reports within QuickBooks online. Here we are, the QuickBooks online dashboard. We will be continuing with the get great guitars problem. We're gonna be entering some of the other reports of in the major financial statements reports other than the balance sheet and income statement or profit and loss, this time looking at an aging report for accounts payable a very common report, especially if we are working in the payable department. In order to do that, we're gonna go to the reports down here on the left side. And if you are working in the payable department, it would probably be here. This accounts payable aging report within the fruit frequently run reports. But if it's not there, then of course we will go up here and we will type in a and then P is the abbreviation. Now they have, ah, dash here. So it's a slash p and will pull up. Then the accounts payable detail. We're gonna take a look at the accounts payable summary so AP stands for accounts payable, and then we'll have the aging summary report So there's our report. We will now change the date range to the in date that we will be working on within this problem. That's gonna be 02 to 8 to one. That's February 28th 2021. Once we have that date and know that that dates only one point in time, we don't have a range because we are talking about the point time at the balance sheet, reports of balance sheet accounts of permanent account of accounts payable, and we'll see how much we owe as of that point time and who we owe as of that point time. So we will then run that report. Now, remember that this is gonna be a report that we were running after. The data has been input. If you're starting this problem and working with us and they may not be anything and accounts payable and that's OK, we're just going to see how these reports the main reports are functioning. How toe toe work them. We will enter the data and then we'll go back and forth from the reports as we enter the data as it's relevant to do to see how things work this is gonna be the accounts payable aging. We saw the accounts receivable aging. It's very common for people to work in either accounts payable war accounts receivable. And if whichever we work in, we will be dealing with these reports a lot. So the scenario on this one would be in a similar situation. If we had, say, the the owner of a business and we're doing the bookkeeping, the owner asks, How much money do we owe people for inventory or other common business activities? We would look at the accounts pay about account on the balance sheet, would say OK, the accounts payable accounts says that we owe people 1200 that account typically for short term type of activities, which would be bills. And, uh, if we're purchasing invoice on account, and so that would be the first thing we would want to know. The next question then would be, well, who do we owe and help? You know, When do we have to pay them before we get penalized and other consequences happen, And in order to do that, we cannot go to the normal detail account. That normal detail account would be to just click on the accounts a payable account on the balance sheet and see the transaction detail, which is a type of general ledger type of account. That gives us a bunch of detail by activity by date, and we'll see that we'll go through that as we enter. Data will go through and look at those transaction details. Report is what I mean as we go through our problem and see where it is applicable and where it isn't and it payable. It's very useful for us to to have this broken out by vendor. Now, this is a very short report. We don't have a lot going on. We pay our bills fairly early in this type of example problem we are looking at, so we only have the one vendor. I depend on the type of business. We may have a lot of vendors here and trying to decide, uh, who we owe at any given time, and so we have it broken out, not by order of date. In terms of win, we entered the data as it would be in a transaction detail, but by the vendor, the people we owe the money to And that's why we need the subsidiary Ledger note. As we enter data, any time we enter something into an accounts payable account, we will need to list the vendor. QuickBooks won't let us post it if we don't. Because QuickBooks is saying Hey, this report, this accounts payable report is so important that we're not gonna let you post anything that won't allow us to generate this report. One thing we need to generate this report is a vendor name. So we need a vendor name every time we enter something to accounts payable. And therefore we can have this kind of subsidiary Ledger report that will list things by vendor. So we have the vendor here. That's how much we owe. We also have a breakout of how current it is. Meaning are we passed. Do so. If we select this Adam this 1200 and we select the bill that created that 1200 we will then go to that bill and we'll see that it was entered into the system on to 14 terms net 30. That means it's due on 3 16 So it's it's gonna be OK. It's not gonna be passed. Do until we get past this date. Therefore, it's still current. So if it closes back out and we go back to our report up top schooling up, I'm gonna go back to the report summary. That means that everything we have here still currents, not path, do. There shouldn't be any collection items on it. Anything that's gonna be within these areas then, of course, are past due. And those are probably going to be the ones that were neat pay sooner and avoid any kind of collection problems that would result if we do not pay them sooner. So that's gonna be this type of ah report. Very common report. We will. Ah, And just note, of course, that this number here is always gonna tie out to the balance sheet if we run the balance sheet as of the same date in our case, February 28 2021. Now we're going to customize this report as we've been doing removing the date and time down here by going to the customized up top. We're gonna go to this triangle for the header that's going to the right and make it go to the down and de select the date prepared and the time prepared. Then we will run this report. So here is now our report. We've removed that item at the bottom, as has been our convention and custom, we're now going to export this report to excel by selecting this drop down export two Excel and we then get this pop up down here, willing to select that pop up down there, open up our reports. If it's not open up, check your settings to make sure that you can open up the Excel report and that we have excel to open up with. We then will enable the editing up top and see what we have Here is what we have. We can now adjust this in, um, Excel. If we so choose, we can check out the formulas and see how this thing's being constructed. It's very nice that QuickBooks does not just put hard coded numbers everywhere. It tries to give us formulas to see, to show how the things constructed, which really helps us to build tables if we're gonna build tables ourselves, weaken deconstruct the types of tables that are very commonly built by exporting reports to excel and seeing how they could be constructed. So that's gonna be this we're gonna check and make sure fits on one page The way to do that . We're gonna go down here to the page layout, little tab icon, and we will see the page break here. And so it looks like it's all on one page, which is nice. Then we're gonna go back to the normal view and we'll see this little dotted line. That's where the page break is at everything's on one page, which I would I would hope there's not a lot of data there, So we're good. We're gonna go ahead and save this. So we're gonna go the file tap up top. We're gonna go down to save as and then we're gonna browse to the location where we want to put this file. We're gonna open up the Excel docks four, and then we'll just change the name so the name will be changed to accounts and we can't put a dash, and it's gonna put AP Aging report, and that will be that we're gonna save that information. We might want to put the date I should put the date, so we're gonna put 0 to 28 21. So there's date. AP Aging Report We're going to go ahead and say that information, and that will be the A B aging report. 28. 6.05 Set Up New Company & Preferences: Hello. In this presentation, we will set up a new company information into QuickBooks online. Now that we have the new file set up, we're gonna enter some of the company data into the file. Remember, there's three main areas that we enter data in. We have this area over here. The ah, icon that will show the sidebar. We have the plus arrow up here that will turn into an X as we see the information for normal day to day input information. And then we'll have the cog here That's gonna give us what we want at this time, which will give us the company information. So we'll select the cog, and then we're gonna go over to the your company, and we want to set up our account and setting information. So we will go into account and setting. We'll see the menus on the left hand side where we have company billing, sales, expenses, payment and advanced. We're gonna start off in the company's section. So we are in the company. That will be the default. As we go in here. We have the company name, company type and contact information. We could up here put a logo in. Well, it's not required, of course, but I'm gonna try to put a logo in. And so we're just gonna click on that logo. We're gonna stay, plus select this plus arrow. I'm gonna go to my desktop where the logo is located Most How likely? Or hopefully scroll down to the logo and just have this guitar be the logo, and you probably don't want to put more time into the logo than that. But that's just to see that we can put a logo in. Ah, we have. Ah, the legal name I'm gonna keep as get great guitars. That's the default. When we set up the company, we're gonna say same as the company name. And then we're gonna put in the e i n or Social Security, depending on it for a sole proprietor, which it would be a Social Security unless we got a t i N number or the e i n. It's useful to get Annie I And even if you are so proprietor, even if you don't have a, uh, employees, that's an employee identification employee identification number of the e i n. You don't need even if you don't have employees. However, it's useful when you fill out documentation such as this or 10 90 nines to not have to put yourself security number on it. So it's worth looking into to have to go toe to go to the irs dot gov. Um, and I want to put that information in, so I'm just gonna select the number here and save that this is typically the format of an E I end. Of course, the Social Security would look like a typical soul security with the two dashes. So there we have that information. Now I've saved it and I'm gonna go back here and just check it one more time. So we have that information has been saved, We're gonna scroll down and then go to the company type and see what we have here. We've got the email address we that got the customer facing email is gonna be the same company phone number we can put here the web page. Of course, we can put here if we have an applicable web page we're gonna want to put down here in the address. We do want to make sure you have the address we don't. These aren't required fields. But if we don't have the address there, that it's not gonna show up on our invoices, and that could affect our building and our payment are receiving a payment. So we do want to put the address here, and that will populate on many of our forms. So we have the information populated here. Of course, this is a fictional information or just toe on address, not at the address where you will not find a guitar shop at this address. Most likely. So we've got the 244 West, 23rd New York 10011 And we're gonna go ahead and save that information. We're gonna scroll down and see what else we have. We have the communications with Intuit Marketing Preferences. We're gonna leave that as is, and then go to under the company in the left. Bari over here billing and subscription. So a lot of these, we're gonna leave to the default. So this is going to be the billing information. If we wanted to go into that information and set up a different type of going set up with Intuit and QuickBooks, this is where we will have the upgrades in the downgrade. So we had the three versions of QuickBooks. So if we wanted to switch from one version to the other version, upgrade or downgrade, this is an area Weaken, Weaken. Do that. Then we have the payroll information down here. No subscription at at this time. We may look into the payroll information a little bit more as we go. We'll talk a bit about payroll, the payroll options when we get to pain payroll and then we have the payments down here. We're gonna keep that not subscribed. We're gonna say checks, checks and supplies. If we were to order checks, then we can go through the ordering of checks here. Checks are going to be something that we will. If we're printing them through, QuickBooks will still order outside checks that we can go through and print them with the QuickBooks software. We're then going to go to the tab over here. We're gonna go to the sales tab. So selecting the sales tab, we could customise the forms up top. We're not gonna go into this now. We're gonna keep most of the defaults within the sales tab. So We've got the preferred invoice terms. The default. It's gonna be a Net 30. Meaning they're gonna be wanting to pay within the 30 days. Preferred delivery. We're gonna keep that at none. The shipping, the customer field, the customer transaction numbers service, state discount and deposit. We're gonna keep those as off at this time. Product and service Show Products Service column on the sales forms. We're gonna keep that on. We're gonna keep the defaults here. Except we do want to track inventory quantity on hand. So that's going to allow us to track the inventory. We're gonna be selling guitars. We're gonna show both the inventory of selling the guitars as well as having some service items that we will be in putting. So we're gonna see if we can turn this on. We'll check both of these, hear someone say track inventory, quantity on hand and track quantity and price. And then we'll save that informations that will say that and say, Turn on tracking track inventory. Corny on hand. Also turned on show item tables on expense. We're gonna say, OK, then we've got the message is here. So we're gonna keep the default on the messages. This is typically going to be messages that if we're given in terms of payment type message messages Ah, here's your invoice message. If we're gonna email the invoice and the receive payment message reminders, so we'll select that reminders here. This is gonna be on a reminder. Typical. Just normal email is a default message. By the way, that QuickBooks has to remind in this case that we need payment. We haven't received payment yet. Ah, we have the online delivery, and we're gonna keep that as the as the default at this time. And these statements list each transactions as a single line show. Aging table. We will keep the default settings there as well. Were they going to go over to the expenses tab moving down to the expenses tab? We've got the building and expenses we're gonna keep Generally the defaults here. Show item, table and expenses and purchase forms, track expenses and items by customer. We're gonna keep that off. Make expenses, items billable and default bill payments, purchase orders, used purchase orders. We're gonna turn this one on. So this one's important. The default was off. We're gonna go ahead and say we want to use purchase orders and we're gonna say use purchase orders. Check that off. We're not gonna enter anything into the custom fields at this time, and we're not gonna have the custom numbers. We're gonna let QuickBooks select the numbers as they go. Mean it will be in order by the time by the order of purchase orders. So we're gonna say, Save on that. And then we've got messages. Will keep the messages as the default. Please find our purchase order. We're gonna keep that as the default. We could customise that. Of course. If we so choose, we're gonna go to the payment options, and we're in the company tab on the left hand side. We're going to payments, so payments get paid fast. We're gonna keep the default settings here. Existing account. We're gonna keep these default settings in the payment options. We're gonna go to the advance tap. So company and advanced tab. So accounting. This is where you can set up your fiscal year. If it's different now, note that usually I think of a fiscal year is what year? What month it ends meaning December 31st is the year end they're putting their beginning date, so just keep that in mind. Don't don't think that this is a January year end. It's the January start, which means it's a December year end. So if you have a typical 12 31 year end, you can keep the default. It will typically be. The default setting is gonna be the same as the fiscal year. So if you don't have any unusual year, that will be the same. If you do, then you want to. Just this accounting method cruel is the default. You typically want it the accrual, because that is the default. But we can toggle back and forth to a cash method as well. And ah, we can talk more about what the differences. As we start entering data, uh, closed the books. We're gonna keep that off at this time. While company type tax forms this will be more or less relevant, depending on how you're setting up your tax forms and how to print this information if you're using the information to print the tax form or or compile that data separately. In essence, if you are a sole proprietor, you would have a 10 40 If you are some other type of entity partnership as corporation corporation, you could select the other forms here. Ah, chart of accounts. We have account numbers off. Unless you really understand the account numbers and how to order the account numbers, you may not want them because it's very easy to set up the wrong account numbers. If you're experienced with account numbers, they could be very useful. But you have to know how to set them up correctly or else you're gonna have some funny looking account numbers. So we'll talk a little bit about that as we see the chart of accounts. But if you don't, if you're not familiar with that But I would leave that off. What it's gonna do is then be in order by first account type, as it always would be, even if we used the count numbers and then by alphabetical order categories, we're gonna say, Keep the defaults here, track class and track location automation. This stuff is actually very useful, So we're gonna keep the defaults primarily soap refill with previously entered content that will help you a lot when we enter a second months worth of data because it will start to apply that information from the prior month automatically apply credits. That also really helps to us to see if there is a credit and whether or not we want apply automatically. Invoice unbilled activity. We're gonna keep the default at this time. Copy estimates, Which is off copy estimates to invoice. We're gonna keep that default off. Adam automatically applied bill payments. We're gonna keep the default and have that on projects Organized all job related activity in one place. We're gonna keep the default, their time tracking. We're not gonna do too much of the time tracking here. QuickBooks has a good trying, time tracking tool, But often times people will use time tracking outside, and then I use QuickBooks. In order to build the time and or enter it into payroll currency, we're gonna have the home currency Will be the dollar multi currency. We're just gonna have one. Here is going to be simplified. Item, Other preferences date format. This is the current date format. If you would like some other format, we could choose some other formats. Number format will be here again if you want to put it in some other format, and you can choose to do them. Custom label customers will keep default. Warn if ah, duplicate check number is used very useful because that's gonna be one of our checks against. Having error or fraud or theft is to have check numbers not being tank, not show up. Duplicated. Warn of duplicate Bill. Number is used. We're gonna keep the default as off. Sign me out if inactive for an hour. So we're gonna keep that default, meaning it's going to sign a south. So we just leave the computer on, is going to sign us out. That will be it, we're gonna say, done on those settings. 29. 6.10 Part 1 Item - Service Set Up: Hello. In this presentation, we will be entering items related to service items into QuickBooks online. The service items are we're going to be. Those items that will be used when we created an invoice or a sales receipt are in QuickBooks online. We are at the dashboard. This will be our default location. It will change as we go, but we will generally start and the dashboard. We're gonna be entering the inventory items at this point. Those are the things that will be needed in order to drive our invoices and our sales receipts. The things that are will help us to populate the invoices and sales receipts. In order to get there, we're going to go to make sure you have this item open. So you want to make sure that this item is open like that and then we're going to the sales items over here. We have no activity in the sales. Iam's note that the type of information we have up top we have all sales invoice customers and products and services. We will be adding products and services which typically we can do with this tab here. But that would be to add them one at a time. We can also add them as we start to make invoices. But typically it would be good for us. Toe Have those service items in there before we start making invoices so that the invoice preparation will be very easy. And we can have other people prepare those invoices as well. If we want to import a file, then to have multiple inventory items imported at the same time, we can import an Excel or see SV file. And we can use this icon here to do that importing feature. That's what we'll start off with as we enter the bulk off our inventory items later on, we'll enter them one by one as we add to the inventory items so we'll select the import A file. This is the browse button where we're gonna be able to browse our computer to find the file that we will be importing. This will give us a sample file to give us an idea of the fields that we need to implement . So what we're gonna do now is put together our excel file that will then be used in order to input this information. Here is excel. Now, if you don't have excelled, you may be able to put this into Google sheets for free, and they save it as a CS the file rather than a Google Sheets violence. See if that works. If not, you can also just put this information one by one each of these items in one by one, into the system. So we're going to use this importing feature we're gonna I'm gonna make these cells a bit bigger, so I'm gonna go down here to the bottom, make this a bit larger. So I'm at, ah, 140%. Let's make 150% right now. And this will be, um Or, of course, with just excel. Then it will be in terms of QuickBooks, which is gonna do some data input into excel. We'll start off with the headings that we typically will need. Those are the things that we will need to populate as we go through. So the first heading is gonna be the item is the itim name that we're gonna have. And then I'm gonna select Tab so Tab will take me to the next sale. If I hit enter, it'll take me to the cell below. So I'm in Selby one, this is so be one. And we have these sales description, and then I'm gonna select tab and note, of course, that it's running over that sell. So in order to make the cell a bit larger, we put our cursor right between the B and the sea. So it looks like that Not like that, But like that, hold down the left, click and make that just pull it out a bit to make it a bit whiter. We're now in cell C one, and I'm just gonna put your sales price. Then we're in D one and we're gonna have income account tab. I'm gonna make this a bit wider again. And I put my curse between C and D. Make that a bit larger. And between D and E, it will make that a bit larger. And then we've got the sales tax code and enter, and we actually don't even need the sales tax code. I'm gonna go ahead and put that and take that off right now. So then we're gonna highlight these. I'm gonna highlight t cells all the way across. So what? I'm doing is putting occurs in here. So it has a down arrow the height of the whole entire column, not just the cell left, click and dragging to sell D. And then what we can do is double click on any of these in between columns Any time it looks like a lab, then we could double click in the auto fill, so I'm gonna double click, and it'll auto fill to the exact size. Now, we're going to have to adjust this a little bit. Mawr still, but that will give us the size. I'm also gonna make this bold so that when we import this, they know it's going to be This is the title cells. So we're gonna highlight these items. I'm gonna go to the Home Tab Font Group and go to the bold setting. So we've got the name, the sales description, sales price and the income account that will be included. So, for example, and is there gonna be some generic names? We have a diagnostic. And yes, this is with guitar So funny names, but that's that's okay. And we're gonna have this is gonna be a service item that we're gonna prepare we're gonna have a state price for our service that we will be providing. It's going to be the same here, So I'm just gonna instead of typing that and again, I'm in cell B two, I'm just gonna say equal and then pointed to that cell and then enter or tap, it's gonna be the same name and items so we could just tap forward the price is going to be 68 So $68. And if we want to have pennies, what I do is I'm gonna highlight the entire work sheet by clicking this item here. I like the entire worksheet and then right click on that selected worksheet and go to format tabs and then within format times I'm going to go Teoh. I typically go to currency, but then remove the dollar sign and I like to have the negatives, which I don't think we'll have any. But negatives with brackets here. And we have the two decimals, so that looks good. So then we're gonna go down here and say OK, and there will have the two decimal, so it looks like dollars there, and then the income account typically excel will pick the types of accounts. We're gonna have an income account called Service. So that's our revenue account. That's our income. Accounts are income for the service items will be service income represented with the account name of just service. Then we're gonna have our second item, our service. This is what's gonna be populated or what will show up on the invoice. So this is gonna be the item on the invoice, and we're going to say this is a little bit different description, guitar, full service. That description will be on the invoice. The amount will be 140 when we created envoys or sales receipt and once again service item . So I could just say service next. Next one we're gonna have next item will be partial service, very creative. Here. It's gonna be guitar, uh, service. And once again, that will be populated on the invoice. When we create the invoice $100 and it's gonna be a service and enter and the last one's gonna be a tune up and it's gonna be five guitar tuneup and for 200 and that's a service. So those are gonna be our items that we want to type in here. I'll make this a little bit larger, so we couldn't make sure toe see everything here once again. If I want Teoh re make sure that the cells air wide enough, I can highlight. Put my cursor on. Here's what looks like that drop down selected through D and then put my cursor right in the middle So it looks like that of any of these cells and double click, double click on it, and that will make sure that it's ah, exactly the right length of column. There's gonna be one more column that we will need before we import this. If we were to import this without any vital column, then we'd have to basically go back and do it again. So we'll save ourselves that time we're gonna have one more, and it's gonna be tight item type, the type of item that we will be including What I'm gonna do is format this to be the same or format this to be the same as this cell by going on to sell D one, then going to the home tab font and using the format painter. And once you do that kind of just look like it's copying it, but it's just copying the format, and then we'll click on this item. All we did was include the D bolding there, which is the type that was on that cell. And then we're gonna see the type is gonna be a service item type. Now, this is gonna be opposed as opposed to an inventory type. So that's why we don't have to deal with that cost to get sold here. It's just gonna be a service item. That's all we have is a service. We can copy that down. Or, you know, if we put our cursor here and we put our cursor on this little icon there or the square, I come and then we can stay left, click and drag that down, and it'll copy that down. So now we're gonna go ahead and save this, and then we're gonna import it to QuickBooks online. We probably should save it as soon as we started here, but we're counting, you know, we're living dangerously. We haven't saved this information yet, so we're going to save this and then import, So we're gonna go to the file tab up top. We're gonna go to save as and locate the destination where we were. We would like this file. I have located the destination. We're gonna save it here. Now I'm gonna save it at the default, Which, of course, is an Excel file. If you wanted to try to save it as one of the other file formats that was that was allowed here, you can go through this information. And if you're using Google docks, you can see if you could save it in a similar fashion as something other than a Google doc to see if that will work for you were gonna say save that information. And yes, I'm gonna replace what I had that before. I'm gonna close this now. I was gonna x out of that. And then we're gonna go back to our where we were in the QuickBooks file, which was were on the dashboard. Now it was under sales on the left and we're on products and services. And then we were going to import down here important file. And now we're gonna browse and look for that file that we have just created. Here is the file location we've browsed and found it. Weaken, select it and open or just double click, which is what I typically news. Just double click on it. There we have it. Once we do that, then the next button will be populated and green and allowed Teoh go to the next Bytom item . And then what it's gonna do is it's gonna match up. It's going to say, Hey, here's the possible formats or items that could be matched up. Here's what we think you matched it up with on your Excel sheet in terms of the headers that you put on the Excel sheet. Is this correct? And is this all we need? So we're gonna say that product, service or name? These are the items that we had on our Excel headers. So it says that's gonna be matched up to the items in the item name that looks correct. We don't need the We're not gonna do anything here. We got the type. Ah, the type is going to be matched up with the type, which is a service item that looks correct. Then we have the sales description. So the sales descriptions matched up with the sales description heading. That's correct sales price is gonna be matched up with sales price. That looks good. And then the income account is gonna be the income account header as well. That looks good. Purchase description. We didn't have one. We're gonna leave that blank for now. Purchase costs. We don't have one because it's a service item and not an inventory item. We will be dealing with that shortly. When we do inventory items. Expense account. We don't have one, because once again there's it's not inventory service quantity. We don't have any quantity because it's a service and not inventory reorder point. We don't need to reorder the re service inventory, acid account and quantity as of date. We don't need any of that. So we're just going to say next here and here we have our information populated. We have that the name, the type, the sales description and then noted, has the account here of service. It's saying that's highlighted. What it's saying here is if we drop down the account, we don't have a service items because the accounts that were set up with this format was a sales because we said we had inventory, so it's got sales for for inventory sales typically is what we ah, match up with sales. So we could use that as the inventory account or the income account, but we might want to set up the service item. So the purchase we don't have any quantity. We don't need any of that inventory. We are okay. And that the as of date is 12 13. This isn't of ah lot of importance to us right now, but we will be working in 2021 because we're gonna be working in a future problem That will be important when we have the inventory items. But these aren't gonna put any numbers on the balance sheet at this point, so it shouldn't affect us. We're gonna try to important see what it says. Although we'll run into a problem, of course, because of these items here. So we're gonna say import and it's going to give us this error here. Zero of four products and service successfully import. We're sorry we can't import all your data just yet. Correct the issue in red. So what, we're gonna dio it's have to create a new account. So I'm gonna create a different service account and set up a new account in order to do that. So I'm gonna close out of this. We're gonna x out of this and we're going to say, Do you want to leave without saving? We're going to say, Ah, yes, we'll leave without saving. Then we're gonna go to the accounting down here, so we're going to accounting. And that typically will open to the chart of accounts you could see appear when the chart of accounts. If we go back to the lists, this is gonna be all the lists that we have. The main list we have is going to be a chart of account. What we want to do is add a new account, which is gonna be a service income type of account. So we will select the new item up top. We're gonna say new, and that will default to the new account. So we're going to say the accounts category accounts receivable is what we are on now. We wanna have a sales type category, so accounts receivable is gonna be an inventory type other current assets, bank type fixed assets, other assets, current liabilities, credit card, other current liabilities, long term equity. And then we want this one here. It's gonna be an income account. Taken income or a revenue type of account within. Have more detailed down here. The detail type is defaulting at the discount. We have discount, not profit income, other primary income, sale of product income, service or fee. That's what we're looking for. Here we have service income or not selling inventory. So we're gonna select that and a default here to service or fee income. And that's pretty good for us. We're gonna keep that. As is the description. We're gonna just leave that here. It's not a subcategory of any other category. We're gonna have it a standalone category. We'll add some more accounts. Ah, bit later. But this will be the 1st 1 we will adhere, gonna say save and close. And then it will add that account. Note that it's gonna be in order by accounts type. Here's the income. We have assets, equity, and then incomes are income. Account is down here in sales, so that should populate now, once we import our items. So let's go back to the items and try to import those again. We're gonna go to the sales up top. So we're in the sales tab on the left side product and services up top. And then we're gonna select this item down here. I'm gonna put the drop down. I want to click the drop down. Not the new, because I don't want one item. We want to import the items and then select import and then go through this browsing again . So we're gonna have our information here. We want to browse this information, select our file that we have created the Excel file. So I double click on the Excel file, and then this next item will show up once again that will select the next item, and then we have this populated again. So here we have it. The items match up. The type matches up the sales description, the sales price, the income account looks good. And then we're gonna select next. We still have these red items over here, and that looks like the name is not exact. So that's okay, cause the item should at least be there. So if we selected the drop down and we scroll down, we have the sales. We want the service fees. So this is what we want. We didn't type in service slash fees, income slash income, so it didn't show up, But we're going to select bad going to select him for all of these. It's so it's going to be the service fee, income account and service the income and service see and come. Obviously, if there was a whole lot of these, then it might be worth going back into excel and typing this exact name, and then it would populate automatically. Also note that it pulled over a two here, and the reason is doing that is because we I used a formula to pick that up instead of typing that in there. So I'm gonna type in diagnose Stick. I also updated the spell in here on the diagnostic, so that should be up to date now, So we're gonna say OK, and then we're gonna import this information so we will import this information. Four out of four product service our excess successfully imported, So that's a good sign. So we have those four items that should be imported at this time. We're gonna x out of this and and then if we go back to the sales and the product and services. We should see these items that are have been updated here we can go in, and ah, just thes. So if we wanted to edit any of these, for example, we could go in here and edit thes up. So possibly we want toe Ah, justice spelling on this one like that that couldn't something we can adjust in here. And then we could save and close that information. And there were habits. Everything has been imported. Note. We can sort this information by this little filter here. So if we select the filter, we can sort by status by type, often very common. We have service items here. Next, we're gonna be looking at the inventory items. So next time we're gonna be importing inventory items can be a bit more complex because we will have the calls to get sold, the amount of inventory on hand that we will have to deal with, as well as the type of ah import features we used here 30. 6.10 Part 2 Items Inventory Set Up: hello. And this presentation, we will be entering items related to inventory into QuickBooks online. These are gonna be the items for inventory that will be used as we create invoices and sales receipts. We are now at the QuickBooks dashboard. This will be our starting point. Every time as we go through this, we're gonna be entering those items related to inventory. So we're gonna go to the sales tab over here on the left hand side, within the sales tax. We tab, we want to be in the products and services you'll recall last time. We have set up some items, but those were service items last time not relating to inventory. This time, we're gonna be selecting the inventory item. Remember that you will need the more advanced version or the higher price version of QuickBooks to track inventory. If you're not tracking inventory, you can follow through this and use the service items and look through that information. If you have the inventory items, we will upload this now and will create some of the sales receipts and invoices using the inventory items. In order to do that, we're going to select the drop down for the new Once again we're gonna import. We could record these one at a time. However, we're gonna put the bulk import in upfront, setting up all the items that we have. As of this point in time later on, then we're gonna If we want to include another item as we go, we'll enter those items as we go. So we will go to the import here and within the import. We have the browse function. In order to imports, we could import a C as the or Excel file. We will be using an Excel file. There's gonna be the example here to take a look at. We're gonna go ahead and open, excel and input this information to it. Here is our Excel tab. If you don't have excel, you can try using Google docks. But you'll need to try to save it as I believe that it was the C S. V to try to save the format of it as the format that will be upload herbal. If not, then we could also enter these just one by one into QuickBooks as well. I'm gonna make this a little bit larger, so we're just gonna go through some excel items here, We're gonna make this from 100 gonna increase it to, say 160. Then we're gonna go up top, and we're just gonna put in our item Hedgerows Here's will type these ends. We haven't item name, and then I'm gonna select Tab to go to the next cell. I'm not gonna worry about the fact that it does overlap, and I'm gonna update or increase the size of the sales afterwards. So this next one's gonna go way over. In other words, this line between B and C, and that's okay. We're gonna keep the civil type on sales description descript. In that way, it's like Tab its way overlapping. And so this might be very disturbing to some people, but it's okay. I'm just gonna type in here and it'll type over this one. So we're going to say purchase description, and then we'll select Tab. So don't don't go to the next cell on, and I think that you're gonna skip one of these cells because we will update it. That won't work with the table. So I'm gonna type in here in cell D one, even though there's there's stuff being populated in it. That was a purchase description with the cost is gonna be in D one, so make sure that's in cell D one tab and then in e 11 So e one, we're gonna have the sales price. They were, say tab And then we've got something called cost of goods sold lips, which starts with C. C. O. G s account tab, and we've got the income account tab, the asset account tab, Sales tax code tab, Quantity on hand. I'm gonna try to abbreviate with Q t. Why on hand? I think that on hand tab and as of date, so know we have a lot more information here than we did when we're doing the service items . We're gonna make this a bit larger so we can see everything, and then we'll go through it and see if it makes sense. So we'll put our cursor on the A's when we see the drop down here. So I want to see this drop down arrow, select the left tab and scroll all the way over to K, and then anywhere in between these cells. So it looks like this not like that. But like that, we can double click and that'll white in the cell. Then we're gonna go down here. I'm gonna make it a little bit smaller. That 1 60 I'm gonna make it a bit smaller so we can see everything. And so bring it all the way down a 1 20 Then I'm gonna highlight these cells, and, um, we will make them bold so that when we updated, it knows that this is the header rows. So we'll highlight. I'm gonna highlight from a one over to K one just the top row because the rose underneath it, we will then be just typing in non bull. That information we will go to the home tab Font group, make it bold. So there we have that, and then we're gonna start typing this in. Now what we have is the item name. That's what we're gonna call it. It's gonna be an abbreviated name, often times, possibly just a number of many times for certain companies. Sales description. That's what's gonna show up on the invoice purchase description also could be recorded on the invoice or the purchase order cause for pregnancy that I'm gonna make that a little bit larger by put my cursor between D and E. We need a little bit larger for the cost. And that's how much it's gonna cost us. How much we're purchasing it for sales price. That's how much we're going to sell it for cost of goods sold account. So when we sell something, we're gonna have to debit, cost of goods sold, expense related to a selling the inventory. And so we'll need that account there. And then we have the income accounts. That's gonna be the income account related to us making sales of inventory of revenue or income type account. Then we have the, uh, account assets account. That's going to be the inventory account that we will use. Teoh. When we sell the inventory, we're gonna have to reduce the asset account of inventory merchandise inventory. And then we've got the sales tax code. Do we have sales tax? Were going to say yes or no there and in the quantity on hand, how much we currently have? We're going to say that we do have some at this point, although we have not uploaded it into the QuickBooks system and in the as of date. Remember, we're making this problem as of starting January 1st, 2021. So what we're gonna do is enter this information as it the day before that Ah 12. 31 2020. So that any kind of entry that the system will make will if there's any temporary accounts involved, then it will make those adjustments and close them out as of the first day of operations that we want to be working on. So we didn't purchase any of these things in the first year of operations we purchased them prior. Doesn't really matter when a song is we just kind of draw the line and put those in place before the year in which we're working on. Okay, so now we're gonna populate this information. This will be the most data input that will probably be doing through the entire problem here. So let's just enter this. The 1st 1 is gonna be an e l p. That's gonna be the item name, and then we're going to see the island. I'm saying tab and then the item description is gonna be the phone. Les Paul, it's gonna be a type of guitar. The sales description. I have to type it in again. Because would if I uploaded if I have a a reference what I uploaded it might put the cell reference in there instead of the what we type. So what we could do is obviously copy it so I could copy it, right? Click and copy, right? Click and paste. And then the cost is going to be $400 now, the cost in the sales price, I'd like to see pennies just in case I'm gonna highlight from D E. Let go, right. Click the highlighted area. Then we're gonna format cells and we want to go to currency. We want to see the negatives and we're going to see the dollar sign no dollars on two decimal places that should do it. And Okay, so there's the $400 and then we're going to sell it for 500 cost of goods sold. Account is gonna be cost of goods sold, and I know that's going over again. That's OK. We're gonna Well, just that at the end here, we've got merchandising account worthy of the or the income account, which is going to be merchandise sales. And then we have the asset account, which is gonna be inventory asset sales. Tax code is gonna be tax quantity is gonna be one. And the as of date is gonna be 12. 31 20. That that's gonna be the last day of the year before the year that we're going to actually be entering data. Okay, let's go through this again. The 2nd 1 is gonna be an e N l p B u in h three, an awfully long description, and then we'll have a discussion which isn't at the phone standard throw. I'm gonna copy that. Right click and copy. And put that same information in C three, right click and paste. 123 Or either way, based other one, the amount is going to be 480. The cost. We're going to sell it for 600. Cost of goods sold will be the same. Same. All these three will be the same from cost cuts sold to sales tax. Someone right click and copy that. Put that underneath in F three, right click and paste. So there we have that. And the quantity on hand is gonna be one. Same date. 12 31 to 0 after put dashes in there. 12-31 to 0. Okay. Next item we have is an E r P 93 It's gonna be It's gonna be a phone, Vera. I'm gonna copy that. Put that here. We're going to say that it's gonna be for 440. 500 fifties. What? We sell it for calls to get sold. Merchandise, inventory, inventory, asset sales tax can all be the same. Even this will be the same. So I'm gonna copy this all the way across, right? Click copy. Put that in F four. Right click paste it. So there we have that. And then the next item is gonna be a G T p R O b. Okay, one that's gonna be a Steinberger solid body. We'll copy that. By the way, these might be missed. Eldon, I apologize. If I miss anything there, I'll try to spell check at this time, but right. Click and paste it. And we're going to say tab and that's gonna be for 328. We'll sell it for 410 and then we'll highlight these items here once again, all the way across, right. Click and copy. And we're gonna pace that in F five, right click and paste. Next item we're gonna have is going to be a G u S A. M to, and we're going to see that. That's a gift, son. U S A. We'll copy, then paste that in C six, right click and paste. The amount thing will be 3043 80. And then we're gonna copy all this from F five to K five, right click and copy. Put that in F six, right Click and paste. Now, I'm just gonna make one change here, and that's gonna be that. We're gonna have two of these, so there's gonna be two of these on hand. Last one. We're gonna have the last one here, and that's gonna be a wow the cat that's gonna be in the phone semi hollow body. I'm going to copy them for 30 here. We're gonna sell that for or costs. It's 3 22 us selling it for 400. And then once again, I'm gonna copy from cost to get sold all the way over to the date, right click and copy. Put that underneath in F seven, right click and paste. So there we have all that information. It's going way, and we are gonna have two of those. So now we're gonna attempt to upload this and see if there's any problems that will have. And if there are, we'll go back here and we'll fix them. That's gonna be the typical process. When we go through these uploading type of scenarios, we're going to save this now. We probably should have saved it upfront, but we're living dangerously and we're gonna save it now, Uh, well, goto file and we're gonna go to save as we're gonna select the area that we want to save browsing through the computer. Then we'll rename this item and we'll call it an inventory item. So we're gonna say it's in inventory item and this is no the Excel type. It's gonna be an Excel type document by default. But if you're using Google docks and you want to see if you could change the type to another acceptable type, you can see that that's where you would go in an equivalent area within a Google doc. So we're gonna go ahead and save that. And there we have it. We will close this and then go back to Quickbooks. So here we are, at QuickBooks. And remember how we got here is we went to the sales tab, We went to products, and then we went, Teoh the drop down and import. So here, we're gonna import. We're gonna browse now and locate that file that we have just created, which is gonna be the inventory item. Double click on that, or you can select it one time and open. I typically double click on it. And there we have. This should be imported. Now. You could see it. Hear it And then we're gonna go to the next, and it will populate this once again. So let's go through these, make sure it lines up. So we've got the product or service type. Ah, that's gonna be the item name that looks correct. Eso note that this is matching up just the header column in our excel sheet. So if we were to open up our excel, she just toe verify what is going on here? We're trying to say we're trying to line up these header tabs. So it's saying that the item tab is lining up to make this go down to the product or service name. That's correct. We don't have the type. We should have had a type here. This will be a problem that might make us go back to the Excel document and enter this information. So we'll go check the rest of it and then we'll go back through it. The sales description, sales description. If we see the drop down, it's gonna pick up the sales description. Looks right. And then the sales price. It's picking up the price column that seems correct. The income account is going to be, Ah, the income account is what we get labeled the line item on our worksheet as well. That looks good. Purchase description lines up the purchase description, purchase cost lines up to purchase costs on the headers that we picked. So this all looks good. Now, the expense account is not something that got picked up. We're gonna go ahead and select the drop down, and we're going to say that that should be the cost of goods sold. So it's a cause to get sold expense when we sell the inventory items, the quantity on hand. We didn't match that up exactly because we gave it a short name of that. So that's how many items we had. So we called it Q T. Why? Quantity on hand. So we're gonna select Q t y on hand. And then we had, uh, the reorder point. We didn't have a reorder point, so we're not gonna will keep that blink. But for now, when do we want to reorder on? And then we're gonna have the inventory assets account. So the inventory acid account we put as just assets account, So that's gonna be that I am. And the quantity as of date, we're gonna select that and we have the quantity. As of date, I'm not sure as update. So if we would match those up more a little bit more perfectly with their wording, these exact wordings of the headers, then it would match up more perfectly. If not, that's OK. We could still line up those headers. The headers that we have on our worksheet here, Teoh there headers and they should be similar. So we're scroll back down. So these are the items will scroll through them. Sure. Slowly. We want to match up this item to what we imported, and we should match up these here. Okay, so next we're going to say next and see if it stops us for anything. The items we don't have on most concerned, Of course, with the type. So we're going to say next and we have these items here. So the income account, it's going to say that doesn't see the income account and the expense account. It's not seeing the expense account were also have an issue with the type here. So if we split the type, we only see the to someone add the type and then the inventory income accounts wouldn't be a problem. We could scroll down and we'd say the inventory needs to be sales. We had merchandise, so we'd have to select sales. The cost of goods sold, account. If we scroll down, we're looking for cost to get sold and so we can adjust that We do need to fix this one. However, it's cruel to the right and see what else we have. Everything else looks pretty good. So what I'm gonna do is close this back out and we're gonna say yes, we're gonna open up the Excel worksheet and then we're gonna go to this and add one more column over here and call it tight. So it formatted for me, and I'm just gonna put in inventory. So we have an inventory type we're just gonna copy that pasted all the way down and there we have it. So when Now we have an inventory type, and we're going to see if that will populate the way we would like it to. I'm gonna go ahead and save this note to that. If we went through here and we adjusted, some of the names appear to be more specific as well as those two that didn't match specifically cost a good sold and merchandise sales. T just sales. Let's do that. Let's try a chance. Just went to sales the income account and see if that matches up a little bored more nicely . Ah, but that's not going to stop us, so I right click and I paste that from moving forward. So we're gonna go ahead and save this now. Clearly, if you had a whole lot of data here than you wanted, to match up really well, because we're gonna have to go in there and make any adjustments within the system after we upload eso. You want to match it up as close as possible? If you have. Ah, a lot of information that will save you some time. You can go back and forth and make sure that everything is perfect. If that is the case. So we're gonna go ahead and save this and then close that back out with our new item. We're back here. So we're in. The sales items were in the products and services within QuickBooks online, and we are now going to select the drop down for new. We will import. And once again, we have the browse menu. We're gonna select the browse button and find the file we would like to import. We want the inventory items here. So we got the inventory items double clicking on that. We're gonna import that and then select next metal. Move us to the next screen. We do need to double check these again. So this looks good. The type now lines up with the type, so that's good. Sales description, sales price income. These older, good costs lines up with the cost. That's good. And then we've got the expense. Remember? Needs to be cost of goods sold. We need the quantity on hand to line up with scrolling down Q t y on hand. We want the reorder point. I didn't have one. There's almost kept hat Inventory account is going to be What did we call that's gonna be? The inventory account is gonna be the assets account, and then the quantity as of date is going to be quantity quantity as of date. Now we'll select next and see what we have here. So we got next and it looks like this is lining up looks good. And then we have the sales note that this lined up now because we adjusted that the sales, the cost of goods hold, however, was not perfect. So the expense account didn't show up perfectly. We're just gonna go through here and pick the right when it's cost a good soul slash cost of goods sold. So if we if we were to spell that perfectly in our system before importing, it would have been done it well, this is okay because we don't have too many items and we could just go for their here and select the proper account. Uh, so just go through. All of these will all be the same account costing get sold. And there we have that. So here's this information. Now, Newt, when we do this information, it's a bit different than when we did the service items in that we have quantities on hand were saying, Hey, QuickBooks, we already have this. So QuickBooks is gonna have to do a journal entry meaning? It's gonna have to say this Times this column. So 400 times one this time's is this times to this times two. What adul those up. And that's how much we have in inventory at this point in time. It's also going to track inventory, and it's gonna have to put the other side in some other account, so it's gonna have to use some adjustment account. That's why we're putting this information in As of the first day prior to the year we will be working on, we will be working on January 1st 2021. Therefore, this is going in right prior to that, we'll try to import this now and see if it accepts this information. So what we will import. We need to go back and adjust the inventory items. We had the type here, but the inventory is not populated because we didn't have the track field. So we're gonna go ahead and track the inventory on each of them, and then it will give us the inventory option. It will give us the only option being inventory without that track and field. If reflect the option, It only gives us the other two service and non inventory the two items that would be recorded or usable if we didn't have the tracking field. So here, we're gonna we're gonna go through here. We're just gonna select the track, and that will convert this to inventory, so we'll track it all. And there we go. And so this and this information is now correct. In terms of inventory, we scroll back over. Looks good. Therefore, we're gonna go ahead and import this information, see if this will take it this time. Okay, so we have six of six products services successfully imported. That is good. So we're gonna closes back out, and yes, and then close this out. Do you want Teoh value? Yeah. Okay. So now if we scroll back through here, we see our items to remember. This bounces of back to sales and the product and services. If we scroll down now, we see our items. They're gonna have both inventory and service items If we want to. Just see what we have added. We could select this item here, go the type and we want just the inventory items, and we will apply that. So here we have our inventory items. Next, we'll take a look at what this will be like on the reports. We're gonna scroll down over here to the reports on the left side, and we're gonna go to the go to reports and that'll give us a drop down of the normal reports we have here. We're gonna go to a balance sheet and take a look at a balance sheet and see what we have. We always have to change the dates because where I work in a problem in the future, we're gonna have the balance sheet as of 11 21. And that's going to go from 12. 31 to 1 so it's gonna be the year will actually be working in. So we're gonna run that this report. So look over here and say run this report and then here we have it. So there are our assets now have been created. Note also that it created this opening balance equity. That's what QuickBooks had to do in order to make this imbalance. We're gonna do something to that later on and adjust that information. But just note that that information is there. If we double click on any of this weekend, zoom in on this information. So we're in the inventory acid. If I click on them, then it'll we'll even get double click, click on it once it'll give us this information here. Now, remember, we put the date in there as of ah ah, December of the prior year 2020. So we're not seeing the detail here If we scroll back up and I change this date up here from January 1st, 2022 12 31 21 then run the report. We'll see if the activity will see all the information that we have. Input ah, into the balance sheet giving us the amount and the balance over here. So this gives us kind of running balance to show if that activity if we double click on any of these items we get to this green and this kind of a default screen, because this is we don't have a nen tree form here. What we did was just put these into the beginning balance. So it says inventory starting value here, and that's where we entered this data. Now we're gonna go back to the reports over here, and we're gonna be in the left hand side. We look for another report, I'm gonna look for an inventory reports. I'm just gonna type in inventory and we got the inventory valuation detailed the summary in the worksheet. I'm gonna look at the evaluation, detailed report. We can adjust the dates again, so I'm gonna put the dates as of 12. 31 to 0 and 12 31 to 0. Just the date that we entered anything out there and then we could run the report. And this will help us to see if we got it in there at the right date. Oftentimes, if there's a problem, it's a date issue. So it might be the fact that you have the information in here, but the date is wrong, so it doesn't populate exactly the same here. That gives us our detail. Gives us the items that we have. The types of inventory that we have a quantity on hand, the rate we're gonna be using, Fife. Oh, that's what QuickBooks online uses rather than the on ground which uses average and the quantity. And then they cost value that we will be seen then, as we add this up on the balance sheet. So this is gonna be the report I'm gonna practice. We want a practice exporting this report. Now we can print it. This report, we can export this report. Exporting is a really useful feature because it allows us to put everything on one tab. So we're gonna go to the export and we want to export two excel. So we'll export two excel, and then it just opens that up, opens up a new tab for Excel and should populate that information as it opens up. I'm gonna pull this over into our screen here. So there is the Excel document populated. Then you go through here and make any adjustments, you can change the name, it put the tab name up there nicely put the name up top to. And so everything looks pretty nice in the first tab rather than just putting it in the header. And so we're gonna go ahead and save this information so we'll go to the file tab, we'll go to save as browse and look for where we want to put this. I'm gonna put it into the Excel docks here. So for six, I'm gonna put that there and the name here. It's name in it for the worksheet. I'm gonna name it. Ah, for the section six here. And put that information like so. And then we're gonna go ahead and save that so that we have that information and that will be exported going to close up the Excel tab. And that will be the inventory 31. 6.15 Customer Balance Setup: Hello. In this presentation we will set up customers and new customer balances into QuickBooks online. Here we are within the dashboard. If you've been following along with us, we will be continuing with the get great guitars problem. We will be entering customers. This is a new company file. At this point, you haven't been following along. That's okay. We will be entering new customer balances, most of all customers and their customer balances. In order to do this, we're gonna go from the dashboard here to the sales item. So we're in the left hand side. I remember you have to have this icon open in order to get there. So if you click on this icon and then we're gonna go to sales because we sell things to customers and then up top, you want to make sure you're on the customer's tab. So we're on the customer's tab in the sales tab, scrolling down. We could issue one customer at a time and add one customer at a time or we could import a file. We're gonna go ahead and import a file and enter this information into Excel, importing multiple files at one time in order to see the sample file. We can select this drop down on. We're going to construct this Excel file. Now, here we are with Excel Open. We're gonna enter the data into the Excel worksheet and then upload that work shit into QuickBooks. You don't have excel. You can try to do this with Google docks and then save it as a CS v file. I believe it was a C as a B file. That would be another option. If that isn't something available or is not working, then we could just enter these customers one by one as we go through it here. So we're only gonna have three of them, so it won't be too bad. Either way, we need to do it. I'm gonna go down here and make this a little bit larger. 100% right now, I'm gonna make this bigger than 100%. Something larger. How about 170? So we are at 100 seventy's percent. We are in cell a one. We're just gonna type in the names first, So I'm gonna put in the full name someone just say name rather than first name and last name. Just typing the full name company. And that's gonna be our second. I'm hitting Tab to go to the next sale that I'm saying Tab cell three. That's gonna be the the customer balance and note that it's gonna be over the sale once again. That's not too bad. It's OK. I can type in the cell and then I'll just wide in the cell later. I wanna practice just being able to be okay with typing in the sale even though there's overlap because that's gonna be a little bit faster for us to do the data input so we don't skip a cell. We're still here on D one and we're gonna type in the opening balance opening balance. Now, let's do some formatting to these sales. I'm gonna first, I'm gonna highlight the whole all of those cells and I put my cursor on a say, See that dropped down arrow, select the left click and then scroll over to D or E. Then I want to format Thies an auto, format them to whatever they need to be. So I'm gonna put my cursor right between any of these cells, so it looks like that not like that, but like that. Like that Not but like that and any of these in between any of these sales and we double click, and then it will give us the format or the length that we need. Now, these two, I think I'm gonna be a little bit longer. I'm gonna need them to be larger than just the name cause we're gonna have an entire name that we will be putting into these two cells. Therefore, I'm gonna highlight these two cells on A and B, and then I'm gonna drag them to the left of making them larger. Just what I would think would be good enough space to enter the full name. So we're just gonna drag this to the left and never have the looks of balance, probably about maybe even a little bit larger. Okay. And then next thing we're gonna do is I'm gonna make these bold just so they know when we upload that these are the Hever headers rather than just the text that will be the names of the actual names and companies and balances Naser the headers of the names and companies about somewhere to highlight all of those. We're gonna go to the home tab font a group and bold. That's all we really need. If you want to center it, sometimes that's nice. Go here and center them. That's the home tab Alignment group center. Then we can type in the names that we have. So we're going to say the first person is Anderson guitars. I'm gonna select Tab to go to the right, and I was gonna type the same thing here. So if the company is gonna be the same, therefore he's gonna copy this and pace, It's our right click, of course. And copy. Right. Clip and B two and paste. No customer balance. We're gonna have the balance. That is do. Now, if this was a new customer and we hadn't been doing business before, we have would have no balance. But in this case, we have been doing business. We just haven't set up our quickbooks file yet and therefore are putting in those beginning balances. So we're gonna say the beginning balance is, uh, going to be 5000. I'm gonna format this l A bit differently because I do wanna have a comma there and whatnot . So I'm gonna put my crush on this whole column. The tie, like that entire cell right click, and then we're gonna go Teoh the format cells and I typically go to currency. I have brackets, even though we don't need him. If there's a negative number and then I take off the dollar sign, we really need the dollar sign to decimals for pennies. That's good. And then we'll select. Okay, which is down here. Okay, there we have that. I want to change the name here a little bit. It's gonna be opening balance as of date. So this is gonna be the date that we're gonna have these opening balance off. I'll make this a little bit. Let wider. Double clicking right in between these there's the entire amount. So this is, in essence, the date that we're gonna be putting this information in. As of now, our problem, we're gonna be working as of 2021 being the first date that we start entering data into. Therefore I want to put this in right before that date. So 12. 31. Um oh, and the rationale once again. Ah, that should be actually 12 31 2020. And the rational once again is that we wanna have this information in there as of the first date before the date that we actually start entering data because when we start entering data, we want this to kind of wash out in terms of any journal entry that QuickBooks will have to do. The journalistic QuickBooks will have to do will be to increase this customer balance in accounts receivable and put the other side somewhere, possibly toe un deposited revenue or opening balance equity. So we want that to all be done with and washed out. By the time we start our new data input, then we have the next customer, which is gonna be Jones guitars. And I'm gonna put the same thing for the company names or just gonna copy and paste that doing this a bit quicker. Now we're gonna put the amount of 7500 tab and the date of 12. 31 to 0 to zero and enter. We didn't have one more customer that we will enter. That's gonna be Smith guitars, and we're gonna copy that over, right? Click and copy and paste that into the company as well. Amounts gonna be 1000 that is owed to us as the point in time that we will be importing this same day to 12. 31 2020. So here will be our were information. We're gonna go ahead and save this document now and this Excel document and then uploaded this Excel workbook. So we're gonna go to the file tab we're gonna go to save as browsing the computer to see where we would like to put it. We have now located where we want to have it. I'm going to change the name now, too, from book one to customers and note that it is a work book, file Ming and Excel file and that will be up floatable to the QuickBooks program. However, if you using some other format and you wanted to change the format in terms of using, for example, Google docks and want to try to change the format to a CFC file or something like that, this is the area that you could go through. Teoh make that adjustment. We're gonna go ahead and save this and then close this and then we'll upload this we're back to Quickbooks here. Now I'm gonna show you what? Where? How did we get here? One more time. So if I close this out, we're in the sales area on the left hand side and customers up top. Then we're scrolling down and we're going to import a file. Now, of course, that file needs to be Excel or C F. V. We have an Excel file now, Therefore, we will browse for that Excel file and upload that here is the Excel file right there. So we're gonna upload this Excel file we could select open. I'm just gonna double click on it. And that should upload the file. Then this Select this next thing or button should in turn green rather than light brain, or it'll turn darker in and we'll select next. Now, we're just gonna match up these items. So these air telling us what the potential categories are matching up to what? We have input here. So we have. And if we open up the Excel file just to show this, make sure it is making sense. These are just gonna be the header columns. And what we're doing is matching him up to our header comes with the name should match up to the name so that the names here will fill up to the names, company, company, customer balance, customer balance. And if our header file here are header name doesn't match up exactly to the input field within the QuickBooks. Then we'll have to match those up manually. So name is matched up with name. That's good company. It's company. So we've got that correct. We haven't input on email, address, phone number, mobile fax. If we had all that information, we should include it and imported here. We're just gonna do the minimum right now just to set up those balances. Those balances being what we're most concerned with for the financial statements, of course, that contact information would be very important as well. Just if we're tracking this information within this database system, So then we have the website that street address all the mailing address. We don't have that information not required to import, however, good information to have. We do have an opening balance note. They have opening balance and we put customer balance. It's still lining up the way it should, so that's OK, so it took this cell here and this is an excel and matched it up with there. Cell of opening balance. And then we have the opening balance date and we put that in as opening balance as of date and they were able to figure that out as well and match that up. So we're gonna go ahead and say next. Here it looks good and it's not liking the balances here, so let's check this out. It looks like it's just not liking the format of these items. So we've got the 7005 with the comma. If we just type in the the number again, 7005 then it seems to accept that. So note that if we wanted to if we had a lot of customers that we were entering and we didn't have just three, that we could just easily go in here and fix, we would want to adjust the, uh, files here back to just numbers, possibly just to general. So if I goto the number up here and we take it back to general, that might be the best way to import it here rather than formatting it. And then the date format. This is a little bit more tricky, because the date format is not exactly standard. What? Or at least for excel, what they're looking for? They wanted to be rather than month, day in year. They wanted to be year and then month and then day. So we could I'm gonna go through here and just update this within our three systems here. But if we want to change that in Excel before we were to import it, we can highlight the Excel for the date. Right? Click and go Teoh format cells and note if we go to the date What? We're looking for something that starts with the year. And if we scroll down here, I don't see anything that is formatted in that way. So we'd have to go to the custom formatting down here, and then we would want to select one that had basically the year and then slash day, um, in I think it was month and then slash day, and that would be the format we're looking for. And they may even want a dash instead of a slash. We have a dash here, so this isn't really important that unless it. This was an issue. And you had a lot that you wanted to reform that because we can go in and reform at thes, But it would look something like that. Let's see if that gives us two format we want we're gonna say OK? And so this looks like the format that they are looking for a year and then month and then day. So then we can go back over here and update this information. So let's go back, Teoh QuickBooks. And I'm just gonna type in this 8000 here and note. I'm actually gonna change that amount to its 8000 someone to scroll back up here. It should we put 80. Should be 8000. So I'm gonna put 8000 there. Let's go back over here. Gonna put 8000 here, and I'm gonna change the format of these dates to 2020. Dash 12-31 2020-12 Dash 31. That will be the information we have Import is now highlighted as a dark green, looking like we can process or complete the import process. Let's do that now, so we will import. And here we have that information. So we've got thes three customers and we've got the opening balances. That's the bare minimum that we need in order to keep going forward. That's what's gonna track for us within accounts receivable that these people owe us money . And that's what we need to go for. Now. Note that when we do that, this is going to create something in accounts receivable, and QuickBooks is gonna have to put another side to that somewhere else as well. So let's sit. Meaning is gonna have to be another account that will be affected by the fact that accounts receivable win up by these balances. Let's go to the reports and take a look at that. So we're gonna go to the reports on this side, left hand side reports scrolling down and we're looking for Let's try the balance sheet first balance sheet report, and we're gonna put the balance sheet report because we're working in the future. So we're gonna make this as of 12. 31 2020 12. 31 2020 That's when we entered this Data four. We're gonna go ahead and run the report, and so here we have the report. And now here's that 20,500 in accounts receivable. Note that we're still in balance, so they didn't throw us out of balance. We still have that amount in the total equity amount here. Why? Well, there's gonna be something that happened in net income somehow, Even though we didn't have any sales and we had the opening balance equity, which is a funny account in and of itself, we will have to deal with those in the future. But we're gonna deal with this now. And if we just double click on the receivable or click on at one time here, then we'll be in the data. So here's the data that we have 12 31. 20. And it gives us our information that we have just entered in order to get to that amount. Now, the reason we're running this as off, I'm gonna go back here, gonna go back to that report. The reason we're running this as of what we enter this as of 12 31 2020 is because we will be actually entering the data into in the new data as of 0101 2021. So no one, No. 1 21 We change the dates. Teoh January 1st, 2021 to January 1st, 2021. Then we'll run the report once again and see what we have here. So here we have the report. We still have the 20,500. We still have the 8 2096 But when we scroll down to the equity section that net income has now moved into retained earnings, That's really where we want it. We don't want in net income as of the first date that we actually have operations. That's why we're entering this date of the day before or the year before we actually start the data input. Let's see the same type of concept as we look at the profit and loss or income statements type report. So we'll go to reports here on the left hand side and we're gonna go to profit and loss. So I just do the standard profit and loss report here, and we're gonna run this one as of 12. 31 to 0 and 12 31 to 0. And we will then, uh run that report. So 12 31 2022 12. 31. 2020 Run the report. And here we have this sales of 20,500. We didn't really have any sales. All we did was enter those beginning balances that sales never then being generated. If we click on it from these beginning balances we entered which QuickBooks made an invoice for even though we didn't make an invoice, assuming, of course, that we had those sales due to on invoice. So we're going to select the back here. So we're back to this report then. Of course, if we go to the next day, we go one more day up to January of the next year. January 1st, 2021 to January 1st, 2021. Run the report. We don't have any information. That's the point. We don't want anything in the temporary accounts in the income statement accounts in the profit and loss accounts. We're gonna go Teoh a accounts receivable report now, and go ahead and print that report out. Let's go back to reports down here. We're gonna go to reports and we're gonna go to Let's try a customer balance and do a summary reports. We want a customer balance Summary report And here is our customer balance summary and note that we don't really need to change the dates. This is as of a point in time. So we're going to say that's going to be the report. That's where we are at. We're gonna practice exporting this report to excel. So we will select the export when export two excel here, and it'll just generate our excel documents. That we're gonna open that up will enable the editing and pull that up to the top and it formats the title for us. It gives us the tab its format a little bit differently than that. The desktop version. It looks good. And so we will save this. We're gonna goto file save as browse to where we would like to put this report. I'm gonna put it into a Excel docks for six, and this time I'm going to keep it on the section six. But I will keep the tap name this time. When we made this prior format, I was thinking we put them all on one workbook, but which works great on the desktop version. The way the online version it's it's a little bit more difficult to put them all on one workbook, so we're gonna go ahead and save them as separate workbooks for now. And that's how to enter the customer balances and new customers and to export that report to excel. 32. 6.20 Vendor - New Vendor & Opening Balance: Lo and its presentation. We will set up vendors and a vendor balances into QuickBooks online. Here we are on the QuickBooks, That dashboard. We are in the get great guitars problem. We will be continuing with the entering of vendors in order to enter the vendors. You want to make sure that we have this window open? Here's we want to click on that window toe have that open vendors air who we pay. Therefore, they will be in this tab the expenses tab. So we select that tab, We're gonna go to the second item up top the second tab up top, which will be the vendors scrolling down. We have the ad vendor and we have the import file. We have a lot of vendors we need to import. Then we can use the import. We're just gonna add the vendors as we go for this item. It's gonna be very similar, of course, to the customers when we added the customers in a prior presentation. This time we only have the one vendors that we're going to use the ad vendor function here . We then have the data input screen. Now there's gonna be a lot of information. We have the title. We've got the first name, last name Suffolk's and all this would be great information. The minimum we need is gonna be the vendor name so that we could track any balances that are still outstanding. At this point, we're gonna put in the name of EPA phone as our vendor name will just tap through some of these sections. We get the display name will be the same. We're gonna have the address again. Good information to put in place. We're not gonna put it in place here. We're just gonna have the minimum of the name in order to record the accounts payable. Phone number, fax, other websites, billing terms, opening balance. This is something that we do want to have input. I'm going to say that we owe EPA phone in this case, 15,000. That will be the opening balance. We're gonna have our problem as of the start date of January 1st, 2021. Therefore, we're gonna put the opening balances in as of the day before that date, So we're gonna say 12. 31 uh 20 12 31 20. That's going to the day before we start entering the data into this particular problem, and that will be it. We're gonna save that. And that should save our vendor. Here's our vendor. Here's our opening balance Note. It shows the 15,000 that will be going into accounts payable. And in order to make that work group books will have to have some other side to that journal entry as well. Let's take a look at some reports in order to see how that works reports over here on the left hand side, we're going to select the reports. Then we're gonna type in first the balance sheet and note it's gonna be in order of the reports. We're gonna go to the balance sheet and they were gonna change the dates. Dates are gonna be Let's put 12 31 ah, 20 to 12. 31 20. So december 31st 2022 December 31st 2020. We will then go ahead and run that report and we see our accounts receivable from the prior print presentation. We have the 15,000 here in accounts payable under, of course, the liabilities section. Now we're still in balanced here because QuickBooks put the 15,000 and must have done something somewhere else, most likely putting it into some way. The net income. So we have this net income. That's not really where we want it, but it will work. And ah, we'll see why in a second, if we select this 15,000 in accounts payable, we see, we see this item here. Now, note that QuickBooks creates a bill. Even though we didn't really enter Bill, all we did was enter the opening balance. QuickBooks will assume, given the fact that it is a vendor, that it will be a bill that has been generated. So it's gonna be OK as long as it was made prior to the to the month that we actually start doing work. And so we're gonna go back to the reports here then Well, let's look at the ah dates of the next day. So the next year, January 1st 2021. Note. I'm just hitting the plus button in order to get one day later. So it's at 12 31 2020. The plus button takes us to 12. 30 January 1st, 2021 and then we got to run the report once again. So then if we scroll back down notes that it moved the net income to the retained earnings That, in essence, is what we want because we want have, ah, nothing. Admit net income as of the days that we're going to start to input the data net income, summarizing and representing the income, statement or profit and loss. So let's take a look at the income statement or profit and loss and see that in more detail . So we're gonna go the reports over here, left hand side reports, selecting the reports we're gonna type in profit and loss, which is QuickBooks income, statement and scroll up to the profit and loss within. The profit and loss will do the same thing. We're gonna have this as of 12 31 2012 31 to 0. We will run that report, and here we have the revenue from the prior presentation. And then they put net income here. No, we didn't put anything in terms of invoices or bills in. All we did was put those opening balances in, and QuickBooks made up this account other miscellaneous expenses, so That's obviously not a account we really want to see. However, it will roll out to retained earnings as of the first day of the next month and therefore shouldn't be a problem. If we click on this item here, we'll see that that once again will be the bill that we had. So we're gonna go back. I'm gonna go back. Teoh the report and let's see what this report looks like as of the first day that we're gonna be operating, which will be January 1st, 2020 and with selected plus Arrow tab plus zero and run the report. So here we have no activity, of course. And that's because they're all temporary accounts on the profit loss or income statement. And we don't have any income expense. As of the first day the next year. That's what we want. That's where we want to start. So we're gonna go back to the reports and get the vendor balance report some type out vendor balance. Let's do the summary report vendor balance summary report, and we'll go ahead and export this report to excel. So there's only this one activity here, so we're gonna go ahead and export that in order to do that, we're going to select this item here and go to the Excel Export two Excel, and it will generate that report for us. We will go ahead and enable the editing. And here is our report. It saves the tab nicely. Tab looks, format and well, so we're gonna go ahead and go file and save as and place. That's where we would like to have it in our documents. Here's what will place the file. I'm gonna name the file, Section six and get great guitars, and we'll keep it there with the vendor balance. So we will save that. And that will be, ah, the vendor balance. 33. 6.25 Set up New Accounts & Export Trial Balance to Excel: flow. In this presentation, we will set up new accounts within our chart of accounts within QuickBooks online. And we are on the QuickBooks online dashboard. We will be continuing with the get great guitars problem. If you're following along with us, that's great. If not, that's OK. We will be going over how to inter new accounts into the chart of accounts. In order to do this, we're gonna go over to the left hand side where we see the accounting on the left hand side . So we're gonna go to the accounting tab and that typically will open to the chart of accounts. There's two tabs of top chart of accounts and reconcile. Here we have our chart of accounts. We can sort these chart of accounts in a few different ways. Note that the default typically will be by type, and that's gonna be the best way generally to look at it because that's gonna be the way that the trial bounce will be in ordered by and in general will be how the financial statements, the balance sheet and income statements or profit and loss will be ordered by meaning. We typically see it in order of assets than liabilities, then equity than income and expense type accounts. Within that sub categories, we have the asset of accounts receivable being a particular account for QuickBooks so that we could track things like the customer balances other current assets. We have current assets sections, and then we have the accounts payable, which is a liability. It's in its own liability section. We then, if we had some other type of liabilities, which we will in the future, we would have current liabilities and then long term liabilities and then equity, which includes this opening balance that we're gonna have to do something with at some point where you have to close that balance out and investments owner investments and retained earnings. And then we typically have the revenue accounts, the income statement accounts, revenue than expenses, income and then the expense of cost of goods sold related to US selling inventory and then all other expenses. Note that because we don't have account numbers within the categories, such as within the expense categories, we typically would have the ordering of alphabetical order within that category if we wanted to order in some other way, which could be very useful because alphabetical order would not be necessarily the order of importance or the most logical order. Then we could have add account numbers. The reason we are not doing so in this problem is because it's very easy if we don't understand account numbers to apply them in a way that doesn't really make sense. So if we're gonna apply account numbers, we want to make sure that we are applying those in such a way that we could still order the accounts by account type. And then the account numbers were work along, ordering first by account type and then by account number, meaning well. We will order within each account, type in a particular order. We could, however, adjust the order by name here or by any other these items here and just the order mainly name and type. So it could be useful that to go through those items Note. We also, of course, have the filter item here, which will allow us to search for certain items within the chart of accounts. The first account we're gonna add is a checking account. We don't have a checking account here, so that's gonna be our cash account. So we're gonna to do that. We're gonna go to new up top and select the new item in Green, and we will have the categories here. The default here is the bank account. So we have the bank account and that's the one we want. As we go through some more accounts, we can pick some of these other items. Note It's in order, in essence, by assets than liabilities and equity income and expense type accounts, balance sheet accounts, then income statement accounts than further sub categories in to things like current assets , current liabilities, long term assets, long term liabilities. We're gonna label this account with a detailed type. We're going to say this will be our checking account. So we're gonna have this detail of the checking account and the account name. We're gonna just leave it as checking. We might want to personalize it. You might want to personalize it to something like Wells Fargo or something like that. It possibly even put the last four different digits of a number. Ah, the of the bank number. In order to if you have multiple accounts in order to differentiate those accounts, we will also enter the beginning balances here. So we're going to say that before we started this company, we had 25,000 before we started putting this information into the QuickBooks system. We're going to start this company and start putting in more data as of January 1st, 2021. And therefore, we want to put this in as the last year as of the last day of the last year 12 31 20 So, December 31st 2020. Therefore, QuickBooks will do whatever it needs to do. It's gonna debit cash. It's gonna credit something, probably opening balance equity in order to roll this over. If it does anything to temporary accounts, then it will be all set and all rolled over. Correct. When we start the year, we will be actually in putting data four, which will be 2021. So I'm gonna say, saving close. We now have the checking account set up Where else are gonna include a credit card account . We could have a visa account that we will set up, so that's gonna be a liability type accounts is going to be down here once we order our operations so we'll go through these similar browses. We're gonna go up top and say we want the new A new account. And this time we're gonna say that it will be a credit card account so they actually have an account Cold credit card. So we're gonna select that. And if we select the detail type, it's only got the credit card, so we will keep it there. We could keep it at credit card. If we have multiple credit cards, we could change the name as all due here to Visa. The credit card description will keep the same. We're not gonna subcategory as it. If we had multiple credit cards we may want to have on a category cold credit card and then sub categorised the particular credit cards we have into that category. We're gonna put the balance here. We're gonna have the beginning balance, which will be 1000 so we'll type in the 1000 here, and we're gonna type the date one day before the date that we're going to start entering information, which is 12. 31 20 December 31st 2020. Meaning we're gonna actually start entering data as of January 1st, 2021. So we're then gonna say save and close that if we scroll down, we see the visa account here and we see that 1000 there. And as we see that it's gonna increase this account. It's gonna have to put something else somewhere else. And probably to opening balance equity, which we will have to take a look at and just for at the end of not this presentation. But we'll take a look at that in the future. We're not gonna put a loan payable. We have a loan payable on the books, which will be a another liability type. Accounts will be down here so we will go Teoh New once again, we're gonna add the loan, and we're gonna call this. It could be short term or long term we're gonna put it for this purpose is into long term liabilities because the assumption is that it's gonna be a do over a year, So short term would be something that we're gonna pay within a year long term over a year long term liabilities. Then we got the subcategory of notes payable or other long term liabilities will keep it into notes payable for the subcategory. I'm gonna actually call it a loan payable. So for the name will type in loan payable description, we will have no description here. We're gonna say it's not a subcategory of anything else, and we will have a balance that balance billing being 22,000. And that's gonna be as of the last day of the year before the year we're gonna start entering data, which is 12. 31 to 0. So December 31st 2020 we will start entering data January 1st, 2000 21. So we will save and close this item. So if we scroll down, we see our loan payable to 22,000. Once again, that's a liability. QuickBooks must be doing something somewhere else. We didn't put a journal entry, and there's gonna be two accounts affected by that. 22 probably went in the opening balance. Equity will take a look at that at the end of this. Then we're gonna add another account, and that's gonna be for furniture and fixture that we currently have. So we're gonna say new account, and we're gonna add furniture and fixture. That's gonna be a fixed asset type of account, something that is appreciable, so fixed acid. And we're going to say it's not gonna be accumulated depreciation. We could go through these building furniture and fixtures. So furniture and fixture is something that we will depreciate over time and the name we're gonna keep as furniture and fixture. No description subcategory. None were gonna keep that is, as is what it is. We will have an opening balance, however, so we will add this. It's gonna be 75,000 and as of date once again, 12. 31 to 0 December 31st 2020 we will be depreciating this item so we will be tracking the depreciation we're going to say track the depreciation. We get a message saying that QuickBooks is gonna have to accounts for the asset and account to track the cost and account, attract the depreciation. We have no depreciation at this point. So we're not gonna put any beginning balance as of this time. So if we scroll down, we see the furniture and fixture that 75,000 and that's really the net. We see the sub categories, then the original cost 75,000 net of the depreciation, which is really accumulated depreciation and there is none there. That's why the book value is the 75,000. Now that we have some new accounts in there, we've adjusted our beginning balances to have a more complete set of books. Then we're gonna go to the reports and see what we have in terms of reports at this time, note that if you're starting from scratch, you may not have these beginning balances. But this is one way. If you do have some beginning balances, QuickBooks makes it nice and easy to put in those beginning balances. Even if we're not doing a journal entry, that necessarily balances out. Because if we put in all the balance sheet accounts, acid and liabilities, QuickBooks will just basically force the other side to be going to the equity section. And then we'll just need to clean up whatever QuickBooks does in that equity section. Let's take a look at that now, So we're gonna go to reports here on the left hand side. We're gonna go to reports, and then within the reports, we want to find the trial balance. First, we'll look for a trial balance. So I'm gonna say the trial balance. Here's the trial balance, and this is going to be more of an accountant type of report. We will look at the balance sheet in the income statement. That trout bounce really gives us everything on one set. Meeting gets us all accounts, meaning it gives us the chart of accounts and the balances within them. We will have to deal with debits and credits a bit, but that's OK. Well, then look at the balance sheet and the income statement or profit and loss after that. So we're gonna have the dates to be 12. 31 to 1 to 12 31 to 1. So this actually 12 31 20 to 12 31 20 This is the date that we put stuff in there as of December 31st 2020 the day before, we're actually going to be starting to enter. Ah, the actual date data for the current time period we will be working with. We're gonna run that report. And here is our trial balance. A few important things to note on the trial balance. One is that it gives us all the chart of accounts. Now it doesn't give us all the accounts that, including accounts that have zero balances. So the chart of accounts was longer because it has more accounts that are currently not in use or have zero balances. But it does give us all the accounts that do. You have an account in it amount in it, and it shows it's the amount that's in there. We do have to deal with the debits and credits, and it also gives us the, um, ordering of the accounts that will typically be the ordering, meaning that balance sheet accounts first and then the income statement accounts or ah, the assets in the balance sheet account check ins and acid counts, tables and acid in tours and acid furniture and quick and fixtures and pass it. And then the liabilities accounts payable that Visa credit card, the loan payable, and then the equity, which we have opening balance equity. Funny account may never have heard of that before. It's not something we typically should see or have, and that's what we're gonna have to get rid of. And then we've got the sales and other missile in a miscellaneous income. And throughout this whole process, we've never done any invoicing or any sales receipts or recorded any expenses. So how did these two get here? In the process of setting up our checking account and more our accounts receivable and are payable typically are receivable and payable when we set these up. See, here is the other side of that entry here. Ah, that's what's giving us these amounts in the income statement. We don't want those amounts because we don't really know when the money was earned. We just know that people owed us 20,500 therefore we want to make the balance sheet correct . It will be correct as of the first day that we start doing the actual data input. Meaning if we look at this one day later than this, these two will go away and close out to the opening balance equity. So if we don't understand that, that's OK. But that's the point of us entering this information before the date that we actually start entering data. So we're gonna then highlight this and I'm gonna make this one day later, the first day of the current year that we will be working on one day later on, we'll run that report and we have the same information. Except now the retained earnings is the only number here. We would have no income and expense accounts. That's what we want. We want it rolled into retained earnings, and then this opening balance equity. That's the other account QuickBooks makes up in order to make this work. That's the other account that we're gonna have to fix. Ah, in order to t really be correct. We shouldn't really have opening balance equity. If you do, it's OK because, um, you know your bookkeeper, your c p a firm at the end of the year, taxes will probably know what that means, but we should clean that out and put it somewhere else. In this case, to retained earnings. We won't get into the debits and credits too much here, but just note that the balance sheet account may at the assets or don't debit balances. We got the liabilities, or they're gonna be the credit balance, the loans or credit, and then the equity is going to be credit Revenue would be a credit to end debits to expenses. We're gonna do much of the problem going forward without trying to avoid debits and credits . Which is kind of what QuickBooks is in a way designed for their some areas where debits and credits are either very difficult to avoid and or it's a lot easier to do some things with debits and credits, and you just can't really avoid it. But we can use a lot of forms that we won't need these. But any case, the trial balance is one form that when we look at it, it we used course, the debits and credits. We're gonna go ahead and export this report now. So we're gonna select this item here and export this report to excel. We will enable the editing. So here it is. And then there's our were report. We're just gonna go ahead and save that to where we would like to have it. And we're gonna goto file and save as than the brows. I'm gonna put mine into these excel docks first of the six here, and I'm just gonna change the name a bit. I'm gonna put Section six before this item and then We'll have it here. We could adjust his down. We probably don't need to get great guitars. We could just have the trial balance here. But I'll keep that. As is for now. We will save that, and that is our trial balance and the accounts that we have and our beginning balances. Shortly we will be dealing with this one here, seeing if we can do something to get rid of that opening balance equity account. That account that QuickBooks puts in place as part of the set up process, which is nice, makes things easy, but which we really should adjust for. 34. 6.35 Payroll Options: Hello. In this presentation, we will talk about payroll options within QuickBooks online. Here we are on the QuickBooks online dashboard. We will be continuing with the get great guitars. If you're following along with us, that's great. If not, that's OK. We will be discussing payroll. We're gonna stroll down over here to the left hand side and go to the employees section as we talk about Hey, role payroll is gonna be one of those things that there's a lot of different options to and as a small business or any business. We typically get a lot of offers about different types of payroll, different payroll options from both if we're using QuickBooks, QuickBooks as well as outside people such as A T, P or paychecks and other types of people that specialize in companies that specialize within payroll. We're going to talk a little bit about some of these options. But what we really want to do here is just know what these different options are and some of the pros and cons, and it's one of those decisions you want to spend some time with, because payroll can be a very time consuming thing and it's also one of those things that, um if we get it wrong, it could cause a lot of problems at the end of the year and want to make sure that we're getting all of our with holdings correct and all that I correctly done. So there's gonna be an option within QuickBooks. In order to do that, we'll need the paid option in some way. It's gonna be a type of add on within the program that will allow its different paid options. There's pros and cons to that. Even within the QuickBooks system, there will be some different options will take a look at within the QuickBooks system. But one of the pros, of course, is that we have all the information in one system, and therefore it's all tied together. We don't have to enter a journal entry from somebody else into the system or anything like that. The downside is, of course, that we are then handling our own payroll, and we have varying degrees of support in doing that. And the payroll process can get complex even with a fairly limited amount of employees, depending on the country and the state that we're in. Um if we're in the U. S. Of course, all the U. S. Has the same U. S. Taxes for payroll taxes, but every state has their own different state taxes, and if we have multi state or multi country, then it gets very complex. But even if we're in the same state, it's still a bit complex, depending on how many employees we have. So therefore, it's good to get some support on the payroll, possibly picked the more advanced payroll settings if needed. And it's also a good option to note that there are third party Softwares that are that specialize in payroll that are pretty good at this now. And there's pros and cons there. There's gonna be something like Paychecks is 1/3 party not related to QuickBooks. I'm not promoting them or any anybody else, but it's just it's one of the third parties as well as a DP is another third party that specialize in payroll pros and cons. There's that they, of course, specialising payroll and therefore are used to handling the issues that will come up the different kind of litigation laws that will come out related to payroll. The cons are that we're gonna have to integrate whatever they do somehow into our system, because obviously we're actually paying the payroll check. And we have to record it with holdings and whatnot into our system somehow in order to report the proper financial statements and taxes at the end of the year. So we still have to even if we're using 1/3 party software, which can be very nice because they allow us to print the payroll or do the payroll process the payroll, get everything set up. It still needs to be integrated into our system, our QuickBooks system in some way, maybe just through a journal entry to do that. So those are some of the pros and cons is 1/3 party software. We go back to QuickBooks the options for setting up if we go here. We haven't set up payroll yet. Then if we go, they get started. It's gonna set up payroll. We could try to enter employees without payroll and go through that process, and we'll take a look at adding employees later. But right now we're going to say get started. We're not gonna actually purchase any of that payrolls right now. I'm just gonna take a look at the options. Options can change over time, but we'll look at what we have at this point. We have the automatic tax calculation. If we scroll down, we see some of the options. Here we have the monthly fee and it's gonna be a plus $2 per employees that will go up by the employees that we will have. The benefit here, of course, is that we have the automatic tax calculation, meaning that when we put the information into the payroll system, it's going to calculate those payroll taxes those with holdings such as federal income tax , soul security and Medicare and hopefully the state taxes as well so that we can get those withholding calculations. Correct. So here's gonna be some of the options you can compare the options. Teoh Mawr full service. Some of the full service options will actually basically dio the printing of the checks and give some guarantees. We see the differentiating options gonna be down here between these two systems being let us violent pay taxes for you based on paychecks, you enter so we can have more of a full service there with the more expensive option get set up with US exports. So it's easy to switch providers. Run your payroll with live help with from US experts, so we'll have some more support. Be protected with your penalty. Three. Free guarantee. This could add some value. What we really want to not happen is to not be in a situation where we're not pain and employees taxes so long from making sure that we're paying the with holdings that were taking from the employee's wages. Ah, and pain those that would be possibly worth a guaranteed option. So if we go back up here, we have the unlimited unlimited payroll and we can check off some more of these options. We got the free 24 hour service. We've got the run payroll mobile and then these items. When we speak, click on these will switch over to I want pay well done for me. Exports and experts handle the set up process. That could be very useful if you haven't going through the set up process because that's where usually the problems are getting. The first set up Organized wants to set up is organized. If it's set up in such a way that we know how we're gonna run things running things from that point forward at least issuing the checks is fairly more standard. Then, of course, we have the quarter vase at the end of the month and, ah, the year lease at the end of the year forms documentation nine forties and 9 40 ones that we will have to process as well as W twos and w threes and what not So we got taxes paid filed for you, and then we've got the guarantee here, which, of course, would be part of the more expensive premium platform plan. 35. 6.40 Set Up New Employees: Hello. In this presentation, we will set up new employees within QuickBooks online. Here we are on the QuickBooks online dashboard. We will be continuing with the get great good tellers problem. If you've been working along with us, that's great. If not, will be entering payrolls at this time or not Payroll ropey entering employees at this time . To do that, we're gonna go to the left hand side and we're gonna go down here to the employees section on the left hand side. Now, this time we don't have the payroll set up, but the adding of employees will be the same. Either way, what we're gonna do is go down to this icon here and say we want to add an employee and you're gonna say, Need pay. Employees were going to say, Not right now. We're not gonna set it up. If we go over here, it's going to go through. Our payroll options were going to say Go to the employees set up. What we now have is the employee information tab, and this is gonna be including all of the personal information for the employees and some of the billable information for the employees What we do not have right here is going to be the withholding type of information things we typically get from the W four. We would have to pay for the service in order to implement that information. At this time, we're just gonna be entering the employee data for a new employees in terms of their personal information. The other information related to payroll is something that we typically get from the W four . This is the information that would differ depending on how we're gonna be setting up the payroll, Weatherby and QuickBooks or through 1/3 party. Either way, Either way, we do it. We're still gonna have to look at this information so that we enter it into our system as well due later, either in terms of the payroll process, to actually process the payroll and calculate the with holdings or in terms of 1/3 party software where we still have to take that information and put it into the system. So if you seen the W four, that's basically gonna be a form we have file whenever we have a new employee, and in essence, it's gonna have the employees tell us their information. Typically a lot of their personal information that will put on this form, including that name Social Security number one, and would get from this form the W four. But it's also going to include the number of exemptions and the marital status, two key components that we will need in order to process payroll. The components needed to process payroll include the payroll status, married or single. It includes the number of exemptions, which kind of coincides. You can think of them kind of like the exemptions that will be on the 10 40 meaning we get an exemption for ourselves and any dependants. But that's not gonna be exactly the same. In any case, we need that information in order to calculate what the payroll withholding amounts will be that typically comes from the W four. Let's go back to filling in the data in too quick books. So go through our screens that we need to set up in order to get payroll up and running. So we'll start through here and it's good to just get practiced with the data input. You just use the tab, but and so I'm gonna stop. Start up at the top left and just tap through it. I'm not gonna put a title. We're gonna tab, I'm gonna put the first name is gonna be Adam. I'm gonna tap through no middle name and I'll put the last name as Hamilton Ton and that's how we have it's built here sets and then we're going to say That's good. And then the display name will then show here we could select the drop down. If you want to display it at a different formats such as last name comma, first name, then we'll scroll through here. We're going to sit, will tap through to the street address, and we'll add the street address. Obviously, this will be a fictitious person and street address. We're going to say 14 to 3 Second ST and we will have the city of New York and we're gonna have the state and ZIP code will keep scrolling through here. Email. We're not gonna have an email address that's gonna be useful if you want to keep that email address. Of course, on your records not required, however, in order to process payroll So we're gonna leave that blank phone number. Same thing we would want tohave that in our database program, however, not generally required for the processing of payroll mobile phones, something that have good information to have billable rate. This is not the rate that were gonna pay the employees. It's the rate that we're gonna build the employees if we're to make it an invoice based on the available time. We're not gonna have anything there at this point. Doesn't really have to do it. Payroll necessarily. It has more to do with e invoicing. Based on this employee time, we then have the employee i d. Number. That's gonna be the Social Security number for the U. S. Which will be 565655665 Obviously, that's a made up Social Security number, but it would be in that format if it was a Social Security I d. Number we don't have at this point, we're going to save the gender male, and then we have the higher date. We're going to say the first month of our operations, which is January 0101 21 So 101 to 1, then we're gonna have and there's not a release date, meaning that they're still with us. And then we're gonna have the date of birth, which we're gonna say is 090579 090579 So Okay, so that's gonna be our information here. We're going to say save. So when we save that, of course, we see in our employees section our new employees. We're gonna add one more and go through this process one more time. To do that, we'll select the ad and employees up here in the upper. Right. We're going to say not. Not right now at this point. And we're gonna go through the process again. Just having through here once cannot practice tabbing through is say Tab. First name is going to be Erica Tab. Last name Tab Tab Last him, Robert son. That's how we spilled it all. Red Tab. And then once again, the default. We're gonna keep the default as what it is. We could check another common riding, last name, Common first name. We'll keep this as it is. We're gonna type in the street address and the address. We're gonna put this at four East Second Street and the city we're gonna put New York the York ZIP code 10003 County, no notes. Email. Once again, nice information. Have not necessary for the prostate of payroll. Good to cabin a database program. However, saying with the phone number and email billing rate, remember is our billing rate that we would put on the invoice if we were using their time Teoh create the invoice of what we would charge a customer. Then we're gonna have the employee number that in our case, Social Security number. So we will put the 454545544 which obviously is a fictitious number. We don't have an i d. At this point, we're going to say female. Ah, the higher date. Once again, we're gonna say, 01 01 to 1. That's the first date that we're gonna be starting operations here are practice problem. That's why we're gonna put it on the first date of operations release date. We don't have one. She's still with us. And we're going to say date of birth is going to be 12. 31 1979 So, December 31st 79. We're gonna go ahead and save that information and that will give us our two employees here . Now that we have these here, they will be listed in our employees. And if you want to see the information about our employees, we can go in here and we could see that information. We can add any notes that we want Teoh into this section. And if we wanted to see a report based on this, we can see reports as well listing the employees that we currently have by going to the report's section and there's different reports we could run. We just want an information list in terms of who the employees are so we could have an employee Ah, contact list that we're going to take a look at selected contact list and this will give us the employees contact information. Now, obviously, we have limited information here. Just the two employees we didn't put in the phone number in the email and whatnot, but this will give us our contact lists are contact information. And if we had put those information in, we would have those listed here. We're gonna go ahead and export this to excels. We're in, Select the export and we will export two Excel. Obviously, you could do this for a quick pdf file, too. That's another way to have the pdf file. I'm gonna keep going to excel. I like the idea of processing to excel because some of the reports that we process to excel weaken, then, Ah, just after their in excel. And that could be a useful tool in many cases. We will then enable the editing. So I'm gonna say enable editing and put this on the screen. And so it looks good. So I'm gonna go ahead and save that we're gonna go to file and save as or browse and look for the location that we want to put this in. I'm gonna put it in something called XL six documents. Now again, we probably could get rid of the name, but this could be useful depending on who were giving this information to. If it's always our company, we know it's get great guitars. We can move the remove that get great guitars put just the employees might be useful to actually put a date. Teoh, when you're starting to export these things because I don't give you a contact list. By the date that you generated the contact list, we're gonna go ahead and save as default. Here, there we have our two employees. 36. 6.45 Transaction List by Date: Hello. In this presentation we will generate and a print a transaction report within QuickBooks online. Here we are on the QuickBooks dashboard. We will be continuing with the get great guitars problem. If you've been working along with us, that's great. If not, we will be generating a transaction list by date. It's gonna be a very useful port. Report the transaction list by day. The transaction list by date is a less common report than we would see from, say, the financial statements, a balance sheet and income statement or a profit and loss. But it's a great report to really see the detail of a particular time period to see if we have everything in there. And it's also great for grading to see if we are going along. If we're all on the same page in terms of what has been input, if we're going on the same information to input, So in order to get there, we're gonna go to the reports. So we'll go to the reports tab on the left hand side and we will just type in the report. So we're gonna be here to go to report, and we could scroll down and find it, but we're gonna put the type in their transaction list by date. So I want to get this by date, and we're going to select the transaction list by date. So here will be the report. We're gonna change the dates as normal, and the first dates we're gonna put in here are 12 31 202 12 31 to 0. So we're just gonna put that one day? This is when most of the transactions that we have been in putting into our problem have been input By limiting the dates as of this, then we can really narrow down to see if we have a date problem. A common problem t to be is a date problem. So I want to see if everything is here in this particular day, we're gonna run the report, and here is our information. So know what we have here is all this information. As of 12 31 the end of the time period, we could see the transaction date. We can see the transaction type. And you might be saying, if you've been following along with this problem like we haven't done a lot of these time, we haven't entered an invoice. We haven't had a bill. We haven't had official deposit type form. Where are these coming from? And these will see later and we'll see that These are the driving forms that QuickBooks uses. So when we put in the opening balances as in here, then QuickBooks used in this case on invoice for that opening balance transaction. As we work through this information will see which transactions will be linked to which forms which forms will be generated. When QuickBooks has a, certain transactions typically will be using those forms to generate the transaction. But also, like here, there could be times when we enter data and QuickBooks assigns formed the typical form used in order to create a typical transaction. So we have the number, the posting, the name, the memo and the description, the account. This is gonna be three other the other two accounts that are gonna be affected here and then the split, and that will be another account inventory acid in this case and then the amount. So it's good here to just go through this and see if all the transactions that we have here . Line up, Teoh, What we think we should have now, if anything is not on this transaction list, and we think that it shoot, if we're working through this problem, we print this out and we don't have the same transaction list. Then a good thing to do is to change these dates, possibly, Ah, whole year back. Maybe Just put this 2019 and then changed the later date to 2021 see if there's any of these dates that are different. Go through here and say, Since this is the first month of operation, we shouldn't have any other dates here. So if I was to change this, let's actually do that. We will change this 22019 and then change the end date to the 21st. And then I'm gonna run this report again, will run it again, make sure to run it. And then when we scroll down here, if we see any dates that will be outside of these dates, that will be a common error. And we can catch that and pick up any dates and then fix those. We could fix those within QuickBooks by just double clicking on this or clicking one time on it, and that will take us to the particular form that we have. So in this case, we had an inventory starting date and we could try to change the initial balance if we wanted to hear. Inventory might be a little bit more difficult to change the balance. But here, all the inventory items we have and then we have this invoice down here, we could do the same thing. If we needed to change the date here, we could go to the invoice and click on that drill down on that information. And here it is, here again, you might be saying had and enter an invoice because we haven't entered any invoices so far . But when we set up the customers, the system of QuickBooks then set up an invoice that being the typical form used to set up the customer. So when we put those beginning balances in for Anderson, guitars are Anderson. Yeah, guitars. That's when this was set up. So I'm gonna close this back out with this X here. Go back to the report. Same with the bills down here. If we want to change anything on the bill. Weaken, drill down on the bill. Check that out and see what the bill was for that again from when we put the vendor in place. We didn't actually. Inter Bill. We entered a vendor with the beginning balance and generated this information. Well, x out of that. Then we have the top part deposit. If we select the deposit, we see the 25,000. That then is the beginning balance. We didn't actually put a deposit in. We put the beginning balance in the checking account, and that was generated a deposit form through QuickBooks closing that back out credit card expense. And then we have the journal entries typically used when QuickBooks doesn't have any other way to report something. So if there's no other form QuickBooks can use, it uses a journal entry. So here we set up a loan payable. There is no journalist because that's not a typical transaction. So it's not something that happens on a day to day basis. So we just have to use the general journal or journal entry, and it puts the other side to the opening balance equity. So here we can actually see the two accounts. And for people that are using financial accounting or have learned financial accounting, this might be one of the most clear things we've seen so far more clear than an invoice or a deposit form, because it actually shows both sides of the accounts what it doesn't show or what could be confusing is it has debits and credits. That's the reason QuickBooks tries to avoid that for normal day to day data input usage so that people don't need to know debits and credits. So we're gonna close this back out. So once again, here are the balances. If we want to go through there and take anti these balances out, we're gonna now go ahead and export this report to excel. So we're gonna scroll up top. We're gonna select this item here, export, and we're going to select export two Excel and that will open up excel and completely exporting process. Here we have our exported document. It looks pretty nice. We might want to format this one a little bit more because it looks like it might be big enough to not fit on one page. We also have some items down here that we can't quite see. In order to do that, we can go up to top first. I'm gonna make this sale a bit wider so we can see all the items here. We could do that by putting our cursor right between the J and the case. So it looks like that not like that, but like that. Not like that. But like that, and we'll just drag this a little bit lighter left, click and drag to the right. And there we have that. Then I'm gonna check to see if it prints on one page. One way to do that is to change from the view here. Down on the bottom. This is normal view to page layout. So this second icon is called page layout view. And so I'm gonna select the page layout view and you'll note that it goes on to pages. If we select this third item, then we'll see the page break view, and we'll see that there's a drastic break right there. So if we go back to the 1st 1 and I'm gonna go back to the normal view, and then it puts this little dotted line Basically, that's the page break. Now, this report won't look very good if we printed out like that, because it be okay if it was on two pages long. But it's not too good if you have to this page. And then you got this page next to and you gotta put him next to each other. So we probably want to do something. A couple things weaken Dio one. We could try to change this form from a, uh, portrait orientation to a landscape orientation. In order to do that, we can go to the page layout, tab up top page layout, tam. And then we're gonna go to the page set up group, and we're going to the orientation, and we're in portrait. We're gonna change that toe landscape. So if we do that, it makes it a little bit better. So we're a little bit better here. Not quite there yet. Other things we could do this first column We may be able just delete this first column so I could put my cursor right on the A here. Just click on the A right click. And actually, because this is a a combined sell or emerged to sell that Lincoln could be a problems Tribal Motown that will put a curse on a right click down here somewhere, Not up at the top. Right Click down here and delete. See if it lets us do that. It does. But we deleted the whole title, so maybe that's not a good option. I'm gonna undo that. Go back up top and UN deal. Now, the reason that's happening is because QuickBooks exported and linked the title all the way across. Mean it made this one cell, all of these cells, we could adjust that title. So this this whole Selvin is really named a one when really it's going across this whole thing, we could have fixed that we could copy and paste the title and put it across B to J. And that might be something we would want to dio. But there's other ways we conform at this. We can also Ah, just just the size of the columns. If we wanted Teoh and or we can kind of force this toe work by going to the file tab top, which is what we'll do now and then we're going to go to the printing options and within the printing options. We have a couple items here. We've got to print the active sheet. That's what we want to dio collection landscape orientation. This is the same orientation option. We adjusted before letter size margins. We could mess with the margins, but I'd rather not. And then we'll go to the scaling here. Scaling is what we're going. Teoh be adjusting. Let me move this up a bit so we can see it. We're gonna go to scaling and we want to fit too. So I adjusted this up a bit so we can see it. So we're gonna go to the scaling options here. We've got no scaling. That's what the default is fit to One page now, typically, this would be okay. If I do that, then it all fits on one page. That's pretty much what we want. But note that if it was a really long document, I don't really mind if it's a couple pages along. I'm just wanted to be on one page wide, so note that if it was a longer document, you want to fit all columns to one page and that would make sure noticed Does the same thing here in that. All the columns on the same page and it was only one page long in the first place, but it still has multiple pages long. And then we would rather have fit all columns one page wide and let it go a couple pages long. Is it? If it has to, otherwise it'll be way too small. So note that that doesn't make it a lot smaller, that text. But that might be the best option. We're gonna go back here. Other option, of course, is to delete some roads, for example, the posting role. We may not need it. The number real. We may not need it. If we delete those, we can make it a little bit nicer. We're gonna go ahead and save this. We're gonna go to the file tab. We're gonna go to the Save as well. Browse to the location. We want to put this, I'm gonna put it into the Excel docks. Six. I'm gonna go ahead and keep the name again. You may want to adjust the name here, but I'll keep the name. We might just want the in part here. We may not need our name of the of the company. We might want to put a date often useful, but I'm gonna leave it as is and say Save that. And there is the transaction list by date. 37. 6.50 Adjusted Beginning Account Balances: hello. In this presentation we will adjust our beginning account balances within QuickBooks online . We will be continuing with the get great guitars. If you've been continuing with us, that's great. If not, that's OK. We will be adjusting the beginning. Balance is something that needs to be done any time we enter new opening balances into the QuickBooks program. Because QuickBooks while allowing us to do that without having journal entries inter beginning balances into accounts, that is, it then needs to put the other side somewhere. And QuickBooks will basically just decide where to put that. And we might need to adjust that there's gonna be some accounts it will be able to see that will be obviously adjusting accounts and we'll see what we can do with those accounts. First, let's see some reports so we can see what we are talking about. So we're gonna go down to the reports here, and I'm gonna choose a report that's ah, little bit more of an accounting report, which is the trial balance. But it shows all of the accounts kind like a list of accounts, although it does have debits and credits included. So here we will go to the trial balance Here. There it is. So we're taking the trial balance. That's what we're looking for. And we will run this report. Now, remember, were working as of 2021. That's gonna be when we enter data January 2021. And we entered all the beginning data for the day right before that. So we're gonna do is run the date right before the period in which we're gonna start entry and transactions January 1st, 2021. So we want to look at 12. 31 to 0 12 31 to 0 and run that report. So we got 12. 31 20 This is when we entered all of our beginning balances because we expect to start entering data the first day of January 1st, 2021. So we have our beginning balances and most of these all we did here was to put a beginning balance in the checking account, and that's only one side of a transaction. So QuickBooks must have done something somewhere else. And same with the accounts receivable. We only did. Ah, customer balances here to get this balance. We just entered customers and their balances. And QuickBooks must have done something else in order to make that balance. Inventory. All we did was inter items of inventory and the amounts we have. And QuickBooks put this number here, and that must have done something else. Furniture and fixture. We put in the beginning balance for furniture and fixture and QuickBooks must have done something else. Accounts payable. We put in beginning balances for the vendors that we put into the system. QuickBooks must have done something else. Visa. We just put in a beginning balance. So that's only one side of a transaction. QuickBooks must have done something else. And then we have the loan payable. We put in the beginning balance, and then we're down to the equity section and we see here. We didn't do anything yet to equity. We didn't do anything to equity. Yet. We have this equity account opening balance equity. That's clearly going to be a part of the transaction that QuickBooks did in order to make this work. So we have that account. So this accounts not typical. We don't really want that account. QuickBooks is just basically saying, Hey, this is our opening balance. That is what we did in order to allow you to just put in these beginning balances and not have any adjusting journal entry in order to do that. And then we have, ah, sales, and we have other miscellaneous expenses to other items, which once again we didn't actually enter anything into sales or other miscellaneous expenses. The QuickBooks is putting this on the other side of a transaction, for it looks like accounts payable and the accounts receivable when we created those. So when we put in, in other words, the customer balances for 20,500 QuickBooks said. Whom Let's just make invoices for that. And that's how we're gonna put the other side together so that the debits equal the credits . When we put in the 15,000 to accounts payable with vendors that always money, QuickBooks said, Maybe the other side's just gonna be some type of expense. So that's a kind of okay, because as long as these two amounts are temporary accounts, they're going to go away. As of the first day of the year that we're actually gonna be working on, which is January 1st, 2021. So we really want these two to go away. They'll roll into whatever our equity account is thes air, temporary accounts. So let's just see what happens If, for example, we go to the first day of the next year. So we're just gonna hit plus one. We're now in January 1st, 2021 plus, and now we're out into January 1st 2021. Let's run the report and here we have our information. Now. Now we've got the opening balance here and those two other accounts, the revenue and expenses are closed out to just retained earnings, so that's where we want it. In essence, retained earnings is more corporate account rather than having equity account for a sole proprietor. But it works in the same way, in essence. So now we just have this one account, which represents the book value of the company. And then we have this other account, which QuickBooks just made up team make the debits equal the credits, so it's a permanent account. Notice it didn't go away. It's not an income statement. Accounts of balance sheet account, in other words, and so what we want to do is just close this out to retained earnings. Really, this is part of retained earnings for us. Now there's a couple different ways that we could do. This one is with a journal entry. That would be the typical way to do this. If we entered a journal entry, we would say this is a credit and we need to do the opposite thing to it. To make it go down to zero. We would debit it by the 79 8 96 and then we would credit making retained earnings go up by the 79 18 96. And that would be the journal entry we would do to get rid of basically the opening balance and put the amount into retained earnings. Because we're using QuickBooks, we could use the register functions as well, just to get used to the register functions and note that QuickBooks is gonna try to do a lot of the data input without no one without needing journal entries. There's some places where we pretty much need to know the journal entries. Even if we use the registers, as we will do now, we still need to see that we have something in opening balance equity. But the registers are a way for us to try to reduce the amount of debits and credits from, or debits and credits. We know the more we can really better understand how the system's really being built. But it's good to try to work within out of QuickBooks system and see the alternatives that they have to entering just journal entries. So in this case, we're gonna try to use the register system and the register system. And for a check register, we're all used to register just increasing or decreasing the checking account. QuickBooks will have a registered for pretty much all the balance sheet accounts. So if we go in the opening balance here and we say we want opening balance to go down by 798 96 and then just tell it what the other account is, QuickBooks will figure out then what those debits and credits are. So in order to do that, we're gonna go down to accounting, will look at the accounting section here, and we're gonna scroll down to the equity section. So it's an order by account type. We're looking, it's in assets, liabilities equity. So here's the equity. Here's opening balance. So we want this opening balance. There's the balance we have in it. We want to get rid of that, put it into retained earnings. So we're gonna select that item, do you? The register And we could see the detail here. We could see our running balanced high school to the right just a bit. There's are running balance and we're ending at the 79 8 96 scrolling back down and going back to the left a bit better. We have this, so we're gonna have a new one. So it's gonna be a journal entry format. If we select the formats, we don't have many. In essence, we're just entering a journal entry because typically, we don't usually use the opening balance, so there's no normal form that would be created in order to deal with this area. So we're just gonna say, Add journal entry and we're gonna put that journal entry at I'm going to say the first date of the current year were on No. One, No. 1 to 1 January 1st 2021 the first day of the year that we're currently going to be working on and there's no payee. Ah, memo it. We could say just beginning balance and we're not gonna increase that. We're gonna decrease it. So this is the key. There's no debits and credits here. We're gonna say it needs to go down 17 98 96. And they were just gonna put the other side somewhere. So I tabbed over to the other accounts, and that's gonna be retained earnings. So we're looking for retained earnings, so we're gonna select that one. So when we do this, this one should go down to zero, and then we'll go take a look at our report and see if the other account was retained earnings. And if it does what we believe, it should dio, let's go ahead and save that. So we're gonna save that. And then if I scroll back over a little bit and scroll back up, it's down to zero. That's what we want. Now we're gonna go to the reports. So we're gonna go to reports once again and we're looking for the trial balance selecting the trial balance, and we're gonna run the dates as over a 1012120101 to 1 and run that report. And there we have it. So we had the retained earnings here at 85 3 96 That looks like what we want. Opening balance is now zero. We're now ready to go forward. Notice what we don't have Here are any temporary accounts. Any income statement accounts, any revenue and expense accounts. That's because we need those air gonna be populated as we move forward into the current year Out and inter normal day to day transactions. So let's go now. Just go ahead and export this report. So we're gonna go export and go to excel. Export it as an excel document. Here we have it opening up in Excel. Here is our report. So currently, your default Okay, I'm gonna say OK, enable. And it looks good, just as is so we're just going to say file save as browsed the location we want. Put this. I'm gonna put this into Excel docks six. I'm gonna keep the name as is, so that'll be that. And there is our adjusted trial balance 38. 7.05 Record Owner & Loan Deposit: Hello. In this presentation, we will record financial transactions related to the owner depositing money into the business as well as taking a loan out for the business within QuickBooks online. Here we are on the dashboard for QuickBooks online. We're continuing with you. Get great guitars problem. It's been working along with us. That's great. If not, that's OK. We're gonna be entering deposits into the register four of the owner putting deposit into the company and for a loan to the company. There's a few different ways we can record a deposit. We're gonna record this using the check registers. We're gonna go through the check register. Now, when you go to the left side here to choose the check register, you might be thinking to go to the banking, but we're actually going to go down here to the accounts and select the accounts, and that will give us the chart of accounts. If we select the top item here, which will be the chart of accounts, then we can go into each accounts and this is where we can really find a register for any of the accounts Now, typically, we are used to having a register for the checking account. And it'll look similar to having a registered that we might see with our checkbook and into the transaction in a similar type of format. So if we click just anywhere on the checking account or select the register over here, we will go into the checking account register. Here is the checking account register we had. We don't have much activity. It's a new company here. The only activity we have so far is the first beginning balance, which had the 25,000 that went into the opening balance equity. So now we're gonna enter another deposit. We're going to say that the owner is gonna deposit 65,000 into the company. So we have another deposit going into the company in order to enter transactions a little bit different than the on ground. We have to select this drop down and we get select the different types of items that would be happening to enter directly here. Now, in this case, we're gonna have some form of deposit. So we're gonna go up here and say we're gonna deposit because the owners putting money into the account and this then is the checking account and therefore, where we will ah, deposit this information. We're gonna put the date as of 0110 to 1. We're gonna be working in 2021. The year starting January is the first month we're gonna be working in. And, Adam, I'm not gonna put the payee. I'm gonna put the memo, which would be owner, uh, deposit so that we know it's from the owner. It's gonna be a deposit notice. I'm tabbing through this. When I tap through, it went straight to the deposit screen. That's gonna be the 65,000. That's the amount of the owner will be depositing Tab tab, and then we're gonna go through the accounts. We could select the drop down for the accounts and note that it jumps to the expenses here . Azaz kind of a default. We want to have the owner putting the money and we're really looking for on equity account . We'd like to have some type of equity. We could see the equity accounts over here, and the chart of accounts that was generated when created in this company actually has a naked account that breaks out the owner investment. So Owner Investments here's what we're going to select. If it didn't, we could put it into retained earnings is gonna be where everything is going to roll over to at the end of the month. We're going to select the owner investment here, and then we're gonna say Save this transaction transaction is now saved. So we have the two items down here. If we school a little bit to the right, we see our items and are running balance here. Toe have the 90,000 which would be the 25 starting and the 65 year We're gonna record another deposit. And that's gonna be from a loans. Were gonna say we got a loan from the bank. Another deposit transaction, same screen. We're gonna scroll over. We're going to say it's from Chase Bank. I'm going to select Tab as we set this up when I slick tab, it does ask if we want to set it up as a customer or a vendor or an employee. Of those three choices. I'm gonna choose customer here and then enter this information. Although it's not exactly a customer because, of course, it's a loan payment. But We're gonna keep that there. We're gonna have the memo. We could put some here like it's alone and we're gonna tab. It's gonna be the payment deposit then and that's gonna be for this one will be 50,000 tab tab, and then we're gonna have the account. And if we select the drop down, it defaults to those expenses again. We're kind of looking for a liability here. We want to have a loan. So we see here we have a loan payable that is in the books when the chart of accounts was created by QuickBooks as we set the company up. So we're gonna select that item. Here's what the deposit will then look like and we're going to say save that. So if we think about these two transactions, what happened here on this 1st 1 is that the checking account went up and the other side went to the equity account in owners investments, this one, the loan. That means that the the checking account went up and the other side went Teoh the loan payable that also went up for the liability. We've got 140,000 now in the balance seen here and there. Let's go to the reports. Let's take a look at the balance sheet and see if we can see that same 140,000 in the balance sheet. So we're gonna go to the reports on the left hand side and let's just type in to the balance sheet. So balance sheet up top, and we're gonna change the dates for the month of January. Zo 101 21 201 31 to 1. Going to the month of January for the year 2021. The year were working this problem for Then we're gonna run this report. Run that report. There it is. So there's the 140,000. If we select about 140,000 then we're going to see the detail we started at 25,000. That happened the date right before this because that was the beginning balance before the year that we are starting transactions in. And then we have the deposit 65 a deposit for 50. If we select either one of these will go to the deposit screen and we'll see this item here And here is the deposit amount. The screen looks a little bit different because this is a deposit screen. We were in the register, and so this would be a little This is the deposit that is generated whenever we make a deposit. That form that will be driving any deposit closing that back out. Going back. Teoh, the original report. The balance sheet. They were gonna scroll there on there's the 140. Let's see the other side of these transactions. We have the liability down here, and that was the It's gonna be within the 72,000. So if we select that I'm, then we're going to see that we started with 22 at the beginning balance. And now we had the 50 bringing us to the 72 selecting the 50. We will then see once again a deposit southers the deposit in the checking account, closing this back out with the ex, check the one other account affected. Scrolling back up the top. We want to go back to our report summary, and that will be the balance sheets report summary. And here's our equity section. It might be a little bit different than what we've been used to before in that we have this investment account and, ah, it's useful to break out the investments. Sometimes they're not always broken out. But here we have the investment broken out to the retained earnings and in the net income, the total equity. In essence, you can think of the total equity has all the same type of thing that could be broken out in different formats. The opening balance is something we're probably gonna wanna have to adjust for, but the owner investments something that will be there, and then we'll close out to retained earnings. So, selecting that, then, of course, we see our deposit once again strolling back up the top, going back to the balance sheet. There's our information here, and note. If you're seeing that the opening balances closed out to retained earnings, that's probably good, because we do need Teoh adjust for that. That opening balances now exactly proper. If we have that closed out to retained earnings that would look more proper, that is, a remnants of us put it in those beginning balances at the start of the company 39. 7.10 Part 1 Record Purchase Furniture: Hello. In this presentation, we will record the purchase of furniture into QuickBooks online. Here we are on the QuickBooks online dashboard. We will be continuing with the get great guitars problem. If you be continuing with us, that's great. If not, that's OK. We're gonna be entering the purchase of furniture as is typically the case with QuickBooks has a couple different ways that we can do that. We're gonna do this by entering this into the register. Now, this case, we're gonna be purchasing this furniture simply for cash and therefore we can enter the transaction directly into the register or we could issue a check for it. However, if we were to do some other format of financing the furniture as well do later on, we'll have to do some other formats. So we'll see that later on. For now, we're to be purchasing furniture just for cash or maybe practicing using the register in order to record this. So in order to do that, we're gonna go to the accounting down here, the left hand side accounting. This will give us our chart of accounts and we'll see that we have a register for every account now, if cash has affected, the easiest registered to use is cash. If we wanted to enter this information into some other register, we could go to furniture and fixture and entered into that register. But it's usually typically easier to think of help what's happening to cash and just do the other side of the account to whatever other accounts is being affected. So we're gonna selective you register for the checking account, and here's the information we have. We scroll over to the right just a bit. There's are running balances on the right scroll into the left. Here is the transactions that we have so far within our check register. We have a few different options. If we select the drop down over here, we've got the check the deposit, the sales receipt bills receive payment, refund, expense transfer. In our case, we could use the expense item here, but we're going to say it's a has a check number, so we want to put the check number in it. So we're gonna use the check item up here. So we're gonna say that check and here is our check, and we're gonna say that date of check ISO 109 to 1. Remember that we will be working in the month of January 2021. That's what we're gonna be starting. We have to enter the check number because it's the first time we've had a check number. We're going to start off with 1002 from this point somewhere forward, it should populate for us within the check number here. Now we're going to say that the pay is gonna be Office Depot and we have to add Office Depot. We don't have that yet, So it's going to say if I select tab or click here if I like Tab, it's going to say, Do you want to add Office Depot? We're gonna say yes, it's gonna be a vendor. That's just gonna be the default to it. Kind of just guesses typically guesses, right, because we are here in the expense window, So QuickBooks is pretty good at that. If we choose the right category here, then of course it can say, Well, if you're buying something, we're probably gonna be dealing with a vendor as opposed to a customer or employee. Ah, memo We could put ah memo here. I'm not gonna put one, but we could put purchase furniture or something at that memo section. And then we're going to say that the payment amount is 16,000 for our furniture and fixture tab to the deposit. No deposit, because this is a payment, and then we're gonna tab over to the other account that will be affected. And it's gonna be if we select the drop down, it'll typically find the expense accounts because usually we would be entrant expense account. But we're really looking for an asset accounts. I'm gonna scroll down. We're looking for furniture and fixture. Here it is. Now, if we knew the account name already, then we would want to start typing it, and it'll auto populate the accounts that would fit what we're typing. And then we could select the account that we want. So it's gonna be furniture and fixture, and we're saving that, and the transaction has been saved. That is good. So if we take a look at all these transactions, then scroll into the outside. We see the amount here went from 140 down to 124. Now, let's take a look at the reports and see what we have there. If we go to the reports on the left hand side, we look to of our main reports for the balance sheet and a profit loss wouldn't go the balance sheet and select the balance sheet. I'm gonna run this for the month of January of the year were working on so 101101 to one. Teoh, pull 1 31 to 1 so that we have that and we will run the report. Here is our balance sheet. So cash was affected. So if we select the cash accounts, then we can see that we have this furniture and fixture and it's a check. There's a check number. There's the split. I mean, in the other account that will be affected. And if we check if we click on that item, then we will see what actually happened. So here is our check, gives us not the register. Put the actual check. So if we entered it as a check, this is what it would look like. We entered it into the register, basically creating a check as we did so and so we're gonna close this back out and scroll back up the top and go back to the report summary Back to the report summary. All right, So there's gonna be that side, then the other side of this thing is gonna be the furniture and fixture here. The furniture and fixture 16,000 once again, if we go back into that, we can see the check once again. Same check. So every transaction is gonna have those two amounts. If we go back and forth from the financial statements, Typically a balance sheet in the income statement. What will we really need then? We can really get a good idea of what we're doing here in terms of even debits and credits . Or at least what accounts are going up and down. And I will give us a good idea of what QuickBooks is doing as we go going back to the report here. And that is the furniture and fixture purchase. Now, we're gonna do this one more time, so we're gonna go back to the accounts down here. We're gonna enter one more piece of furniture from Amazon this time. We're gonna go to accounting, and we're gonna go back to the register. So we're going into the register, click anywhere here, or click on the register, Apparently click on the register, and then we're gonna add once again a check. So we want to add a check. We are gonna have a check number. So if we put the check in there, it should populate for us at this time. Now, we're gonna put the chick as of one 1121 And the check is gonna be 103 Note that because of the settings, its default into the current date before I put the date I'm working in the future in this problem, so just be aware of that. Ah, it's that typically good little default to the current date. But when you're working on a practice problem, you have to make sure that your dates are correct or else you're gonna have date problems. So we're going to say Amazon, and that's gonna be our pay. Ee tam. It's going to say we don't recognize Amazon. You want to include we're gonna say yes, it's gonna be a vendor select in the drop down that the corrective endure, so that is good and We'll tab through that memo and will tap through that. And the payment amount will be 7000 tab, tab tab and the amount, then the other account. Then will be furniture and fixture. Get if we select a drop down, it's gonna go to the expense accounts. And if we scroll down through them, we will then find under the expense accounts the account we want asset account furniture and fixture selecting furniture and fixture. We want to make sure once we've got everything in there that we say save if we don't say saved and it doesn't save it. So it's a save, and then we'll have it. So say saving will have it. And then we're gonna go back to reports. Let's check this one more time. Go back to the balance sheets that we really need. No income statement account affected. Note that when we purchase furniture and fixture, not an expense, even though we're paying cash in this case, not decreasing net income eso we're gonna go. It will when we depreciated, by the way. So then we're going to go to the balance sheet balance sheet. We'll select the balance sheet and check the dates one more time. So it's gonna be as of 101 to 1. Teoh 01 31 to 1. And we're gonna go ahead and run that report. So there we have it for going to the checking account soul, Select the checking account. And here is our items. Years we've got Thesixties een there and the other happened on the 11th. So there's air to amounts there. We'll go back up, Teoh, back to the report submarine and then scroll down and we'll see Furniture and fixtures. Same items will check that and 23,000 and we should see are two items there the 16 and of the seven. If we select the seven, then we will see the amount we put in there, and that's going to be this amount here. It's gonna be a check that we have written 40. 7.10 Part 2 Record Short-Term Investment: Lo. In this presentation, we will record the transaction related to short term investment into QuickBooks online. Here we are in the QuickBooks dashboard. We will be continuing with the get great guitars problem. If you've been continuing with us, that's great. If not, that's OK. We will be entering a transaction for the recording of an investment, taking cash from our Jake in accounts. Putting it into a short term investment sets as stock and bonds couple ways we can do that . We're gonna do that with the check register. Were practicing here really dealing with cash for a few transactions or to go directly into the check register and put this money from the checking account to a short term investment account. No, to do that, we're gonna go to the checking account down here or the accounting down here on the left hand side accounting item. And then we could remember select any of these registers here. Now, of course, we're gonna have a short term investment. We could select a short term investment account if we had it. But if dealing with cash, that's usually the first thing. That's easiest for most people to think about. as it is for me at least. So we're gonna take the view, register here and select the register. And what we're doing is we're taking money out of the checking account, and we're putting it into the short term investment so we can see some of our drop downs. Here we have a few different drop down, so we're gonna do it with a check note that you could have some other decrease. You might want to call it something other than a check, like an expense. And one of the reasons you might have the difference between expense and a check isn't because it's actually an expense where we will be dealing with because we were going to be dealing with putting it from one asset account to another. The other accounts gonna be an asset account as well. Not an expense, but the expense screen, the dealing differences. We're not gonna have a check register or a check number. In essence, if we're not actually issuing a check, for example, if it was an Elektronik transfer we're trying to put into the system, then we might choose an expense in order to not have a check number we're gonna have a check number. So we're gonna say it's going to be the check, and then we're gonna say the date. Now note that the check number while we're on the issue of check numbers is already here. It's already populating because it should be populating. Now. If you were writing the checks by hand, then of course, you should be on that check number within the checks that you're having to match up here. If you want to print the checks, you would still have out external checks That which you would have to print, and the check number on the external check should match this 1004 automatically generated by the system. That's one of the internal controls related to cash if you don't have a check number. If this was an electronic transfer to just trying to put it in here to put it into the bank account to get your bank account correct so that you can reconcile, you could change the check number, possibly to something else, like a like a transfer, or just delete the check number. Or put someone other indicator there that will tell you what what you're dealing with. So we're gonna have a check number in our example, though, so we're going to say that this is going to be as a 0104 to 1. Remember that we on this problem will be working in the year 2021 starting with January. Now the check number populated automatically. But we're gonna go a little bit out of order in the videos that we've had. So we haven't used check number 1001 yet. We're going to use 10 there, one here. And after we do this, it will pick up the next check number should be correct after that on and follow along. We have to jump around in time a little bit here as we go through these problems. So we're gonna say that we are investing in a Vanguard account. So we're gonna put Vanguard. That's a mutual fund type account that we could investment. I'm not promoting them or not there. I think they're pretty good if you're looking for mutual funds. But in any case, we're gonna put Vanguard and we're gonna say that and it's gonna be a vendor. We're gonna keep the vendors. Not like a traditional vendor, but we'll keep the vendor here. In other words, we're not buying from them on guard. Um, but we are investing in them, and it's clearly not gonna be a customer or employee. So we'll keep vendor and we'll save that and memo. I'm not gonna have one. We could probably put short term investment. There would probably be a good idea, but I'm not gonna. They were gonna put the payment is 12,000. That's how much we're gonna invest out of our checking account to the investment. Now, the other accounts gonna be on investment account. So if we select the drop down we started the expenses is not gonna be an expense here. That's where they start because typically when we buy something, it would be an expense. But it's not in this case. And if we go to the asset accounts, I don't see any short term investment. Therefore, we're gonna need to set this up pretty easy to set it up. We don't have to go to the chart of accounts to do so. We just type in just like we did with the name Short term, short, short term invest events. So we're gonna type in short term investments when we select tab. It's going to set this up soon asked. We want to set it up and say Yes now the type of accounts. We could have a bank account and this may be a reasonable place tohave it. That big group in it Basically, in the cash accounts as we grew bit on our chart of accounts, I'm gonna put it into another type of investment. I'm going to just say it's another type of an asset or another asset. I'd rather have a other current assets were going to say It's an other current asset. Now that's just the grouping. It's gonna be grouped when we look at the trial amounts of balance sheet assets, liabilities, equity and then within assets will have cash in accounts receivable and current assets and then non current assets and then property plant equipment. So then, on the detail type allowance for doubtful gonna put down here investments, others. So that's gonna put investments other and the detailed account. We're gonna keep the name as short term investments description we don't need one. Not gonna have on. It's not gonna be a subcategory. This would be making its subordinate to some other categories. So if we did have, like, investments, overall mutual funds or something like that, and enlisted out of particular types of accounts within them, that's a good way of using the sub categories. But we're just gonna keep this as a stand alone has no beginning balance right here. This will be the beginning balance as we enter this data into this check register. So we're gonna say save and close and had some kind of air. But I said saving close again and it saved and closed. So here we have that. So there's the short term investment. This will be the full transaction of the investment for Vanguard Payment. Going out of the checking account were in the checking account and into this investment account. Let's save it. Let's check the balance here on our checking account, scrolling down, scrolling to the right just a bit scrolling up. And we see that we have this adjustment to the checking account one of 510 5000. We're not going to see the effect of this on the financial statements. So we're gonna go back to reports. Over here. Left hand side. We're gonna look at those financial statements. We want to look at the balance sheets. I'm gonna type in balance sheet. There it is. Balance sheet. And both of these accounts will be on the balance sheets. That's the one we need. So we're going to say that dates are gonna be 010121201 31 to 1 tab. January 1st, 2021 to January 31st 2021. That's gonna be the year. Of course we're working in here, so we're gonna run this. Here we have it. There's air checking accounts. 10 5000 in it. If we select it, then we see in it that we have this information. Ah, here. And what we just did was his vanguard's. We took this 12,000 out, put it in the vanguard. So if you select that item, then we see this transaction here it will be a check. So we see the check amount. No, What we don't see is the check register where we actually input this data. That's because when we put that data input, they create QuickBooks creates a check because that's in essence, what we're making. So we basically a shortcut form of the creation of a check. So we're gonna close this back out and let's go back to the report. So we're gonna go back to the report summary and then scroll back down. Where would the other side go? It's gonna go into other current assets. Note. We're in order here on the balance sheet assets and then within assets, current assets and then other current assets. And in fixed assets, we're in other current assets. We have the short term investment, so we're gonna select that short term investment. And here we have the same transaction Vanguard short term investment. That 12 it's going up. It's increasing this account. If we selected, then we're gonna go back. Teoh that same check and we see that same information here. So closing this back out, going back to the balance sheet if we after every transaction, if we take the time to go through this and look at the financial statements, we really could get a good idea of what the what the statements are doing. We don't really need to know debits and credits. Really, to do that, we can see if it's going up or down in order to practice the debits and credits after every transaction. What I recommend doing is going Teoh the reports and checking out the trial. Balance the trial balance. And if we select the trial balance and go through the date range of a 101 31 Teoh, 101 21 Teoh 01 31 21 January 1st 2021 Teoh January 31st 2021 Run it, then. This is really a good one because you can see everything going on. If you want to practice the debits and credits, you could see that the checking account. If we click on it, the activity will be in terms of debits, debits and credits or amount. It's gonna be still increase in decrease. But we have a decrease here, which was a credit to the checking account. And if you go back to the report, you can see that the debit balance went down. It was out of 105 and it went down from this transaction. The other account, the short term investments, a debit account and it went up by the 12,000. So really good to practice every transaction, whether you put it into the register or a form, anything you do in QuickBooks, see what the effect is on the financial statements, and you will get a lot better idea of what is going on within the system. 41. 7.16 Sales Tax u: Hello. In this presentation we're going to set up the sales tax in QuickBooks online, and we are at the QuickBooks online dashboard. We will be continuing with the get great guitars problem. We're gonna be entering the sales tax options into QuickBooks online, setting up the sales tax options so that we can then go forward and use them to create invoices and sales receipts. The sales tax set up has changed a lot in QuickBooks online recently. As of the time of this presentation, it could have potential to be a lot better because they're trying to automate the system so that we could just choose the location and the sales tax will in essence, be calculated. So if we have different states, then the location will drive the sales tax, and rather than us entering the different rates for the different states, the system should be able to pick that up. So, in order to do that, what we're going to need to do is set up sales tax for each particular area that we believe we're gonna be using sales tax in. We're gonna have to set up our addresses for our customers correctly. Make sure that we have our dress in their correctly and then quickly. QuickBooks can then make the decision as they tracked the sales tax for each individual invoice by the address that we are using for the customer as well as our own, and try to derive the correct sales tax settings. So it has potential to be great. But also, for a problem like this, we might want to standardize things and standardizing things and just put it in a rate so that would get practice on it, too. Can be a little bit more difficult. So let's go through this and set this up. We're gonna go taxes down here. This is gonna be the item to set up sales tax. If it's not set up yet, your system will have something that looks a little bit different. It'll just basically have a green icon sane set up sales tax. Not typically, something you have to pay for at this time. You just gotta go through there and go through the set up process. Now the set up process, unlike prior to this time period used to Evan area where you enter the sales tax into it at some points. You'd have to basically look up the sales tax, enter the sales tax and there's a lot of complexity in terms of different types of sales tax settings. QuickBooks. Now, just if you're looking for that sales tax, not gonna be there, at least at this point, because the idea here is that we're just gonna choose the area and choose the agency, and the QuickBooks will automatically set up the sales tax. There's no real way at this time around that, meaning you can't just put in a rate a straight rate for something like a practice problem or if he had some kind of special circumstance. However, when you create the invoice, you can then go back in there and make adjustments. Once the sales tax has been calculated, you can you can change the adjustment of the calculation. So to do this, I've already set up a couple here. Let's just go through and see these. We're gonna set up a new so if you want to set one up and have a green icon to set up the sales tax, or if we were going to add one, we would add an agency up here I'm just gonna go through the editing of the set of the sections. Now, we started this problem with a New York, which is actually less familiar to me. So what, we're gonna click here and it's got some more complicated dem sales tax settings, and we're just gonna put in the sales tax information and all they all we need to do is have, um we picked New York. We had the filing as at the location. We had the filing frequency. We're going to save monthly. That's gonna depend on the different locations, Do we? How many times do we have to file and pay? Ah, that's gonna depend on the state and or the country. Ah, and probably the amount of sales tax that we have. So if we have less sales tax, possibly we may only have to do it quarterly. Or even nearly if we have a lot of sales tax may have Teoh process it more than monthly Bi weekly or something like that. We're gonna say the start date is January, and then we're going to say the start date is gonna be a January 1st 2021. That's gonna be the first year of our operations that were working This problem, of course, whatever you're putting information in, if it's something other than this problem, then put in the stunned that correct start date and that's it. That's all you can put in right now. So it looks almost too simplified like there's not enough information here on. We'll go through what else needs to be done in orderto have QuickBooks calculate this stuff ? So then we're going to save this. That's gonna be it. And I'm also gonna put into California cause I'm a little bit more familiar with that, so we'll actually use a California one as well. So I'm gonna click on California. That's gonna be the California State Board of Equalization. And once again, it's just gonna be monthly in terms of the frequency we're gonna put January start of tax, period. And I'm just gonna keep this as that as the default date because that was working, afford made. So I'm just gonna keep that there, and we're gonna close this out. So this is going to be the other seven. So that's the first thing we need to have set up. Now we put in the inventory items before, but we need to make sure that we're allowing the sales tax. So before we go in and look at an invoice and see if we calculate this thing, we want to go back to the inventory items and make sure that we now have the sales tax it set up correctly. In order to do that, we're gonna go to the sales item up here. So we're in sales on the left hand side. We will select the sales item, and then we want to be in the products and services, so make sure you're within products and services. These are the products and services we have everything that's ah, that's for us. Of a guitar, in essence, which is what we sell is gonna have sales tax related to it. The taxable area is right here. So now we've checked off the E l P, but the rest have not been added. So in order to do that, you're just gonna say edit to to edit, the tax settings were going to scroll down and we want it to be taxable, and I'm gonna put mine as a retail here on the drop down setting and then, ah, taxable retail item here Note that you will want to do some more research in terms of your taxes settings to make sure you got the right tax settings because obviously those will change. I'm just gonna put in some tax settings that we can then use and then within the problem. I'm trying to use just a flat 5% rate once we actually calculate the sales tax so that we could just see how sales tax works. Once we know how the sales tax works, then of course, it'll be the same, although the rates will change depending on location and other types of circumstances. So we're gonna keep that on, and then we're gonna do the same for the rest of our inventory idea. So I'm gonna go down here and I'm going to the same thing for this item. We're just gonna edit this, we're gonna scroll down and we're gonna click taxable, and then here we're gonna put retail, and here we're gonna be taxable retail, and that's gonna be it. I'm gonna save it and close that. And so we have a check mark here. We're going to the same thing here. I'm just gonna say this item, it's gonna be taxable. We're gonna say its retail and it's gonna be, of course, the taxable retail and save and close. And then I'll do one more. And just to see this No, we're not going to be doing the service items. So this is a GSP. This is a guitar. So I'm going to say that one and we're gonna scroll down. We're gonna make it taxable. We're gonna make it retail. And we're gonna say that it's gonna be taxable retail save and close. Now we've done this. I've done this, all of it. So I just repeated that process so noticed this 1st 1 is a service, so we don't have taxable their second ones at tax bills. We haven't checked off, checked off, checked off, checked off than our services is a service. Nothing in terms of taxable nous. Nothing in terms of tax bonus here and then down here, this wildcat is also a guitar, and that one has been taxable as well. So now we're gonna go in and just look at a test invoice. We're not gonna actually make an invoice, but we just want to look at it and say whom what's gonna happen now does this. Will this work? And so I'm gonna go to the invoice tab. So we're still in sales over here on the left hand, and we're gonna go up top to invoices now and within the invoices. We're gonna go to new invoice. We're not gonna record it. Just test it out. Gonna make a new invoice and see if the sales tax will now record Just gonna pick a client , just toe, have a client. Now, the address doesn't pop up here because I didn't put an address for the client, and that's going to confuse the system. If I put something down here and I try to pick a service item which I know I can calculate sales tax on a guitar such as the E L P. Then I know I just calculated sales tax. There it is right there. Nothing's gonna happen down here until we click somewhere else. So if you're frustrated before clicking somewhere else, then that's because it's it's He hasn't calculated anything yet, but if you click off of it, then it's gonna give you something. It might calculate the sales tax or it might give you some other calculation here. I gives us nothing, and that's because it's basically saying I don't know what to do because there's no, uh, address here. Now it might revert if there's no address here to the to the home address the current address of of the invoice meaning the address of the company. Ah, and or could use the billing address here. So, um, but here it's not calculating. And therefore, what I'm gonna change here is gonna be the address, and that'll give the data, I hope, in order for the system to calculate. So I'm going to say, now we're gonna have this address and and by the way, the company address, I might be doing that because of the address I choose. I chose to set the company up in, which is one I'm not exactly familiar with in terms of sales tax. I would think their sales tax in the address such shows. But in any case, I'm just gonna change the the other address to an area. I know they're sales tax, and then it's going to do the calculation here. So we have this calculation. And so it calculated the sales tax. And based on that information, that's that that's now in there. Now, of course, if we if we calculate what that sales taxes, we can, you know, do a quick calculus. If it's correct by just saying, 38.75 is the attack May sales tax they calculated, divided by the sales amount is 500. So the sales tax is 7.75% that they're calculating. So you could go in there and try to verify the sales tax based on what you believe that sales tax to be on your location. So so do some research on that. For the purposes of this problem, we're actually gonna make the sales tax ah, flat rate at 5%. So we're gonna actually actually have to go in there just for purposes of making it all standardized. That's why we're doing this, because obviously other states are gonna have different sales tax would rather just use something like a pretty easy standard kind of even number. Not really even but 5% so it can say 500 times 0.5 or 5%. And that would give us $25. So I'm going to see if it lets me change this for purposes of the problem to 25 and then click off that It says, Are you sure you want to do that? Um, and we're gonna say, Yeah, keep the changes and then it's gonna say, Why? Why are you doing that? Did we mess up and we'll give it some feedback and it's nice that it allows us to make the change. This is just a example problem. So I'll give him the feedback there that it's just exact problem. Their system probably worked great. And there we have the 25 we can then go forward. So in order to do this, however, in order to make this kind of example thing work, you have to set something up first. Or else you won't be able to put anything in the sales tax field, which means that you got to set up a sales tax location, which has tax. Make sure that you have the address here and or in the company file, so that it knows what address to calculate the tax on. Then, once the calculation is made you can change it at this time to some other day a number. For whatever reason, you might want to do that, such as an example problem. 42. 7.17 Part 1 Purchase Order: Hello. In this presentation, we will enter a purchase order into QuickBooks online. Here we are on the QuickBooks online dashboard. We will be continuing with the get great guitar problem. If you put continuing along with us, that's great. If not, that's OK. We're gonna be entering a purchase order at this time. Before we continue on entering the purchase order, we're going to check the settings to see that we have that tracking for customers within the purchase order. So we have the purchase order turned on. We have purchase orders enabled. We want to check that the tracking for customers so that we can enter customer fields as will become more apparent is enabled. In order to do that, we're gonna go this cog up top, selected this cog up top, and we're gonna go to the account settings. We want to see our account settings within the account. Settings were gonna scroll down to the expense tab on the left hand side, looking through those expense tabs. We want to pick this one here. The tracking expense items by customer. It's currently turned off. I'm gonna turn this on turn that item on that will allow us to click this Ivans will click that item and then save this. And now that item is on. So we have the track expenses and items on this will allow us to add a customer field. As we Inter dated into our purchase order, I'm gonna close out of this and go back to the dashboards. Will close this Xing out. There's a couple ways to get into the purchase order rather than going through the left hand side. Item here, we're gonna go to this little plus item up top. So we're gonna select the plus item that's gonna give us most of the transactions we have in, ah, drop down type fashion. So we have customers, vendors, employees and other When we're talking about a purchase order, what we're doing is we're requesting the purchase of something from our vendors. And the purchase order is gonna be a little bit different when we think about this Siris of transactions, as opposed to if we were to purchase something, say from, like, Amazon or something online. When we purchase something from Amazon or something online, we have to basically make the payment at the point of purchase and then we receive the goods after payment has been made. However, if we're purchasing a lot of goods, a lot of times the purchaser has a bit more authority within the transaction and therefore we might be able to request the inventory to be shipped, actually received the inventory, count the inventory, see if it is in accordance with what we ordered it to be, and then record or make the payment. And that's what we're gonna do here. In this case. What we're saying is we are going to be requesting inventory, not making a payment for that point in time at the point time that we request it and we won't be making a payment until after it's received. So this is really just a request. Were just saying Hey, we need this much inventory. Ship it over to us. We're checking out. We'll see if it's what we want, and then we'll make the payment for you. There's actually no transaction related to the purchase over order. Just gonna be a request. So here it is. Down here. This is the purchase order Well selected. This item here is the purchase order. It looks like like a bill, but it doesn't have any terms in it because we're not actually making a payment, Of course. And we're gonna just tap through this information and put in populate this as we go, I do recommend using the tab function and just tapping through some forms as you get to complex forms. And that'll just basically let you at least see each input field within the form. 1st 1 is gonna be the choose the vendor vendors. They're gonna be who we buy from. We are requesting the purchase of inventory. We're gonna buy guitars in this case, we buy guitars. So we're gonna buy a guitar, and we're gonna choose the vendor. The person that we purchase from, we already have the vendor set up. So we're going to select the drop down and we're looking for EPA phone. So that's gonna be EPA phone. Not totally sure it's spelled right, Boris. It's EPA phone. Then we're gonna tap through this and we're not gonna have anything on the email. That mailing address has been populated with what we already have in the vendor field doesn't include an address. Probably we should put an address in there for the vendor. But this will be what we need in order to populate on record the data. We're not gonna but a ship to hear the shipping and address this will be ours. It's populated automatically because we have that intimate into the system, Of course. And then we're gonna have the purchase date. Now, this is gonna be the date default date, but we're gonna put in the date of a 1 to 1 Teoh to one. This is the year or that we're gonna be working in 2021 started in January, so January 12th is the date of this transaction. Nothing in the ship via and we'll type through and then we've got the custom customer field . I'm gonna tab through this as well, and we're schooling down and we want to see the items down here. So these they're gonna be the inventory items we've gone through in the past and input the inventory items. Is there gonna be a guitars that were purchasing for us because we're buying guitars and selling guitars. And so if you want to look into how to input those inventory items, you could take a look at that If this was a new inventory item, we could enter it here because this is a recurrent inventory item. We're going to select the drop down and see if we can find this piece of inventory so we'll select the drop down. We're looking for the E l P. That's gonna be the EPA phone less poll. So we'll select the E L P up a phone, less poll, and it'll populate for its automatically. So then we already have this set up. So here's the description were going by one of them the rates gonna be 400 the amount that will be 400. And then we have the customer field over here and we could enter a customer. Now, before we do that, we do want to point out that the rate looks kind of like there's something happen in terms of a financial transaction. We see numbers. We see dollar signs down here now, one this rate already is populated because we put in there when we entered the data. And that means that it's gonna be the rate of the guitar that we purchased, not the rate that we're gonna sell the guitar for. We had to enter both of those in when we set up the inventory item. And the other thing to note is that although we're seeing the cost here, we're not actually recording it because one we haven't received the guitar yet. And therefore we're not going to increase the inventory by the 400 until we do and to we're not actually making a payment with this purchase or order. It's just a request to purchase the guitars at this price. And therefore we're not gonna record any reduction in cash or any accounts payable showing that we owe this money. Nothing. Nothing will be recorded in terms of financial transaction. That's really unusual with the purchase order. That's why making kind of a big deal with it any other form we make. Typically they'll be financial transactions, especially if we see numbers like this at the bottom of the forms, such as an invoice or bill or sales receipt. Those are all gonna have effects on the financial statements on the balance sheet and the income statement. Okay, so now we're gonna add that customer. Now, If you don't see the customer tab, you have to go through that process. We did the beginning of the video in order to make sure that customer tap is their customer tab optional field, because it's not always gonna be there. We don't always need it, meaning a lot of times we're just gonna order a lot of guitars. We have them in the store and there's no particular customer that we ordered the guitar for . However, if in the case of guitars, we might have some custom guitars or guitars could be expensive in some cases and we may have a customer say, Hey, I want this particular guitar I wanted in this fashion I want this color on it or what not and therefore we would make the custom order for that person. We're going to say, Hey, we're purchasing this guitar specifically for this particular customer. In doing so, we can then link that to the invoice that will later create when we actually, you know, deliver the guitar and expect payment on the guitar. So customer field optional field can be useful for those custom type orders. When we're ordering specifically for a customer, we're going to say that the customer is a new customer. If we select the drop down. We don't have this customer yet. It's gonna be Eric music. We're gonna call it Eric, you dick, And it's gonna be our customer, and we're gonna be able to add that just as we go. So we're gonna say, Add that customer, select the ad, feel it's gonna be a new customer which could save that as is. And there we have it. If we tap through this there we have it. So a customer is added. Here's our totals here. No effect on the financials. We're gonna go ahead, save this item. So we're gonna save this and we could print this information. So I'm gonna go ahead and print this at this point, were printed out, and this will be it. So if we scroll through this, there's our item. Now I'm gonna download it in our printing, so I'm gonna select the download and there's our pdf file. I'm gonna scroll down and see where we want to put this. I'm gonna put it into this Excel docks here, and I'm gonna change the name so we'll make the name. We wanna have it. It's just call it a purchase order and we probably want the date. You might want to put the date up up in the front row 1 12 to one. What will put there and you could form at the date Depends how you want to order this thing . So think about how we want to order them. We're gonna say save that information and there is our purchase order. Note. If we wanted the email it, then we would, of course, need the email tab, and then we can go ahead and send that directly rather than saving it and then emailing it . 43. 7.17 Part 2 Purchase Order Add Inventory Item: Hello. In this presentation we're gonna enter a purchase order and add a new inventory item at the same time into QuickBooks online. We will be continuing with the get great guitars problem. If you've been following along with us, that's great. If not, that's OK. We're gonna be entering a new purchase order with an added inventory item that we will have to add. Ask me. Go. We're gonna go a little bit faster. We've seen the purchase order before with no new inventory item. So we'll go a bit faster if you want more detail. Take a look at that prior presentation to enter the purchase order. When I go up top, we're going to select this item, this little plus item and this is where most of over transactions will be located. So we have the customers we have the vendors were gonna be here under vendors because we're going to be purchasing from a vendor vendor, meaning who we purchase from and we're going to scroll down and we want, of course the purchase order. So we will select the purchase order. It's important to note what the purchase order is. We're not actually purchasing the inventory or pain for the inventory. There's no actual financial transaction going on here for and it's different than if we were to purchase something from, like Amazon, where we would make the payment and then receive the inventory or what we bought later in the mail here. We're not making a payment. We're gonna make the payment when we receive the inventory. Were just requesting the inventory. No financial transaction really happening. Just gonna be a paper request. So in order to do that, we're gonna go through here. I do recommend tapping through these fields as we go so that we touch on every every field and that'll just be good practice for going through a any type of, ah, data input. So we're gonna start up at the top, gonna choose the vendor. This is gonna be a new vendors. When we selected, they dropped down. It's gonna be Gibson. We don't have a Gibson yet, so we're gonna add the vendor. I'm gonna do that by first just typing in Gibson and I'm going to Click Tab or or if we could just select the plus here, so, like, two plus and it's going to guess that We want to add Gibson as a vendor. And that is, of course, correct. So we're gonna say add and save. Then we'll go ahead and tap through. There's no email, Gibson, we're not gonna put a mailing address yet, s so we're just gonna keep the name. Although we might want a male internship to We're gonna keep that same date we're gonna change the date to. It will be as a we'll say, 01 12. 21 January 12th 2021. Note. This is going to give us the current date, but we want to be working in the future and our problem here, so we will change the date. 1 12 21 January 1st 2012 2021 will keep tabbing through here. So we've got the product or the service item as the next item we're gonna have. These are gonna be inventory items, and we're going to do with the request these inventory items, they've already been input into the item list. For the most part, however, we're now gonna be entering an item that has not been input into her item lists and will be importing it or creating it as we create the purchase order to do that will select the product or service. And once again, if we select a drop down, these are all the guitars that we've purchased before and we have a purchase order or item set up for them. This one, we're going to say it's abbreviated as a GSB. So we're gonna call it a GSB not included yet, and therefore we will add it. So I'm gonna add this information. It's gonna be an inventory type. Items that were going to say it's going to be inventoried, meaning it's gonna have both a sale price and a costs, not a service item that we will be importing. We're gonna keep the short name here. We could put the full name on, and it's gonna be actually, the Gibson SG will be the full name. I'm gonna keep the GSB here because that's gonna go under the price and product item we're going to scroll down. I'm gonna stab through these items category. No category initial quantity. We don't have any because we're just purchasing it as update report point, we're gonna keep scrolling down, tabbing through these items inventory asset account it It's going to be an inventory acid account. So that's because we're purchasing. Inventory is that's correct. Sales description. This is where I'm gonna put the full name, and that is going to be a Gibson SG. So we're gonna have the Gibson SG there, and then we're gonna have these sales price. This is what we're gonna sell it for. Not what we're gonna put you in the purchase. Order the sales price, not the purchase price. That's going 777.4 777 and 40 cents the income account. Now it might default to something other than it might say sales of product. We're gonna just call it sales. That's gonna be our sales of product. So I'm gonna select the sales account, then tap through this and then the description once again, Gibson as G, and that's the purchasing information. And then finally, the cost. That's what we're gonna buy it for. This what's actually gonna go on this form, and that's gonna be the 598. That's what we're gonna be purchasing for, and that will go to the cost of goods sold, meaning when we sell it. We're gonna credit or increase the sales amount of Ah, that's a revenue or income account by the 7 77 40 cents. Then we're gonna increase the cost of goods sold, which is an expense of the 5 98 The difference between these two, of course, being the prophet when we sell this particular Gibson SG guitar, So we're gonna save enclosed that. Actually, these are required fields up here. So I'm gonna put initial initial quantity on hand. Zero as of date is gonna be the beginning of this year 0101 to 1, and then we're gonna say save and close, and then we populate this item. So here's our new item. It's a GSB Gibson SG. We're going to get one of those and the rates gonna be 5 98 That's of course, the purchase price, not the sales price that we had included. Sales price will be included when we make the related invoice to this sale, and we're gonna again add a customer here. Now, once again, this isn't going to be something we're gonna use all the time. For every purchase order, we might just be buying this guitar toe have in the shop to sell to whoever wants to purchase it. But in this case, we're going to add the purchase order saying that we're purchasing it for a particular customer who came in, said I want this particular Qatar. Could you buy it, want this color of these dimensions for it, and then we're gonna buy it, and then we'll be able to link this purchase order to a particular customer. That customer being music stuff, stores were gonna call it music stuff store, add the customer, and so that's gonna be our customer there. So here is our information. We're going to save this note, however, that although we have information down here, this is really unusual. Four forms invent. We don't have an actual financial transaction. No financial statement account, no balance sheet account, no income statement accounts being affected by this 5 98 just a request that will then help us to prepare this information. When we received the inventory, we can then match out what we got and see if it matches what we have here and then use this information to help populate and record that inventory as well as the next invoice or sales receipt once we sell this. Finished if sale too, Our client customer in this case, music store stuff. So we're gonna go ahead and print this information if we have the email address up top, we could email this, save an email directly from here. We are going to print it as a pdf file so we can email it there and or send it out. So we'll go ahead and print this, and I am going to then download this information, and it's going to the place I wanted to go to. So I'm just gonna keep it there and we're going to put the date. It's gonna be a 1 to 1. And you know what? I already have one there, so it probably should put something else Music, stuff store. And that's the P. O. Okay. And we'll save that. And there is our purchase order 44. 7.20 Part 1 Create Invoice with Inventory: Hello. In this presentation, we will create an invoice within QuickBooks online. It will be an invoice related to inventory. We will be selling inventory a guitar within the invoice. Here we are in the QuickBooks online dashboard. We will be continuing with the get great guitars problem entering an invoice and invoice for selling goods, selling inventory, in our case, selling a guitar in order to do so. There's a couple of different ways we can get to the invoice. We could go to the drop down here where this plus item is. This has a lot of the quick functions, and it's organized by customer vendor and employees. We would be dealing with customer and invoice. Once you start working with this a lot, this will probably be the most common way to go into the invoice. I'm gonna go into the invoice, however, over here on the sales item tab. So sales meaning and we're gonna make an invoice, which is kind of would be reasonable to put in the sales grouping and then up top. We're gonna go into the invoices right here selecting the invoices. And this is another way we can get to these invoices, and we will be creating a new invoice over here on the right hand side green button. Selecting the new invoice, we'll get a familiar type of invoice, and we're gonna go through this form and just tab through it and enter the data. Note that as we go through these forms, we do want to think about what the journal entry will be. It's very easy to do these data inputs and not really understand what QuickBooks is doing. If we can understand what QuickBooks is doing, however, then we get a lot better idea of how to fix problems and what the financial statements gonna look like and how to read the financial statements and all that kind of stuff. So we note that if it's an invoice, that means that we're not receiving payment right now. Otherwise, we would use the form called a sales receipt, and therefore the invoice really means that we're gonna be increasing the accounts receivable the account meaning making other people owe US customers owe us within the accounts receivable account. When that goes up, that's what an invoice will do for sure. The other side will be revenue. We're gonna increase revenue, and that's gonna be a sales item in this case sales revenue because we're selling goods. If we're a service company, that's all there would be. If we sell goods and services in Vandore in our case guitars, then we're also gonna have the decrease of inventory and related costs of get sold, all recorded by this simple form. When we put the data in, however, it's pretty easy to put the data, and we don't need to know all that just to do the data input. If we want to know what's going on, however, I want to keep that in mind. So to put the data input I'm gonna put in the customer. First we select the drop down, we could find the customer if we start typing in the customer name, which in our case is Anderson. We get the customer name and I'm gonna tab through. Now we're not gonna have an email address, so I'm not gonna put the email if you have. If we're going Teoh email the invoice. It's really helpful to do that. We can email directly from their from this invoice, which is nice billing address. I am going to add a billing address because we are going to have sales tax and the QuickBooks online is going Teoh need a billing address in order to calculate the sales tax . Now, I'm gonna use a California address because I'm more familiar with the sales tax there. So we set up the sales tax settings last time. If you want a prior presentations and go back and take a look in order to get that sales tax set up correctly Once we have that, then I'm going to set up the address. And I'm just gonna pick on address, which I believe is a pizza place here, and we'll have that and that will give us the just the option. This is just a random address, and so that will give us the calculation from the sales tax. We're going to say that the settings are gonna be, ah, terms net 30. We then have the invoice date. Here's the invoice date we are going to say is 01 12 21. So, january 12th 2021 that will automatically give the due date, then, which is february 11th 2021. And I'm gonna not gonna fill out the shipping information. I'm gonna keep that as is, and we're gonna just scroll down here, then to the actual inventory items. I'm tabbing through everything to the product item. Now, these are going to the inventory items we set up. So if we haven't set up the inventory, Adams, you go back and take a look at that the set up process. We're gonna be selling goods in this case meaning actual physical inventory in our case guitars. And we can select the drop down to see the guitars here and the other inventory items and or we can start typing in in our cases that g t p r. That's the one right there. I'm gonna click on that item and it'll automatically populate. Based on that information that we put into the item list, so will give us the description. It's a Steinberger solid body quantity. One rate is 410. It pulled that just from the items. Now note that that 410 is the sales price. The retail price. What is not being shown here is going to be the cost. However, QuickBooks is generating the cost will talk a bit more about that. As we go, we see that we do have the tax checked so that so That should be correct. Meaning? We're telling the system. Hate, calculate the tax on this. And therefore it does. And we see this calculation. So we've got the 410 sales price. You can imagine that being, if we're in a store, I'd be like the sticker price. My guitar. That's what we actually sell it for. Sales tax. Then we have this 31 78. Now that's gonna be based on the calculation in terms of what what state we're in, what the local sales tax settings are because this is kind of a generic problem. I want to make it so that it can be applicable to different states. Have different sales tax. Note that once you know how to calculate sales tax, it's all the same. It's just gonna be a tax rate times the sales. It's just the tax rate that will change. So I'm going to use a simple tax rate here. I'm gonna just a justice to a 5% across the board tax rate. So I'm gonna, for example, purposes that could be more applicable just to the concept 410 sales times 4100.55%. We're gonna change that to $20.50. So we're going to say that this sales tax were going to say is $20.50 and there will have that It's going to say that you want to keep that. Why did you do that? It doesn't. Relying upto what we calculated. We're gonna say, Yeah, let's keep that. I'm gonna tell us and other. And it's an example problem just to give them feedback to say they didn't mess up or anything. So you don't have to give him that feedback. But there you go, So that we have that now and then We have the end here. The 410 that 20 and that will give us the $430.50 is the total. So if we break all this down, what is actually happening here in terms of how is this gonna affect the financial statements? We know that it's going to increase accounts receivable, meaning Anderson hoses money by the fact that it's an invoice. That's invoice basically means that counter staples going to go up. It's gonna go up by the full amount of $430.50. We also know that sales is going to go up because it's an invoice and sales is the other side that always goes up and we can call it any kind of revenue account. In our case, we called it. I believe it's gonna be in sales revenue That's gonna go up by the 410 however, not the 430. The difference between the two is the 2050 sales tax. That's gonna be a liability account because we don't get to keep it. We have to pay it back into something like sales tax payable liability not on the incomes, David. Not affecting that income. Then we have two other accounts affected that aren't even on here. In terms of dollar amount or account one being inventory is going down. We can see the inventory item here. However, the amount is the sales amount, not the cost. It's gonna go down by the cost. We don't know what that is by This presentation will see it when we look at the financial statements, we would see it if we looked at the items. And then the other side is gonna be the cost of goods sold for this, which is an expense going up. So the income statement is going up by 410 and then down by the cost of goods sold, which we don't really know in terms of net income. So we'll take a look at that once we record this note. Once we recorded, we can save and send it. If we had the email appear, otherwise we can save it. Ah, we can print it or review it if we want. Let's do that. We're gonna say print and print or preview. And so here is our invoice. I'm gonna go ahead and download that, and we're gonna put that into this folder so it looks like it's going where I would like it to go. So I'm just gonna save that. We're gonna say invoice Anderson, and I'm gonna just put the date 01 12 to one, something like that and save that invoice. And there we have that. Okay, so now I'm going to go back and let's take a look at the financial statements and see what happened there. So this has been saved. We're gonna x out of this, and then we'll go to the reports and see what this has done. So we're gonna reports, uh and I want to take a look at all the report. So let's take a look at a balance sheet. The main reports of financial statements will first take a look at that balance sheet, and we're gonna change the dates from 101 to 1 the current the year that we are be working in our working in a 1 31 to 1 the first month of that year. And then we'll run that report and see what happens. So nothing happened. Cash scores wouldn't cat. We didn't get cash. Something did happen. Hopefully to receivable, we would think, Let's click on Receivable and see what we have in the detail within the detail. We see this account unstable. There's our invoice for 100 form. If there's the 430 if we click on that, then we get back to our invoice. Here. There's the 430 that looks word What's being affected So we'll close this back out, see what else is going on, and we're gonna scroll back up. When you go back to report summary, we'll scroll back down. So that was accounts receivable. Ah, the other side of the accounts receivable would be the sales side. So let's take a look at that. Second, that's gonna be the count's evil went up. The other side's actually on the income statement. So let's go back to reports. Over here we go back to the reports and QuickBooks calls that the profit and loss let's go look at the profit and loss reports will type in profit and loss. And then we'll change the date range from 010121201 31 to 1 and run this report. We get good at running these reports, and there we have it. And there's our sales item, the 410. If we click on that, that's our sales. The 410. If we click on that, there is our invoice Note, however, that it didn't pick up the 4 30 It picked up the 4 10 So the difference 2050. Where is that gonna be what's find it. We're too close this out. That's gonna be back on the balance sheet. So I'm gonna go back to the reports every year. We're gonna go to the balance sheet again. So balance sheet, we'll change the dates once again. Teoh 101212 01 31 to 1. Run the report and on the balance sheets. We then should have a liability. We would think of sales tax payable. So here we have accounts payable. Here it is. California State Board of Equalization and other current liabilities. They didn't call it sales tax payable. They'll night, they named the actual board we're gonna sell to now, of course, this will differ. Based on the area we are at so on, we might have multiple locations. So it's actually telling us a bit more detail than possibly we would expect, which would just be sales tax payable that we always sales tax. So that's good, though, because it tells us exactly who we need to pay to write on the balance sheet. Ah, we're gonna click on that. If we click on it, then we see our items here and our information and our invoice. So we're gonna x back out of this or go back to the report. Now, the other side of it is what we didn't really see on the invoice, and that's gonna be the inventory going down. So that's gonna be a balance sheet accounts. I'm schooling all around the balance sheet looking for inventory. We're looking for inventory, so that's gonna be up top under total counts, Other current assets, inventory letters, inventory. So we're gonna click on that and see what happened to inventory. And we see that inventory is here. It went down by 328. I don't remember that number at all. And when I click on that number and go to this invoice, I don't see that number here at all. And it's not gonna be here because it's on the items. When we created the items, that's when we set up the cost. So if I close this back out and we go to the sales and we go to the products services, we set up this e LP item here. If we click on the edit, then we can scroll down and we see the sales price and the item for the E LP, which is not the inventory that we sold school back down. We're looking for the g t this one. This one's the one we sold. So we're gonna take a look at it's information and we'll see that we put it in their sales price 410 and the cost is 3 28 So the system knows the cost. But we're not gonna put the cost on the invoice because we don't relate. Tell the we don't want to tell the customer what the cost is clearly, but the system will calculate it when we generate the invoice. Therefore, we will see the invoice as the back up to the inventory going down as well as the cost of goods sold. So let's see the last form. We're gonna look at reports we're gonna go to the profit and loss again profit loss, and we want to see from the dates 010121 2/1 31 to 1 and run the report. And then we got the cost of goods sold. Here is the other side of that 3 28 If we click on that. We see this item once again. If you click on it, we have once again of that invoice. Xing back out of that, going back to the profit and loss, we can see the effect on the income statement increase 410 from sales. Also, an increase in the expense of cost of goods sold 328 net increased to net income then is only $82. 45. 7.20 Part 2 Invoice with Inventory: Hello. In this presentation we will create an invoice with inventory into QuickBooks online. And we are on the QuickBooks dashboard. We will be continuing with the get great guitars problem. We entered an invoice prior to this presentation, and this will be the second invoice. We will be entrained with inventory in order to enter an invoice. There's a couple places we can go. Last time we took a look at the inventory by going to the sales item here and then going to invoices up top and then finding the new invoice. This time, let's go into the invoice by first go into this plus icon up top just to have something different. This will be the drop down customer vendor and employees giving us the major type of data input forms that could be used in those categories. We, of course, will be in the customer category because we will be invoicing a customer and we'll choose the invoice options. We're gonna have the invoice. Remember that an invoice is going to be used when we are not receiving payment at the same point in time and invoice for QuickBooks, in essence, means we're gonna increase accounts receivable that account representing people owing us money. So we're gonna increase accounts receivable. We're gonna increase revenue. And we're also gonna have if we sell inventory to decrease the amount of inventory and Teoh record the cost of goods sold related to this. We'll talk more about that as we enter this. And then look at what the effects of this invoice will be on the financial statements, balance sheet and income statement. So we're just gonna tap through this? Remember that the data input, it's really pretty basic foreign envoys. That's the point of QuickBooks having the data input to be pretty easy to dio. It's a little bit more difficult, really to think about what QuickBooks is doing in order to understand how the system is working. So we'll go through both here. We're gonna go through the data input. We're gonna start off with the customer, we select the drop down. We could see the customers here if we type in the customer and start to auto fill. We're looking for Jones guitar. There is Jones guitar. They were gonna select Jones guitar, and then we'll tab through this. So we're gonna tap through. This is the email. I'm not gonna enter an email. If you have the email, that would be great. And you can actually send directly with the email linked here. If not, men will print it and we can email it outside and or, um, send it by mail or print it and give it to him in some other way. So then we're going to have the address. Now, note that the billing address over here is gonna be really important once again because we want to calculate sales tax. And the new system with the auto sales tax calculation requires that we have either our address and or the billing addressed in such a way that we will be able to calculate the sales tax. If we don't have that, it's not gonna be able to calculate the sales tax. So typically to create an invoice, you don't even need the billing address. But in order to generate that sales tax item, we do, I'm gonna use just the same address for all the invoices, cause I know it'll calculate how I how I wanted to calculate just for an example. So it's gonna be this address again. You need something there in order, Teoh, Have it calculate through what the sales tax should be. We're going to go through the terms, then terms Net 30. The invoice date. The invoice date is going to be, 01 12 to 1. So net 30. That's the net. 30. Choose this one. And then the invoice date. 01 And we'll say 12 to 1, and then they will give us the ending date to 11 2130 days later. Then I'm not gonna put any different thing into the shipping. We're gonna go down to the product, act him, then this is gonna be from the inventory items. Remember, we need to have the inventory items set up in order to be able just populate this from the inventory items. We could do so by the drop down these air gonna be for us guitars. These They're gonna be types of guitars that we have on ah, in the store. So we're gonna type in G U S. That'll auto populate. This is the one we want. There we go. It's selected. We have that. The description is going to be showing up automatically. We scroll through the rest of this we have. We have one of these. The rate is gonna be 380. The amount 380 we do have sales tax. If we click off of here, then on some other line it will calculate the sales tax for us. Remember, if this doesn't populate their that sales tax doesn't calculate, it's probably because one we haven't set up sales tax, which means we have to add the state. Or that we that we have the sales tax in in the sales tax preparation. And then we need to make sure that we have the proper address in our own address and the billing address toe allow QuickBooks to calculate. Now, I'm also going to change this number because we're gonna make it even 5% just for an example problem. So all of our invoices gonna be even 5% and therefore out And remember, sales tax will be as long as we know that present, the calculation will be much of the same meaning we'll take the sales prices of the sticker price on our case, the guitar, the inventory item, that guitar, and then we're gonna just take 5% for the sales tax. So we're gonna take 380 times 5% or points 05 And that will give us the in this case $19. So I'm gonna change this item to $19 and that will be the sales tax we will be using. QuickBooks is going to say, Hey, you know, that doesn't look like the sales tax we calculated. We're gonna say yes, we want to keep it. And I'm just gonna tell him it's practice problem, and that's why we're doing it. So if we take a quick recap of what is happening here, then remember that we're gonna look at the financial statements and see what is gonna happen. Once we generate this invoice, we know that it is an invoice, and then therefore, accounts receivable is going to go up and go up by the entire balance of 399 representing people owing us money. We know that revenue also is going to go up. However, revenue or sales revenue, in this case because we're selling inventory is only gonna go up by the 380 the sticker price of the guitar. The difference of course, is $19 the sales tax that's gonna increase. Not an income statement account, but a liability account that being sales tax payable. Then we also have the fact that inventory is going down and there's a cost of goods sold. That expense related to us selling that guitar we didn't really earn 380 we earned 380 minus the cost of the guitar. We don't know the costing of the guitar. This is all in the sales price, but the system knows it. And we'll see it when we see when we go through and take a look at, uh, the financial statements. So we're gonna go ahead and print this now so we'll say print. Ah, preview. We wanna print or preview. And here is our item. We're gonna go ahead and save this, So I'm going Teoh, print this on or just download. Let's go up Here it was download this had him and there it is, and we're gonna say it's going to be an invoice. I would give it the date first, which is a 1 12 to 1 and will say it's an invoice for Jones guitars, and we will save that and close that. Now let's take a look at the financials and see what happens to the financials. So we're gonna close this out, Xing, out of this item. We will then go to the reports on the left hand side, we're gonna bounce back, back and forth a bit between the balance sheet and income statements, starting with the balance sheet. So I type in balance sheet here. We're gonna go to the balance sheet item and take a look at the balance sheet. We're gonna put the date up here is gonna be no. One. No 121201 31 to 1 and then run that report. So here we have it. Now we're gonna go through here. That invoice means that it's gonna be a receivable, so we know that receivables is gonna be affected so well. Selectively receivables item. And we see the invoice here. So this is the Jones and voice. It has the 3 99 If we click on that weaken auto, zoom down and we see that invoice that 3 99 being the total amount here. Now, the other side of this, typically, when we think about just recording a journal entry, Go back. I'm Xing. Out of that and going back to the report is typically the sales or revenue account that would be in the profit and loss statement. So let's take a look at that. We're gonna go to reports over here, and we're going to select the profit and loss will tap in profit and loss statement. Change the dates from a 10121201 31 to 1 and then we'll run the report. So for the month of January in the year were working in 2021 we have the sales of product income. That's gonna be Thies sales items. That's the default. We're gonna select that item 790. And there we have our two invoices and this one was for Jones Guitar 380. If we select that item, then we have the 380 note. That's this amount. The sticker price, not the full amount, including sales tax. The difference of sales tax. $19. Where would that go? We don't get to keep that. It's a liability. Let's go. It's gonna go on the balance sheet. So let's close that out. Go back to the balance sheet by going to reports. Well, type in balance sheet once again. Balance sheet. In reports, we'll change the dates once again. 010121201 31 to 1. No, we get quick pretty fast at that. But January 1st, 2021 Teoh in January 31st 2021. We're gonna run that report, run that report, and then we're gonna scroll down, Should be in the liabilities, that section and we have the liability of California State Board of Equalization. That's who we owe sales tax to. So rather than just having sales tax payable like we may imagine, there we have this item here. There is the amount. So if we if we drill down on that, then we've got it broken down in a few different sub categories. But if we click on one of these items here and scroll down, we'll see the sales tax calculation. Now it's close out of this and let's go back. So we're gonna go back to the summary report, and then we're gonna look for the other items. What's gonna be a decrease in the inventory and the related cost of goods Sold the inventory a balance sheet account, cost of goods sold, an income statement accounts. So we're gonna go the balance sheet and we're looking for inventory. Here is inventory. We're gonna select this 2000 to 64 in inventory and we're looking for this invoice item here. So here it is for ah Jones. There's 304 So three or four decreasing inventory from 8 2096 by three or 4 to 2005. 92. If we select that item, then we see the invoice. But we don't see that amount. We don't see that amount at all. What happened there? Remember that we're not gonna put the cost of the item on the invoice because we're not gonna give that to the customer. However, when we generate the invoice, that's what triggers the cost of inventory to decrease the amount of inventory reported. So in order to find that if we get the right guitar this time, it's ah G U S A. We close out here and we go to the sales and we go toe product and services, and we scroll down. We find that if we want to check where that came from, it's right here. This is the sales price, and this is the cost. $304. That's where that number is coming from. It's gonna be on the invoice or generated with the invoice, although it's not gonna be actually on the physical invoice. So we're gonna go back now to the reports one more time. And we'll look at the profit and loss, profit and loss going to the dates of a 10121201 31 to 1 and we'll run that report. And then we got the cost of goods sold. That's gonna be the other side. This is the expense related toe A selling the guitar. So revenue went up, expenses went up. The difference is the effect on net income. If we select that item, then once again we see the Jones guitar, the amount of three or four, which is the cost, not the sales price. Selecting that item we get back to the invoice and here once again is the invoice 46. 7.23 Undeposited Funds Set Up: Hello. In this presentation, we will set up the UN deposited funds account in QuickBooks online. Here we are on the QuickBooks online dashboard. We will be continuing with the get great guitars problem. We're gonna be setting up an UN deposited funds account because we're gonna be creating invoices and sales receipts. The idea of the UN deposited funds account is that we're gonna get deposits from customers . We're gonna group those deposits together, and then we're gonna deposit those in the bank all at one time and thereby put the deposit in the bank as a grouping and group it in the same format that we will see on the bank. Ah, statement. It's gonna be really important and really helpful when you want to check to see if a deposit has cleared and when we want to reconcile the bank account. So the idea once again, is Teoh not record every time we receive cash directly into the bank, but to wait until the end of the day or whenever we actually go to the bank and then deposit that information into the bank all in one lump sum and match that lump sum in our system to what it will be recorded in the bank and therefore be able Teoh, check our amounts to the bank much more easily, for example, in the form of a bank reconciliation. So we're gonna set up an account in order to do that, and then later we'll create invoices and sales receipts. So we're going to go to the items down here will be in accounting. We're looking for the chart of accounts, so we're gonna go up to the chart of accounts will be the first tab. Here's our chart of accounts typically going to be an order by type assets, liability equity, income expense, more specifically bank accounts than accounts receivable than the current asset accounts. Other asset accounts, fixed asset accounts, then the liabilities and so on and so forth. So we're gonna add another account. It's gonna be another asset account, and it's gonna be just, ah, holding account for our cash that we have or other receipts checks that we have received that we have not yet going to the bank and deposited. So in order to do that, we're gonna say new up top. We want to have a new account, and we're going to say that this account is going to be the account type of an other current asset. We want to make it an other current asset type of account, then the detail account. There's actually a detail account, four UN deposited funds and that will help us to track this information. So we're gonna go down and look for this UN deposited funds account that will help us Teoh track and group the information. As we record these deposits into the bank, it will give us the default name as UN deposited funds. That's typically what most QuickBooks users would be used to so that one will work. I'm gonna keep everything else the same. It's not a subcategory. We don't need any other description. We will save and close that. And then as we enter, sales receipts and invoices were going or receipts of payments from an voices. We will then be recording this into the UN deposited funds account and then using this account, then Teoh go into the bank so it's zero right now. It will increase whenever we get payments from customers, either from sales receipts or receipt of payment from invoices that we had in past, and then I'll go back to zero. Once we take that money and put it back in the bank record the deposit into the bank will see that in future presentations. 47. 7.25 Part 1 Receive Payment f: Hello. In this presentation, we will record the receipt of a payment within QuickBooks online. Here we are on the QuickBooks online dashboard. We will be continuing with the get great guitars problem. We will be entering a customer receipt payment. That's gonna be a payment that we received from the customer. Typically, this will happen in the format. Over. We got an invoice in the past or sent out an invoice for something that happened in our case, the sale of a guitar. And now we are receiving payment, possibly in the mail for the invoice that was sent out. We need to record that receipt of the payment. We're gonna do that by going to this little icon up top. That plus icon. This will give us a short window of many of the common transactions with the grouping of customers, vendors and employees and other. We're gonna be in customers over here, and we're gonna have the receipt of payment. So it's gonna be this item received payment, and we will see this screen. So we're gonna have received payment, and we're gonna enter the data within here in terms of the payment received, starting with the customer that we are receiving from Remember to look at these forms and know what we're actually doing with them when we say it's a received payment. That means that we're getting something some kind of money, sometimes of cash. Now, we could put that directly into the checking account. Or traditionally, QuickBooks put it into this UN deposited funds account. But it will increase the cash account in either way. The other side of the transaction then typically will be going to accounts receivable, reducing that account that represents the amount of money owed to us from customers accounts receivable. So we're going to say that we received the first payment from Anderson Guitars. We could select the drop down here and we can start typing to auto. Fill it, Anderson. There it is. We're gonna select Anderson Guitar's gonna tab through this, as we normally do, the dates is gonna be a 1 12 to 1, and the payment method we can choose the different types of payment methods were You want to say that we have a check here, Could be cash, could be credit card, and then the reference number. This is going to be optional we don't have to have a reference number. I'm gonna put 8755 for the reference number. Now the deposit. It's going to our checking account here and what you want to be careful with the deposits one, because we need to do the bank reconciliations at the end of the month. And we want a deposit in the same way that they're going to appear on the bank reconciliation and to a zoo. We have the cash right now. It's not really in the checking account, so there's a bit of a time delay if we say it's in the checking accounts. Now, we're gonna try to do what typically will be done within QuickBooks, which is to group them in this account called uncanny arised assets, sometimes called un deposited funds. And that'll be the holding account that we're basically going to use to hold this asset accounts until we go to the bank and make the make the deposits, in which case with at which time will take it out of here and then put it into the bank and deposit that will allow us to group multiple checks. So, for example, if we got five checks today and we went to the bank. At the end of the day, we can group all those deposits together and see them in one deposit as they would be seen on our bank statement helping us to then group the bank statement and match it out to what we have in our system, which is really, really important. We want to be able to say, Is there a problem here? Did this deposit clear? And it's a lot easier to do that if we have the grouping the same in our system as in the banking system. So we're gonna have that be the item here. Then we've got the two invoices that are outstanding. If we check on one, we're going to say that this is the one that we received payment for. So these air invoices we made in the past for click on them will go to that invoice. But we're receiving payment now in the mail for one of these invoices for click on this item, it will automatically populate the amount, so the amount is up here matches the invoice. If they paid us less than that amount, then we can put an amount less than that amount and there will still the amount outstanding do on this invoice. Here we have the full amount paid, and Thean Voice will be completely paid off after this has been recorded, then So just a recap. Once we record this, what's gonna happen? We're gonna increase not cash kind of cash, but not the checking account going into the uncanny arised assets, which we will then put in the checking account when we deposit it, and then the other side's gonna be decreasing the accounts receivable account for, in particular Anderson guitars. So we will go ahead and save this item and then see what the impact will be on our reports . So I'm gonna close this back out. When I close this out up top with the X, we're going to go to the reports, which is gonna be on the left hand side and go to our main reports. So it's selective the reports, and then we are going to look first at the balance sheet so we'll go into the balance sheet here. We're gonna change the date to the dates that we are working on, which will be from January 1st, 2017 No. One No 1 21 January 1st 2021 201 31 to 1 January 31st 2 2021 We're then gonna run that report, and there we have. Now, if we scroll through here, the first thing we have is going to be this uncanny arise asset. That's what we put this asset at this point until we then Canada as it and deposited it into the bank. So if we select that item, we have the uncapped ago rised asset. Here we have the amount of the 5000. If we selected that to 5000 then we will go into our payment to receipt, so there's gonna be the one side of it. If we close this back out, we'll go back to the balance sheet and we're gonna scroll back up. We're gonna go back. Teoh report summary back to the report submarine and we're gonna look for the other side of this transaction and that's gonna be in accounts receivable. Someone owed us money. They no longer always money. So we're gonna go into this 3 16,029 and then we'll see this sales receipt or payment here , right there. And the payments for the 5000. If we click on that, then we see the receive payment here once again. 48. 7.25 Part 2 Receive Payment: though. In this presentation we will enter to receive payment amounts into QuickBooks online. Here we are with QuickBooks online dashboard. We will be continuing with the get great guitars problem. We will be enter into customer receipts when considering the customer receipts. We want to make sure we know where we are at. And that is that We issued an invoice in the past. Now we're receiving payment on that invoice. The invoice basically saying, Hey, we did work in our case, gave a guitar, delivered the guitar her and we expect payment in the mail. We are now receiving the payment, and we need to record that to receipt of payment. To do that, we're gonna go to this, plus Eitan up top this half. Most of the quick forms that we will be needing in order to inter datum. We have the customers, the vendors and the employees sections. We will be under the customer section and we want to go down to the receive payment amount here or receive payment item here, and we'll select that item and we're gonna go through here and enter the simple data through here. Make sure that we want to focus in on what's actually happening in terms of the financial statements as we do this, the received payment means we've got some kind of payment. Cash check, credit card. That means we got money. Typically, we would think of the checking accounts going up. However, we're gonna put it into an other account in this case on uncanny grise. Count that we will then deposit into the checking account as we group them together. And the other side is gonna be decreasing the accounts receivable for the customer who has now paid us who now no longer owes us and therefore the account representing them. Oh, enough money accounts receivable is going down. So we're gonna get money. We got money from ah Jones guitars. And that's what we're gonna be issuing or recording here, going to select the drop down to find Jones guitars. And then we could also type it in, and it will auto fill in selected Jones guitars. But then we can tap through this information. We're gonna have the date here the day it's going to be a 1 12 to 1. So january 12th 2021 the payment method could be a cash check, visa or a credit card. We we will select the payment method of cash. We're not gonna have a reference number. And instead of going to the checking account, which we could have it go directly to the checking account here, we're gonna put it into the uncanny arised asset. And then once we go to the bank, we will then group all of our deposits together and put them into the bank at the same time . We didn't have the amount of received over here. We could populate that directly here. Or we could go down to the invoices and select the invoice we'd received payment on. And it will then auto, populate the amount up here. So if we receive payment for this envoys of 7500 then we can just select this item. It will auto populate the amount that we received. It will then populate it here as well, saying that we have received full payment on this invoice. If, however, we received something less than full payments, we could put something less than full payment here, selected this invoice and then we'll still have a payment remaining do on this invoice, so that's gonna be it. Here. Let's remember what happens when we record this. We had an invoice in the past that put information or in accounts receivable, representing the customer owing us money and sales. We now got the money meaning cash went up, but not in the checking account yet. Therefore, we put it into UN deposited funds so we can group them at the end of the day and then deposit at one time. And the other side is going to reduce the accounts receivable for Jones guitars in specific . We're gonna save this and go to a new one into another one, and then we'll go to the reports and see what happens to the reports. So save a new green icon down right hand side. We'll do this one a bit quicker this time. We're gonna say that customer, we can say they dropped down for the received payment. Type the customer in their toe auto fill. We're going to say it's Smith guitars, so we will select Smith guitars having through this. We see we have the date January 12th 2021. We are going to have the payment method which this time will select a check is going to go into the UN categorized fund again. Rather than going directly into the checking account, we have the amount. But once again, we're going to select the invoice down here. We have an invoice outstanding for this particular client. Note that we had to put that client in in order for it to then generate this invoice that we had entered in the past for that client. If we then select that invoice, then it'll give us the 8000 here. Put that amount in the received payment. Once we save this, then it's going to increase cash. But not the checking account in a new categorized asset which we will then deposit. Hopefully at the end of the day, put it all together, deposited at the same time in the same amount, which will then be on the bank statement allowing us Teoh reconcile our cash account to the bank statement. So we're gonna save this and then we'll go to the reports and see what happened. So we're gonna say save and new, and then I'm gonna close this out with the X up top. Let's go to the reports reports around the left hand side. So we're gonna select the reports. We're gonna look at our our normal reports. We always look at which it will be the balance sheet, the financial statements more specifically being the financial statements and the dates. Then up top. We're gonna say our 101212 01 31 to 1 January 1st, 2021 to January 31st 2021. Let's go ahead and run that report. So here we have the report ran and we're going to scroll down and remember that we put the money. We got money, but we didn't put in the checking account because we haven't gone a bank it we will do that shortly. What we did do is put it into this uncap ago rised assets. We have that much 20,500 there. We should really go to the bank soon. That represents money that we have just, you know, in our store right now that we haven't yet deposited into the bank, we're gonna select that item, and then we see the items here. So we had Anderson that we did that last time we've got the eight 1004 Smith and Jones 75 If we select either one of these, that will then take us to the receive payment form that we just input. So we will close this back out, take a look at the other side of the transaction, scrolling back up, going to the back to report summary, and we will then find the other side, which was accounts receivable. Here's accounts receivable. We select this item, it should be going down by the fact that we receive payment counter stable representing the fact that people owe us money. Once they have paid ifs, they no longer Oh, us. And therefore it should be going down. So here we have the eight and the 75 selecting either of those we see the received payment . 49. 7.30 Part 1 Sales Receipt f: Hello. In this presentation, we will record a sales receipt in QuickBooks online. Here we are on the QuickBooks online dashboard. We will be continuing with the get great guitars problem. We will be recording a sales receipt. It's important to note what a sales receipt is in comparison to a related document, that of the invoice, the sales receipts gonna be representing the item that we are selling and payment happening at the same time. Whereas the invoice represents the fact that we sold something and we have not yet received payment, meaning we're selling something in our case being guitars. We could also think of this as a service company where we would do the service and had not yet getting paid gotten paid. That would be an invoice that we would be sending out in expecting to be paid in the future . If we're getting paid at the same point in time, that would be the sales receipt where we record the form of payment now and the related sales at the same time. So right now we're saying that we are going to be making a sale in our case, a guitar that we're selling. We're getting payment at that point in time, you can imagine it being in the shop were actually in the shop and we sold the guitar. Someone brought the Qatar up has to sticker price on the guitar, and it's going to give payment. At that point in time, we're going into that transaction into the system here. To do that will go up the plus icon up top where most of our quick kind of transactions will be. We have the customers, vendors, employees and other. We're looking in this case to the customers section and we want to find the sales receipt. So here is the sales receipt that we will be recording for this particular customer recorded the fact that a guitar is the purchased at the store payment received at the same point in time. We're gonna get this from, ah, string music. So that's gonna be our customer who were selling the guitar for two. At this point. Remember to keep in mind everything that's happening as we report this form. So here's the form that form means that we're receiving some type of payment, typically going either to the checking account or into in our case, we're gonna put it into that uncapped ago rise fund to be deposited later. The other side of this will be some kind of revenue. So we're gonna select the drop down. We're gonna look for string music. We don't have one. So we're gonna type in string music and we will add string music as a customer. So we're gonna add new customer string music. We're not We're not going into the details right now. We just have the name. Details would be this screen showing all the other information here. We're just going to keep the name. That's what we need to keep going. We then have the email address. Email address would be important. If we were going to email this information to them, send an email. If we're gonna print it, then we don't need it. We're not gonna put it here. We have the billing address. Now the billing address and the address for our company are going to be important when we consider things like sales tax. So if we are not charging sales tax, if it's a service company for not subject to sales tax, then the billing address may not be as important and we can move forward. If, on the other hand, we need to calculate sales tax, as we do here on a guitar, it's gonna be important to put these amounts here on the amount the address here and then go through and set up the sales tax. The new sales tax, remember, will be set up so that the computer will try to calculate that. And in order to do that, you got to set up the sales tax. We have to say it's taxable for the item that we're selling, and we need some type of addresses so the system can know what the rate will be. So we're gonna use this address California address here, and ah, that should hopefully allow us to have the sales tax. Then we're going to say the date will be, 01 16 to 1. We are working in the future. So january 16th 2021 we're not gonna have anything in the shipping information. The payment method we're going to say is going to be cash, no reference number and what we're not gonna put it on the checking account directly because we're kind of imagining we're getting it at the store here and we're going to go to the bank at the end of the day and deposit not only this check, but multiple checks, and therefore, within our bank statement, it will be grouped with multiple checks. We want to group it in the same format so that we can then do the bank reconciliation at the end of the month. And therefore, we're gonna put this first into uncanny arise funds and then go and deposit everything that's within the UN, categorize funds to the bank and in so doing, group it in the same format within our system as will be seen in the bank. Then we're gonna have the product down here, and we're going to feel like a tar. If we select, the drop down will have all of our items. Once again, these Ivan's are these service items that would be seen when we entered in the items where they go in and enter these items. If we had not yet entered an item, we can add one here or we could select the items that we have. We're gonna have a while. They can't. So that's the one we won. It's an EPA phone, semi hollow body guitar. It's gonna be a quantity. We have one. We have the rate at 400 the amount of 400 because it's 400 times one and then we have the tax. It's gonna be taxable. Now, the tax isn't showing up here yet yet to be off the sales. If I click off of it or a tab one more time, then we'll go to the next cell and we should see the calculation. So here's the calculation made now, because this is just an example problem. And I don't want to make it specific to a state. And I want to make it Ah, somewhat even or a simplified numbers. I'm just gonna change this to 5%. So our sales tax is gonna be 5%. So if you're working in QuickBooks, you can't change it unless it calculates something and then you can go in and change it. If if you want to. At this point in time, so it's gonna be 400 times 4000.5 we're gonna use $20 so we're gonna use 20. And because this is not a problem based on the calculation of the sales tax. We we just want to use a somewhat standard sales tax that on just get the concept of what sales tax will be, and you can apply that to any location. So we have $20 so there's the 20. If we click off of there, it's going to say, Hey, that's not what we calculated We're going to say yes, we want to keep the 20 and I'm gonna tell QuickBooks that it is an example problem and therefore they didn't do anything wrong there. Calculation was fine. So there we have that. And if we look at what we have so far, then if we think about what's gonna happen, as I always suggest, we due to the financial statements when we record this, we know that the UN positive funds kind like the cash that hasn't yet been deposited will go up by the full amount. The 420 we know that revenue will go up. Some type of sales revenue merchandise sales revenue will go up by the sales price. The sticker price on the guitar, which was only $400. The difference will be 20 that will have to do something with that will go into a payable. We don't get to keep that. We are collecting it, not giving to keep it. However, Therefore, it's gonna go into something like sales tax payable, which we will then have to pay some point in the future. There's also the inventory going down. We see the inventory item here, but it's not gonna be going down by 400. That's what we're selling it for, not the cost of the inventory. It will go down by the cost. The system knows that cost. We're not gonna put the cost on the sales receipt because we're giving this document to the customer and we don't put the cost on document. We get to the customer and but the system knows it in this form will drive the inventory going down. And we'll see that as we look at the financial statements and the other side is going to be the cost of goods sold, which will go up and bring that income down effect on the income statement, then increase of 400 revenue but also increase in cost of goods sold and expense. We don't know what that amount is. We'll take a look at it on the financials. But the difference would be the increased to net income from this form. So that is going to be this and we're gonna go ahead and save this item. It's also an item we may want to print out. Oftentimes I'm gonna go ahead and print this item. So we're gonna print and here is Here it is. I'm gonna download it and save it, and it's going to go into our docks. That's right where we want it to be. So I'm going to call it a date of a 11621 And it's gonna be for straight are, Let's call it sales receipt, string music and we will say that. And there we have that. I'm gonna close this out. We'll go back to the reports now and see what happened. So we saved this when it close it and let's go to the reports. So we're going to go the reports on the left hand side check. Our main reports are financial statement reports, which will include the balance sheet. Let's go. The balance sheet. Here it is a top and we're gonna change the dates to the current period. We're working on a 1012121 31 to 1. And then we will run that report. Here is the report. Now we put this into UN deposit funds. So here's the UN deposited funds account. It is increasing where at 20,920. That's money that we assume we have that we haven't put it into the bank yet. So if we select that item we're going to see here is our our items here. And this one was the 420 right there. So for select a 420 we can see here. It's a sales receipt. If we select that, then we should actually see the sales received we created. I'm gonna close this back out and go back to the report. The other side's typically gonna be on the profit loss related to that cash growing up, that being revenue. So let's go the profit and loss. Check that out. We'll go to the reports left hand side. We're gonna go to profit and loss, profit and loss report, and we're gonna change the dates once again. Teoh 10121201 31 to 1 January 1st 2021 to January 31st 2021. That period that we are working on, we're gonna open up the run reports. And here we have this item. We're going to say the sales then, is sales of product income selecting that we should then see that not for 20 but the 400 sales received clicking on them. Why do we have for 20 and not the 400? Because we're recording just the sales amount of sticker price of the guitar in sales, not the $20 sales tax, even though we will be receiving 420. So let's close this back out once again, and we will then go back to the report back to the report summary, and we're gonna check out the other side of this and that's gonna be the $20 that's gonna be in the sales tax that's back on the balance sheet. So we'll go back to the balance sheet reports on the left side here, reports we're gonna select the balance sheet, and we're gonna change the dates once again 2010121201 31 to 1 and run that report. Once we scroll down, we now are looking for the liability related that $20. So if we scroll down, we have the liabilities, the California State Board of Equalization. So if you're using California, it will show that if you're not in California, you're using something else. It'll have some other body that will be the collecting body of the payments. We will be making four sales tax. Gonna select that item. Here's the information related to the sales receipt. So if we select that, we then we'll see our sales receipt. Once again, there's the $20 gonna close this and go back to the report once again, back to the report. Now there's the item that we didn't see was the inventory must be going down so the inventory is going down. Here's our inventories and asset account. So we're up in the assets Here's inventory, we select inventory. Then we're going to say what happened to inventory? Um, it went down by 320 from this firm, this sales receipt. So if we select that 320. We see no 320 on this form. Why not? How could this form be the cause of that 320 when there's no 1 320 on this form and that's because it's being driven by this item. This item, when we enter this item is gonna have the 320 costs and the sales prices All we're gonna have here. So this form is driving the 320 invoice inventory going down. Although it's not on the form, let's find where it is at. We're going to say this is a wild cats. I'm gonna close this out. We're gonna go to the sales items up, Tom. We're gonna go to the products and services and scroll down, see if we can find that wildcat inventory item when we enter this inventory item we said here that had a cost of 3 20 That's where it's pulling that 320 from. So now let's go to the reports once again. And let's see the last component on the profit and loss or income statement. Profit and loss is what it's called by QuickBooks profit loss. We'll change the date once again, 2010121201 31 to 1. And we will run that report. So the other side's gonna be in the cost of goods sold. So sales went up by the sales price, which I believe was the 400. And then the cost of goods sold is going to go up. The expense related us consuming the inventory in order to help generate revenue. If we select that item, we see the 420 right here selecting Ortho 320 right here selecting that item. Then we see the same sales receipt, the same sales receipt here, that number being driven by once again, this item. So I'm gonna close that back out the effect on net income. I'm gonna scroll back up. We're going back to the report summary and the effect on that income. That is an increase of 400 for the sales price. An increase in costing it sold of it was 3 20 The difference was the net increase in net income on our profit loss or income statement. 50. 7.30 Part 2 Sales Receipt: Hello. In this presentation, we will enter a sales receipt for a service item in QuickBooks online. Here we are on the QuickBooks online dashboard. We will be continuing with the get great guitar problem. We're gonna be entering a sales receipt, four service items as opposed to inventory items. So, for example, we won't be selling guitars, the inventory item, but having a sales receipt for a service item, it's important to note the difference between a sales receipt and an invoice, The invoices, What we're going to use when we do work, and we expect to receive payment in the future. In essence recording and I O. U and accounts receivable from the client. The sales receipt within QuickBooks is going to be the documentation used to record the sale at that point in time. So this item, we're going to use the sales receipt you can imagine we're in, they get guitar store here. Someone came in and I get a sour store and wants to have the service on their guitar for returning or diagnosed something on the guitar involving service not selling a guitar, and we're gonna do the service and get paid at that same point in time and that would be the sales receipt. In order to enter the sales received, we're going to go up to this item up top the little plus item. This is our quick window to get to most of the documents in a quick fashion, we're gonna be in the customer section and within the customers section, we want a, ah, sales receipt. So here is the sales receipt going to select that item and we see a sales. You see a lot similar toe to an invoice. Just remember, the difference here is that when we see the form sales receipts, it means that we got money and either deposited into the checking account. But typically, we're gonna put it into some other accounts on account, like UN deposited funds and then deposited at a later time. And then the other side of it will be going to revenue. If we were selling inventory, we would also have a decrease in inventory and cost him get sold. If we don't have inventory such as a service item, as we're doing now, then we don't have to worry about that second piece. It's ah, it's a more simplified process. So we're gonna pick the customer first of all, so we select the drop down. Here is our list of customers. If we start typing in the customers, it will auto fill. We're going to say we're on Sam the guitar Man, and this is a new customer. So, Sam, the guitar man is not very yet. So we're gonna add Sam, and then and we're gonna say, Sam, the guitar man. Then we're gonna tab through here. So we're gonna say the email address. We don't have one at this point. If you have the email address, it's it's useful. If you want to save and send by email. If you're just gonna print it out and give it at that point time or save it as a PdF than email is not as necessary. We're then gonna tab through here and we get to the billing address. The billing address will be important if we have sales tax now, in this case, the service items. So we're not gonna have any sales tax, and therefore the billing address would not be as important. But just keep in mind as you work with this, if you're selling something that has sales tax. QuickBooks online will do this automatically now, and in order to do that, it needs it needs the address of the store. So when you set up the company, make sure to have your address in there and it needs the billing address in order to calculate the SAT sales tax or at least where the sales gonna take place, and as well as setting up the agency or the location by agency as well that the sales tax will be required. So I'm gonna add an address here, even though we don't really need one for service items. It's not gonna be as big a deal for the service items. We're then going to go over here and have a date. As of 01 16 21 we will be working in the future here, tapping through the shipping. We don't have any shipping. The payment method we're going to say is cash. So we're gonna say cash and the reference number and then make sure this is un deposited funds UN deposited funds. So it's gonna go in on deposited funds when we get payment. When we get the cash, that means we have it. You can think of it in the store in the register. Then we're going to deposit it into the bank at the end of the day. Then we're gonna have the product or service thes. They're still going to be items here, So just like inventory items, we've already listed the items out. We have input the items. If you want to see how to do that, take a look at the prior presentation and if they're already in there, then we could just use those. If they're not, we could end up. We could enter items here as we go as well. We can add the items in this screen or we can add all items in a prior screen, and then they should be set up. It's great to have them set up because once they are set up, then anybody can run this system that can basically is. You can say, Hey, run the register, Run the QuickBooks system record these and it should be a simple data input processed at that point. So we're gonna have a diagnostic. So I'm going to say that dropped down diagnostic. I'm not sure exactly what that is in terms of guitars, possibly a diagnostic on the amplifier or something. I don't know, but we have one of those that we sold that we have a service item for that. And we have one rate 68 68. No tax is gonna be applicable because this is gonna be a service item. And then the next Adam we're going to say, is a guitar to note guitar full. Tune up. Well, let's let's see the drop down. We'll see the drop down to see if we have the guitar, actually, label that our service. So there it is. And that's gonna be the description guitar tune. Now, word of this description be different than the our service. How did that happen? Because that's in the description. When we set up the inventory item, it's is pulling that information in. So that's gonna be ah, quantity one rate, 140. So there's the 140 there tapping through that. That's all we have. So this is gonna be our to service items were imagining someone in the store getting a diagnostic in an hour service on their guitar equipment, and that's going to cost $208. There's no sales tax because this is a service item. If there were sales tax for any particular reason, we have to select that tax item here. Let it calculate their, and that's going to give us the total then of the 208. So let's just recall what this form is going to do, and then we'll go see that it does what we think it's going to do. We know that it's a sales receipt. That means we got a payment. We didn't put it in the checking account, so we're gonna put that in the UN deposited funds. An asset account under positive fund account will be increasing. The other side is going to be the fact that we earned the revenue through the service. We did agnostic and our service, and therefore the other side will be some type of revenue account on the income or profit and loss statement that will increase as well. So let's print this out and then we're going to go and check out the financial statements so we'll go to print or a preview print or preview, and we will print or preview of this documentation. Then we're gonna download this information and save this to the place where we want to put it on our desktop dates gonna be, 01 16 21. And it's gonna be a sales receipt for Sam. The It's our man. Hopefully I spell that. Okay, that's okay. We're gonna save that, and it has been saved, and we can do whatever we need to do with that. And we're gonna go ahead and close this now, Ex out of it up top with the ex. And let's go to our reports and see what happened to the reports from this document. From this sales receipt, we're gonna go to reports left hand side, drop down menu. We're then going to go to our balance sheet. Type in the balance sheet, select the balance sheet, change the dates to the dates were in no one. No. 1 21 Teoh 1 31 21 January 1st, 2021 to January 31st. 2021 will run that that report and see what happens. So we're gonna scroll down. We got cash, remember? And we put it into these un deposited thoughts. We have a lot of UN deposited funds. Right now, we really need to go to the bank. But that represents funds that we have that we have not yet gone to the bank with their basically in store. So we're gonna click on that. And here is our items here. And there's the Sam the Guitar Man payment or sales receipt. Item free. Click on that. We will see the sales receipt. Hopefully that we have just input. There it is. So there's the 1/2 the one side of the transaction. We just did gonna close that out. We're gonna see the other half the other side of the transaction. We just did scrolling back up. We're going to see the back to report going to go back to the report and the other side should be revenue. That's gonna be not on the balance sheet, but on the income statement. So let's go to reports on the left hand side, selecting reports gonna type in the income statement or profit and loss as it's often called or is called on QuickBooks. There's the income statement will change the range from a 1121213121 And we will run that report. So we're running the report for January 1st 2021. The year were working into January 31st 2021 the year we are working in. We have a revenue account. No, we have to revenue accounts here. This is gonna be the inventory we sail, which QuickBooks is calling sales of product income. And this is gonna be for the service items. The items that don't have inventory related. Teoh, the revenue we make we, of course, will be choosing this. Second won the 208 We'll see the items here. And ah, we have the 140. We're going to select the 140. And here is the data that we have just entered for that information for the to 08 So we've got the two items here. So if we close this back out, note that this is one sales receipt with two items in it. If we close this back out, we see the detail is actually breaking it out by items. So it's the same sales receipt number 1007 with these two items in the detail for this transaction report. Kind of this kind of GM. General Ledger, by the way, showing the detail of the account that history of the account, we're gonna go back to the profit and loss. Now, if this was something like inventory we sold, then we would also have cost of goods sold here. No cost of goods sold this time because we did service, not inventory. Therefore, that too. 08 is the increase we have. The only increase we have that will increase net income. 51. 7.32 Sales Receipt & Payment Correct: Hello. In this presentation, we will cover the correction of a sales receipt within QuickBooks online. Here we are on the QuickBooks online dashboard. We will be continuing with the get great guitars problem. We're gonna be looking at an air and correcting an air within sales receipts and receipt payments. We're going to find that error, identify the air through the reports, then think of ways to adjust the problem and think of pros and cons to adjusting these problems. These finding errors and then adjusting errors and finding ways to fix them is one of the areas where we really need to understand what the software is doing. So it's good practice to troubleshoot what is going on in order to see what we're gonna do . We want a first run, a report. So we're gonna go to the reports down here, select a report. We want to see the financial statement, the balance sheet, some type in balance sheet and select the balance sheet. And then we're going to say the date range is going to be from a 1012121 31 to 1, and we will run that report so This is the time period that we're working this problem through. I'm gonna look through and identify the area where we're having an issue and then troubleshoot and see if we can fix the problem going forward. We're gonna run this report and there we have this report. Now, what we're looking at here is gonna be this uncapped categorize asset account is 20,920. The concept here was to put it in the UN categorized assets and then Teoh use that to deposit in the bank in the grouping. We're going to the bank with those deposits so that the grouping within our system in terms of deposits is the same as on the bank statement. Now, the QuickBooks usually has an account called un deposited funds to do that, and they still have that. It wasn't set up on this system. We tried to go back and correct that and prior presentations. So hopefully you don't have this problem if you're working through the problem. But if you do have this or if you see this in another area and you have something in uncapped ago rise assets and now you want to make a deposit, but you'd like to group it a little bit differently. You'd like to use that UN deposited funds feature within QuickBooks to group it a bit differently. Then we can go through and make adjustments to these. So in order to see that, let's first look at the deposits and then we'll go back here. So I'm gonna go back to the plus item up here and pretend we're gonna make a deposit and we're going to go down to bank deposits. And typically here we would see the UN deposited funds listed out, and we can kind of check off the UN deposited funds because it's set up as another current asset, not as an UN deposit funds. We can't make that adjustment. So if we were to troubleshoot this problem a couple things, we could do one. We can try to see if we can change the account type to be un deposited and see if that will make any any changes when doing so. We got to be careful with that links to other accounts because it could cause other difficulties. So to see that first step, if we close out of here and we were to try to change that account account type so it shows up there. We could try to go to the accounting on the left hand side and find that UN deposited funds account. Here's the UN deposited funds and see if we could edit this information. This is UN deposits is uncanny arised asset. And then we set up the sun deposited funds. Owen Categorize has that 9 20,020 If you go in here, you could try to edit this and create the subcategory to be UN deposited funds. Now it's not gonna let us do that. It's going to say that there's problems with us doing that. We can't We can't change the subcategory. So that's the first thing you could try to dio. You want to be really careful if you're changing, subcategory. So it might not be something that that you even want to attempt some cases because the links could have problems that you changed subcategory. The other option we can try to dio is let's see if we can set up a nun deposited fund, as we've done in the past set up a new account with UN deposited funds. If we look at this set up, then it's We're gonna edit this. We have the other current asset, subcategory un deposited funds. So we set up that account and really, what we would like to have now, is this amount in here now? We could do that with a journal entry journal. Entering the whole amount over there and that has some pros and cons because it doesn't deal with prior data doesn't make us go back into the data and and change anything. It would be from this 0.4 and we can say, Hey, this is the problem that happened will make the journal entry. That is probably actually the most proper way to do this. Because then you have a paper trail of what we did before, and we have what happened. Now what we're gonna do, though, is we're gonna do what QuickBooks allows us to dio and try to go back in there and see if we can Ah, just the entries that made up this 9 20,020 to now be recording in this account again. If you've been working through with the problem, hopefully you put it all in the into UN deposit funds as we go. But if not, or if you run into this problem this type of issue, then this is one thing QuickBooks allows you to do. It allows you to go back in the prior transactions and makes adjustments. There's pros and cons to that. You know, always wanna want to do that because it could distort or change data to financial statements and linked information. But if you're careful with that, that's one of the pros and cons that QuickBooks has. So to do that, let's go back to reports. How could we do that? We can go to reports, and we kind of go backwards from the reports to each each item. So let's see how that could work. If we go to the bank, uh, we're gonna go to the balance sheet, so we'll select the balance sheet and the date range. Once again, No one no. 121201 31 to 1. That's the range we will be working in. And if we scroll down here, we will then find these uncapped ago rise assets. Now we don't see the other account on deposited funds because it zero once. If there was something in it, we would see it. What we want to do is move this amount to UN deposit funds. Another current assets, just another current asset account. But we would like to have it have that feature that would link to the depositing section. So I'm gonna select this Adam the 9 20,020 and we see all the information here that makes this up. It's a payment, payment, payment and sales receipt. So what if we just go into each of these by drilling down on each of these and then changing the UN deposited fund account, changing the UN categorize fund to UN deposited Fund? It will change things retroactively and past transactions. Not always something we want to do from a paper trail standpoint, but it might work in terms of a QuickBooks standpoint. So let's see what happens here. We're gonna go Teoh the 5000. It's going to uncap ago. Rise asset. If we change that too UN deposited funds, remember, what this is doing is it's a sales receipt from Anderson, So that means we got payment in this case, a check, and it hasn't gotten to the bank yet. so we didn't put it into the checking account. We put it into uncanny arised assets. We're gonna take it out on Categorize Asset Re issue this and just put it into UN deposit funds and save that it will say that and that has been saved. If I close this back out, then we go to the second item here. Payment 7200 and we'll do the same thing. It's it's a received payment. We got a payment. Cash in this case hasn't gone to the bank yet. We put it into uncanny cries. Assets. Let's change this to UN deposited funds and then we'll just save that and we'll save it. And then we'll close this out next one. We've got the 8000 payment we're going to select that we're gonna go into this is a payment from Smith. We put it, haven't deposited it yet. We put it into uncanny grabs assets. Let's change that to UN deposited funds. We'll save that. Yes, and we'll close this and do this one more time. The 4 20 This is a sales receipt. I'm going to select that item. This means that we made a sale on invoice kind. Not like a like an invoice, except instead of going accounts receivable, we got payment at the point and got cash, and we put it into that one categorized acid again. Let's change that to UN deposited funds and save. Or let's just say that. And then we'll close this out and we'll see that the subcategory that transaction detail is now nothing in there because we cleared it all out. If we go back to the main report back to the balance sheet, then and scroll down when Now we see that UN deposited funds account not Ian Categorized Asset account having that 20,920 in it. So that's one way we can make that adjustment again. You got to be really careful when you make that adjustment. For a paper trail standpoint, you probably want to make a journal entry and adjust that the information out so you can see everything that happened. But from a QuickBooks standpoint, you can go in and make those prior period those prior adjustments by actually adjusting the forms, and you typically have more leeway than another software to do that, which is a benefit and could be a cost. So now let's take a look at the deposit sheet. If we go back to this icon up here and we were to record bank deposits, we then have this nice little feature that allows us to check these off. So instead of us, you know, having to put the mountain in, Ah, that we're depositing from the UN categorized section. We could just check these off, and then we can group them in, however, format, that we went to the bank. And probably if we were just going to bank every day, we would deposit the full amount. We would take anything that's under positive, go the bank, deposit it. But if we're grouping it in any other format, this is really nice, because we can just check these off and we could deposit it in any format that we hope to have. And that's helpful because it helps us to tie out what the bank statement will say to what we have. So again, if you're following along with this problem, hopefully you avoided that by putting it into under positive funds from the beginning. But I thought we'd put this in here troubleshooting This is is going to be useful to do. This type of troubleshooting is useful to consider in this case Ah, and related types of cases. 52. 7.35 Deposit Record: Hello. In this presentation, we're gonna record deposits within QuickBooks online. Here we are on the QuickBooks online dashboard. We will be continuing with the get great guitars problem, and we're going to see how to record deposits and group deposits in the same way that we will be depositing them into the bank. So to do this, we want to go through the scenario of what is happening in terms of the ordering of when things are going to take place, why they're going to take place in that way. Why we need to enter them into the system. In that way, when we're going through the normal business process, we're gonna be processing invoices and sales receipts, invoices, meaning we are invoicing someone, and we're gonna get paid at a future point. Sales receipts, meaning we're getting paid at that same point in time. In the case of an invoice, we expect to receive payment later. So within the mail, we expect hopefully to get a payment for the invoice for the work we did in the past. If we had a sales receipt such as a guitar and was sold in the store, we probably get payment right At that point in time, we get cash. At that point in time, let's say then at the end of the day, we're gonna have receipts that we got from invoices that happened in the past and we're gonna have sales receipts that we got from sales made during the day. At the end of the day or at some time interval. We're gonna have to then go to the bank and deposit this information into the bank. As we enter this into the system. When we get the money either from the receiving of payments from an invoice in the past or a sales receipt, we dont put it right in the checking account because it didn't go into the checking account If we received a cash or a check what we're gonna do with put it into this UN deposited funds go to the bank at the end of the day, then put it all in the bank in the same grouping that we deposited into the bank and therefore will have the same grouping in our system as we will see from the bank on the bank statement will be needed to do that when we match up our system to the bank statement in the bank reconciliation. So we're gonna go through this process now is basically the in process where we're more making the deposit. We're going to the bank at the end of the day, and we're gonna deposit this thes money that we've got turned the day. So we're gonna go through here, We got the the normal transactions in this little plus icon. We have the customers, the vendors and the employees and the other. And we want to be in the banking system, so we're actually in other. That's gonna be the normal kind of transactions that don't fit into just one of the customer vendor or employees. And we're going to say the bank deposit notice, however, that this bank deposit probably fits most closely into the customers area because we're typically gonna have an invoice and then receive payment on that invoice and then enter the bank deposit. Or we're gonna have just a sales receipt and then go and enter that into the bank deposit. The reason the bank deposits over here and the other it's most likely because there's other taxes deposits. We can have other than deposits from our customers. So it's in. It's in this section. So we're gonna say the bank deposit. And if we've been working with these UN deposited funds account, then it gives us a nice little check figure over here so that we can group these deposits now. Typically, whatever's in UN deposited funds means that we have deposits we have not yet made. And we're just gonna take it all the bank and deposited. Also, normally we would check off everything we have here. That's what we would be deposited into the bank. But in this case, we want to get used to grouping this stuff out. So we did this problem a little bit in a funny or order in that we didn't multiple days of transactions so that we could practice like transactions. And now we're gonna make the deposits here at one time. So we'll group these deposits just to see how this grouping will happen. And we're first going to say that we're just gonna deposit this 420 this 208. So this is the total amount in UN deposited funds. If we're on the balance sheet, we would see that in other current assets were just gonna deposit of that? The string music and the Sam Guitar Man. That's for 20 and 208 or 628. So when we do that, then it's going Teoh, increase the checking account by the 628 because they were deposited into the checking account and decrease the UN deposited funds. The other asset account, the holding account that we had this in until we made the trip to the bank note appear that we do have the checking account selected that should be selected by default. The checking account item. There's a balance. And then, of course, we should have the date here, and the dates gonna be we're going to say January 01 17 to 1. So january 17th 2021. We are working in the 2021 year for this problem. This demonstration problem, we're then gonna say save. I'm just gonna say save and new, and then we'll take a look at the deposits. I'm gonna close this back out. We're not gonna make another deposit yet. We're gonna close this back out and we'll go to the reports on the left hand side will go to reports were looking for the balance sheets. We're gonna type in balance sheet and click on the balance sheet and will change the dates to the dates were working on which is a 101 to 1 January 1st 2021 201 31 to 1 January 31st 2021 run that report within that report. Then we should see in the checking account. It should be increasing by that 628. Let's see if that is indeed the case selecting the 105 And there we see the 1 28 Here it is . So we have this deposit. It will be a listed here in the transaction detail report. If we select that item of men, we see that information here. Here's our deposit. So we'll close that back out. We'll see if we could find the other side of this transaction going back up, going back to the summary which is going to be the balance sheet, and we will look for the other side in UN deposited funds. Here's UN deposited funds still has 20,500 in it. If we select it, we see these items and it broke it out by two different items. Note It's the same deposit here, but it broke it out by item. If we select either of these, the 420 Well, see, it's this deposit that ah is including the 4 20 and the 208 So in the checking account, it was showing attitude as the 6 28 which is important because that will match what we see on the bank statement for our bank reconciliation. And here we see the detail of the two exits Back out. Go back out. And here we see the detail of the to the actual components of the deposit of the deposits in this form. So those are gonna be the two parts of the deposit. Gonna go back to the balance sheet back to the report. Now, we're gonna run this back one more time and deposit the rest of them, grouping them in a different format. So meaning instead of grouping them all in one big deposit, we group them into two deposits, So we're gonna go up top once again and make another deposit in this little plus icon in the other section, we have the bank deposit. So we're gonna select me bank deposit and within the bank deposit, we're gonna have the date. Let's change the date. First of all was in that were in the checking account once again. And don't forget the change of date 1 17 to 1. Obviously, if it's the current date that we're working on, then we don't have to worry about that as much because we're working in real time. But when Whenever we work in book problems, we haven't added difficulty sometimes, and that's because when you want to jump around and dates in order to demonstrate things So we're often working in a date situation a bit different than normal set of circumstances, we're going to use the rest of them now. We will deposit all of the rest of these, so we're gonna go to the bank, deposit this Just check it off, check it off, check it off and there we have the 20,500. It's gonna all be deposited at one time. It's going to be showing in our system in the checking account as that 20,005 and that will match what will be shown on the bank statement if we group the same grouping when we go to the bank and that means it will be easy for us to check off. So when we do this once again, any time you see the bank deposit, it means it's gonna increase the checking account. Most likely if that's the account we selected here, which it generally will be. And the other side of it will typically be, in this case, un deposited funds because that's the system we have set up on deposited funds being that clearing account. So therefore the checking account won't go up under. Positive funds will go down to zero, which means it'll disappear on our our report on our balance sheet. Because never balance sheet will not report any accounts that have a zero balance in them. So let's check that out and see if that is indeed the case. We're going to say save and new down here. Green icon next year, recorded before we leave it and then we're gonna leave it. We're gonna go close this out. We're back to the balance sheet. So if you if you need to open the balance sheet back up, you gotta reports over here and type in balance sheet. And then we want the dates to be 010121201 31 to 1 January 1st 2021 to January 31st 2021. We're gonna throw back down, and we might want even refresh this even if we already have that here just to make sure clicking on the checking account once again, we're going to select the checking account and see the detail here and now we have our two deposits. So we made this one prior, and we grouped those those deposits in this one and then we group these deposits out in this 20,500. If we select that, then we see our deposits here on, and this is gonna be grouped together in that separate deposit. Gonna close this back out. We're gonna go back to the report, so back to report summary, and then we're going to scroll down and we have the UN deposited funds. It is still showing up, so we still have the an deposited funds with a zero balance so we can see the detail in it . So we're gonna click on that and we're gonna scroll back down, and we see these items the 5 15,000 We see the detail in them. So if we click on one of them, then we'll see that one deposit. It includes all three of those items, and it's broken out in the detail when we go back to the summary to the summary reports, if it closes back out. In other words, we see the detail here, whereas in the checking account, remember, it was all one number. So we're gonna scroll back to the report back to the balance sheet, and those will be our two deposits. 53. 7.37 Expense Billible Setting Turn On: Hello. In this presentation, we're gonna turn on the sitting within QuickBooks and order to make expenses a billable. In other words, when we enter a bill, we're gonna have a setting to be able to then track that bill and invoice that bill when we create a bill and therefore charge the customer for the bill that has been created. We're gonna do that in QuickBooks online. Here we are in the QuickBooks online dashboard. We will be continuing with the and get great guitars Problem what we're gonna do here, turn the settings on to make expenses billable. So what we mean by that is that if we were to go to the expenses here on the left hand side and we were to go to a new transaction and create a bill, then typically when we create a bill, we're just gonna pay the bills will be utility bill and what not and we'll just expense the bill. Sometimes, however, we might want to include the contents of this bill on an invoice that we later create for a customer. In order to do that, QuickBooks will have ah little box here to usually check off whether or not, we're going to build this so the terminology can be a little bit confusing in that we are creating a A bill, and we're gonna make it billable, basically to our customers. Meaning we're gonna put it on the customer invoice and link this information to the invoice and basically charge or customer for the particular bill we make. Now, at this point in time, we don't have any check box here in order to do that option. And that's what we will turn on and then see if this has been adjusted. When x out of this, close this out, we're gonna go to the cog up at the top. We're gonna select this cog at the top, and we're going to go to account and settings on the left hand side, under your company and within this section, we're gonna look at the expenses on the left hand side. So the expenses tab and then within the expenses have we have this option here, make expenses and items billable. If that is off, then we're gonna turn that on at this time. So I'm gonna select that item, and we're going to say that we want to check that item. I'm gonna keep the default settings. It so track billable expenses in a single account. I'm gonna track that and we're gonna keep the settings as are and save this item. Then we'll close this setting box outside, gonna close this back out, and then we're gonna take a look at another bill. We're gonna go back to the expenses tab. We're gonna go toothy new transactions, button and let's select another bill. And within this item, now we have this this item here that says available. So once we have an item selected weaken, then check this off. What that will do then, is when we then go to a customer. If we had a billable item and the customer selected, then when we create an invoice, we can pull this information into the invoice will get a pop up saying, Hey, you got this billable item for this person. Do you want us to pop that the invoice for this line item and we could say yes. And that will be a way for us to tie out this information 54. 7.40 Inventory Payment Tied to Purchase Order f: Hello. In this presentation, we're gonna make a payment for our inventory purchase within QuickBooks online. Here we are in the QuickBooks online dashboard. We will be continuing with the get great guitars problem. We're gonna basically just be issuing a check. However, this check will be for a purchase order that we had prior put in place for the purchase of inventory in our case guitars. It's important to know the flow here as we think through this, and it's a little bit different than it might think we might think depending on or based on our normal purchase type of activity. For example, if we were to purchase something from Amazon, I'm going to select the drop down many toe to demonstrate this. We're gonna select the drop down menu were considering the vendor section because we're making a purchase of inventory. Typically, we would pay for the inventory, meaning we'd actually have that the credit card payment go through both and then the inventory would be shipped to us in this case when we buy ah lot or in bulk, or if we have an agreement with a vendor and we are purchasing, oftentimes we don't make the payment up front, we give a purchase order. So we're saying that a purchase order happened. We have a purchase order. We then are receiving the inventory at ah, later time. And at that point in time, we're getting the bill and we're going to issue the cheque at that point in time as we could check the inventory and match it to our purchase or order that was created. So it may be a little bit different, this purchase order, maybe a little bit different than we typically think. And there's actually no financial transaction. When we create the first disorder, we're just basically saying, Hey, it's It would be like it's looking on something on Amazon and I want that thing and just tell on Amazon. Hey, I'd like that thing and not actually paying them until they deliver it. Once we receive it, then we're going to either enter the bill and or make the payment at the point in time of receipt. So we, the purchaser, therefore have more kind of control. In that case, we're not gonna make the payment till we verify that we've gotten the product. And so that's what's happening here. we ordered guitars in the past. We've received them now and we're actually just going to write the check. We're going to say that there's a bill within the ah, within the inventory that we have received and we are writing the check for it, and we're gonna populate that check import with what we've created in the purchase order will be able to link those two things. So we're gonna select the check here, and we'll just be writing a check. The check number will automatically generate. That's gonna be good. Whether we print the check from QuickBooks or if we're doing the checks and some other system, we should be matching that out and making sure that they tie out. Then we're going to select the choose payee, and we're going to select in our case, EPA phone. We're paying for guitars that we purchased. Our vendor is EPA phone. So here's our drop down. Here's our payees. Here's our vendors. I'm gonna then type in EPA phone and there we go. So that's the one. Now when we do that, we see this pop up. Here we have this adding this is our purchase order for the 400 that we requested. And this is what we have. So we can populate this whole check through this matching of the purchase order to the check and link it. So this is gonna be a great feature toe. Have to say, Add that and let's go through and see what happened here. If we scroll down, recieved the accounts here, we can put in the accounts typically that we would be recording to you. So if we paid the utility bills or something like that, the utility's expense, telephone expense, What Whatever the payment was, four would be going here. Items, however, are gonna be down here. These air the inventory items. So remember we want to keep that separate. Whether we're writing for a neck Spence or an asset like I purchased equipment or purchased or paid for normal business expenses, those would be appear if we have an inventory item such as a guitar, in our case that we are buying and then selling, those will be populated down here in the items section populated force automatically, it pulled over the item number or short form the product or service the description. It's EPA phone. Les Paul Quantity one $400 price that's being pulled over from the fact that we have this in the item list. And we even have the customer here who we purchased at four. Which is Eric Music. Remember that this customer field will not always populate. It's gonna populate. Um, if we chose the customer within thean voice that we may depend Not if we bought this guitar in particular for this particular customer Eric Music. So we're gonna scroll back up and check everything else off the other side. It's EP phones, obviously going to be the checking account that were writing the check for the mailing address that we're gonna keep it here. We're not gonna have a mailing address, and so it would be good to include that, but it's not required to process the check. We're going to set a date ISO 1 to 5 to one January 25th 2021 check number Should auto populate and should be good after the first check. We right, we could select if we're gonna print it or not. If you are to print these, then you're gonna want to have that printed cheques with a pre. There's still pre formatted checks with the check number on it. You'll have to make sure that you put in the in the printer in the correct way. I went in and print these out, and you can print them straight out from the system. But you still have to buy the checks in order to do that, and then we're gonna have the rest of the information will just be down here. Here's our Here's an item Kind of like the expense account. What is this item mean? It means we're gonna be decreasing the account or increasing the account of inventory. This is an inventory item. So the journal entry related to this check then is going to be by the fact that it's a check decreasing the checking account, and the other side of it will be increasing the asset account, the inventory which we will then expense at a future time in the form of cost of goods sold once we sell the inventory. So we're one last item on this invoice we want to include, and that's gonna be this billable items. So we should have available line item here if we have this setting turned on. And if you don't have it turned on, take a look at the prior presentation to turn this on. We're basically going to be saying that when we create an invoice we would like for Eric Music, we would like it to prompt us and say, Hey, do you want us to invoice for this particular guitar that you have purchased directly for Eric Music? We're gonna say yes. So you won't have this checked off and we wanna have the tax is going to be the sales tax for it checked off. And if we do that, we save and close it. When we make the invoice at a later time, we will be able to pick up this information and tie it out to it. We're gonna go ahead and save this and then check out the financial statements and see what happens. So we're gonna say, save and knew the green button on the bottom, and it's actually telling me that the check number already exists. So I'm gonna say, Ah, check it. Do you want to to save? Anyway, I'm gonna say no, and I'm gonna adjust this Usually that auto populates But for some reason, the check numbers are not populating in order. I'm gonna put check too old for this. Probably because I'm going a little bit out of order as we go through. This problem were bounced around in time a bit, so I'm gonna change the check. Number 21004 The check number we are on. If you had to check that, you'd have to go to the check register and see which check number you're on. Obviously, if you were printing checks, you would have the checks there and you can check the checks that you're riding on. Just make sure that you're not skipping checks. That's that's the point of of the process. So you want to make sure that if there's a check that's that's been skipped within the check number than that could be a problem. So we're gonna keep that we're gonna say save and new. And there we have this and we're gonna close this back out, and then let's take a look at our reports. We're gonna go to the reports the left hand side. We are going to run first, the balance sheet, the balance sheet or only the balance sheets. All we're gonna run, and then we're gonna check the balance sheet. That's what we will be running. The dates then are gonna be over 101212 01 31 to 1. And that's January 1st, 2021 to January 31st 2021 then we're gonna run that report. So here is the report. They checking accounts should be going down by $400 for that check that we wrote. We will select that checking account and see if that is indeed the case. Here it is. Check number 1004 EPA phone inventory. Let's check on that and see if it is what we think it should be. So there's EPA phone. There's the payment date. The checking number scrolling down. This is the check. We have gonna close that out. We're gonna look at the other side. We're gonna close. I'm gonna go back to the report. We're gonna go back to report summary and we're going to scroll down toothy inventory assets. Here's the inventory assets, and this should be going up. If we scroll to the right. We see the 400. They're increasing that amount and quicken on that. There is our check. Gonna close this back out now. We did purchase inventory. It's increasing inventory here. It might be worth taking a look at the inventory report and see the detail there. In order to do that, we can go to the reports on the left hand side. We want to see the inventory, and I'm gonna do the inventory evaluation detail so we'll select the inventory evaluation detail. Gonna change the dates once again from 01012121 31 to 1 and run that report. So once again, January 1st, 2021 January 31st 2021. And then we could see our detail that we have here. So it's listed out these are types here, So we haven't e. L p. That's an EPA phone last fall for us. We have the other types of guitars dropped down by the type, and then we have, of course, this 100 afford. There's the check that we just wrote for a new EP phone. Les Paul. Here's the the phone quantity 1 400 we currently have two of them on hand, and that's $800 total. Now note that the amount that we pay could change because the vendors we buy them from could increase or decrease the price. And the online we use here, the first in first out method is what the online version is going to use as opposed to the on ground version, which is going to be using the average methods. So for this particular guitar, if it just went up or down in price and we had a two off them, then we would take the first in first out. And when we sell it, we would assume we sold the 1st 1 we bought just as an assumption s, that's how, as opposed to averaging the prices together and taking an average price. So that's the difference between the on ground and the online version within here. We're gonna purchase within each of these pretty much the same purchase price which, depending on your industry, may may be the case for Mr the transaction. So that's how the inventory will be working if we and that is going to be the purchase of inventory 55. 7.40 Part 2 Inventory Payment Tied to Purchase order f: Hello. In this presentation, we're gonna record an inventory payment by check and tying that out to the related purchase order within QuickBooks online. Here we are on the QuickBooks online dashboard. We will be continuing with the get great guitar problem. We're gonna be basically just writing a check for inventory that we have received in the past. But the tricky thing about the check is that we are tying that out and tracking them to the purchase order we had made in the past. Let's take a look at what is going on to do that. To tell the story. We're gonna select this plus icon up top. We're gonna go and just look at the vendors section and see what is going on here. What's happening is we already issued a purchase order purchase order happened in the past , meaning we asked for a guitar to be given to us a little bit different. That if we were to purchase something from Amazon as an individual where we make the payment at the time that we decide we want to buy something and then we get it delivered at a later time in this case, what we're saying is the purchase order has no actual transaction. That's what we have entered in the past, just to request just a piece of paper. No financial statement being affected when it is corrected in terms of numbers asking for a guitar in this case, that being the inventory that we are purchasing and therefore it's just a request form. In essence, we're not gonna record the inventory until we receive it. And we're not even going to record the bill because we haven't yet received the inventory. We don't we don't owe anything at this point in time. And, of course, we haven't yet made a payment either, which is a bit unusual thing in terms of the comparison between purchasing within a business and purchasing. If we're just on individual, that's the thing that could be different, meaning there's a little bit more power or could be a little bit more power on the purchasing side of things to be able to first get the inventory, check it, verify it and, ah, then enter the bill and make a payment upon receipt. So therefore, we're saying that we have already had this purchase order we're going to write a check now and we're gonna tie that to check out to the purchase order, be able to populate the check through the purchase order we had created in the past. To do that, we're gonna say check wearing a rain check and we're gonna enter the information for the Czech. Of course, the check means that we're gonna be decreasing cash or the checking account. We're going to choose the pay ee and we select the drop down. We typically have the vendors on top. That's where we're guessing would be the normal payees. We're gonna say, Gibson, someone type in Gibson as the payee tabbing through this, it's the checking account and we're not gonna have a male and a just We're just gonna keep it as Gibson. The date. Of course, If it was today, we would be have today's date. But we're gonna be doing this has a low 1 25 to 1 because we're working in the future for this problem and the check number should populate automatically. We have the and we want to match that. Remember, you do want to match that. We want to match that Teoh for writing checks that should match out with the automatic number of the pre number checks that were writing. Then we're gonna print them. We would select this print item, and if you print checks, remember, you just can't print checks. We can't print checks just from the QuickBooks system. We have to buy. The checks will be pre printed. They'll already have the number on it. And they won't have been some of the other information, like the amount and the person more pain and what not? That's what will be printed on them. And that's gonna help be a check against, um, people stealing our checks and whatnot and making sure that we can track our cash. So note When we entered Gibson over here, this purchase order item popped up and this is gonna tell us a There's a purchase order right here for this. Ah, this vendor, Do you want Teoh populate this with this purchase? Or should we link these two things were gonna say Yeah, add that in. And if we scroll down, we see it doesn't populated anything here, so you might get a little worried there, but it's just scroll down. It's in the item detail over here, So this is a bit different than the on ground version where they had two tabs. And so it's a little bit easier to see in some ways because you can if you can miss the tabs sometimes. So now they're just they're listing the items here. This is where we would put normally the expenses if we're paying for the utility bill, the phone bill or any other type of normal expense, or for purchasing anything that would be an asset like supplies, possibly or equipment of some kind, that would go up here. Or even if we're paying off a loan payment, anything other than a new inventory item. In this case, we have the inventory items so we can list out the inventory items important because we have to track the inventory items. And therefore we can't just say it's the inventory account. We need to put it into the subcategory and described which inventory we are purchasing in this case, a GSB, which is a Gibson SG guitar. That's what we bought. This is populated directly from the purchase order right here, so we don't have to enter it. It's just gonna link it it's showing that through the little link here, saying that this is linked Teoh the purchase order. So if we think about what this is going to do and then we record it and verify that it does indeed do what we think it's going to do, as I think we should be doing. Every time we enter just about anything into quick books, this is a check. So what's it going to do? Well, it's gonna decrease cash. It's gonna decrease the checking account. Clearly, the other side is gonna be what, This account that's not even an account. It's an item, and it's an inventory item. Therefore, we're buying inventory, and so the other side is really inventory. This is really an inventory type account. Inventory items gonna increase inventory by the amount of that 5 98 Let's save it and see if that is indeed what happened. So we're gonna go to save and new before we do that. However, do want to scroll back up and mention that we should have this billable item here as well. So if we have available items set up, we could have this billable setting, and that will allow us to when we create an invoice, pull this information over. So we have the Eric music here, and we're gonna invoice Eric music shortly. And we want to be able to tie this product, this guitar and Bill Eric music directly for it. And if we link this together, it'll make it easier for us to do that in orderto have this line item here. We need to set that up in the settings, which is done in a prior presentation, Will probably see it in a future presentation as well. So check this off. We want to check the sales tax. That means we're going to charge the sales tax for it. And then we can go through here and save this information, and it saved it. Looks good. No red, no red message that nice. And I'm gonna close this out with a red the X up top except top. And then we're gonna go to the reports left hand side and verify that it does What we think it should have done reports is going to be the balance sheet. We're gonna look through the balance sheet, that's it. And we're gonna change the dates to the dates that were working on a 11121201 31 to 1 January 1st 2021 to January 31st 2021. We're then gonna run that report and we'll go through this and check it out. So here we have the checking account will select the checking account and see if this check is in the checking account. There it is. There's the 5 98 If we select that, then we will see the check that we just created. Closing that back out with the except Tom and going back to the main report with the back to report up top here. Well, then choose the other side, which, remember, was a service item or item an inventory item, which is inventory. So inventory should be the other side going up. Here's the inventory. We select that. Then we should see it going up as well. From this check, here's the check. Here's the 5 98 We select that, then we should see again the check 1005 and the 5 98 down at the bottom. Let's close this back out. Let's look at one other area where this should be at, and that should be the inventory listing out. So we're gonna go over to reports on the left hand side and check out an inventory report. So let's go to reports. Let's tap in inventories that we want in the Tory. And we would like an inventory detail report. So we want an inventory detail. We're gonna then change the dates. 2010121201 31 to 1 and run that report. So we're gonna run that report. And here is the information. Now, we just purchased a, uh what did we purchase? A G A G s B. So if we scroll down, we see the GSB here. There's the check that we wrote. There is Thea Mountain. So we have one of those in our inventory items right here. 56. 7.42 Correct Check Add Billable Customer: Hello. In this presentation, we're gonna make a correction to a check for a billable items within QuickBooks online. Here we are in the QuickBooks online dashboard. We will be continuing with the get great guitars problem. We're gonna be correcting a check in order to add the available option to it. If you've been following along with the problem, hopefully you've done this correctly and you don't have to make any correction. But I thought this would be a good point. Another area where we can go through and see what would happen if we wanted to set something up. We see something not connecting as it should. How can we troubleshoot that problem? Can we fix it retroactively? Should we fix it retroactively? Those are some of the more interesting kind of problems we have. So let's take a look at the type of problem we're looking at. And then we'll go through the solutions and what potential things weaken Dio? So what we're gonna do is I'm gonna try to create an invoice. And to do that, I'm going to go to sales over here and I'm going to go to the new invoice. You can also get to it by this drop down up top. We're gonna say new invoice here, and it's just gonna be a demonstration. We're not gonna complete the invoice, but I'm gonna put in Eric music now as we create this invoice will noting that we don't have any related purchase order or billable item that pops up sent A. We have some billable items for this individual, and I know we have some that we had a guitar that we purchase particular, particularly for Eric music. And the question is, why isn't it pulling up? We could go down here and put in the guitar and recorded as is, but we'd rather have it be tied out. Teoh the purchase of the guitar and ultimately to the purchase order when we ordered the guitar. Because we will be dealing with inventory. We're not gonna have a perfect method here because what we're gonna do is link and expense , and it's gonna pull over the fact that we have this guitar purchased for this particular customer. However, it's gonna pull over the costs rather than the sales price, and then we'll have to make a quick little adjustment for that. The on ground version of QuickBooks really links these two together in a different way That worked fairly nicely will make any updates if we can here to see how those links will change. But this is a good little work around to basically pull that information over from to the invoice from the check that we write and originally from the purchase order that we made for particular guitar for a particular customer. So in order to do that, we're gonna kind of troubleshoot this. I'm gonna close this back out, and we're gonna say, Ah, yes, we want to leave that and we're gonna go and say, I know I had a purchase order so we can take a look at the purchase orders. Aiken, scroll up top. It's like the plus item, how down here. And then we could go to the purchase orders, which is part of the vendors purchase order right here, and select the purchase order and try to recap and said, Is there a purchase order that we have for this individual? If we if we select this little timing icon, we can see some of the recent purchase orders and we had a purchase order from, Ah, EPA phone here. So if we select that believe that's the one and scroll down. We did label a customer, so we had a customer labeled here when we had the purchase order. So the purchase orders what we did when we first ordered the product and then they're going to sell it. They're going to send it to us. There's no journal entry related to the purchase order. But we did hear that, Markoff, that we want Eric music to be something that's gonna carry through through that whole process through the purchase order through the billing through the check. So the next thing that happened is we got a check. So if we wanted toe, look at that. We received the guitar and we wrote a check for it at the point in time that we received the guitar. So I'm gonna close this in order to see that sometimes it's good to go to the report and drill backwards from there, So we'll go to reports, and I'm gonna go to the balance sheet balance sheet and see what we have on the balance sheet and what we're going to say that dates are No one. No 121201 31 to one and then we'll run that report. This is the month that we will be working on January 1st, 2021. January 31st 2021. We'll run that report. Then we're gonna look at the inventory because we're purchased an inventory item, so we'll look at inventory. It would not show up in inventory until we actually pay for it. Because that's when we we received the inventory. So we have the inventory item here, and it's this 400 for the EPA phone. So if we select that item, then we can see the check that was written. Here's the check that we wrote to EPA phone our vendor. We could see it's linked up to that particular purchase order. And if we scroll down, then we see the item here. What we want to add is this billable section here. This is what's not linking through this billable section. If we don't have this set up, we go to a prior presentation where we set up the billable items in the in the settings. So what we're gonna do here is we're gonna click this off. I'm gonna say, check that and we're gonna add the sales tax to it. Now, once again, note that this won't be perfect because it's gonna pull over at this rate rather than at the sales price for this. This is what we bought it for, not what we sell it for. So we're going to deal work around for that, But this will tie it out. If it was anything other than inventory and we just wanted to pull over the cost, we can then use this to pull over the cost and have that cost included or billable something. We charged Teoh, our customer. When we create the invoice, then we're just gonna say save and new and save that we're gonna save those changes. And then let's just go and see if we did indeed make the changes that we need. We're not gonna actually record the invoice right now. We just want to see if the invoice will populate. So we're gonna go back, Teoh the sales tab on the left hand side, and we're gonna go to create an invoice, and then we're going to select the Eric Music again. And here's Eric music. And when we select tab, then it's gonna say, Hey, you've got this this billable item for the 400 That's what we expect to see. That's what we want to have happen. Note that once we select that item, it will show up at the $400. Now, if this was for just something that we wanted to add at cost other than inventory, that would be fine. The work around if its inventory. Then we got to figure out what's the sales price, and we'll see this later once we enter the invoice fully. But to do that one way we can do is we could just set type in E L. P. Again and then it'll pull up the sales price. So there's the sales price. So I want this one to be linked, so I'm gonna I would select this one, put the 500 there's what links out and then just close this one out. So that's kind of a work around, so we can link up the inventory, this method, which works great if we just want to pull over the cost. If we're if we're trying to link in the inventory. We gotta put in a bit of a work around. If there's any adjustments to that later, we'll let you know. But this is what we have at that point just toe just to put that in place. If we weren't to do that, then of course, we can just type in three e o people. We wouldn't have it auto populate as it does here. And so this is one of those areas once again where we could go back. And we can kind of make a change to something that happened in the past often something that we want to be very, very careful of, because if we change numbers and they're linked to other things, that can change other things and it could change our financial statements if we go into especially prior time periods. But in this case, it might be a good good option to have. QuickBooks generally has ah lot of flexibility and going back and changes things which could be good. And that or bad. So let's do the same thing. There's another check here, so I'm gonna say I'm not gonna record the invoice here, but I'm gonna go back to reports, and we'll do that one more time. I'm gonna go to the reports. We're gonna go to the balance sheet, and we're gonna choose the balance sheet here. When it changed those dates once again from 010121201 31 2 1 31 to 1. No one, no 1 to 1. So let's run that report from January 1st, 2021 to January 31st. 2021. We're gonna scroll back down. We got the inventory item when it's like that inventory item, and then we're gonna find the other check that we wrote. We wrote this check as well when I select that item and we want to do the same thing. We wrote this check. If we scroll down, here's the check. It's Gibson check. And that's our vendor. And we want to make sure it is billable. It's checked off here, so this one's actually checked off. If it wasn't checked off, we select the check. I want to make it available. It should also be taxable because we will have sales tax on it. And then we're going to say there it is and save and new for that one. And so those are the changes now when we make the invoice, if those should tie out and pop up as we go, So if you've been following along with us, you hopefully don't have to make that change. But if you haven't or if you're in some other circumstance where you want to see why that's Lincoln out, then you can go through and make those adjustments and tie out your invoice to the billable items the expenses. 57. 7.45 Part 1 Invoice Created by Billable Expense: Lo. In this presentation, we will create an invoice populated by a billable expense. In other words, we entered an expense for inventory in the past and will link that to the invoice we create at this time within QuickBooks online. Here we are, the QuickBooks online dashboard. We will be continuing with the get great guitars problem. We will be entering an invoice and populating that invoice from a check that was written in the past and a purchase order that was created in the past, which we wrote the check for. Let's go through the scenario of what is going on real quick, and then we will enter the invoice. We're gonna select this item that's dropped down, up at the top in order to go through this process. What we're imagining to have happened here is that we had a customer come into the store, wanted a particular guitar, that guitar, different color or some type of customization for it. Therefore, we went to our vendor asking for a particular guitar not just for our store, but for that particular vendor. And we had a purchase order in order to do that. Remember that purchase order does not have a, um, journal entry related to it. It's just a request. We haven't paid for it yet, and we haven't received the guitar. But on that purchase order, we did include that it with for a particular customer. Then when we got the guitar, we made a payment for it. And when we made the payment for the guitar, we still populated that payment through the purchase order and applied the fact that it was for this particular customer. Now we're going to go through and go to the customer here and create the invoice which will be linked. Teoh the check we wrote following the process of that guitar being given to us, and it will be populated through the original purchase order, which was then followed up by the check. The same process could be followed with the bill. In order to do that, we might We've got to make sure that the check has the billable option available to it. So we could go to the invoice here. We can also go to the invoice over here on the sales area. That's what I'm gonna do. So I'm gonna select the sales on the side and then we're gonna go to New. So we want a new invoice. So we will select a new invoice and the invoices gonna be related to ah, customer named Eric Music. So we're going to select the drop down and we could type in Eric Music and it will auto populate Selecting Eric Music and Tab, we get this pop up over here saying, Hey, there's a billable expense there for $400. If we open that, then uh, do you want to leave this? I'm gonna go ahead and leave this For now. We see the information for the billable expense. So Mark as a billable expense, Here's the actual check. Here's the Eric music, the description and the amount. If I click on the check here up top, that will finally take us to the actual check. So here's the check we entered and it was for $400. If we scroll back down, we see it was for the EPA phone. We said it was billable. And with for Eric music, this isn't set up. You can go and find the check in the check register or back through the detail in your cash and set up to the billable item. And then it should link as we want it to noted that this will be an imperfecta method because when it pulls over, it's not gonna pull over the sales price that'll pull over this cost, which is the cost and will have to make an adjustment. But it will show us a link and it'll tie this thing out so we can see that this item will pull over automatically. So we'll see that as we go going to close this back out, we're gonna go back to the sales item on the left side, and then we're gonna go to new invoice once again and we'll type in Eric music once again, Eric. Music of their regale. So we're gonna say, then that's gonna be that billable item we're gonna say, Yeah, add that, please, please at them. And when we do so, the balance changes and we could scroll down. And there is the invoice that we have Note that this method is not perfect, however, because it's pulling over the cost, the 400 rather than the sales price which we don't even know because we can't see it on this form. So this method doesn't link it so that we can see ah, this information and linked through the whole process, meaning the purchase order to the payment that we made Teoh the invoice and have it all linked up. However, it's pulling over the cost and we need to change that Teoh the market price that we're selling it for, not what we bought it for. In other words. So as this changes, if there's any updates, will take a look at that and we'll fix the link and see if we can link this out. Ah, different way. The on ground version, of course, kind of links this out a little bit differently. So in order to fix this, the work around for this too easy kind of way to fix this and say OK, it's linked up. We owe this amount, and that links up the bill. We just want to change the rate. And how do I know what the rate will be? Well, I'm just gonna make another line item, and then I'm gonna delete it. So I'm gonna say, Here's an E l p another e l P same item that we have up top. The sales price is $500. And so I'm just gonna change this rate then to $500. And that's the rate we want to have. And then if we tap through, we have that. And then I'm just gonna go ahead and they'll lead to this item. We don't really want it. We just want to see the rate. So that's one way. We kind of link everything in and have this rather than typing in this information, you have it pulling automatically through that process. The rest of the this process is going to be much the same, so as other invoices. But invoices are complex transactions. So let's go through this. We've got the invoice up here. What that means is, of course, we're going to increase the accounts receivable, so Accounts receivable is going to go up the other side typically will be some kind of revenue account or income account. We're gonna call it sales because we're selling guitars in this case, and then there's gonna be the inventory that's going down. The inventory is going to be going down, not by the amount here that we have the 500 but by the prior amount, the 400 what we bought it for and there's a related cost of goods sold. So we'll see those items. When we take a look at the financials we're gonna tap through this. We're not gonna put anything in the email. Then we have the billing address. The billing address is important because we have to have it so that quickbooks can Catholic . The sales tax sales tax is gonna be different by region. It's different by what we sell. And in this case, we have to have sales tax for where we are because we sell a guitar. We're not gonna charge sales tax for service items. The sales tax concept itself is pretty basic. Once we know what is taxable, we just apply the rate. And I'm gonna try to apply a 5% rate even though QuickBooks is going to try to apply the rate for any location. Just have a kind of a problem that will work anywhere. So in order to do that, you do need to have it calculates something. You gotta put that place that the taxable entity and you can take a prior presentation for that we're gonna put an address available address and we need an address for our company so the quickbooks can calculate something. If we don't do that, QuickBooks won't calculate anything, and you can't even just put something in there for an example. Problem. So you got to set those up, and and then we can We can then change it if we want to. So we need the billable address toe. Have that information populate. That dates gonna be, ah, 1 25 to 1. We will be working in the future that due date, then a month later, and we're not gonna have a shipping address. And then, of course, this populated by itself. But we had to change that. So if you are linking it, you have to change it. If you always to enter this in just from scratch, it would then put the sales price, not the purchase price. And that would be what we want on the invoice. Um, because the invoice should be saying two things here. It's gonna it's gonna tell us the sales price, which is gonna increase in this case, it receivables and sales and the other which we can't see, But it's still recording is the cost, which is going to record the reduction in inventory and related cost of goods sold. Then we have the sales tax. Now, the sales tax is calculated based on the information we put in for the sales tax again, I just want a flat rate. So what we're gonna do is adjusted, Which we can do now. Now that it's been calculated, I'm gonna say 500 times 5000.55% and we're just gonna take a flat 25. So we're gonna change that sales tax. We're just gonna change 25 to have kind of a more simplified problem. QuickBooks is going to say, That's not what we calculated. We stopped it wrong. And we're going to say no, you did everything right. But this is a practice problem, and we want to keep it standardize. So once again, you know the concept of sales tax will be the same. We just wanna keep a standard rate. Once you know the rate for wherever you're at, then you can apply that rate and you can use the auto apply. That's QuickBooks now has, which is could be very useful, especially different locations, could be very nice. It is very nice, actually. And so All right, so then we're gonna go through this and let's just analyze what we have here. What's the transaction gonna look like? Well, it is an invoice, So accounts receivable is going to go up. It's gonna go up by the sales price, which is five Sorry, sales price, plus the tax, which is 5 25 The other side of that is gonna be sales. It's gonna go up not by the 5 25 but by 500. The difference is 25. That's the sales tax. We don't get to keep it, We owe it back, and therefore it's gonna go into a liability, which will be sales tax payable. We also have a decrease in inventory. Inventory is going down. Uh, it's and it's an asset, so it's gonna decrease. It's going down by this guitar, but not by 500. The sales price, but by 400 amount known by QuickBooks. Not seen by us anymore, because we changed VIPs to the rape and therefore it's gonna decrease it by that we'll see that in the forms and then the other side is gonna be cost of goods sold. So we're gonna increase in terms of the, um, income statement net income by 500 decreased by the costs which we saw. What's 400 net increases? 100. Let's see if that is the case. We're going to save this. Take a look at the forms, so we'll save that. Going to say yep. Want to save that? Close this out. We're then gonna go back to the reports left side, and we're gonna go to reports and we'll take a look at the balance sheet. First balance sheet. We'll change. Dates up top. We're gonna go from 010121201 31 to 1 January 1st 2021 to January 31st 2021. Run that report then. Typically, I look at the receivable. First we made an invoice. So what happened to the receivable? Let's take a look. Going to the receivable here. There's Eric music. There's our information increasing the receivable by the 5 25 If we click on the 5 25 and scroll down, we see the 5 25 years. That's the total that it's going up by. The other side's gonna be sales. So let's go take a look at sales, which is on the income statement or profit and loss as it's called by QuickBooks. We're gonna go to the reports over here. Well, type in profits and loss, and we'll change in dates once again from 0 1/1 2121 31 to 1. And that is January 1st, 2021 to January 31st 2021. Run that report. Then we had a sale. We had a service sale, so it should be up top right there. So we're gonna select that item and we have the sales item for 500 not 5 25 If we select that, we see the same invoice. But we only have the 500 not the 5 25 25 25 The difference is gonna be into a payable A liability accounts. Let's check that out. We're gonna close this back out. We're gonna go back to reports, in fact, of the balance sheet. So we're going to go to the balance sheet getting good entering the dates here. Balance sheet. We're gonna change the dates once again from Owen 012121 31 to 1 and January 1st, 2021 to January 31st 2021. Run it, then we're gonna go to the liabilities, assets and then liabilities. They're going to be down here. We see the liability to the California State Board of Equalization. That's because ah, that's who we pay the sales tax to. Instead of just saying sales tax payable, we actually are naming the board here. It's gonna change, of course, by our location. If we select that item, then we see this information. It's breaking it out. Eso these three should should add up to the total of 25. We click on it, then we see the same 25 there there is that we're gonna close that out Now. There's gonna be the other side, the inventory going down and its related cost of goods sold on the profit and loss. Let's check that out. Going back to the report summary back to the balance sheet. The other side is inventory going down. If we go up to inventory, we see inventory up top. There is inventory. If we select the inventory, then we scroll down. We see that it is going down by the 400. So here is the 400 decrease in inventory. If we select that item, then we see our invoice. Once again, we're gonna close that back out, and we're gonna slick that last piece, which will be the cost of good soul. For that, we're gonna go back to the reports on the left hand side. Scroll back down one to go to the profit and loss, profit and loss report, we will change the dates. Dates going from a 1121201 31 to 1 January 1st 2021 to January 31st 2021. Run that report. We then have the cost of goods sold. That is an expense item increasing which would decrease the total net income selecting that cost of goods sold. We see that we have the 100 here. I'm in the 400 once again, if we select the 400 we don't see the 400 on this form. We only see the 500 the 400 is being driven. Buy this item here so even that we change that. Remember the 400 to 500 because it was recording that costs or the expense, and we needed to put the sales price. So the note that it's still putting the 400 like it should and the cost of goods sold and in the inventory we just saw free closes that back out and go back to the report. So that's gonna be our information. It went up by 500 the sales went up by 400. Costs get sold. Net increased net income 100. Then, if we want to see that 400 then we can go to the sales on the left hand side. We want to goto products and services up top. We're looking for the EPA phone, and there's the cost that we sold it for 500. I mean, there's the sales price. 500. Here's what we bought it for the 400 58. 7.50 Receive Payment & Make Deposit: Hello. In this presentation we will record the receipt of payment and the making of the deposit within QuickBooks online. Here we are in the QuickBooks online dashboard. We will be continuing with the get great guitars problem. We're gonna be a little bit more ambitious here in that we're gonna record both the receipt of payment and the deposits that we can see both of those activities happening. In order to do that, we're gonna go up to this little plus icon where we can see the transactions and select this plus icon transactions laid out by customer vendor employees and other. What we're doing here is basically the receipt of the payment. So if we go through the process, then what must have happened is we invoiced somebody in the past? Generally, this is how that receipt payment would work within the customer or receivable or sales cycle. We're gonna invoice the customer, and then within the male, we're gonna get a payment, probably in the form of a check, and that's when we will have the receipt of the payment. Now, when we receive the payment, however, were not just going to record it into the checking account unnecessarily. We are going to group it together, and then we'll record the deposit more group all the deposits together at one time as we put them into the bank so that they appear in our system in QuickBooks in the same format that they will show up on the bank statement from the bank and therefore make it easy for us to check the two things off. Verify that we are correct. We tie out to the bank and reconcile. So the first thing we're gonna do then is we already did the invoice. We're gonna receive the payment. So we're gonna imagine here that we got a check in the mail, were in our office, and they get great, get great guitars office, and we have a check that was received from a customer and we're gonna enter that into our system. Here we have the receive payment up top. We're gonna just enter the data input. We're going to say that the payment was from Anderson guitars. We could select the drop down to find Anderson guitars and or type in Anderson guitars, which will auto populate Anderson, already being a customer set up, we're gonna tap through this information, the date is gonna be a 1 to 8 to one. We are working in the future in 2021 January 28th will be the date we will be using. We're going to say that we got a check so the payment type is gonna be a check in the mail reference number. We're not gonna include a reference number. It would be It could be good to put it. The reference number of the Czech number not required. However, it's going to go back to have more, more information is always better. And then we're gonna have the deposit to And remember, it's not gonna go to the checking account for us because we're not gonna deposited to the checking account check by check were hopefully possibly receiving more than one check at any time. And we want to make sure the group that deposits in the same format if you are depositing checked by checks that you're you know you're going to bank every time you get the check or scanning the checks Somehow Elektronik Lee depositing then it might be making sense to just put this to the checking account so that because you won't have a problem with tying out the bank account. But if we're grouping the checks together, that's when you might want to use their own deposited funds and then, uh, go to the bank and group them all together. That will really help with the reconciliation process, which is important to Dio. That's one of our major checks that we have on making heirs against making heirs. So we're gonna put into the zone, deposited funds accounts, and then we're going to say that we could put the amount here, but we're going to start off by just checking off the invoice. So we're gonna check the invoice and that will auto populate the amount of top? If, of course, we receive some amount less than the 430 total of the invoice, then we can put that amount here, and then we would still have some left over from this invoice. This clearly would be the invoice. This is the invoice that we had in the past that we created four Anderson guitar, presumably for a guitar that was sold, and now we are receiving payment for that so that when we record this, then it's gonna be a journal entry that will be recorded. That journal entry will be cash is going up, not the checking account. However, this account called un deposited funds, which we will put into the checking account later. And the accounts receivable is going down specifically the accounts receivable related to what is owed to us from Anderson Guitars. That being no longer owed to us because he isn't. That company has now paid us. So then we're gonna say save and new and let's see and record this one more. We're gonna have one more sales receipt to record before we go ahead and deposit this at the end of the day. The next check we were lucky enough to receive today was from Eric Music. So I'm going to select the drop down here up top and weaken, select Eric Music and ordered to start the type in Eric music, and it will auto populate. So there is Eric music here. We're gonna tap through this once again. We've got the payment date. That payment date Oh, January 28th 2021 payment method will once again the a check. So we're gonna take a look at the check. That will be the payment method. No reference number. If you have the check number probably would be a good reference number to use, but we're gonna leave it blank for our purposes. We're gonna put it once again into this UN deposited funds accounts that we set up to be a holding account until we make the deposit. Then we have the amount. We're not gonna put the amount here. Once again, we're gonna check off the invoice. And if this is the amount we received, we've got full payment. If we want to apply it to that invoice, which we do, we can check off that invoice and it will then apply that amount to the invoice and auto, populate the receive payment amount. If we have course received less than that amounts, we could put something less than that amount there. If we received some payment for something other than this invoice, then we could uncheck that and just put the amount here. And we would, in essence, have a credit. That or overpayment they use of debits and credits could be a little confusing in terminology. Would have an overpayment that we're gonna play out for this particular customer to somebody once again, the journal entry here being an increase in cache of UN deposit funds, a check that we have now and a decrease in accounts receivable, we're gonna say save and new one more time. Let's take a look at the financial statements and then we'll go ahead and deposit this information. So I'm gonna close this out. We're gonna go to the reports on the left hand side and we're gonna run the balance sheet, the balance sheet report and running the balance sheet. We're gonna change the dates to once again the year that were working in 2021. So 10121201 31 to 1. So january 1st, 2021 to January 31st 2021 will run that report, and then we could see within the UN deposited funds down here. That's where we put this information that 9 55 50 is now being included by this 450 at 5 25 I believe that two payments just made that we've recorded on January 21st as a payment from Anderson Guitar and Music Eric Music. If we select either one of those, we will see one of the payments that we have received and input. I'm gonna close that back out and let's look at the other side by scrolling back up to the top and we're gonna go back to our report, which is the balance sheet. The other side was going to the accounts receivable account. So years accounts receivable. If we select accounts receivable within school down here's our two payments. Once again from Anderson and Eric Music, we select either of those. We will once again see the receive payment amount, so we'll close that out. And now we're gonna go directly to the deposit area. So now we're gonna deposit this payments we've got. We're imagining it's the end of the night. I want to select his drop down so we can see ah, little bit more of the activity and kind of like a flow chart area. So we have invoiced, we'd receive the payment. Now it's the end of the night and we're imagining we're going to the bank depositing the payment we're gonna deposit in group of both together and make one deposit, not to deposits. And therefore, we want to make sure that we grouping together within QuickBooks so that we can tie them off as we reconcile the bank reconciliation to the bank statement from the bank. So in order to do that, we're gonna make a deposit, were jumping over from the customer section to the other section to make a deposit. And really, this is a deposit, hopefully is mainly kind of part of the customer over receivable cycle. Most of the time, hopefully, most of our deposits are coming from customers, so it's kind of part of the customer section, but obviously we could have other deposits as well. So it's in the others section over here. So we're gonna say bank deposit and we're going to say that we want the checking account. That is gonna be our main checking account. The date of the deposit, we're gonna say is a 1 28 to 1. We went to the bank this time more in in terms of a normal process. We had a bit of a delay in some prior presentations we had so that we can group transactions together which means we held on to a lot deposits for long amount of time before depositing them. This would be more of a normal transaction. Hopefully where we collect money throughout the day and we make deposit at the end of the day, we're not holding on to checks, and then we're gonna go down here and check off the two checks that we will be depositing this one. And this one's the two that we just made it. Anderson get tarred and Eric music now being populated because we use that UN deposited funds account. So that gives us a total of 9 55 50 that will be deposited in that, of course, will increase the checking account amount. The other side of it will be decreasing the UN deposited funds amount so that other clearing account is what will be going down. So then we're going to save and new on this transaction. And let's take a look at those financial statements one more time. We're gonna close this back out, and the financial statement is still here. If it's not your run, report once again and go to the balance sheet. I'm just going to scroll up to the top and we're gonna go back to our report summary, and then we're going to go to now that checking account and see if that amount has indeed appeared as we believe it should, which is that 9 55 right here? That deposit has now showing up in the checking account. That's a good sign. And then we're gonna go back to our report and scroll down. And this is the UN deposited fund are clearing account. If we select that zero, then it has going back to zero. And that's what we want because it's really just a clearing account. Hopefully, it should be zero at the end of every night. Should be zero in the morning. We collect money and then we deposited in the bank and it goes back to zero. At that point in time, that should be the track we kind of see here. Obviously, we don't quite see that at the beginning of our problem, because we weren't quite ah, set up to the system yet n were kind of changing the Tates around to what would actually happen in order to group similar transactions. But this type of activity has put in the deposits ends at zero, we do some activity and then it should go back to zero. This is that That's the type of activity you should see in the UN deposited funds. If we have a lot of money in UN deposited funds, something probably went wrong. We might have entered deposits two times somehow, and we'll have to make some type of adjustments. 59. 7.55 Write Checks for Expenses: Hello. In this presentation, we're gonna write checks for expenses within QuickBooks online. Here we are on the QuickBooks online dashboard. We will be continuing with the get great guitarist problem. We're gonna be entering some checks now kind of some normal transactions entering some checks. In order to do that, we're gonna go to the plus sign up here to see our normal transactions. Where we have the customers that vendors, the employees and the other when we're writing checks were typically writing them to vendors people. We owe people we buy stuff from. That's where the checks will be. Where next select the checks item there, and we're gonna go through this process for writing the check. So obviously, this is a check number. It's gonna be then reducing our checking account, and the other side will be going to whatever account we decide that it needs to be going to , depending on what we're paying and who were pain. So first, we're going to say that we have insurance, so we're gonna pay for insurance of some kind, probably liability insurance. We're going to stay here, and we're gonna say the name of the company is safe insurance so we don't have that name here yet. We need to add them. So I'm just gonna type that in when you're so we're gonna type in safe insurance and then we're gonna select thesis a add button so we'll add it, and it's gonna add it as a vendor. So we want it as a vendor. That's correct. Because we're paying somebody's That would be correct Will continue to having through here . So we're going to have this from the checking account. That is correct. We have the mailing address. Well, to keep it just the mail address. We don't need the actual address here to in order to process the check, but it might be good information to have. Then we're gonna say the payment date the payment date is gonna be a 1 to 8 to one for our problem here. The check month number should populate automatically, so that should be correct. Remember that the check number should tie out to whatever checks that we are going to be using. Whether we use pre printed checks that we're gonna be printing on here. We still need Teoh. Use those checked which will have a check number that will be external and or if we're using just a checkbook or something like that, it shouldn't lineup. And then we have the printed later button. If we want to print these checks at a later time on, we're going to scroll down to the account. Now. This is the things Force is different than what we would normally put just in a chequebook , which is the account that we need to apply this to. Insurance is a little bit tricky because we would probably think it should go to insurance expense. But typically, we put it into some type of asset accounts because he usually would pay for insurance more than just a month out of time and any insurance we usually prepaid, meaning we have to pay for the insurance before we get the coverage. So it should go into a prepaid account and asset account, and then we'll apply it out with the adjusting journal entries at the end to an expense at the end of each period at the end of each month or year. And we'll go through that process as well. So what? We wanted something like a prepaid insurance account. If we go through the drop down here, we see that a lot of expenses. Here we see an insurance expense, and that's tempting to do. But we really should put it into the prepaid. And the reason is because if we pay for a year here of insurance, then if we put it all into an expense this month, it'll look like this month was a really bad month because that it will bring down or net income a lot. And really, it's covering an entire year. It's not really fair to the month of January to write down the whole insurance expense, so we have to really apply it off to the year that will be covered, to be fair to all months that are really benefiting from the expense. So in order to do that, we're gonna put it into a prepaid, expansive other current asset accounts not set up yet. So we're gonna go ahead and set that up. We're gonna just type in what we wanted to be prepaid insurance, and then we're gonna add that account and we're gonna choose the account type. It's gonna guess that we wanted expense, but we don't we want to put it into an other current asset account is going to get other current assets here and then subcategory, we have a few different options for the subcategory. Here we have a prepaid expenses option down here that looks like a good one. We're gonna use the prepaid expense option, and it's gonna be a prepaid insurance. There's gonna be no other description. It's not a subcategory of any other account. We don't have any beginning account balances. I as well. So that's we don't need that. Sell it all, and we will then save this information description. We don't have one here. We might want to put one if it's if it's possibly how long we're paying this insurance for possibly the terms of the insurance, but would probably have to look at the contract when we did the adjusting entry, no matter what, and then the amount we're going to say the amount is 11,000 now. We're not going to say it's billable and we don't have a customer. These two fields were set up because we set up the option to have these set up. If you're working with the default settings, you may not have available option as well. This would be billable, meaning it's available on our invoice, meaning we're gonna build a client for this information. So that would be useful there if we had a customer that we were going to build for that information. So once again, just to recap this, this is going to be decreasing the checking account and the other side of it's not going to go to an expense not gonna decrease net income by 11,000. But go to another asset that asset account being prepaid insurance, which will be expensed in the adjusting process but on a monthly basis in accordance went with win when it's consumed rather than when we pay for it. So we're gonna go ahead and save and new for this one. Next, we're gonna write a check for office supplies, and we will go to the financial statements and check those that check out what happened there. But first, well, let's write a few more checks here. We're gonna go to office supplies and we say we're gonna buy office supplies from Staples once again if we select the drop down. We're looking for staples. It's not. There's we're gonna type in Staples and we're gonna add that that's a store. Of course we're adding, which will be a vendor. So we're gonna say save here, tap through. It is the checking account that we are going to be writing the check from decrease in the checking account. No mailing a gist. We just have the name that dates gonna be as of the end of the month. It's keeping the last date that we were working on. That's good. January 28 2021. And the check number should auto populate. We're not gonna be printing these and the check in the amount then or the account. Then we're going to say it's gonna go into some type of supplies. So we're gonna scroll down here, should be an expanse. And if we if we scroll down, we can look for the year and we have office supplies. If we were to just gas and type in, even if we didn't start with this with the office and which is typed in supplies, it's still finds that it doesn't have to start with the word and it's still kind of picks it up so we can start to auto populate that if you have a lot of accounts that's very useful and select, this item could be helpful to tell us what the supplies are, especially if it's $500. Maybe when someone audits this, they might be saying who? Maybe we should capitalize that or something like that because we're gonna say the amount It's 500 by the way. 500 and therefore so you might want to put in what the supplies were. Many Do we want to capitalize it or not? If it is it big enough that we should be putting it on the books as an asset rather than just writing it off as a supplies here. But in this case, we're just gonna write them off as supplies for this problem. And that will say that the checking account once again going down the other side, being office supplies and expense, which is going up and that expense would then bring down net income. So then we're gonna say save and new once again save and new. Next check we're going to write is going to be for the electricity for the utility's expense. So we're going to say that we get our utilities from a company called Edison. So we're gonna type in Edison. This is the first month of operation, so, no, we don't have these vendors in here, but later we will, and it will be really repetitive. So it'll be really easy next time we see a bill, and we're going to say, Edison, it's gonna be ableto auto populate for us, and we'll know exactly what is happening. The first month of operations, of course, is a little bit more difficult most of the time because we have to set up vendors and possibly accounts for them, then accounting cyclical. So obviously, we're gonna dio a lot of the same stuff after that. First point. So here we have the vendor, and then we're gonna say, save that information going through. We are working with the checking account. Of course it's Edison. We're not gonna put any, uh, address at this time. The dates gonna be January 28 2021. Check number 1008 We're not gonna be printing this out and the account. Then we're gonna say his utilities, we could select the drop down and find utilities. They probably are gonna provide one through the QuickBooks automatic generated trial balance or chart of accounts. We could start typing utilities and there it is. So we're gonna say utilities and tap through that and we're going to say the utilities is 620. Once again, it's not billable. We're not gonna be charging any invoice for the utilities or be charging a customer for the utilities. So this will, of course, bring down the checking account, bringing up utility's expense utility's expense, being part of net income, then bringing down the net and come on the profit and loss statement. We're gonna save a new saving new for that one next one. We're going to say that we're paying the phone bill, and our phone company is Verizon. So we're gonna type in for rising again new vendor, because it's the first time we paid Horizon in this system. So we're going to add Verizon here, add them and save that after we do that. However, of course, next month this will be a lot easier, and we'll see that as we go through, it'll be able auto populate that information checking account. Of course, is going down Mailing address. We're just gonna keep the name and not the address. The date once again is January 28th. Were printed all these checks or writing them all at the same time. Check number is auto populating. As we can see, we're not gonna be printing these checks and the, uh, the account, Then it will be something like a telephone expense here. Now, this is one work. It's a little bit more tricky because when we think about these expenses, of course, we have a lot of leeway in terms of what the grouping should be. Often times, people think that the grouping for the expenses is totally standardized. And there's a lot of standardization in the types of groups that people use. But we could group them in different ways, meaning, for example, here Some people might put this in the utilities and group, the electricity and the gas and even the telephone and utilities. Others may want to break this out. Most people, I think, would break out the telephone expense because it's significant, but to have the gas versus the electric, possibly you want to break that out, depending on the industry you're in. Possibly It's not worth the time that break that kind of thing out. So those are the decisions that need to be made? How detailed do we want to be in our expenses? More detail is good a lot of times because it gives us more information about what we're spending in particular areas. But it also, if we have too much detail, we are just not gonna look at anything. It's like it's like if you're given a book that has, ah, 10,000 pages, you're probably not gonna read Page One If you're given a book that summarizes that down into, you know, a few 100 pages, then you can probably read that book. So we're gonna say that here. We got the telephone, was typing telephone and see if anything pops up so we don't have a telephone expense. So we're gonna go ahead and add telephone expense. So I'm gonna go ahead and add this expense now Note A lot of times like I typically put expense in the name here. They're going through the strategy of not putting expense in the name and you could tell that it's expense by the by the fact that in the expense category, so when it shows the category, you can see that if you if you like having expense in the name to just tell you that it's an expense, you can do that. If you want to conform everything together, you can have expenses in the name of all expenses or not. But if you don't have something like an expense in the name, you have to look at the category type to know it's an expense. Obviously, something like a telephone would be easy to know. But if you're looking at something like insurance, which had that prepaid insurance, it's not so easy to know. So just just another conventional thing to think about. So here's the expenses up top were going to say it's not gonna be advertising or promotional, See what else we got in the detail type. So within the detail, I will just select the utilities. So utilities and then we're gonna name it telephone expense. No description and not selecting anything for the subcategory. We're gonna go ahead and save that information, and then we're gonna say that, of course, what's happened here that checking accounts going down, telephone expense is going up and we need the amount here by 360. It's not gonna be billable. We're not charging anybody else for our telephone expense to our customers that we will later import invoice and therefore the telephone expenses going up by 3 60 which will bring it down net income by 3 60 We're going to say save and new. Now we'll take a look at the financial statements and see what happened with some of these activities we have done. We're gonna go ahead and close this back out. We will go to the balance sheet. First, we're gonna go to the reports on the left hand side reports and then we're gonna type in balance sheet. Here is the balance sheet, and we're gonna put into the date range the date we're working on over 1012121 31 to 1 and January 1st, 2021 to January 31st 2021. Let's run of that report within the checking account. Up top. We wrote a bunch of checks, so this account should be going down. Let's see if it's going down as we believe it should be Here. We have the I'm gonna make this a bit small. These are all checks. I'm gonna go ahead and make this a bit smaller and maybe the this a bit school. I'm just grabbing this and making this a bit smaller. All right, so then we can see the insurance company staples for office supplies, utilities and telephone expense. So there they are, going down in the checking account. Let's look at the other side of these activities, or at least some of them. So we're going to roll back up to the top. We're gonna go back. Teoh the report. Now the funniest one is the 1st 1 where we had the insurance expense. We didn't put it into an expense. It's right here on the balance sheet. It's in the other current assets accounts. So there's the insurance for 11,000. It's not affecting net income. We're calling it an asset. All we did was pay from the checking account to buy something we have not yet consumed. When we were When will we consume it as we use it? In order to help generate revenue over the term of the of the insurance policy have it as it's cause of covering risk for us. So here it is. Here's the insurance. If we click on that, then we will, of course, go back to our check. Let's close this back out. The other accounts with the other side of them will be going to the other report the other main financial statement, the income statement or, as QuickBooks calls it, the profit and loss. So we're gonna type in the profit and loss report here. Profit and loss. We're gonna change the dates from 112121 31 to 1. And January 1st, 2021 to January 31st 2021. We will run that report, and then the other side of this is going to go here. So we have these three expenses that we just set up the office expense at the 500. If we select that, then we see the check. If we select the check, then we see the actual check closing this back out. Going back to the report up top back to the report. If we see the 2nd 1 of course we could do the same thing. I won't click on them all. But here, the here, the three checks, these air all expenses Note again the convention that I put a telephone expense here. If we're following the convention of the chart of accounts that were given to us through QuickBooks, they did not put an expense on all the expenses. And we know that these air expenses here cause, of course, it's in the expense category. But if we were to see him within a check, for example, if I went on, uh, on this check or the utilities, let's go here. Utilities and I go into this check when you just look at the description down here, something like this. It just says utilities. You don't see the fact that it's an expense. Now, of course, we probably assume it is, but we can't see it there. If you go to the drop down, however, then it's going to give you the subcategory on the right hand side and say, Oh, it's in. It's in the category of expenses and that's why I think with books, sees it as repetitive. Teoh say everyone is an expense. So we're gonna close that back out So that's just a convention, Teoh. Keep in mind. So you know, some people might think it's sloppy to add an account and put expense by it when No, none of the other ones have expense by just, you know, Ah, a couple things to keep in mind. Also, we could be grouping these things together. You gotta keep in mind your group and I've worked with customers that, you know, really like detail and the group everything, even if it has, like, a $60 line. Adam, if you got a $60 parking ticket instead of putting it in the auto expense, you put it in the parking ticket expense and probably might not be worth it because, um, although you might want to track how much you're spending on parking tickets, it might be a one time thing that's not worth breaking out into its own category and setting up different accounts for So there's just the grouping is something that you just got to get a feel for in terms of your personal taste in the taste of your company and keeping consistent with what has been done in the past. You don't wanna we do the whole system. We need consistency. Or if you are to redo the whole system, do it in a other one, full flute, full swing and say, Hey, we're starting everything over here. Or do it in a slow, systematic kind of way so that you can have some consistency and see See the changes from report to report. 60. 7.60 Pay Bills: Hello. In this presentation, we will pay bills within QuickBooks online. Here we are in the QuickBooks online dashboard. We will be continuing with the get great guitars problem. This time we're gonna be entering bills. We're gonna go through the scenario to entering bills and look through the process. And then, of course, enter the bill to do that. Let's go through this drop down up top to see our normal business transactions. We're gonna see this drop down, which is grouping the transactions by customers, vendors, employees and other. We're gonna be paying bills and typically paying bills would be with a vendor. When you think about the pain of bills, you might be thinking Well, what I'm paying with a check. Why don't we just write a check? As we've seen in the past, the bills are gonna be a little bit different in that we are gonna be writing checks, of course, But we're gonna use the process of the bills process in the pay bills in order. Teoh, write those checks. The benefit of this process is that we can then enter the bills when we receive the bills. Weaken group. The bills weaken, sort of the bills. And then we can print them all at one time, as as we go through and check off which ones we want to print as opposed to the check, which typically would be used more when we just want to write a check at that particular time at that particular moment and often times within business, it's going to be useful for us to put that information into the system. But the bills into the system and try to decide which one of those bills we want to then pay and then pay them as we go. That will help us out with the matching principle, meaning we can enter the bill when we get it, when we incur the expense, or rather than waiting to put it into the system when we pay it. And that's gonna be a more accurate way for us to match up the income and expenses. So we shouldn't be put in that bills into the system when we pay it. Theoretically, we want to put them in there when we incurred it. Just like the idea if we haven't yet paid for a credit card, doesn't mean we haven't occurred all the expenses related to it. We still over that money? We should be putting it into the system. Not when we pay the credit card. Supposedly when we when we incur the expense, that's when we should be recognizing it. Showing it on the income statement, Not on cash. Of course, we haven't paid cash, but on the income statement to say, Hey, we've got these expenses we want toe take a look at when they were incurred, the month in which they were incurred and see which months weren't current more expenses or not, depending and not contingent on when we paid it, but on the consumption of those expenses. So to do that, we're going to go. We entered bills in the past that we're only gonna have Ah, bill in there. At the moment, we'll just go through the process. So we have the bill here, and we're gonna go to the pay bills, items that weren't pay bills. And here's the pay bills item. Now, we only have the one bill here, and this was in place when we first started the transaction. We entered this vendor and we had the bill that within the opening balance when we included this vendor. This is who we pay for the guitars for meaning we buy and sell guitars in his business. And this is the vendor that we buy from. This was the opening balance we had when we first set up the business. Many of the other transactions we focused for this month on transactions that are more cash are related, so we didn't go through. The building process will take a look more at it in the second month of operations when we look at some other different transactions and MAWR and now on cash transactions when we enter a bill. Of course, what that means is that it's it's not coming out of a checking account. When we enter the bill, it's going to increase the expense at the time we put the bill in place, or the asset in this case, we increase in inventory acid at the time we purchased it, and then the other side goes into a payable account, a liability meaning we owed someone money. And now, of course, we're picking those people that we owe money to these amounts represented generally in the accounts, payable accounts and we're gonna pay them off. So whenever we see the pay bills, that means that accounts payable is going to go down. This pay bills represents the accounts, payable accounts. Anything that's in the pay bills section mean we need a bill. We enter the bill, not a bill that we build our customers for, but a bill to US bills that we owe from from vendors. We entered those bills, and now we have a payable that would be tracked in the accounts payable. So now we're gonna pay them off. We're just gonna pay the one off. If we have more than one. Of course. Then we can really check off the ones that we want to pay. We can kind of decide which ones do we really need to pay? And which ones can we wait and pay a little bit later at a little bit later date. When we go through this process, we have the checking account. We're going to say the pay date is going to be in our case. We want a whole one said no. 1 28 to 1 January 28 2021. The check number. We're gonna say it's gonna be auto populated. Acted 10 10. We're not gonna print these. If we were, then you want to have another your stack of checks that will have, you know, still have to buy the checks that will have the pre printed numbers on them and then use this system to put him in the printer and print of the checks from here. And that's gonna be it. So what we're gonna say in what's gonna happen pay bills, remember, means accounts payable is gonna go down specifically the accounts payable related to us only EPA phone money. The other side of it is going to be the fact that the checking account is going to go down because we're writing the check. So we are, in essence, writing a check. The difference between what we're doing here in writing a check and normally in the check writing process is that normally in the check writing process, we would have wrote the trek check directly for the for the inventory, increasing inventory and decreasing the checking account. This case were decreasing the checking account, but we're not recording the inventory. What? We bought the 15,000 worth of guitars. In this case, we are increasing. Oh, are decreasing a liability were not increasing the asset. What? We got an expense or an asset or D creator were decreasing the liability. What we owe in this case to EPA phone the accounts payable. So we'll take a look at that after we record this on the financial statements. So let's save and print. Well, just gonna save and print. And I'm gonna close this, Ash. I'm not actually gonna print it, and we're gonna say x out of this and let's go to our reports and see what we have. We're gonna go to the reports on the left hand side. We're gonna go to the balance sheets was type in balance sheets and see what happened. We're gonna change dates to the dates that we're working on, which is the 10121201 31 to 1. So that's gonna be January 1st, 2021 to January 31st 2 2021 Let's run that report. We scroll down. We see any checking account here. We'd wrote a check from the checking account. Let's see if we can find the check that we wrote from the checking account. Scrolling back down. We see the 15,000 there it is other accounts. Is theatre counts payable? We wrote it to EPA phone, and it does shave. It's not only a check, but it says that it's a bill payment check. Meaning it's still just a check. But we wrote it to a bill payment section, meaning the other side most likely will be accounts payable. If we click on that item, we still see a, uh, item that looks like a check here. So we got the bill payment item. We have our data, our input screen here to pay that bill. We're gonna close this back out, and then we're gonna scroll back up, go back to our report summary, and if we scroll down to the liability section than in the accounts payable, we now have no accounts payable because we have no outstanding debts to anybody at this time. That's great. In terms of short term debts. In terms of accounts payable, we still have her visa card down here. We owe the States that money. We have this loan which is there, but we have no short term accounts payable vendor debts. So if we click on the zero and it's nice that the online version note that still has the zero here because there's activity in the month, even though it's a zero balance at this time, which is kind of nice, because that allows us to go in and and see the activity from this report using the zoom in feature, which on the desktop version many times if it's a zero balance, whether activity in the month or not typically removes the zero balances. So this is kind of nice for us to to use as an on option for us to, uh, to do more of this audit type stuff or we're going through, and we're figuring out what has happened. And so if we go through here, we say that the accounts payable had a $15,000 balance. We paid 15,000 reducing the balance that is owed in this case to EPA phone. And, of course, if we select that it's a bill payment check selecting that item, we then see the bill payment check here as well. No effect on net income or the profit loss. It's important to note when we pay the bill, it's only the liability going down and the checking account going down S So, in other words, even though we paid 15,000 here, net income for the whole profit loss is not affected. No revenue, no expense is affected. 61. 7.65 Customer Jobs or Sub Customers: Hello. In this presentation, we're going to set up customer jobs or subcontractors as their cold within QuickBooks online. Here we are in the QuickBooks online dashboard. We will be continuing with the get great guitars problem we're gonna be entering or adding customer jobs or as they're cold in the online version, sub customers, jobs or sub customers can be really important if we want to track the costs of a particular item for a particular project and they're using its construction. But they're also used in any type of service business that really is gonna track type of projects that are gonna be independent. So if we're not charging a fixed fee, But we want to put the actual fees of the cost that we are incurring on an invoice, that's one way that we often could use the jobs. And if we're any type of service company, including a bookkeeper, a law firm, but any other type of service, we might want to customize our job. I put in the expenses in tracking the costs, especially time by particular jobs, and then build out those particular jobs even though they are for the same customer. So to do that. We're going to go to the sales items that were on these sales tab, and we want to be on the customer tab on the upper side. We will then see our list of customers down here. So we have all of our customers, and what we want to do is really have a sub customer. So, for example, if we had Eric Music here, what we want to see is a sub job for Eric Music that we contract in particular costs to one particular project that we may be doing. We're going to create a sub customer or job related to Jones guitars. If you're used to the desktop version, you would click on Jones guitars and you'd set up not a customer but a job. And this case, we're going to use as a bit different type of options. In order to set this up with the online version, we're gonna go Teoh new customers and you'll notice within the customer field. The only required field here, although we have all this information, is this item here, and that's what we wanna have. We want to just name it a job. It's gonna be three 005 We're just gonna have a number here. We're not gonna put a name or a company because it's related to another customer. So this is how we're gonna create the job, which is they're going to call a sub customer because they have this sub customer setting so we can select this icon. And then it's going to say, Well, you need a customer then And we're going to say that the customer that we want to get selected, drop down and over, of course, type in Jones guitars as well. It'll auto populates as most field do. And there is that information. Then you get the billing option. Do we want to build it with the parent with Bill Jones or, Ah, Bill it as a separate entity bill as this customer separately. So we're gonna keep the default setting here, and that's how we're gonna set up the job. So really, just setting up a new customer and then click in this Adam, it's not gonna be called a job here. It's gonna be called a sub customer and we're going to just put in the job number here. If we then say safe, then We'll see that if we scroll down through our customers. We have the Jones guitars here. So here's Jones guitars and here's the job 3005 as a subcategory. Now we contract the costs in this subcategory and Bill Jones guitar for the costs related to a particular job. Let's do this one more time. So we're gonna do this one more time. We're gonna have Sam the Guitar Man and just like Jones guitars up here, we want to have a subcategory sub job that we're just going to say it number Ah, 44400 to that, we can then track. So in order to do that, we're just gonna screw up the top. We're gonna say new and we're just going to type in the number, Then, which is gonna be 4002 in the display field. And we don't want to have that subcategory of another customer, that customer, then being Sam the guitar Man. And so we're going to drop down. We can just type in Sam the guitar Man and auto populates. We're gonna select sand and then say save and there is our information here, so I'm gonna go back to the sales item and then customers tab. And if we scroll down, then we have Sam. Then we have the subcategory of the 4002 for the job or sub customer. So keep in mind if you're working with the contractors or other people that use job cost system, you probably going to hear the word of job a lot referring to these items. If you're working with QuickBooks online folks than you might also hear, the word s up customer, and you want to just be able to relate those two. They're really talking about the same thing when you go from software to software and just from terminology in terms of what's going on in terms of tracking, cost per job or sub customer. 62. 7.70 Pay Employees: Hello. In this presentation, we will process payroll within QuickBooks online. Here we are with the QuickBooks online dashboard. We will be continuing with the get great guitarist problem. We're looking into the processing of payroll at this time. A couple ways we can get into the payroll. Processing one is to hit this little plus icon up top that, then turns into an X and then go to the employees and payroll. The other gonna click out of here to go to workers over here on the left hand side. So if we select the workers item, we have this item here. If we're in the employees tab, then we'll see. Are two employees were just gonna be processing payroll for two employees? And as we discussed last time, there's a lot of different options for payroll. So when you look in the payroll, you really gotta decide of what we're trying to get out of the payroll processing. We haven't really complex payroll that we need to get into and really decide what we want to do with it. Do we have a payroll process that we're trying to decide how to handle the payroll process ? Should we do it within QuickBooks. Should we do it outside of QuickBooks? If we do it outside of QuickBooks, how do we then put that information into QuickBooks? And so there's a lot of different options. If we are going to do this in QuickBooks, as we discussed in the prior presentation, there's a couple different options to do that. And if you are to do it outside of QuickBooks, then we still need to process that information and into that information into QuickBooks. What we want to do here is to get a general idea of the options that air there and then to process to checks just to see what the payroll entails and why it's more complicated than just what a normal journal entry typically would be. So if we were to set up the payroll, we have these two employees, but we haven't set up the payroll process within QuickBooks. We can go to the get started here, and that would go through the payroll option. We won't take a look at all the different options within QuickBooks, but you can take a look at that and then you need to consider also, of course, whether or not. You want a process payroll outside of QuickBooks or have 1/3 party such as A T. P or paychecks processing the payroll of possibly a C p a firm. And if that's the case, you still needed to put that information into QuickBooks. And that's what we're gonna basically do here. We're gonna process payroll. We're gonna process thes two checks and look at the payroll calculation as if it was done by a c. P A firm or an outside. This is the information we're gonna be processing into Excel and calculating the payroll. This is actually the QuickBooks desktop version. It would look very similar to the QuickBooks online version. And we're doing the calculations for payroll here, starting with Adam. This is the information we'll put into Excel. We're gonna say that Adam has a salary of 4005. 83 33. So that's gonna be a salary is gonna be the same each month. That's why it's a salary and not an hourly wage. Then we have to calculate the with holdings. Now, we're just gonna have a very simplified with holdings. Just thinking about the withholdings for the Fed US Fed meaning the federal income tax, the Social Security and Medicare, obviously by location. Those with holdings will differ. But the concepts of the withholding and the journal entry that would be involved in it and the idea of taking the money out of the paycheck and then obtain it at a later time is applicable to any type of withholding, whether it be to the federal government, the state government or some other type of withholdings for benefits like 401 K plans. So those will all differ. But the concept of taking the money out of check will be similar. So when calculating, these items will have to figure out what region we are in and what those calculations will be, and then set up the QuickBooks settings as well as our own settings and work with our third parties. Soft Uh, cos if hurt to set up the payroll here. So in this case, we have the federal with holdings. That's gonna be the f i T. Federal income tax. That's what our employees pay for their taxes that we are required to withhold as Theo employer. So and that's going to be 7 20 We won't get into the calculation here, you have to do some calculations that comes from the W four is going to give us some of the information we need, including marital status, the amount of the wages and then the payroll frequency. Meaning do we pay monthly? Do we pay bi weekly, semi and semi monthly and so on or weekly. And then we have the sole Security and Medicare. These are gonna be more straightforward calculations again. We're not gonna focus too much on those calculations. But if you just have a flat rate, as these typically are flat tax, more of a flat tax, then there are a lot easier to calculate because we don't have the progressive rates. So we'll take a look at those. Those are what are gonna be taken out of the paycheck that gives us our net check of 5 3039 33 Then we have the employees er, portion, and that's gonna be over here. We need to match then the Social Security and Medicare. This is what's coming out of our paycheck or that the NAFTA paycheck it's coming out of the company's funds for the wages that are earned by the employee. This is a little strange. You can think of it kind of like a 41 K plan that we're matching on. That's similar to the way the calculation will work. Let's take a look at this within Excel will put the same information to excel. We'll take a look at the journal entry and then consider how we would put this into QuickBooks and why. Typically, if you were to have 1/3 party software like 80 p or paychecks process the payroll, you would have something like a payroll register, which we will be using here, listing the employees and then listing the information related to the employees, meaning their wages, their Social Security and Medicare that was withheld on them. That then can be used to create the journal entry or enter that data into QuickBooks. So we're just gonna put the same information here. We're going to say that Adam had 5 4083.33 Social Security is usually going to be, ah, flat rate. The flat rate for Social Security is around 6.2% but we're not gonna get into the actual calculations here. Even though it is a flat rate because it will change from place to place. Although federal taxes will be the same for the U. S. The whole US and the state taxes will change. But the ideas what we're looking at here. So we're just gonna have used the number 258 Medicare's same way. It's 1.45% typically, but the idea is more of a flat tax. Just gonna be a flat tax, meaning you would take the earnings times of whatever rate we have. And that's what we would get for the Medicare with holdings for our purposes is going to be $66 in the income tax you would think would be the most common tax and the easiest to calculate, possibly or understand. But of course, the income tax is going to be one of the most complicated because of the progressive tax rates, the multiple tiers used to calculate that tax rate, and the way we would do that, we would need to know the marital status, which would be on the W four, the number of exemptions, the amount of earnings, of course, and the time period on which we pay, whether that be monthly or semi monthly or weekly, and so on and so forth. So we're going to say that the income tax were going to say it's 720 720. We'd also have toe take that information, of course, and look at a table in order to then get this number of the with holdings. Then we have the total earnings. We're going to subtract out that Social Security, Medicare and income tax to get the amount of check that will actually be received by, in this case, Adam Hamilton. To do that, we would say we have the 4583.33 totaled amounts earned minus Social Security of 2 58 minds and Medicare 66 minus the income tax of 720 gives us the 5 3039 33 will do this with a formula here. This isn't an Excel class, but we'll do. A quick little formula equals this. So that's the total earnings minus the 2 58 miners, the 66 minus 720 that gives us that 5 3039.33 So that's what's gonna happen on the employees that this what they're gonna get. That's what they earned. This is what we took from them from their check that they earned in order to pay their responsibilities of their taxes, including their federal taxes, Social Security, Medicare and income taxes. Now there's the employer side. What we have to pay for their earnings are employees, earnings, what we, the employer, have to pay. And we are, in essence, just matching the Social Security and Medicare. So it's a kind of doubling up on Social Security, just same number for Social Security and Medicare. So that's gonna be a simplified kind of calculation. We're going to take that information then and use it to process a paycheck and Teoh into that information into our system in QuickBooks. Now we'll do the same information for Erica, So this is gonna be QuickBooks on ground. This is a similar set set up that would be look like if we were to enter this information into QuickBooks online as well. It's gonna be the payroll data for an hourly employees. So we have the $20 an hour, the hour the hours are 40 hours. That gives us the $800 that was earned by Erica We. Once again, they're gonna take out federal with Holdings and then the soul, Security and Medicare, the federal taxes that will be withheld. And we'll put that into our worksheet. This is the information will put into our excel worksheet. Then we're gonna have our matching of self security and Medicare into our work sheet in Excel. Then we'll enter this data once again into QuickBooks online. So within our payroll register, where once again going to say that we earned or Erica earned this time $800? That's her total wages that were earned so security would be, ah, flat tax that 800 times some type of flat rate. These calculations, by the way, is what the system would calculate for us if we were Teoh. You purchase the calculation of the system within QuickBooks. Depending on the type of system that we are going to set up. QuickBooks typically is going to be pretty good at being able to captivate the Social Security Medicare because it's standardized through the whole country. When we get into more, uh, things that are gonna be specialized to certain areas. State taxes are a little bit more difficult because they're not something that the system QuickBooks congest put in for the whole country. So as we get more specialized needs to four different regions or multiple regions, it's going to get more complex. But the concept's will be the same. So security, flat tax we're gonna take this time some rate usually 0.62 or 6.2%. We're just gonna use a 49 year Medicare would be this item time some rate. I believe it's 1.45 but we're just going to use a flat amount of 11 here. Income tax. That's gonna be the more complicated, although the most common one which we take this and we have to look at some table, including the information that needs to be known related to marital status, payment how often we pay and, um, the number of exemptions. So that's gonna be 110. So we're just gonna be using this numbers. We're not gonna get into too much detail, obviously, how Teoh pick those numbers up and how to calculate them so And if you buy the system. Of course, the system will do less of that of less of actually telling you how it's being calculated. So we're getting a little bit of understanding of how these things are calculated by putting this stuff into the papal register. So then, of course, we would have the net pay, which would be 800 gross pay minus the 49 taking out for Social Security minus the 11 taken out for Medicare minus 110 taken out four federal income tax means that she, she Erica, is going to get $630 of the 800 she earned. So this, once again, we'll do that with a formula. You don't have to do the formula here. It's not excel class, but we'll take this 800 minus the 49 minus the 11 minus the 110 that gives us the 630. Then, once again, we're gonna have to match the Social Security and Medicare. So this is the Social Security where the same number and the Medicare. Now it will be more clear once we do, the journal entry will take a look. A journal entry, and then we'll think about how to put this into the system. This would be the information if we were to processes by an outside C P A or an outside company like paychecks or 80 p, they may process this information, which we then need to put into our system in some way. Note the requirements for payroll typically are. We need to give him a check, of course, to our employees, to Erica and Adam and the Czechs gonna be for the Net pay, which is going to be this amount. That's what they're actually going to get in terms of the Net pay. But what were also required to give them a pay stub telling them, Here's your total earnings. Here's what we took from you, and we typically need to put the total earnings and what was taken from them for the year to date. Information. This doesn't seem too complex with too employees, although it might. It's it's fairly complex. But if we have a lot of employees, that becomes very complex and the more taxes with holdings we have, it becomes very complex just because of the amount of data that we have So when we enter this into the system, we could think of it as one lump sum. I could say, Let's put this into the system in terms of just one journal entry, and then we will. Ah, Then we will look at the detail of that journal entry by looking at the payroll register. Or we can enter that information as to journal entries, basically or two transactions. And by doing that, it has the benefit of us having that in our system that detailed more detail in our system . And we'll also have the net check. Basically, if we're putting the checks in there that we can then check off in the system, So that's what we're gonna do here. I'm gonna try to put this information using a journal entry. We're gonna use debits and credits here. If you don't understand debits and credits, that's okay. Just give us an idea of what's going on, and then we'll enter this same information into QuickBooks. So if we were to make a journal entry from this, I'm going to start with just Adam and Erica entered them separately. Ah, and then we'll and then we'll look at the totals. So with Adam, we're going to say that the payroll that was earned was 5 4083 But the check that was received, what happened to our check going down was only the 5 3039 So what actually happens to our bank account? It's gonna go down by this 5 3039 I'm gonna represent that with a credit. So this is a credit? Not really a negative number here. Although it's negative in Excel, it's just a credit for our purposes. And then we're gonna debit the or the expense meaning we could have a deduction or an expense reducing net income of the full amount, this amount, the amount that was earned by Adam. So that's gonna be a debit of this amount again. We don't need to know the debits and credits too much, but that's gonna be the dead. But there's a difference then of these two. And the point is, the difference, of course, is going to be these amounts, which is the payroll taxes we owe. We could put those into three different counts. So security, Medicare and income tax expense, or lump them all together into one account for payroll liabilities. They are liability accounts, meaning we owe money. In the future, we're gonna have to write a check to the government for the some of these three amounts. Now that some of those three amounts, of course, will be the 2 58 plus the 66 plus 2 721,044 Which is the difference between this. 4583.33 minus 23539.33 That's what we need here. That's the credit we need. So we're gonna put that here. I couldn't do it this way. Negative. So there. We'll put that down here negative. Some of these three numbers. And that means that now the credits equal the debits, so that's going to be a journal entry. We're going to say that we have an expense lower in that income of that, but the checking account only when it went down by that and the difference here is gonna go to payroll liability. We'll do the same thing for air. Erica. We're going to say that Eric, um, got 800. It's how much was earned. But she's only gonna get in terms of a check. The 630 the difference between what she earned and the 630 will be a liability, which is gonna increase the liabilities of. And that will be the 49 plus the 11 plus the 110 or the 7 170 which is the difference between 806 131 170. That's what are credit will be here 170. So this would be the two journal entries we could use. Now we could put this all in the place with one journal entry and just add those to, uh So if we add up the debits and credits, then we could just enter this information as one large journal entry for these two employees. So we could put these two journal entries in, in essence, for the to to give us more detail. Or we can enter the some or the total in right here. If we summed up, as we typically would the totals here in our payroll register, we could see that same information, I mean, equals some. What was earned by Adam and Erica Tab than equal some what was earned by or what was taken from Adam and Erica for Social Security equals the sum. What was taken from Adam and Erica for Medicare equals the sum of what was taken from Adam and Erica for income tax vehicles. Some of the net check that are checking accounts gonna go down by equals. The sum of our portion of Social Security and Medicare for Adam and Erica equals the sum of our portion of Medicare for adamant. Erica. So this is our information. So this matches out here, the some of this total, he's gonna be here, and then the net checks, which are multiple checks that went out for processing total payroll, is gonna be here. So then we have to record our side. And this is what you really confused about payroll is that we've got the employee side, and then we have our side What we took out for our portion of the payroll liability, and that's gonna be our matching. So these air these two atoms over here, they have nothing to do with the payroll check. They're not gonna be on the payroll stub. They're going to be separate over here. A separate transaction. A separate journal. Now the debit would typically go to payroll taxes, but QuickBooks generally lumps them together in payroll expenses. So payroll expenses for QuickBooks includes both the earnings as well as the taxes that will be withheld, that we have to pay on the earnings for the employees. So the payroll expenses for Erica or Hamilton let's start with Adam are gonna be the some of these two items. So we're just going to say this equals the sum of these two items. Enter now. No, we're not paying than yet, So cash is not going down. The credits gonna go into payroll liability, so it looks similar. It looks like these two should be matching up here, but it's different. These two things are different because this is what we are paying on the employee's wages as opposed to what we're taking from the employees out of their paycheck that they Oh, we're going to the same thing for the Erika. So we're gonna equals some of these two items and we'll have the debit and credit, and then if we total these up, then we've got the totals. So this is the information we'd have to input. We have to take this information and now put it into QuickBooks in a couple different in some way. We could once again just put this information into QuickBooks using a journal entry totaling everything up, or we could enter the detail. If we have just a couple employees, it may be beneficial to enter the detail so that we can see the break out of the detail all in the same system without having to jump over to the CPS payroll register or 80 p or the outside firms registered to see that detail. And if we're gonna use this to basically enter the checks into our system, it will give us those checks that we can then check off as we are going through the bank reconciliation rather than having to group them together in one lump sum check when we're matching out from the bank statement to our books. So because we only have two employees here, that's what we're going to do. We're gonna put into the detail we're gonna put in the checks for Adam and Hamilton. If you have a lot of employees, might not be worth your time. It might be better to put some kind of lump sum journal entry in place, like just this type of journal entry and use the register from the third party as the backup or detail of that information back in QuickBooks. We're gonna enter this information into QuickBooks now, and we're gonna do this with a check. So we're gonna select this little icon up top, and we're gonna go to vendors and check. Now, we're gonna process the check here, but note that we're not gonna have a payroll check. We're not gonna be able to print the payroll stubs here. We'd have to do that in some other fashion. The third party software would be helping us out without what we're going to do here is put the information into the system so that we have it within the system. So we're gonna process the check, and we're going to say the check is going to go first to Adam eso. There's Adam checking account mail address. We're gonna keep the same the date we're gonna have as of the end of the month. 01 31 to 1 is the time period we are working in. We're not gonna print this, so I'm gonna say this isn't gonna be actually printed because we're just entering the check into the system and processing it in some other format outside of the system. The check numbers, however, should match up. Then we're gonna enter these accounts. Now, we're gonna enter the same kind of information we did with the debits and credits, but we'll do it with a plus and minus format. No matter how we do it. It's a little complex because we have multiple accounts that we have to deal with within the check. As we enter this information, we know that by the fact that this is a check, it will be decreasing the checking account. The other side of this transaction is gonna be payroll expense, a role expense. Now, if we have payroll set up, it would generate the payroll expense for us. But we don't have it set up, so we're going to add the account. Had the payroll accounts, we're going to say that the detail type is gonna be a payroll expense accounts that's an expense and then apparel expense account and will keep the name, payroll expense. No description, no subcategory And save and close. So there's our item description. We might want to put the pay date and what? Not on there. I'm not gonna put any description. However, here we're gonna put the amount then, which from our payroll register was 4583.33 We're not going to say it's billable. That's gonna be billable. As if we're gonna put it on a customer invoice. We are gonna add another account, though, because we didn't actually pay the 45833 We only paid 3539.33 because we withheld payroll liabilities were withheld the payroll taxes owed. So we're gonna put that into a payroll liability account. So we're gonna set that up. I'm going to set up the payroll liability. It's not an expense. It's gonna be some type of, ah liability accounts. If we go through these accounts types, it's gonna be another current liability. That looks good. If we go through these account types were saying loan payable. Other current liability payroll clearing account. We're gonna go with payroll taxes payable account. So payroll taxes payable that name is here too. We have the description, none and no sub account and save and close. So we'll have the payroll liability and I spelled it wrong. So I go in and adjust the spelling at a later time here. But we're gonna have this information and we're gonna say that here, we need to reduce this. So this is kind of tricky because we have to put a negative amount here to do this. If we're gonna do this within this system 1044 that should bring this amount down as we go through here. Once we tap through to the next information to that 5 3039.33 This is the amount of the pay check that this is what would actually be showing on the paycheck. Now, we could try to enter the other side of it the employer side in this information as well, or go to the journal entry to enter it, which would be more typical to enter a journal entry. But let's go ahead and try to finish this whole thing out just right here. So it's all on one type of transaction. That's the employer side there's no cash that were really involved. But we can use this same screen to basically enter the journal entry, which would be the fact that we had, um the payroll expense is gonna go up again payroll expense. And that's going to go up by the employer portion, which was, in the case of Adam 324. And then we had the other side of that, which is going to be the payroll liability, their role ability that we that I misspelled here. So then there's gonna be the other side, and that's gonna be a negative 324. So if we select those two items, note that it doesn't change the total, which is 3 53,005 39.33 which is what we had when we just entered these items. But it does enter the other information and set up this liability that will have to pay at a later time. So, in essence, what we did remember here we just entered Adams information. We said that we had the expense here. Then we took out thesis Social Security, Medicare and ah income tax to give us this number. And then we said that we're also going to increase the expense and the, um, related liability for our portion. So noted just this check, even if we do the payroll through an outside services. Still a little tricky to put this into our system here. So we're gonna say saving new. And we'll do this one more time for our second employee, Erica Saving new. And we'll go through this information again. So now we're gonna say, Erica, Erica Robinson, that's gonna be our employees. The checking account and the dates correct. That's correct. We're just tapping through this whole thing. Then we're going to say that the other account once again is going to be payroll expense. And we're going to say the expense for Erica is 800 and then we'll have another account here that that's gonna be the payroll liability. And that's gonna be for the negative 170 And if we scroll up, that should give us our correct check amount 630. That's what she actually received. Now we're gonna try to enter the employer portion into the same section, which is the fact that we have another payroll expense, and that's gonna be for 60. And then we have the other side, which is going to be payroll liability, and that's gonna be for a negative 60. And that should have no impact on the total amount here, which is still 630 but will record in essence of journal entry, increasing the expense and a liability for our portion of the payroll. So let's save and new this. And then let's go to our reports. And let's see if this does what we hope it should, too. So we're gonna go to reports here, I and scroll down and we go to reports and we're gonna take a look first at the balance sheet and we'll change our dates. Up top from 010121201 31 to 1 and January 1st 2021 to January 31st 2021 run that report. So we know that the checking accounts should be going down by the two checks we wrote. So if we select that item and we scroll down, there's Adam and Erica, and there's how much the Net check was four. So they should match up, then to the net check and to the amount actually decreased in our checking account, the amount that we can then tie out to when we reconcile the bank account. If we select those items, then we see our check, and we could see some of the detail here again, this check is not sufficient for a paste up. Typically, Teoh give to the employees because we typically need more information in terms of the detail of the withholding types. But this is enough. This is the information we can enter into our system as we process the payroll. So we're gonna close that out and then let's go back. So we're gonna go back. We also have the payroll liability that should be down here in the liabilities sections of here's payroll liability. If we select this item here, we're going to see our liabilities, and that's gonna be too for each. We have Adam and then two for Erica, and that's gonna be our liability created from the, um, employee liability and the one that we created for our portion of the employee taxes. We select one of those for Adam. We get back to our check. Here's the Here's the information. If we scroll back down, of course, the the other one. That's also for Adam. If we select the other one, that's Adams and we scroll down. We see this information there. So there's the two that are going on the payroll liability. If we close that back out and we go back, Teoh the reports on the left hand side and we go into the profit loss, profit and loss the income statement type report within QuickBooks. Change the dates 2010121201 31 to 1 and January 1st, 2021 to January 31st 2021. Run that report going down to the payroll expense item and we select that item. Then we see Adam, Erica, Adam and Erica. What we have to for each one is gonna be the payroll expense that was earned by the employee, the others, the payroll taxes that were paying on the employee Note that this is not this number. Here is the full amount earned, not net of the taxes. And this number here is gonna be our payroll taxes. So if we select this item for 583 That's the full amount that was earned and this amount that's going in the payroll expenses, really, our payroll taxes that we put in. So if we close that back out, those are gonna be our two items there. So if we scroll back to the profit and loss, then of course this is being increased. The payroll expenses being increased by the full amount, not the net amount paid to the employees, plus our portion of the payroll taxes that increased to the expense. Bringing down that income given us a loss at this point in time. 63. 7.75 Job or Sub-Customer Sales Receipt: Hello. In this presentation, we will create a job or sub customer sales receipt within QuickBooks online. Here we are within the QuickBooks online dashboard. We will be continuing with the get great guitars problem. We're gonna be entering a sales receipt. That's gonna be the type of receipt that is given at the point in time that we receive payment for work that is done. So work is done. We receive payment at the same point in time. The thing different about this sales receipt is that we're going to apply it not just to a customer but to a job in order to see what that looks like. We first want to go to the types of jobs, and customers will then go to the sales area on the left hand side. And then we want to be in the customer's section in the top. This will give us a list of customers, and in a prior presentation we set up these jobs this 3005 job and that's 4002 We can see that they are related to Jones guitars and same the guitar man, respectively, by the indentation. And these jobs allow us to allocate costs and revenue to a particular job rather than to the customer in general. So we're gonna create a sales receipt and apply it to a particular job in this case, starting with job for 00 to apply to Sam the Guitar Man. In order to do that, we can select the plus arrow up top, and we're gonna go to the customers on the left hand side and within the customer section, we're looking for the sales receipt. Here's the sales receipts. We're going to select the sales receipt whenever were doing the job and getting the money or some type of payment at the same point in time. So here is the sales receipt, and we're gonna tap through this information so we're gonna type in, not Sam the guitar Man. But the job for 002 there it is, and it'll then pull up and it doesn't pull up the whole customer related to that job. But then we have the job here of 4002 were tapping through. Now the email, we're not gonna add an email. It would be good to have it if we were to send this by email, but we're not gonna do that. We can send it in another format. We're gonna scroll down to the billing address, not gonna add anything to the billing address at this time. If it were something that we're selling in terms of inventory, then we may need the billing address in order to for QuickBooks to calculate that inventory . But we're gonna be dealing with a service item and not dealing with inventory on. Therefore, we don't have to have something that calculates the sales tax. So then the date we're going to say is, 01 31 to 1 and then we'll tap through the rest of this information. So January 31st 2021 we are working in the future. Ah, the payment method we're going to say is cash. So we have a payment method of cash and we are putting it into the UN deposited funds, an account that we have set up that we're gonna accumulate the cash in or anything we receive during weaken, say, in our store as we're working through our store, which we will then deposit and group together in one deposit at the end of time, period. Then we're gonna have the type of service that we've provided, which is gonna be a service not selling a guitar. In this case, we sell guitars and do guitar service here. We're gonna say partial service is gonna be an item that has already been set up. We already set this item up. It's gonna be guitar service. We're gonna say 1 $100. No tax on this item. If we select down here the next item, then we'll have it calculate in terms of the sub total, no tax and that'll be the total amount. So let's think about what the journal entry will be or what will be the effect on the financial statements when we record this. That will be, of course, that we're gonna have the cash going up because this is a sales receipts, not an invoice. And therefore we're not having accounts receivable go up. We're getting payment. We're getting cash. However, it's not going into the checking account. We're gonna put it into this UN deposit funds that's going up. The other side that is going up will be some type of revenue account because we earned revenue by doing the service up here. So it's record that and let's see the financial statements and see how that plays out accounts that will be affected. So I'm not sending it. I'm just gonna save it here and then we'll close this out. We'll go to the reports on the left hand side, and then we'll take a look at our balance sheet first that balance sheet and selected the balance sheet. We're gonna change dates from 010121201 31 to 1. That's January 1st, 2021 to January 31st 2021 we will run that report. We scroll down to the other current assets. We see the UN deposited funds with the $100 in it. If we select that item that we then see the UN deposited friends. Here's thesis. Aim the guitar man. If we select that item, we then see our sales receipt that has been created. Closing this back out, going back to the report up top, back to report some room. We're not gonna look at the profit and loss and see the other side of this. We're gonna go to reports on the left hand side, we're gonna type in profits and loss and, like the profit and loss report and change the dates once again. 2010121201 31 to 1. And if we run that report, we then see the service items so we don't have We're not selling products here. We have the service item. We're going to select the service item, and if we scroll back down, we see that $100 that the other side going to UN deposited funds thes sales receipt for same the guitar man for 00 to selecting that item. Then we will go back to our sales receipt. We'll do this one more time, creating one more sales receipts. So we're gonna close this back out. We'll go back up to the plus item up top, and we're going to select within the customer section another sales receipt. So will select sales receipt from him. And we're gonna enter another sales receipt for another job. This job being +3005 so it could type in +3005 and pick up that job for Jones guitars. So this is the job number. Jones, the customer. We're not gonna be entering an email. We don't need a billing address because we're not gonna have any sales tax. So it's not gonna be calculating on the sales tax or need the billing address in order to calculate the sales tax on the date. 01 31 to 1 will be the date we are using. We are working in the year 2021. Then we're going to scroll through this. Remember that the other side will be going to the UN deposited funds. And then we're going to say that we have a partial service is gonna be our service item already set up in the system. We will have a quantity of two, and therefore the 100 rate at two of them will give us the $200 no sales tax we have, then the ending amount of the $200. Remember, we didn't need to select down just to be on the second level in order for the calculation to be complete. So let's see what will happen here once again, what will be done as we got cash but didn't put it in the checking account. Instead, put it into the UN deposited funds. The other side will be some type of revenue account. We're gonna save this. We're going to them it. Close this and go to the reports and check out what has happened. We're gonna go back to reports on the left hand side, and we're gonna type in first deep balance sheet. So we're gonna have the balance sheet, and we're going to select the range for the balance sheet Will, which will once again be 01012121 31 to 1. And we will run that reports. We're gonna go down to the UN deposited funds. There's 300 it if we select those UN deposited funds, we see that $200 amount the other side go into service Revenue. Jones guitar job 3005 Selecting anything in that row, we will then see that sales receipt we have set up. Let's take a look at the other side on the profit and loss by first closing this out. Going back to the reports on the left side. We're gonna go to the profit and loss, We're gonna type in profit and laws. So here is the profit and loss reports. We're gonna put the date range once again. Ovo 10121201 31 to 1 January 1st 2021 to January 31st 2021 run that report. We then see in the service income or the fee income that 508 Selecting that amount, we scroll down, we see that 200 again. Here's the other side of it. Then it goes to UN deposited funds and the split account. We have the 3005 job four Jones guitar. If we select that item, then we will once again see the sales receipt. 64. 7.80 Generate Report & Export to Excel: Hello. In this presentation we will generate reports including the profit loss, balance sheet and transaction reports by date. Then export those reports into excel within QuickBooks online. Here we are in the QuickBooks online dash, but word we will be continuing with the get great guitars problem. We're gonna generate financial statements. Look at what we have so far for the month of operations that we have been entering, including the profit lost balance sheets. Look at the connection between those reports and then look at a report that's gonna be really important if we want to see the activity as we go. It's really good to see what has happened through a time period. And if we want a great or compare things than this transaction list by date is a great report to look at. So we will look at that as well. It's got a reports on the left side, and we're gonna select first the balance sheet so in a city balance sheet and select that item, then we're gonna change the date range to the month we are working in 0101212 a 1 31 to 1 January 1st 2021 to January 31st. 2021 will then run that report. Here's what we have. Now if we just go through this and just check it out a few out quickly. We've seen it a few times before, but we want to look at its components, compare it to the other main report being the prophet lost the income statement type report and then take a look at the transaction that detail. So remember that the three main components are gonna be the assets and then the liabilities . And then, of course, the equity We know we are in bounds by total assets here, equaling a total liabilities and equity. That's our accounting equation. Assets equal liabilities plus equity. Another way to put that is that the asset side represents what the company owns or has claimed to. This is what the company has, and, of course, the company being a company, thinking of it as 1/3 thing at simp entity in and of itself, whether it be a sole proprietor or a corporation, we know that whenever it has, it owes to somebody somebody has claimed to those assets in other words either 1/3 party in the case of liabilities or the owner in the case of the equity. So the other side of the accounting equation the bottom number here liabilities and equity represent who has claimed to the what of assets that the company owns. So this is the balance sheet the one way we can look at the balance sheet. Note that we then have these sub categories within the balance sheet. If we were to to minimize thes within the form here, it's pretty nice that you can see components. So the main components are just the accounting equation, assets equal liabilities plus equity. All I did was take this little triangle and take that down to its minimalist parts. So if you want a very minimalist financial statement here, we could say this. This is basically what the company has. This is what they owe it to. That's kind of like, um, listen, the most overview you can get, then, within assets, we have the current assets. Those they're gonna be do within a short period of time, including the checking account and then the, um accounts receivable. What is owed to us, which has its own subcategory within QuickBooks here. Then we have the other current assets. Those things that are gonna be convertible or used in a short period of time, generally a year inventory, prepaid insurance, short term investments and this UN deposited funds and essence of form of cash account an account that might be long better up here once we group them together. But we expect to deposit these shortly, so that will be OK. Then we got the fixed assets that we will break out separately because they're gonna be longer lived acids. That's the 98,000. We don't have any accumulated depreciation related to that yet. And then we have the liabilities broken out between current and long term. Once again, the current liabilities air do within a year. We want to match those up to the current assets, which are things that will be consumed within a year to see if we can pay off those current liabilities with our current assets. So we have nothing in accounts payable at the moment. We do have a visa card that's a current asset, and then we have other current assets. We owe the state Board of Equalization for sales tax that we've been collecting payroll taxes, payable that for processing our payroll, both the employee and employer portion. Then we have the long term liability for a loan that we took out. We're assuming all of it is due after a year's time period, and we might have to make an adjustment for that at the end of our adjusting process, which will do after the next month. And then we've got the equity section and remember that we zeroed out opening balance equity. It's not really an account that typically will be used. It's more like a plug account QuickBooks uses when setting up accounts and not knowing where to put something. If QuickBooks doesn't know what it put it, it might be going opening balance equity. So that's that's what we want to check out anything in that area and adjust it. We have the owners investments. That's what the owner put in in terms of money from the owner to the company, as opposed to retained earnings, retained earnings being amount that has accumulated over time in terms of of earnings generally and then. And of course, this isn't the earnings for just this time period. This includes are beginning balances that we put in the place. So although this is the first month of operations within QuickBooks, it's not necessarily the first month of operations for the business. We set up the business and put in opening balances and clearly had transactions before this time contributing to the retained earnings. Then we have the Net income note. This is something not typically on the balance sheet, but QuickBooks puts it on there because it helps us related to tie out what we're looking at here and to the profit and loss statement. So that means that total equity, what is owed to the owner is 1 44 1 74 and that represents the investments from the owner and then the earnings of the owner, which relate these two. And this is actually a net loss, even though it says net income, because its a negative and we lost money. So that's gonna be a recap of the balance sheet for the month. We're gonna go ahead and print of this report and exported, I should say, to excel someone export and export two excel. Here it is. I'm gonna open that up and see what we have here It is. I enabled the editing, and we have the report. Looks good on formatting. The printing preview looks like it's gonna print, select print preview down here print layout. And it looks like it prints as we would like it to all on a page there. It's two pages long. We could make it fit on one page, but I'm more concerned when it's more than one page wide. So I'm gonna keep it like that for now. And just go ahead and save this. So we're gonna say file, save as browse to where we want it on the computer. Once we found the location, we could change the name. I'm gonna go ahead and just keep the name at the default, which is the name of the business and then the balance sheet and save that information. We're gonna close this out, then go back to our reports. We want to select another report now that of the prophet in laws. Now, as we select the profit and loss, we know that they're linked because this 6000 to 21 should be in the profit and loss. Remember, however, when doing this, we've got to make sure that we have this the correct time, period. So when when we do the balance sheet, typically it's a point in time, not a time period. But when we put in the income statement here, we're selecting something that has a time period of beginning and end. It's not something like cash, which is just is what it is. At a certain point in time. This must be net income for a month or a year. So when you compare this to the profit and loss, we've got to make sure that we are looking at the same time period in this case, the month of January 2021. So now let's go back to the reports on the left side, we're going to select our profit loss or income statement. Typed reports will type in profit and loss and select profit and loss. We're gonna change the dates 201012121 31 to 1 January 1st 2021 to January 31st 2021 Running that report. We then have this information. Let's just recap this real quick We note that the bottom line number is that 62 to 1 93 That's what we found on the balance sheet. So they are connected. They are related. This will be part of the equity section. This is really detail about the equity section about the earnings over time or, in this case, the loss over time. So what? We have first years, we've got the sales of products, these air inventory items we sold as opposed to service items that we sold, and we broke those out into two separate accounts. That's gonna be our total income, sometimes called revenue. We're gonna call it income. Same thing. Cost of goods sold. That's the cost of the inventory we had to consume in order to generate revenue that's mainly connected to this revenue. Appear what the revenue related to selling inventory. This number is so important as an expense that we typically break it out in its own area. When we sell inventory cost to get sold, it's hugely important if we don't have inventory, cost of goods sold is not there, so this will give us a subcategory of total income minus costs of goods sold gives us the gross profit. That's our profit before all other expenses. And then we have all of their expenses. Office payroll at telephones. Utilities notice that when we set these up, I put payroll expense on some of these and no expense on some of the others, such as utilities. You may want to standardize that and have an expense in their went on all the accounts or none of the accounts. Some accounts, they just typically roll off the tongue as payroll expense. And possibly you want to put expense in the writing as opposed to payroll liabilities, which would be on the balance sheet. Um, some people would like to be consistent, have that go through all the way through, like utilities expense to have it all the way through. So you might want to think about that. That's really just something that goes into the bookkeepers, preferences and eso. Some people will always want to have an expense that some people will never want to have an expense. And some people might put in the system such as, well, if utilities is the Onley utilities and it's the utility's expense, meaning there's no prepaid utilities or no out utilities liability or utilities payable, then it's not very confusing. It's just an expense. And I don't need one or as opposed to payroll expense, which has a payroll liability accounts as well. So if we just put payroll, it might be confusing. So think up. Uh, there's a lot of flexibility on the profit and loss in terms of how you're gonna group these things. So then we have the total expenses here, and then we have the gross profit minus the rest of the expenses in this case, giving us a loss not uncommon for the first month of operation or for a fairly new business . So we'll have lost year that was then part of the balance sheet. We're gonna go ahead and then print this out, so are exported. We're gonna export this once again. So we're gonna select exports and export two excel when it closes, will enable the editing. And there it is. That's all it looks like. It fits on one page, So we're just gonna go ahead and save this information. So we're gonna go to the file time we're gonna go to save as we're gonna go browse to the computer where we would like to save it. And then we could change the name. I'm gonna keep the name we have here, which is the name of the business forward by the profit and loss and save the records. That's gonna be the profit loss. We're gonna close this back out. Those are two main financial statement reports that we see we go to off the time of their go to reports and now we're gonna look at the report. That's really a good detailed report, and that's gonna be the transactional list by date. So to get to that report, we're gonna go over to the reports on the left. Also note, however, before we do that that the General Ledger is also a really good place to go. And that's something we work with a lot in our normal accounting courses. If we're taking accounting courses and really we could get we could run a general ledger and get all the General ledger for all reports, which is often asked for in terms of an audit. Ah, but the transaction detail, if we select on these items, will give us something similar to it's called a transaction important QuickBooks. This, in essence, is the G L activity, the General Ledger for each account. So if we wanted to go through the Geo individually by account, we can do that and go through to these accounts. If we want to see all the transactions that have happened over a time period over any accounts, that's when the transaction detail list by date will be helpful. So let's do that. We're gonna go to the reports on the left side. We're gonna type in here the transaction list by date. So here it is, the transaction list by date. That's the one that's the one we want. So we'll select that, and then we'll change the dates from 010121201 31 to 1 January 1st 2021 to January 31st 2021 will run that report. And here is that report. So we have the dates on the left side. We're gonna have the types of transactions, and this is what's great about this report. It gives us all the transactions we have great for taking a look at what has happened over a month. Also, great if we're comparing what we have done to someone else, such as in grading. So this is a good one. If we're doing this problem for working through this problem, if our balance sheet and our profit loss haven't tied out exactly to what they should, then take a look at this report ticking tie off everything here to there. What I have to you have. And that should be the difference. Now if something is on this report, if something is on this report and not your report and you're checking off work in the same problem, possibly it is a date issue, meaning it's very possible he didn't put everything in there as of 2021. So just changed this beginning date to the currents date or before the current date. And then run this report again and see if you see any outlier. See if you see any dates. I'll do that right now will save run this report and we'll just say, uh, the current year is 2000. Let's say 16 just to go way back in time and see if we just put a date that was way out of whack then if we go through here, we could see that. Okay, we see detail for 2000 to 20 and we ran the report for 2021. And that makes sense because 2020 we had entered data before the month in which we started operations. We did that Ah, in the last section and ran a detailed report for that. And then we've got the 2021. So that looks good. And there's nothing other than that here. If there is something other than that, you say this was the wrong date. The states in there as of ah away earlier date. It needs to be changed. You could select it. Say, if this item eyes in a random date, we could select it and then change the date. You want to be very careful when changing the dates and practice. However, because it could really throw off your beginning balances and your reports for a month Month. But QuickBooks gives you the ability to do that. And if you do ah, any cheap date changing with care, it's possible that that could be very useful. But it's also not the best way to deal with the audit trail in a normal business as well. You should actually do another journal entry that fix that So you can see that mistake and see that correction from an auto trail. So we're gonna close that back out. So that's how we can We can fix this, however, when we go through here, so I'm gonna change his back. I'm gonna go from 0101 to 1. No one. No. 1 2021 Now, we'll go ahead and run this report once again and we'll have our dates back. Teoh, January 1st 2021 through the 31st. Now this will have the date. It's gonna have a transaction, that type, which is really important. That will tell us if it's a journal entry, a check or deposit. So this is really useful information when checking this stuff off, then we'll have the number of the posting the name if there is one. The memo description, if we have one, will have the account and split account the two accounts that will be impacted by the transaction and then we'll have the amounts. Now it is possible for the amounts to be out of date were in ordering by the dates over here. But it is possible if they're on the same dates for the amounts to be out of order. What you want to do is check off everything t just taken. Tie it off. Just check it off here and then check it off on your report. Just tie everything out if everything here matches what you have and the beginning Beginning balances were right. Meaning we have the same beginning balances at the end of the first section when we entered the bikini balances. Then this has toe work. It basically has to tie out. So So if we check everything offer, just go through all this. If we've been working through the problem and just check all of these off from this report to your report and see that they are all there, and if they are not all there, we can add them. Or make sure to check the dates before we add them and make any date adjustments that need to be made. Once we do that, then that two reports should tie out. We should be able to go to both these reports and tie them out. They want to go through this whole thing and just basically check off these numbers from this report to your report. And so let's go through that entire thing. And then you also could check these items over here in terms of the transaction type and make sure that you have all the transaction types that are in here by date, going through each date, checking off that you have the same transaction types and each of the dates. And if that is the case and the amounts are matching out, then we should be okay. And everything should tie out your balance sheet and your income statement should tie out. So let's go ahead and print of this report and exported to excel. So in order to do that, we're gonna go up top. We're gonna go to the Export two Excel. Here is our report. I'm gonna close. This will enable editing. Now, this one typically won't always fit on one page. Let's see if it does here. I'm going to go to this second tab, which is the page layout and see if it fits on a page and it doesn't if we go back to the first tab, the normal. Then it usually puts this little dotted line on where that where the brakes will be. It's also not. We can't see all the numbers over here so we could make this larger. I can put my Chris right between the J and the K, make that a little larger so we can see those items. Then we can go through and try to format this information. So first thing we could go toe landscape rather than portrait. So to do that, we'll go to the page layout. We will go to the page, set up orientation, select orientation landscape so we can have that. That will help us out just a bit. And the next thing we can do is start adjusting the columns or maybe deleting columns that are not needed. We might want to go through that process and elite columns. It's a little difficult to delete Collins because they merged these top cells, meaning, rather than having a bunch of cells, a B, C. D. It's all a one. This whole thing is a one, so that makes it a little harder. Teoh delete the sales sometimes, but I'm gonna go ahead and do the next thing we could do, which is go to the files and go to the print and within the printing options. We have the scaling option at the bottom here. I'm gonna make this a little larger so you could see it because there's a drop down. If you go to the scaling option, what we want is to fit not really on one page, because I don't mind if it's two pages long. I mind if it's two pages wide and so what we want to its fit. All columns to one page wide, all columns to one page. So we'll select this item, and that will kind of force it toe work. That'll put all the columns on one page. It does happen to be still one page long as well here, but that's just out of coincidence. That question that thing we want to have happened is not to have a cut here and another page. I'm okay if there was a cut here in another page, but not if there's a cut here and another page, because that makes it that makes it messy. So now it's all on one page. We have kind of force that you want to do that as a last resort. If what if there's any other way we could delete columns or anything like that, that would be better, because it doesn't change the size of the text, especially if you have multiple reports that you will be printing. Then you're gonna have reports with all these different text sizes on them if you have to use that function and you'd rather ah, just the columns and whatnot in order to make it work rather than rather than adjusting the size of the font. But if you know sometimes you gotta do what you gotta do. So we're gonna go ahead and say that. So then we're gonna go to file tam, and we're gonna say save as. And then we're gonna go to browse and locate where we want to put that on the computer. Once we find the location, we could change the name once again, but it's gonna keep default name and save that information. So those were going to be the main reports that we will have again. This reports really the one you want to check out. There's any problems with the balance sheet of profit loss. This is the one checkoff. Check everything off that is there. Go into it and drill down on it for any problems. Check the date ranges on it. Once this is set up correctly, then everything should be working on the profit and loss as well as the balance sheet. 65. 8.05 Make Loan Payments: Hello. In this presentation, we're gonna record a loan payment, including the interest and principal portion within QuickBooks online. Here we are in the QuickBooks online dashboard. We will be continuing with the get great guitars problem. We're gonna be entering interest payments in writing a check for interest payments. Before we do that. It's good to take a look at the actual loan on the balance sheet and see what these payments are made for. Then we'll take a quick look at an amortization table, how it's put together and how it will determine how we make our payments. So first we're gonna go to reports on the left side. We will go into the balance sheets. I'm gonna type in balance sheet here. We're looking for the balance sheet report, and then we're gonna change the date to the month we are working in. I'm going to say 010121201 31 to 1 January 1st 2021 to January 31st 2021. We're actually gonna be working on the following month, February here. But this is where we ended off at, so we're gonna run that report. And then if we scroll down, we're looking for the liability. So you're the assets, your the liabilities we have, Then this 72 loan payment. Ah, here. So this loan amount, this is the amount that we will be working with. So if we click on that amount, then it started off at 22. The original balance we've put in place, and then we had another 50,000. So we're gonna have this $72,000 loan. The terms of alone could be, ah, lot different. We could change from loan to loan. Most of us are familiar with, like, a car payment or possibly a mortgage payment where we pay a portion of the principal and interest as the lone goes. It's possible for us to have a loan that we just pay the interest and principal at the end of alone, or we only pay interest as the lone goes, and then we pay the whole principle back at the end. We're gonna look at this loan as if we're paying a portion of interest and the principal. The other issue with a loan is often times when we get the terms of the loan. They will tell us what the payment will be but and what the interest rate will be, but not the allocation between interest and principal. And that's gonna be something that's a problem, because it changes throughout the life of the loan. So we don't know how much to allocate to interest in principle unless we have an amortization schedule, something not always given to us at the point of the loan. Therefore, if we're recording the loan and we don't have that, then we can. We either need to make that or we can make an arrangement with our c p, a firm and our accountant to adjust the loan amounts at the end of the time period. So we'll go through the two methods of doing that. First, we're gonna go through the method of making an amortization schedule and then recording the interest in the principal's correctly as we go. The other methods you could do is just say whatever the loan payments. Are you going to write a check and write it to this loan payable amount? Knowing that you're overstating the amount that this will be going down by and then tell your c p A. From at the end of the year, when you do your taxes or possibly monthly to make an adjustment. For that, say I record all my payments to this account, I know there's an interest portion of it. I'm not even gonna worry about it because it's not worth my time. I'd like to pay you to do that and adjusted at the end of the year and and then hopefully, they can go in there and make those type of adjustments at the end of the year. So either method works. We're gonna go with the the amortization schedule and see how this loan payment work. So here's an Excel sheet, and we'll just do a quick calculation. Typical learned loan will have the amount 72,000 the number of months or periods. In this case, we're paying monthly. So 60 months or five years, so five years paying monthly, the rates going to be 5% and then the payment amount they'll usually give you but well calculated here because it's if we have everything else, then we can calculate the last piece, the last component in this case, the payment amount, so we'll do that with Excel, and then we'll break out the interest and principal portion per payment. See how those change as we go through the loan process. So So the formula for this in excel to calculate the payment is equals payment P m t. Payment. And then we just go through this little check box to figure this out. So we got the rate, the number of payments and the present value. Now there's a little bit easier of a method that we can use QuickBooks. I mean, Excel has up here, and that would be in the formulas. And if we choose to formula that we want to search for a calculation for payment and search for that, then it'll typically find that payment calculation. So when I searched for that, we have these items down here. Here's the fair value returns, the future or the future value. That's not what we want. We want. Actually, this one, it will give you the little description down here, calculates that payment for a loan based on constant payments and ah, and a constant interest rate. And it will give you a little bit more of a detail in terms of a box that will help you give you the description. So we'll give you the description down here, we need the rate. The rate is the interest rate per period. So we're gonna take that 5% tricky thing is that whenever alone gives you a rate, that's for a year, and we're doing it every month. So we need to take that rate and divided by 12. So that's the trickiest thing about this calculation number. This is gonna be the total number of payments. Number of payments is gonna be 60. And then we're going to say that we have the present value is the present value total amount that a series of future payments is worth. We're going to say that that is going to be the loan amount, the 72,000 here. And then if we calculate that it gives us our mountain now, we're gonna basically verify that as we go through the table here because that's not going to give us exactly what we need. That's just what we write that check for. But there's two accounts. We need to break that out to one interest to the reduction of principle. It also might be a good that if we want this to be a positive number rather than a negative number for just double click on this and a bit before or after the equal sign, we're just gonna put a negative. And that'll, in essence, take this entire thing in Multiply it times negative one. And we'll say, OK, once in after the equal sign. Negative. And there we have that. All right, so that's gonna be our payment. So within our excel table now, we're gonna have the number of payments here payment amount, which is always just gonna be this, so that's a constant. We know what that's gonna be. The interest in principle will change the principal amount before this is 72,000. After the first payment, it's gonna be something less so there's gonna be 60 payments. I'm just gonna say this equals this amount here, and every payment we make then will be equal to that same amount. So the amount of the payment will always be the same. That's just given the terms of the payments. I just copied that down, then the interest calculation for the first month, the interest would be 72,000 times 0.5 That would be for a year, though 5% of 72 principal divided by 12 because we're doing its monthly 300. So we're gonna say this equals same thing 72,000 times, 5% divided by 12. That gives us the 300. So of this 3 1059 300 is interest. Therefore, the rest is principle. So the principal will then equal this amount amount of the payment minus the interest that will give us the principal reduction. Here's the principle before and there's the principal reduction. So we're gonna say this equals the 72,000 minus the principal reduction. So once we record our payment, then if we have this amortization table, we know that we're gonna make a payment. Write a check for that. We're gonna apply 300 to interest and 1059 2 principal, leaving us on the balance sheet with the balance of 70,009. 41 from that 72,000. The second month is gonna be a little bit different. So we'll do this calculation again. We're going to say now we've only got 9 70,041 The principle has been reduced times 5% 50.55% gives us interest for a year. But we only want a month, so we'll divide by 12. That gives us the to 95.5. We're going around when we do that calculation here to the nearest dollar. So we're gonna say it equals this amount times 5% divided by 12. So notice the interest amount goes down a little bit, but the payment is the same. Therefore, the reduction in principle is the payment amount. That's the same minus two reduced interest portion, meaning that the reduction in principle goes down by a little bit as well. So now here's the prior principal 9 70,041 minus this amount. And that gives us our new principal. So we'll do this one more time. And then what? We won't do that 60 times. Don't worry. So we're going to this one more time. I won't do the calculator. I'm just gonna put it into the formula here. We're taking this amount the new principal times, the 5% that would be for a year divided by 12 to get there for a month. Then we have the That's the interest portion. The the principle, then is gonna be a principal reduction. It's gonna be the amount of the payment minus the interest portion giving us the reduction in principle. The principle amount then, is gonna be the 69 uh, 8 78 before this, minus the reduction in principle. Now, what we would like to do is just copy this all the way down. So let's test that. I'm gonna copy it down one time, see if it does what we wanted to do and then, uh, copy it down again. I'm gonna copy this down and this looks way out of whack. Of course. Let's see why we double click this. And it picked up this amount like we wanted to know what this number was picking up that amount and it moved it down just like we want. But it also moved this amount down and we don't want that to happen. We want to keep it at the 5%. So that's the thing that got messed up. This looks correct. Still, everything else looks actually correct. So what we want to do is still the so I'm gonna delete this. We want to tell the things that don't move this cell down. When you go down, you could move this cell down. That's what you want to do. That's fine. Don't move this cell down. How do you do that? You use an absolute reference. So we're gonna go over here and we're gonna make an absolute reference By putting a dollar sign. I'm gonna make a full absolute reference, even we know we don't need. We need a mixed reference, but I'm just gonna do the whole thing. And the dollar signs just mean That's just like code for cell saying, Do not move this. So when we copy it, just keep the cell exactly where it is, and that is what we will have. And then once we copy it down, I would do one cell at a time in double check it. That looks correct. That looks correct. That looks correct. So therefore, I'm just gonna copy this all the way down. It's gonna auto fill it down. Auto drives it down. Autos driving it way down to the 60 payments and Dr Filled of the calculations, and it ends at zero So the fact that it ends at zero means that what looks like we did this correctly. And look what happens to the interest payments as we go, the interest portion goes way down, and the amount that's gonna be allocated to the reduction of principle goes way up until it's almost a full amount at the last payment. So that's why that's why we need to do this in order to figure out a payment. So we're gonna write a check now for the first payment, which is gonna be this item. So here's our first payment that we're gonna make. We're gonna make it for this dollar amount. This will be the amount we're gonna allocate to interest this. The amount we allocate to principle. Now, QuickBooks online doesn't generally give us the split feature in the register account, so we're not really able to put this into the register. We're gonna have to write the check, do the check feature in order to write this. So let's take a look at it. So to write this check, we're gonna go up top to the little plus icon up top, and we're gonna go to the vendor section that's where the checks will be. We're gonna write a check. So we're gonna write the check to. We're going to say it's Chase that we're gonna be reported this to It's a bank and we're gonna say tab and it's gonna be the checking account. That's correct. We're gonna run it from the checking account. We're gonna keep that as the address. We're going to say that the date is gonna be 0201 21. This is the second month of operations that we are starting here. We're going to say that check number should remain the same. So we will keep the check number for this time. We're gonna keep tabbing through here. We're not gonna print it on, and therefore we have the accounts now, so remember what this is doing. We're making a loan payment so the one portion is gonna be the loan principal is going to go down. The loan payable amount is going to go down. And but it's not gonna be for the entire amounts of member the entire amount that were writing the check for its 3 1059 The loan amount is going to go out down by 1000 to 59. The other portion, then we're going to say isn't another account. It's gonna be interest, expense, interest expense. And you might have to set up the interest expense account. It's gonna be an expense account type, and it's gonna be an interest expense account type. So if you don't have interest expense set up, we need Teoh set that up. It is going to be an expense, and they'll be a subcategory for interest expense. And then the interest expense is gonna be for 300. And that will give us our total then of the check of 3 1059 that we are looking for. So we will go ahead and save and new for this transaction and let's see if it does what we believe it should. So I'm gonna close this back out. We're gonna go back to the balance sheet, so I'm gonna go back to the balance sheet up top or go to reports balance sheet, and then we're gonna change the dates and I'm gonna make the dates for the new month of operation. So if I'm gonna keep it at January 1st and then we're gonna go through February's I'm going to say 02 28 and 21 and run that report. So january through February is the report that we need. And if we scroll down through this information, then which have in the checking account this item, we select the checking account item and scroll down. We've got the check amount T 3 1059 If we select that amount, then we see our check here. So the check 1012 here is our amount. Closing this back out and going back to our report. We're then gonna go down Teoh the loan amount. So we're gonna scroll down to the loan and here is our loan 70,009. 41. If we go to our amortization table, then we should have the same amount in the amortization. 70,009. 41. What's left after we make the payment. So that looks correct. And then we're gonna go to the profit and loss statement by going to the reports. Well, type in profit and loss. So it's a profit and loss type in the dates of and we could just do the second month so 201 21 Teoh too. Ah, 28 21 7 The month of February of 2021 the year we are working in. Run that report. And if we scroll down, all we have then is this interest payment the 300 selecting that item there is our interest payment. So of course, if we go back back to the report summary, then that's gonna be a decreased to net income. And that's the only activity we have at this time. Now, we're gonna do this one more time. In essence, we're just gonna say that we're gonna make another payment as of the end of the month. So we made a payment to begin of the month. We're gonna make another payment at the end, So we've done this one. Now we're working on this payment, and it's gonna be slightly different. So we're gonna make this as of the end of the month of February 28th same amounts. But now the interest will be this, and the principal reduction will be that leaving us with a principle of that. So let's record the second check. So gonna go back to our system here. We're gonna go up top to the plus, and we're gonna go to the vendors and check, and we're gonna write another check. Also to chase checking account. It's gonna be the date is gonna be 02 28 to 1. It's gonna be that for the check number scrolling through this. We see the loan payment note What it did here is it memorized the last check we wrote. And it's tempting just to say to keep these numbers and typically, oftentimes that's gonna be corrected a really great feature that QuickBooks does this. But in this case, we have a difference between the allocation. This is what was allocated last time to principle. Now it is slightly more. It's 1063 the interest portion then is going to be to 96. Everything else we're remains the same. Same amount appear of 3 1059 going down in terms of the checking account. But the allocation to the other accounts being ah bit different to the loan payment reduction and the interest expense. So let's record this and see what happens on the financial. So we're going to save and new here. We're gonna close this out, and then we're gonna go Teoh the reports once again and look at the balance sheet. So we're gonna say balance sheet and we're gonna run this report as of seo 20121202 28 to 1 . And let's run that report. They were gonna go to the checking account up top, and we'll see that second check. So the same amount. But it's gonna be different in nature. So if we go into that check, it's gonna be a bit different in terms of this allocation, so we'll close that out. So we've got two checks for the month of February. So far, we're gonna go back to our summary to our balance sheet, scroll down to the liability section. We're looking for that. Ah, lot loan payable. We have 69 8 78 That amount matches here 69 8 78 on our amortization table. So that looks good. And then if we click on that amount, we see the detail and it's a bit different. So note the first check went a reduction of 1059. The second it's a little bit larger of a debt reduction because less of it went to the interest expense and mawr to the reduction of principle. So here's the check for clothes that back out. We're gonna go back to the reports and we're gonna go Teoh the profit and loss. And we're gonna change the dates from O to a 1 to 1 Teoh 2 28 to 1 and run that report. And then we see the interest expense once again reducing the net income toe a loss. At this time, please click on it. The same amount was paid, but the interest expense allocation is going to be a bit different now. Of course, we did this in order to to show the two payments in one month. We wrote one at the beginning, one of the end. So of the activity of the report, there gonna be a little bit different here because we jump forward in the month and now we're gonna record some or activity. That's gonna happen through the month of February 66. 8.10 Short Term Investment Deposit: though in this presentation, we're gonna record the deposit related to a short term investment which has become due within QuickBooks online. Here we are in the QuickBooks online dashboard. We're gonna continue with the get great guitars problem. We're gonna say that we have a deposit that is going to be made into our bank account four , and investments that we have made it has become. Do you want to get a better grasp of what is going on there? Let's take a look at our financial statements, the balance sheet in this case, and see what we're talking about. We're gonna go the reports down here on the left side. We will then say the report will be the balance sheet. So we're going to say we have a balance sheet and we'll run that report as of 02 28 to 1. We're gonna be working in this month in our problem here. So, actually, let's make that 0201 starting at the beginning of the month and then 02 28 to 1 for the month of February in the year we are working on running of that report rolling down to what we want to see here. We see we have a short term investment. So we have this short term investment we're gonna imagine that's in something like a CD or something in the bank and the same possibly the same ah bank account that we are doing business with. And if it was something like a CD or, ah, a short term investment account, it may just become do. At some point, we might tell her, Beckett, when it becomes do we want to take that money out and the interest earned from it, and put that money into our checking accounts? If the bank does that, we may not see it going to our checking account until a later time when we check the bank account cause it's gonna happen automatically or when we do the bank reconciliations on the bank statement. So we're going to say, Hey, that happened. Now we've got this deposit into our checking account that we need to reflect on our side of the books, meaning our checking account has gone up by that 12,000 plus the interest that we need to reflect here in QuickBooks and that other side of it is because of this 12,000 investment that has become do, therefore, this needs to go down to zero and some added interest. On top of that, which we're going to say it's $250. So the total we're getting is 12,250 12,000 of its gonna be reduced from here and go into the checking account, and the other 250 is going to go into the checking account. The other side will be interest income. So to record that, we can just go straight to the deposit. There's a couple different ways we could do this, but we're gonna record it with a deposit. So we're gonna go up top to this little plus icon, and we're gonna select in the other area. We're gonna record the bank deposit. So bank deposit and then within the bank deposit. Remember, we have these UN deposited items. That's the ones that we can kind of click on. And those represent the items that we have received from customers generally that have not yet been deposited. That's what not what we're working with here. We're working with another deposit, meaning a different type of activity happened, our investments became Dio and is going to deposit into our checking account and out of this other investment account. So we're gonna scroll down to the new accounts, add new deposits down here, and we're going to say that we received it from and again we could choose whoever the recipient of the deposit was from is gonna be our bank. We're going to say again, that's who we have the investment with and the account then is going to be short term investment. This is the account that we need to make go down to zero. We probably should put out a memo description not, but that the amount of became do a short term investment, became dio deposit into the checking account and then the the payment method. We're just going to say, Ah, we're gonna keep it at cash. I'm not sure that's required field, but it's probably a transfer. Were probably taking a transfer in this case. It actually was transferred automatically from our one account with the bank to another account. And in the amount that we're going to say for this amount is only the 12,000 even though we got 12,200 because we're trying to reduce the investment account by that amount. So our total deposits 12,000 But we really got 12,200. The other side, it's gonna also be chase, But it's not gonna be short term investment In terms of the account, it's gonna be interest income, so that should be subtype of interest income. And if we don't have it, we're gonna add it. So we're gonna add interest income in this case, So it's gonna be an income type of account. Actually, we're gonna change it, not from an income. It's not gonna be a main income is not our principal portion of income. We want to put it into other income, and that'll put it in a different place on the income statement to tell. Our readers say it's not really our primary thing. We don't make interest income as a normal business. We're gonna put it into other income, and it'll be in a separate subsection of the income statement or profit and loss, and then on the detail type, it's gonna be interest earned. That's the one we want interest earned. And so the name we're going to say its interest, income and description None. It's not gonna have a subcategory. So we're gonna save and close that description. Probably a good idea. We're not gonna put one there method. I don't think we need one there because it is a transfer, and that's not an option here. So I'm just gonna try to leave that blank this time. And then we're going to say that the amount is going to be for the 250. I remember the tab over so that it does calculate down here. So this is the total deposit we're having. It's gonna go into these two accounts, the chase, a short term investment and the interest. So if we think about the journal entry before we go visit the journal entry in terms of finding the financial statement accounts, we could say that Well, the checking accounts gonna go up by 12,250. The other side is that the investment account is going to go down. That's where it came from. The other acid account is gonna go down so that this asset account, the checking account, will go up, and the rest of it that 250 is going to increase the income account the prophet lost for what we have earned through investing that original 12,000 and then gaining income interest income of 250. Before we do save this, However, make sure to go back up top. And this date amount is ah, we need to make that. As of the dates that we are working in an hour, case is gonna be 0206 21 so February 6 2021. To change that self, make sure toe put that date in there. If we don't, she's gonna be out of order. That transactions were gonna have is out of order. Of course. QuickBooks online will try to pick the date. That's the current date that were working in when we work a future problem or when we go back in time and work things as often happens in practice when we're entering things that a little bit late for transactions that happened prior, then we gotta make sure to go in and change those dates. So we're gonna scroll back down here is thesafeside and new. Then we'll check out these reports and see if it does what we think it should do. So I'm gonna close this back out. We're gonna go to the reports left side. We're gonna look at the balance sheet first, so we'll type in the balance sheet balance sheet. Here is the balance sheet. We're gonna put the range of the dates to the February over to a 1 to 1 month. We are working in 02 28 to 1 and run that report. So then we have If we scroll down here, we see in the checking account, we should have a deposit of 12,250. If we go in here, there's our deposit 12,250. It's not the last transaction, because remember, we kind of went out of order in order to record the loan payments. So we're going to go. We're going to skip around a little bit because it is a book problem here. But if we click on that amount, we will see the payment. And of course, our goal here to skip around is to group like transactions so that it can you know, we'll go out of order when it is giving more of a benefit to go out of order than it does to go in order. So we're gonna close that back out, at least in our judgment. And then we're gonna go back to the reports up top back to the report submarine, and then if we scroll back down, then the other side was the short term investment. And noticed QuickBooks online still has a zero there, even though it's gone now. So if there was activity during the time period, QuickBooks still puts that zero there, which is nice, because that allows us to go into that and see the activity. So if we go there, then we can go in. We see there's the 12,000 that was there before. It's now at zero. Note. It's only 12,000 not the amount of the check if we or the deposit. If we go into it, we see the total deposit was 12,000 to 50 the other 2 50 going to interest income. Let's find that interest income account. We're gonna close this bag out, and we're gonna go to the reports left side, and we look at the profit and loss of this time so I'm gonna say profit and loss, profit and loss and the amounts or the date range is gonna be 0201 to 1. Teoh 2 28 to 1. February 21 2021 to February 28 2021 run of that report. Then we're going to scroll down. We have this interest income 250. Note. It's not in the main income. That's why we didn't put in the main income. We stopped from doing that. We put it down here in the other income, and that's going to say QuickBooks is going to say our reports are to our readers. They're going to say this is gonna be our major income up here. These are normal expenses. Here's other income. It's not part of our normal operations were not an investment company. But we do have some other income down here, so judges really on our operations by our operation income and then down here, we got some other items. The interest expense, by the way, might be better. Ah, and in another category down here as well. But I'm gonna match what our problem has set up in our case and keep it where it's at. But just note that interest expense might be better down here below as not a normal top of transaction as well. So we're gonna say that says click on this 250 there is the 2 50 If we select that item, then we have our deposit once again, of the 12,000 to 50 broken out between short term investment and interest income. 67. 8.15 Purchase Order New Item: So in this presentation, and we're gonna create a purchase order which includes a new item that we will have to set up within QuickBooks online. Here we are with the QuickBooks online dashboard. We will be continuing with the get great guitars problem setting up a purchase order a purchase order where we will need a new inventory item, which we will then add. In order to get to the purchase orders, we're going to select a plus icon up top. We have our sections, the customers, vendors, employees and others. We are in the customer section. We're going to actually were in the vendor section. We're gonna be purchasing from the vendor and we have the purchase. Order the item we need. We're going to select the purchase order within the purchase order. Remember, what we're doing with the purchase order is we are requesting to buy something, and there's actually no transaction happening here. Very funny thing about the purchase order is that it was just a documentation that nothing in the financial statements happens, whereas just about every other form we have there's something that happens to the financial statements. So although we will have numbers here in terms of what we're going to buy for the purchase order. We haven't bought it, and we haven't asked for Andi Haven't paid for it. We haven't received it. Therefore, we're not gonna record inventory or the payment Different than oftentimes when we purchase something personally from something like Amazon or an on line distributor where we actually do pay for it at the time of purchase. Even though we have not yet received it in this case, we're going to say that we're not gonna pay for it until we receive it. Very common for that to be the case in up type of situation where we purchase a lot from particular vendor giving the purchaser more power to be able to not make the payment until they receive the order and can check the order that it's in compliance with what they I wanted to have ordered on the purchase order. So we're gonna set up our who were gonna purchase from which is gonna be the vendor, which in this case is Fender. We're gonna purchase guitars from Fender, which is our vendor, and that is a new vendor. So we're going to set up that vendor. We'll add the vendor of and we're not gonna have an email for Fender at this time. We're going to say the mailing address. We're not gonna include anything on the mailing address of the ship to, and then we will have a date that will have input here. And that's gonna be for the month of the date Will be 0209 21 february 9th, 2021. We're gonna be working in that year. That month we keep going through this, we're gonna tab through and we get to the product or service that we will have is gonna be a new one. Typically, if we select the drop down, this is gonna be the items were gonna order. Typically, inventory items were purchasing guitars. In this case, we don't have this item on there. We're gonna add it, and we're going to say it's an sq that we want. So we're going to say, Tab, that's gonna be a new item we need to add. It's gonna be an inventory type item, So we're gonna select the inventory type item and add this item as we go Now we're gonna tap through this. Typically, we just really need to get the sales price and the cost in here. So we're gonna tap through this and we're going to say the initial quantity. We don't have any as of date, we're not gonna have We got Reorder Point. Where do we like? How low do we want to get before we we we reorder. We're not gonna put anything there at this time. The inventory acid account will be inventory acid. So when we say that we have these guitars, these items, these inventories, they will be in the asset account on the balance sheet. The sales disquieting description is it's gonna be a Squire. That's the type of guitar or we're gonna have. And then we're gonna say the sales price or rate. So this is what we're going to sell them for, not what we are purchasing them for, which is what will be on the purchase order. Once we sell them, it's gonna be for the larger amount of 244 and that's gonna be going to the income account of sales of product income. So that's gonna be our inventory or our revenue type account. or our income type of account, the account that will be recorded once we sell the silent for 244. It's gonna increase revenue or income to that account, increasing net income. It is gonna be a taxable item. We're gonna have to charge sales tax for it. That will depend on the region we are at as to whether it will be sale tax. In our case, it is taxable, and we tax inventory items and not service items is how we're working our sales tax. They were going to say the sales tax category. I'm just gonna choose retail here. So you probably want to make sure you're picking the correct attack category. There's more calculating the correct sales tax. We just want to make sure to calculate some sales tax so that we know how the sales tax will be calculated. It will differ from place to place. I'm gonna say the item is taxable retail item. So then we're gonna have the purchasing description. I'm going to say that's the same. So we'll copy this description and that will be the same. And then finally we have the cost. We're gonna sell them for 244. We're gonna buy them for 168 in this case. And where did we come up with these numbers, By the way? What? He's just being given to us? What we would have to do, of course, in real life is note what we're gonna buy it for and then decide on the appropriate markup . What do we want to receive as a mark up on that? And that's gonna be a business decision will need to make. Then we have the expense account. When we sell something again, we have the revenue account here and the related expense of us consuming the inventory, the asset in this case, in order to generate revenue, that's an expense. That's our most important expense when we still inventory items called cost of goods sold. So that's gonna be it that will set up our inventory item here rather than having to go to the items section setting it up there before creating a purchase order or an invoice or sales receipt. So we're going to say save and close, and it's saying that we are required to have a field up here. So initial quantity I'm gonna say it. Zero. That's indicated by this little star. So we did that on purpose. Of course, to note that we have to have that information there. So and then we're gonna say the initial date and I'm just gonna say, the beginning of the month 0201 that were working in 21 were working in this month in this year. A reorder point we don't need. That's not a required field, no little ass tricks. So we're gonna keep that as is, and we're going to say save and close. And so there is our information on the purchase order. Here's the product or service. The description, The quantity that we're gonna buy is one. The rate is what we just input into the item of a 1 68 The amount 1 68 customer is optional . Depends if we're going to order this for a particular customer or if we ordered this for basically the store toe have in the store. We're going to say that we ordered this for a particular customer. The scenario being customer came into the store says they like this guitar. They would like a different color or something like that. So we're gonna basically order the purchase order for that particular guitar and apply it to this particular customer. And by putting the customer in place here, we can use that Teoh generate the rest of the transactions related to this piece of inventory, including the bill, payment of the inventory check and the invoice that we will make to this customer for this guitar that we assume or hope to get for them. So the customer is going to be new music stuff. And so we're going to say that's gonna be our custom. This is a new customer, so we're gonna add them as a customer. We're not gonna add any details. We're just gonna save the description there. And that's gonna be I'm gonna click off of that so that it will total up over here. We're not gonna add any vendor message or memo at this time or any attachments. So remember what this is going to do in terms of journal entries? Nothing. It's not gonna record anything. Although we have an amount here, it's not gonna increase inventory. It's not gonna increase ah payable. It's not going to record the fact that we made a payment. We haven't made a payment. We don't have any inventory yet. And we don't over the inventory because we haven't received it yet and therefore are not yet obligated to pay for it. So there's no transaction here, even though there's a dollar amount, which is unusual, but that dollar amount will be tracked for us within the purchase orders within the system and can then be used to apply out to when we receive the inventory and help us to create the recording of that inventory. So we're just going to save this item now? We're gonna do this one more time, so I'm gonna close this one out. We've saved it. I'm gonna close it. Then we're gonna open another purchase order going to go to the plus item. We're gonna go to vendors purchase order, and we'll enter another purchase order and more of our standard purchase order that we have had in the past. Our main guitars that we purchased and we're gonna purchase from the vendor. We select the drop down, we'll see the vendors here. We're gonna type in the vendor of EPA phone, and here is EPA phone we're gonna purchase guitars here again. The spelling if it's wrong. Sorry about that. The address will be here, and then we're going to say the ship to on the purchase order Date we're gonna we're gonna say is 0209 21. That's gonna be the month we are working with. With this particular problem, we're going to scroll down to the items down here and know what it did. It is. It remembered the last item, which was an e l p. And in the description. So it's populating that for us and trying to help us out there. If we have multiple purchase items, then this may not be the most useful place for that. Because we may the order in different items from the same vendor at any given time. So you have to check that out. We always ordered the same item. It could help. This is the main guitar we purchase. So that's actually what we want. He e lp. That's gonna be the guitar we are purchasing. Thesis Ailes description automatically populates. However, we're not gonna purchase one this time. We're gonna purchase three of them at a rate of 400 a mountain 1200 that will give us the total amount 1200. So note once again that although we have 1200 as the amount we know that will be the mount . There's no journal entry to this meaning we didn't get the inventory. We haven't made the payment. We don't even know that money yet because we haven't received the inventory for that money to be owed. So no transaction happening, However, that 1200 on the purchase order can be used to generate the bill to generate the check to generate the invoice as we move through the process as we receive the guitar building guitar pay for the guitar and then hopefully sell the guitar and invoice clients for it. This time we're not gonna have a customer. We're just gonna put these guitars. These are our main guitars. We're gonna put use them in and put them in the store. So we'll have these ready to sell within the store. We didn't get any pre order for them. We don't have any customer to assign them to at this time, so we're just going to save that, and that will be it for the purchase orders 68. 8.20 Receive Inventory with Bill QuickBooks Pro 2018: Lo. In this presentation, we will record the receipt of inventory along with a bill within QuickBooks online. Here we are in the QuickBooks online dashboard. We will be continuing with the get great guitars problem. We're gonna be entering a bill, and we're gonna be connecting that bill to the related purchase order that we have created . So let's take a look at the plus item down here and see the activities that we have. What we're looking at is in the vendor section, and what we have done so far within the vendor section is to have a purchase orders. We have the purchase order. Remember that a purchase order does not actually have a transaction related to it. It's not us purchasing inventory. No inventory has increased because we have not yet got it, and we actually haven't even paid for it at that point time. It's just a request for inventory to our vendors. Once we receive the inventory from the vendors, then we're going to pay for the inventory or entrant into our system in this case and record the inventory At that point in time. Note. This is a little bit different than would be something if we were purchasing something for our cells and something such as Amazon because we typically make the payment when we make the purchase, as opposed to this item where the purchaser has a bit more control. When we make the purchase order in that the payment has not been made at the point of purchase, We're actually going to get shipped the inventory before we enter that information into the system and then pay for it. So we're imagining here that we have the purchase order, went out requesting inventory. In our case, a guitar it has now received been received along with a bill, and we're gonna record the bill into our system represented the fact that we now owe money for that guitar because it has now been received and record the related accounts payable. That is do at this point in time. So we're first going to select the bill item here, and then we will pay the bill at a later point. So we're gonna select the bill. We see this item here, and as it is a bill, that means, of course, that it will be increasing the accounts payable the account representing that. We owe money and the other side then will go to what we are purchasing. What we got in this case inventory. So we're gonna put who were purchasing from. We could select the drop down and find them or and or type in. In this case, it's fender that is the vendor fender. And so we're going to say that is the one we want. Once we do that, then we're going to see this little pop up saying, Hey, there's a purchase order 1003 related to this particular vendor. Would you like to add this information from the purchase order to the bill? And yes, we would. So this was a total of 1 68 That's the purchase price from the vendor. It's a Squire guitar. We're going to say That's the one. And add that once we dio, then if we scroll down, it's not gonna be in the account detail. It's in the item detail. The difference between these two is that the item detailed has to do with the inventory. These air inventory items, in this case an sq Squire guitar from Fender, as opposed to other types of bills, which might be, say, utility bill or the phone bill or the typical type of bills theatre types of accounts. We would put up your other type of accounts that were acid accounts like prepaid insurance and whatnot would also be up here. Items typically will be the inventory items. Items are typically things that will have a list to it, things that we're gonna have Teoh record and enter some other place and then populate them here so that the Adams will be therefore us to populate with in the future. So if we could just tap through this now, once a fender, we aren't gonna put a mailing address at this time. The terms we could select the terms so have probably net 30 are typical types of terms, meaning it would be due within the 30 day time period. We're gonna put the date of 02 14 to 1. That's the date. Were working for the month of February in this problem. And that's the date we will have that. Then 30 days later would be, Ah, 3 16 We're not gonna Bill number or the permit number. We're going to scroll down Teoh the accounts again. No accounts here. We're gonna have the item down here, and that'll be it. So we got the square. We got the quantity. One, The rate is coming from the fact that we entered the Squire as an item, an inventory item. And that's the cost of the inventory item that we are purchasing form. We have it a billable Teoh customer, and it's new music stuff. So we're actually going to say that it's gonna be billable. And again, this isn't a perfect kind of connection. What this is going to say is that when we go to new music stuff, remember what this means. Is that the purchase order? We purchased it for a particular client, in particular customer, in this case, in new music stuff. So we imagine new music stuff for someone representing them comes into the store. Once this particular guitar and sq Squire, we don't have it or we don't have it in the color or whatever that they want. Therefore, we put in a purchase order to our vendor, which is Fender up here prior to this prior to the bill, and they then send this particular guitar. Now we're gonna enter the bill for that particular guitar, which is populated with the purchase order. So within the purchase order, we had said that we're gonna purchase this for a particular customer, not always something that will be done within a purchase order. And now that we have the bill, we're gonna keep trying to track through this customer for this particular guitar that is due to this customer. Now, this will link, then when we create the invoice will not be a perfect link, however, because it will pull up the cost here, rather than what we want is the retail price. But it will provide the link for us So we can kind of see that pop up and populate the invoice for us for this particular guitar, and that will help us to remind us that this guitar is the one that they wanted. And then we can change to the to the retail price. So that's how we're gonna connect these two out for now. So the customer is going to be new music stuff and we'll see that connection when we create the invoice. So what has happened now? What's gonna happen when we record this one. This is a bills. That means that no matter what, a bill always is gonna increase the accounts payable. That's what a bill means. So accounts payable is going to go up by, Of course, this 1 68 The other side is that we purchased a guitar, which is inventory for us. So that's an asset when the assets should go up as well. Let's go ahead and save this and see if that is what happens now. QuickBooks is trying to sell is one of their services here. We're gonna say no, thanks for now and close this out. We'll go to our reports on the left side. So we're gonna go to reports we're gonna type in first the balance sheet civil type in balance sheet. And the dates that we are going to be looking at is gonna be the month of February's Let's they go to go to 21 were working in the year 2021 duo to 28 to 1, and that's what we're gonna month we're working in. And we're gonna run that report. If we scroll down, then we're going to see that the inventory item should have going up. So here's the inventory item. If we select that item, then we see the Squire here. I'm gonna select that item. And here it is. Here it is. Here is our bill. We can close that back out. We can go back to our report up top. Back to the balance sheet, that is. See the other side, which is a liability account. When we see the accounts payable liability right there. There's the 1 68 Once again, if we select that 1 68 we once again see the bill for the fender. If we select that item, then we will see once again the bill that we have just input. So we're gonna close this back out. We're gonna go back to our report up top notice that the two accounts affected our on the balance sheet. There's no income statement accounts. Even though we entered the bill and we got the inventory. What happened is a liability went up and the asset went up in income. Statement account will not be affected until we sell this item. Then we'll have to expense it in the form of cost of goods sold. Also note that if we went to the payable by customer, it will show this same amount by the customer who we owe. Which, of course, in this case is Fender. So we wanna select and back this up by another report a sub ledger breaking this information out by vendor, which in this case is just one vendor by the name of Fender, the person we purchased our inventory item of a guitar from. We will now do this one more time. So we're gonna select another bill. We're gonna enter another bill for ITAR we received. Remember that we are talking here. We had a pretty we have a purchase order. Now we have the bill, and then we will pay the bill at a later time. So we have received the guitars at this point, and we're entering the fact that the card guitars have been received and therefore inventory is going up and that we owe payment for them because they have been received, and therefore the accounts payable is going up. This is gonna be for EPA phone. So we could select EPA phone from the drop down and or type in EPA phone and select that vendor before f. It's not spell correctly. I apologize. And if we tap through this with NCD purchase order related to this popping up meaning we had that QuickBooks is telling us here you have entered a purchase order prior to this for 1200 purchase order 100 for Is this the purchase order you would like to use? In order to populate this bill, we're gonna say yes. This, of course, is an EPA phone. Les Paul. That's the type of guitar that we got here. We're gonna add that and we're gonna scroll down. It's not in the account detail. It's in the items because it is an inventory item. It's an E LP, an EPA phone. Less poll. We got three of them on the purchase order. $400. That being an item that we recorded as items. So if we look star item list, we would see the cost is 400. The retail is different. They cost is 400. We have the amount billable this time. Not gonna put anything there. Why? Because we didn't populate a customer. This is not a guitar that we purchased from EPA phone this time are these three guitars are not purchases that we said, Hey, a customer came into our store, wanted the guitar we didn't have in the store and therefore we're purchasing these guitars for that particular customer. What we did say is we said the E l p guitar, one of our more popular guitars. We want to have more of them in the store because we tend to sell them just randomly from people going into the storm. And therefore, we're just gonna purchase three of them now and sell them as people come into the store. So that's where this is gonna pull in. There is no customer. We're not gonna have it Bill through at this time. So note that when we have a purchase order, it really depends on the type of company we have as to whether we buy something that are typically more customized for a particular customer or we buy something that first goes into the store, and then people are gonna purchase him. In other words, we don't buy them for a particular customer in mind at the point of the purchase order. So that means we're not gonna have any billable items in this in this one. So we're going to say what happens here will remember it's a bill. The bill means that the accounts payable will be going up. That's what a bill is. Means we owe money for this in the future, and the other side will then be the inventory is going up because its an item. Now, remember, if we have a bill that was just a bill that we record the phone bill or the utilities bill , the accounts payable would still go up. But the other side would be some type of expense or some other type of asset. In this case, it's inventory specifically because it's an item that were buying, in this case, a guitar, which is an inventory item for us. It's something that we're purchasing and then will be reselling. So we're gonna say save on this and check our financials one more time. And the system actually saved me here because we didn't do an important thing. I didn't do it an important thing, and that's gonna be tabbing through this. I should select the terms I'm gonna slay. The turns are net 30 once again and the dates were working in the future Here, so s So I have to go back in here. Go to 14 to 1. If we're working real time, it wouldn't have to do that. But this is the date we're going through here. I do recommend tabbing through these as you go just to make sure that we hit all the cells as I didn't do this time. When we select a purchase order, I'll didn't want to go down there and see if it's populated as the first thing. But then it's a good idea. It's always go back up to the top and make sure we tap through this here as I wanted to demonstrate by not doing that and then the showing the problem, of course. And then here's the to 14. The date and the in date would be 30 days later because we selected Net 30 from keep tabbing through this. I think we have everything we need at this point, and so we will then scroll down and let's save this item. Then we'll go to the reports and we'll see if it does what we expected to do. So let's close this out. We already have the balance sheet open. If you don't have the balance sheet open, go to reports, type in balance sheets and then change the date to the dates we are working on. Oak Teoh 2 to 1202 28 to 1 February 1st February for should be 1st 2nd over to go to its It's gonna be the same. But February 1st, 2021 do you. February 28th. We will run that report, and then we're going to say that if we scroll down inventory item, that is what we purchased. If we select that inventory item, we will see the bill that we have here. You're the second Bill. We had EPA phone, less poll. If we select that item, we will then see our bill that we had input here. And there it is. Closing that back out. Going back to our report up top. That's the first half that we have inventory. Second half we have is the accounts payable. So here is accounts payable. If we select that item, then we see the fender. The second item. They're selecting the second item for the event. Oh, actually, that's fender I'm gonna close that back out. We actually want the EPA phone. That's the one we just put this time. That's the 1200. So if we select that item, there's what we just purchase right there. Notice. Once again, nothing's happened to the profit loss. I'm gonna close this back out back to the report. Both the accounts, our balance sheet accounts. We haven't done anything. Profit and loss liability went up because we bought something kind of on credit. Kind of like on a credit card. We owe something for it. Other side assets went up because we got inventory. Nothing happens to the income statement until we sell the inventory and get revenue sales going up, revenue going up and sell the guitar. Meaning the cost of goods sold will go up bringing that income down by the cost of goods sold. Once we make that sale, 69. 8.25 Sales Receipt & Deposit: Hello. In this presentation, we will record a sales receipt and the related deposit within QuickBooks online. Here we are in the QuickBooks online dashboard. We will be continuing with the get great guitarist problem. We're gonna enter a sales receipt and then they deposit for the sales receipts. To do that will reflect the plus icon on the right side. So it looks like an exhale, and we're gonna go Teoh the customers over here. Now, note the difference between a sales receipt, which is what we will be entry now, and an invoice invoice, meaning that we will be receiving payment at some point in the future as opposed to the sales receipt. That means that we're gonna get payment at this point in time and deliver the goods in this case, the inventory at the same point in time. You could imagine the sales receipt as an item as a receipt that would be generated within a store as opposed to the invoice, which would be something that we would then generate and expect to mail out and receive at a later time in terms of a check at a later time. So we will be selecting the sales receipt. So we have these sales receipts item. We're going to select the customer up top that we are going. So we're imagining we are making a sale. At this point in time, we can imagine the customer being in the store picking up a guitar within the store. It's gonna be an E L P and EPA phone must Paul guitar. They pick up, and we are going to sell it to them at this point in time and record the payment at the same point in time so we could select the drop down to find the customer and or type any customer which is gonna be Garcia guitar. This is gonna be a new customer. Therefore, we will add the customer will be a new customer type, And I'm not gonna put the details in at this time. We're just going to say save and move to the next item. We don't have an inventory or an email. If we did, we could send it by email. But we're typically thinking that this is gonna happen within the store. We're gonna give this sales receipt at this time. We're then gonna have the billing address now, the billing address could be important. If we sell inventory, remember, because it will be needed to calculate sales tax in many cases. So to calculate sales tax, QuickBooks will do it automatically, but it needs to know the location that we're at. It needs toe know the building location that will be there. And we need to input the sales tax information in terms of the who we owe sales tax to and set up those items to see that look at a prior presentation because this is a practice problem, we will be using a 5% sales tax. But in order to get that to calculate, what we're gonna do is enter an address here. We're going to say that we have the addresses. It's just gonna be an address that that is in California, so it will then populate the sales tax. Then we're gonna change the sales tax to 5%. Just have a standard sales tax item. Remember that if you don't put this information in the billing address, then it may not calculate the sales tax. It will be something that you can't change. So for a problem like this, you have to basically set up sales tax, then enter something. You can't put the sales tax in the set up at this point because it does it automatically. But you can go back in and change it once it does the first primary calculation. So that's what we're gonna do here on. We're gonna tap through this and we are going to see the date is on 021 Thio thio to 1 February 12th 2021. We are working in the future here. We're gonna tap through this and we're going to say the payment method. We're going to say we got a check. So here are the payment methods. We received a check at this point in time. Remember, we're making the sale at this point in time. The deposit is not gonna go into the checking account right now. We instead are gonna deposit it into an UN deposited funds account and then put it into the bank as we go to the bank at the end of the day, collecting all the checks we have, putting them into the bank in the same grouping so that it will match the grouping on the bank statement, and we can then tie out the bank reconciliations as needed. Then we're gonna cycle select the product and it's gonna be an e lt EPA phone, less poll. So we're gonna We could select the drop down to find that and or type in the LP. We'll tap through this were imagining that they brought the phone, the guitar up here, up to the store, up the front. And this, of course, would be what would be the guitar name on the guitar. And the sticker price then would would be given in this case, $500. So we're going to say that they bought one. Here's the description populating for us automatically because we have already entered the item we have, ah, quantity one. The rate is 500. Sales tax will be calculated. It's not calculated yet because we're still on the same line. So hopefully, when we click down to the next line, it will calculate the sales tax, but it is checked so it should do something. Will click on that next line and see that it should calculate something here now is calculating based on our location, the billing address and what we have entered into the system in terms of who we owe sales tax to typically. And we're gonna change that to flat 5%. So what, We're gonna do it just the way it would be an example. For any type of location, you can apply whatever rate is needed and or use QuickBooks to apply whatever rate, uh, is needed. So we're gonna say 500 times 5000.55% and we're gonna say it's a $25 sales tax. So we're gonna change this. That 25 for our example. Problem purposes. It's going to say the system QuickBooks says, Hey, you know, that's not what we came up with. Do you want us to, uh, we do something wrong and we're gonna say, Now keep changes. You're okay. And I'll tell him that it's an example problem so that everything is OK there. So we're saying that we build 500. We had to charge sales tax of 25 5% on the 500. That gives us a total of 525. So if we recap what is happening from this sales receipt? It is a sales receipt That means we got payment in this case, cash. But the check not going into the bank yet going into un deposited funds. Still an asset account asset account increasing by the full amount, which would be the 5 25 we are receiving in the form of a check. The other side will be going up, which will be sales. It's only going up by 500. That's the sticker price of the guitar that we sold. And then the difference between those two is, of course, the $25 sales tax, which will be increasing a liability for these sales tax that we owe in the future. Also, what is going to be recorded, which we cannot see here is the cost of goods sold for this guitar that we sold and the related decrease in the inventory. We don't have those amounts, but we know that the inventory is going down by the cost, which means what we bought it for. We could find that if we looked at the item list in order to see what we what we paid for the guitar. QuickBooks knows what that is and is using a perpetual system as we make this sales receipt , it will then decrease the inventory and record the related cost of goods sold. So we're gonna go ahead and save it. We'll check to see that it does what we expect it to do. So saving it, we're gonna close this out and see our financial statements and go through those those components to see if it's done what we said it would do. We're gonna say reports on the left side. We're gonna type in the report First, the balance sheet and there is the balance sheet. The dates on the balance sheet are gonna be the second month 0201 to 1, Teoh 2 28 to 1. Then we're going to run that report. So within the balance sheet, we know we got cash, but we didn't put into the checking account we put into UN deposited funds. So it's an asset. Accounts got 825 innit? Selecting that item, we see the 5 25 year. If we select that item, then we see our sales receipt. We're gonna close this back out, check out the other side of this when I go back up top and go back to our report. The other side, typically we think of as sales on the other side. So we're gonna go to the reports and we would go to the profit and loss, which is where the sales will be at profit and loss records. And we're gonna change the dates to the month of February to a 1 to 1 to go to, ah, 28 to 1 G February 1st to February 28th. We we are working in the year of 2021. Run that report within, say, the sales outside the 500. Here selecting that item, we note that we only see the 500 rather than the 5 25 If we select that item that is on the bottom here, that's how much we got. But 25 of it is not going to be kept by us. We're going to pay it. Teoh, the state for the sales tax collected on the sales price of 500 the amount actually earned the amount then reported as sales or revenue. Closing this back out, we're gonna go back to the balance sheet now, so we're gonna go to the reports once again, look for that 25 which will be on the balance sheet. So type in balance sheet once again, selecting the balance sheet. Changing the dates to the month of February 020121202 28 to 1. Running that report. Then we're going to scroll down to the liabilities section. We want to go down to the California State Board of Equalization. That's our location, that we're gonna have to show this to in a lot of places. That would be call if there wasn't a lot of other programs that might just be called sales tax payable or some type of papal taxes payable accounts. That's what it is. This, of course, is given its more detail in terms of who we owe that to on. So if we select this item and scroll down, we see the amounts here for the sale. These air, the three amounts should add up to it. The 25 we select either one of these, we will scroll down that's being generated from this 25 sales tax. Closing this back out, we're gonna go back to the report up top the other side of this, remember, was that the inventory is going down, even though we didn't see that inventory amount on the sales receipt. So if we go to the inventory, we know we sold the inventory. So this must be going down and we select the item of the inventory that we sold. It's going to be the sales receipt is what we're looking for for the 400. So if we select that 400 then we don't see 400 anywhere on the sales received. We see 500. That's because they 400. What's we sold it for? It will be there in the amount on the item list to see that we can close this back out. I say we're that 400 get there from We're gonna go to the sales items here, and they were going to go to products and services up top. So we're on sales on the left side products and services. If we scroll down, we're looking for I think it was the e. L P that we sold 500 sales price 400 costs, so the system knows it's a 400 costs, although we're not gonna put that on the sales receipt because our customer doesn't need to know that cost amount. Then we're gonna look at the other side of that. We're gonna go to that reports one more time. We're gonna go to the profit and loss. And we will change the dates once again to the month of February 020121202 28 to 1 and run that report. The other side is cost of goods sold. So here's the 500 re got in revenue. We got 5 25 500 of it was revenue to us. It costs us 400. So the net increase then, of course, is 100. Selecting this 400. There's the cost of goods sold for that guitar. Selecting that item, we once again have our sales receipt here closing this back out. We're gonna now record the deposit, so we're gonna scroll back up top. We're gonna collect this little plus icon, and we can think of the deposit usually as part of the customer section. Although it is over here in the others section, meaning what typically happens is we're gonna invoice the customer and get a bank deposit in the mail or we're gonna create as we did hear a sales receipt get a bank deposit in the mail. The reason the deposits not in the customer section is that there's a significant amount of times that we may not have that at the way we got deposit, meaning we could have got alone or possibly we put money into the system. So there's other types of transactions that can have a deposit. But hopefully the deposit most of the time is really part of the customer cycle. Meaning we're building the client. We're getting money and we're depositing that money into the bank. So we're gonna go ahead and record that deposit, and that's gonna be the concept we have here. We just kind of sales receipt. And we recorded that into UN deposited funds were gonna group those sales receipts together with any other deposits. We have not yet to go into the bank with yet and then record those deposits at this time. So here are the deposits checking account. We're gonna make the deposits dated at 02 12 02 12 2102 12 21. So February 12th in the year were working in 2021. Here's the sales receipt we have We're gonna check that off. We're going to posit that we also have these other two that we hadn't made that we had received these four on. And we're gonna deposit visas, wells and two other sales receipts that had happened that we have not yet going to the bank with. We're gonna deposit them at the same time. So we're gonna have a deposit then of 825 not just the 5 25 And therefore, when we look at her bank statement, it's going to show a deposit of 8 25 that we can then match out to our books, which should be grouped in the same way at 8 25 So we're gonna go ahead and save this once we do have over, let's make sure we know what's going on. It's gonna go out of our checking account. So of course it's going to go into our checking account because we're depositing into the checking account and the other side will be the UN deposited funds. These air all items that we got money from your typically a check or cash and haven't going to the bank with. So we put those into an account called un Deposited funds so that we can record the other parts of the transaction Not yet putting it into the bank because we want to do that at one time, grouping them together. Ask They will be grouped in the bank. So let's save this and see if it does what we expect it to do. We're gonna close this back out. We're gonna go back to the reports. I'm gonna go to reports on the left side. We're gonna type in the balance sheet. So balance sheet. This time we're gonna change the dates from 020121202 28 to 1 and run that report. We will in check the checking account. That's where we deposited it this time. Finally put it in the checking account. We select that item. Here's the 8 25 deposit that we have. Selecting that item will give us our deposit here. The 8 25 Here. We will close this back out. Close this back out. We're gonna go to back to the balance sheet. So back to the report, which is the balance sheet and see the other side of it, which is the under positive funds. Note that QuickBooks is is nice here in that there was activity in this account, so they didn't just make it zero they I mean, they didn't just take it away. They didn't make it zero and left it on the reports that we can see the detail. We can use this auto zoom function and say, Yeah, I know it. Zero. But what just happened to it? If we select that item, then we could see that we have the breakout and noticed that they broke it out here. They didn't just put the one deposit of the 800. They're saying here it was consisting of these items. Here. We deposited the 5 25 the 100 the 200 which would give us if we select any of those the 100 to 200 the 5 25 or the age 25 that was made as a deposit on the date February 12th 70. 8.30 Advanced Payment From Customer: Hello. In this presentation, we will record an advanced payment from a customer within QuickBooks online. Here we are on the QuickBooks online dashboard. We will be continuing with the get great guitars problem. We're gonna be recording a payment from a customer, but it will be an advanced payment from a customer. Meaning we're going to get paid before we do the product or service in this case, that giving the product we're selling guitars. Therefore, we're gonna get a payment before we give the guitar away. And and that means that we haven't earned the revenue at the point in time that we got the money. This is a little bit more unusual of transaction. Not all types of companies will have this type of transaction because normally the process would be that we get paid at the point in time that we do the good or service or at a later point in time, not typically before, but certain industries we do get paid before many times with the case of a guitar or something like that, we may be asked to hold on to the guitar and therefore get advanced payment in order to do that for example, and then provide the guitar later. Something like a concert where we sell tickets before the concert actually happens should go into some type of unearned revenue. As we will show. Here's we'll have a similar situation in other words, as we will show here. So to do that, we're going to select the plus icon up top, and we're looking for the customers section over here, and we will have the received payment here. Funny thing about this is it's not going to go through the normal flow. The normal flow for customers would be that we either have an invoice, and then we received the payment at a later point in time in the mail. Or we have just a sales receipt, at which point we made the sale, gave the guitar away and got paid at the same time. What we're gonna do is use the receive payment, which is usually what is used after an invoice, but record it before we actually have the invoice. That's what's gonna be a bit unusual when we select received payments. We have this screen here. Received payments means that we've got some type of money and that typically will increase some type of cash type of count. This one's gonna increase the UN deposit funds. Until we deposited into the bank, we're gonna say that Anderson guitar gave us some money. The scenario is gonna be that they give us $250 at this point in time, and we did not yet give them a guitar. What we did is we say we're gonna hold on the guitar for a later point in time. So they gave an advanced payment. The 2 50 will be going towards the guitar that we will provide at a later point. At this point in time, no invoice has been made because we have not yet given the guitar and the 2 50 we're getting we really haven't yet earned. So we're going to say that Anderson guitars We could select that dropped down and or type in Anderson guitars, and that will populate for us. We then have kind of an error signal here saying who Anderson Guitar payment doesn't have an open invoice. So if that means that there's nothing that link it to Typically, when we have a received payment, we will have some type of invoice that we will just check off and click on down here at this point in time there saying, Hey, you know what? You're getting a payment for. What? You didn't do anything. You haven't given a guitar. You haven't done the service. Why are you getting this payment? And so we're going to say, Well, that's okay, because we got the payment before we're going. Teoh record the invoice, which is once again a bit unusual. So we'll tap through this and we're going to say that this is 0 to 16 to one is the date we're gonna be working in February, February 16 2021. Note. When I say that it is unusual, by the way it's under the usual for most types of companies, it could be a normal transaction for certain types of companies, such as if we have a concert or if we sell magazines or any type of subscription service of thes days. Those are all types of businesses where we get paid before we provide the service and we will have a similar situation with those types of industries. So we're going to say here that the payment method I'm going to say that it is a check. So I'm gonna say it's a check that we got and we're going to see the check number is 5 to 43 it's gonna go into UN deposited funds were not gonna put it in the bank. That's just the same as normal. We're gonna group them together and then put them all in the bank at the same time. The amount then we're going to say is we got $250 as the down payment on one of the guitars that we will later be recording, and that's gonna be it. Note. There's no other invoice that we have here. So what is gonna be the journal entry here? A little bit different than possibly you may be thinking from a theory type class, which you could say we got a pre payment. We have money for work that has not yet been done, which means that cash would go up. Cash is kind of going up, but it's un deposited funds. It's not going in the checking account yet, and the other side typically wouldn't be revenue because we haven't earned. It's not it's not gonna go into revenue, and it should go into a liability. UN deposited funds I mean that liability called unearned revenue typically or some type of unearned liability type of account. Note that the receive payment option here, though, typically means that we're going to reduce a accounts receivable account so receive payment form typically means accounts receivable will go down. Problem, though Account stable doesn't have anything in it related to an invoice for Anderson guitars. And therefore, when we bring the accounts receivable down, what we end up with is a negative receivable min in. It looks like we owe Anderson guitars, which we do. We open either to 50 back or we owe them the guitar in the future. So that's that. That shouldn't happen. We shouldn't have a negative receivable. We should have a ah liability that's going in the liability direction, not a negative receivable. This works really well for QuickBooks, however, because the negative receivable allows us then to create an invoice, and the invoice will match up against that negative receivable, meaning the sub ledger that we track this negative receivable in by customer Anderson Guitars will work great in this process, However, until we match it up. It's not quite right. So if we make the financial statements Azaz of the point time that this is still outstanding, we'll have to do in adjusting entry as we'll see to really kind of correct the fact that we're creating a negative receivable instead of a NPAs it of liability. So this is one of those areas where functionality, logistically, this works quite well. Not exactly correct in terms of Gap, Arjuna accepted accounting, cruel principles, and we'll see that in the adjusting process. So let's save this and then take a look at it. We'll close this back out. We're gonna go to the reports left side. We're going to go to the balance sheets once a balance sheet and open up the balance sheet and change the dates to the month of February over to a 1 to 1 Teoh Teoh, 28 to 1 February 1st 2021 to February 28th 2021 run that report that if we scroll down in the UN deposited funds, we see that 250. That's where we put the funds. Until we go to the bank. There it is there. There's the 250 that we put the funds until we go to the bank. And here is our were received payment item. Closing that out, scrolling back up and going back to our report back to the balance sheet. The other side, then, is not in a liability account called Unearned Revenue, as it should be, shouldn't be in revenue because we haven't earned it, but it should be in some type of liability. Typically, we put it, however, into the receivable accounts, which is 965. If we look at the detail there, then we see the 250. That's a negative. It's bringing the receivable down. However, even if we go back to the prior month, if I go back and change the date range here to January 1st 2021 to February 28 for this transaction detail report and run that report. We don't see anything matching up against that 250. What we What we should see is the account going up like this and then going back down. And that should be the typical trend we see. Even the receivable goes up and then it goes back down here we have this going down and there's no corresponding increase prior to this. And that's what's unusual. So note the receivable is still positive. It's not like it gave us a negative receivable in total, but the receivable should be 250 higher and we should have a liability of 250 rather than having the receivable decreased by this 250 here. To see this more clearly, let's look at another report, which will be a report by the receivable report by customer. So we're gonna go the reports left side. We're gonna go to the customer balance detail. We would like to see the customer balanced detail report. We will select that report and run that reports customer balance, detail and what we see here when we run this week report as we see the same total 9 65 27 However, if we break this out by customer, Jones looks normal. We got we got to 399 owed their to us. They owe us 309 9 music store stuff owes us 816 and then we have this negative receivable, meaning it kind of looks like we have a receivable in which we owe them 250. And that's what it means because we owe them to under 50. We're not gonna give him $250. We are hopefully just going to give them the guitar to complete the transaction that we have started by them giving us a down payment. However, it shouldn't be that we owe someone something in the receivable. It's an asset. The fact that we owe somebody else means it's a liability and should be in the owner revenue. So this works great logistically because once again, once we have the invoice for Anderson, it'll match up to this amount and this sub ledger, this customer balanced detail will be correct. However, until that happens, it's not quite right. So it's going to be just one of those little quirks that logistically works. Well, you see this a lot in practice, you won't see it so much at all. In a theory kind of book textbook 71. 8.35 Apply Credit to Invoice: Lo. In this presentation, we will apply a credit to an invoice that we will create within QuickBooks online. Here we are in the QuickBooks online dashboard. We will be continuing with the get great guitars. We're gonna be created an invoice and applying a credit to it before we do that, however, will go through the story of what is happening here. So let's lengthy plus icon just to go through what is going on by looking at the types of forms we have 40 customers. The typical format would be that we would have an invoice and then we would receive the payment. However, we would receive payments that we have the invoice and then we'd have the receive payment here. Here's the receipt payment and this case, what happened is we received the payment before we have the invoice, meaning we were going to sell a guitar and we got a down payment on the guitar before we gave the guitar. And then we're going to invoice the guitar now and credit the amount that we have actually received already for it. So it's a bit reversed of the transaction. If we see it in accounts receivable you'll remember that in a prior presentation we've recorded a received payment amount, but we recorded it before the invoice happened, and that created a negative receivable. Let's take a look at that negative receivable. I'm gonna click out of year. We're gonna go to the reports on the left side and we want to look at the customer balanced detail. So we're gonna type in customer balance. Detailed reports. Here it is, customer balance detail. And then here's our balance detail. Now for the Anderson guitars, we have this negative 250. If we select on that item, then we see our sales receipt. Here's the 250. That's a down payment we got. It's not applied to any invoice down here. That's the problem. So if we close this back out, I'm gonna close this back out. You'll note that this is really odd. It's got a negative receivable that shouldn't really happen because it really means we have Ah, negative. You know, we owe money that in the receivable account, the receivable count itself represents what is owed to us. It's an asset. People owe us $965 but really they always 250 more than 965. Because this amount really is a liability. It's not a receivable because we owe the money back or we owe the guitar. However, it works really well as a negative receivable logistically, because then when we create the invoice, we can keep in the customer balanced detail and match those two things out, and that's what we're going to do now. We're gonna match those two things out. We're gonna create the invoice that will then match out this 250 that was pre paid for an invoice had not yet been created because we can't create the invoice until we actually deliver the guitar. So that's what we'll do now. We're gonna go to the plus item up here. We're gonna go to the customers once again and create an invoice. The invoice will be for Anderson guitars. I'm gonna select the drop down, and we can also type in Anderson guitars, Teoh Auto, Populate Anderson here, and we're not gonna have an email address. We do need some type of billing address so that the sales tax will calculate We will have calculate sales tax on this particular involved because this is an example problem. We're gonna use just a 5% sales tax. But the online program does calculate sales tax automatically based on the location and setting up the sales tax. So we set up the sales tax and we're gonna just add the address here so it will calculate our sales tax. So we're gonna put the address, and so that's just natural. So it will calculate the sales tax. If we tap through here than we've got the terms Net 30 we will say that the date is going to be, 0 to 12. Let's make this 02 18 02 18 to 1 and the due date then will be 30 days later. 3 2021 We keep tapping through this. We're going to say that the item that we are going to be selling is gonna be an E l p. So I'm gonna select the drop down, and we could just type it in there as well. Either way, E L p, it's gonna give us the description from the service items that we have set up already. We're gonna have a quantity, one rate and the amount it's going to calculate the sales tax, Remember, we're just gonna use a 5% rate. So if it's not calculated yet, once we click on the next roll, it should calculate. And then we can make any adjustments. We need to for a practice problem like this, but it has to calculate first before we can make any attack of adjustment. We're then gonna pull up the trust a calculator and say, 500 times 5000.5 or 5%. We're just going to use 25. So we're just gonna change just 25. It's gonna give us Ah, a little signs saying, Hey, that's not what we calculated. We're gonna say, Yeah, we'd like to keep it. It's not your fault. It's just practice problem, and we'll type that in there for them. We now have the 500 sales amount. We've got the 25 sales tax, and that gives us the total of 5 25 However, we know that there was already a deposit of the 250 in this case. What we're gonna do is record this and then go back into it, and it should automatically apply for us For example, if we go up top, it says to 75 That's the 500 minus 22 50. Here is our payment. If this link up doesn't happen automatically, if we save this Adam gonna go ahead and save this item and then close this item and then go back into it, one way to go back into it would be to go to the sales here on the left side and then goto invoices up top, and that will show you the invoices we have. Outstanding. This is the one where workout, says Anderson guitars. It's part partially applied. So what happened is that automatically applied that outstanding balance because it picked up the fact that there was a negative balance due for Anderson and automatically applied it to the next invoice we made here, which would be this one if we weren't able to see it when we generated the invoice, we may have to save it and then just go back into the invoice, and then we can print it out from that time and see that see the balance in there. So when we connected, it should show that we had 5 25 That's the sales, plus the sales tax less the to 50 0 in now they still owe us. Anderson does the customer to 75 however, again, if that doesn't happen, try saving it and then go back into this item. And we could go back into this invoice selecting the invoice and should show properly now at sea seven at the 2 75 that is still owed to us. And we have the 500 which was the amount and the 25 that with sales tax giving us the 5 25 and then we've got the amount paid to us, which was 250 leaving that balance two of 275. Now let's go through and think about what this invoice is going to do. It could be a little bit more complicated because, remember, invoices are pretty complicated in and of themselves. And now we've got this deposit. What's all the accounts that are going to be affected here? Well, we know it's an invoice, so we know accounts receivable is going to be affected, and that's gonna be it's gonna actually be for the entire amount. The 5 25 Because remember, we already had the 250. That was a credit balance there. So we need to 525 of the receivable to be posted to the receivable as a debit or increasing the receivable in order. Teoh, Counter balance. The fact that we had 250 negative amount before this leaving us with the amount still owed of the 2 75 And then we're gonna credit the sales or the revenue account, but not forward. 5 25 But for the 500 the difference, of course, 25 Going to sales tax will increase the sales tax payable a liability. Other two accounts will be inventory going down by the amount of whatever the cost was of this EPA phone, not on the invoice. I believe it was 400. We'd have to look at the items to pick that up. Will pop. We will probably take a look at that as we look through the forms. And then the other side is cost of goods sold the income account. That would be also be the cost or 400. So income went up by 500. What's gonna go up with the expense is going to go up, which brings net and come down. The expense is gonna go up, I believe. 400. That costs bringing the total net increased Teoh 100 on the sale. So let's see if that's the case. We're gonna go ahead and save this and then close this and let's go to our reports and see what happens. And so when you go to the sales item here, which going back to the sales and invoices, you'll see this partially applied item here so you can see a quick little summary of the invoices. Here. Let's go. The reports left side, we're gonna go the balance sheet first will say balance sheet and select the balance sheet will say that the dates is gonna be 020121202 28 to 1 and run that report. So here is the report. We're going to say that they receivables up top. Here is the receivables. Let's select the receivables and see what happened to the receivables. And we have this year we got the 5 25 So this is what we just did. Now this was the payment. So notice it. It's taking the whole 5 25 even though that's not what was owed to us at that given time, and that'll net out nicely against the 2 50 that was already there. So let's select this 5 25 and see what we have. That, of course, is our invoice. That was the total amount, that of the invoice, plus the sales tax sales plus sales tax, not the amount it still do. So this is nice that we can print this out. We could give to the client saying they always to 75. And it will record the amount of 5 25 netting out against the 2 50 leaving the amount that is still do by Anderson in the receivable account. If we scroll back up top, you'll see that we have this one payment here, too, and that's nice. That's if we select that. It will say we applied this out automatically tiu this payment, and if we select that payment, we will see these receive payment that we recorded before the envoys in a prior presentation. So we actually recorded the receive payment before we did the work in this case delivering the guitar because we got a deposit before we deliver the guitar. So we're gonna close this up and let's go back to the report. So let's go back to you. The report's summary Back to the balance sheet. If you got confused on that, we're going to report balance sheet dates the month of February 2021 and we could see, then the other side of that is gonna be sales and the difference. Let's look at the difference. While we're on the balance sheet, which will go to the sales tax payable here, That's the 25. So if we select this icon and this is courses because I'm in California, it says, or we put a California location on the address. At least it goes the state Board of Equalization. Now we could have whatever location is that it would go to that state board or whatever the sales tax is going to be. Go to it it in a gym. More generic sense. All it is a sales tax payable, but it's breaking out to who we actually pay. Within the financial statement. It's a bit different than it. Then the on ground version or the desktop version. If you're used to that, the formatting will generally say sales tax payable, then break it out. But in any case, if we go through here, we're going to see this and we see Anderson here. If we add these three up, that would add up to our 25 right there. The sales tax. Let's see the other side on the profit and loss. I'm closing out of this. We're gonna go to reports on the left side. We're looking for the income sides. We're looking for the profit and loss, profit and loss. And we're gonna put the dates of 020121202 to 8 to one, and we're gonna run that report. So here's the report. We got the sales of AH product right here. The 1000. If we selected that 1000 we will then see our 500 to Anderson. Here's the one we just we're looking at. And here's the invoice number, Anderson and the other account being of course accounts receivable. Selecting that item. We will then go to our invoice. Here is our invoice. We are recording here the 500. That's the sales amount. That's the amount you can think of. That would be on the sticker of the guitar of the sales price that we would have there. So we're gonna close that back out, and then we're gonna go back to the report back to the report while we're on the income statement will take a look at the or the profit loss, as it's called within. QuickBooks will take a look at the other account on this statement, which will be the cost of goods sold. We had to give up the guitar and use that in order to consume that 500 that will be represented by the expense of cost of goods. Sold that expense 400 here. Here's the same invoice. 400. If we click on that 400 we see an invoice with No. 400 on it. How is that possible? Where did the 400 come from? It's part of this item. So the invoices that one driving the 400 figure. But it's not seen on the invoice because, of course, we're giving this to the customer, and we don't want the cost on there So how do we know what that is? If we wanted to find it week, it would close this out. Clothing this back out, go into sales left side, go into the products and services, and we can go down. We could say this. We sold this E l p. And that's the one we sold it. 500 sales price. 400. That's what we bought it for. Now we'll take a look at one more side that we haven't seen yet, and that's going to be the inventory side. So we're gonna go to the reports. We're gonna go back to the balance sheet balance sheet, and we will change the dates once again to the month of February by saying no to a 1 to 1 Teoh 2 to 8 to 1 February 1st 2021 to February 28 2021 run that to report. We scroll back down. We see the inventory. Here is the inventory asset 2512. If we select the inventory asset and scroll down, we're looking for Anderson. There's that 400. It's decreasing by two Anderson guitar for and in voice If we select that 400 then we will go back to that invoice one more time. Let's take a look at one other report, and that's gonna be the customer balanced detail to see what this deposit payment looks like on the customer balanced detail. So we're going to select the reports left side. Once again, we're gonna type in customer balance detail. We want to see the customer balanced detail. And then if we see this, it it doesn't It actually doesn't give quite as much detail as I would. I would like here because it really crunches the these two up, but it does give the amount. And I'm used to seeing this basically in two line items from the desktop version. We would have the payment on a separate line, Adam to match these two things up. But it gives it all here that everything we need So it's got the amount for this particular invoice and then the open balance, the 2 75 And if we select on this, then it will give us the invoice. And if we want to see the payment amount related to this invoice, we can select a this one payment over here and get all the detail. There's the one payment made on to 16. If we select that, then it will take us to the receive payment amount. So when it closes back out, that's gonna be it. So you can see that now we have We're back to where we want to be Before we did this, we have this negative balance within this statement, which was really not quite right for the accounts receivable, but works from a logistical standpoint and makes it nice and easy and puts everything on the same sub ledger. And as long as we're completed with that and know about it before we make the financial statements were good. If we need to make the financial statements on an accrual basis of gentle exit the accounting basis, then we would have to make an adjusting entry if they were still on outstanding deposit that had not yet been, um, reversed, meaning we haven't invoiced for by the cut off date. And we'll see that when we do the adjusting journal injuries 72. 8.40 Record Sale on Account: although in this presentation we will record sales on account within QuickBooks online. Here we are in the QuickBooks online and dashboard. We will be continuing with the get great guitars problem. We're gonna be entering a couple invoices here, So there's a couple ways to get to the invoices. One, we could select this drop down or this plus icon, which turns into an X the invoices, then being under the customer section the other way to get there. Let's go there. This time is going to be in the sales section on the left side and up. Top will have some items here. We're gonna go to the invoices item. So here is our invoices item. We could also get there from the all transactions and select the new transaction, which would be a nen voice. Or we can go to the invoices here and then select the new invoice Teoh, create the new invoice. So here's our envoys. We're gonna type in our information. We're gonna say this first invoices gonna be to music store stuff. Ah, continuing customer. We could select the drop down to find music store stuff and or type this in to help populate this information and select that information. We don't currently have a email address, so we're not gonna enter the email address, Remember that it is an invoice. So typically, that means that we're going to be debuting or increasing the accounts receivable. That's what the invoice typically is, as opposed to a sales receipt which would be used if receiving payment at the same point in time. And then we're gonna tap through this. We do need a billing address here so that we can calculate the sales tax because this is an example problem. We do want to use the sales the sales tax in just 5% just to standardize this. But we do need to get the sales tax calculated before we can make that adjustment. In order to do that, we have to have these sales tax set up within the system. Take a little prior presentation to do that. And we typically will need some type of invoice here, a billing address and the address of the company to set this stuff up. Once it's set up, then we can go in there and change it to what we're gonna use 5% just to standardize this so that you know, it could be used anywhere. And obviously sales tax can be changed by locations. Typically a pretty easy tax as long as you know what the rate is to calculate. So there there's the Net 30 we're gonna use. We're gonna use the date of oak to 19 to 1. Go to 19. That's gonna be February 19 2021 and 30 days later is 3 2121 I hope that's what it should be. According to the Net 30 here and then if we go down to the product, we're going to have and product item and we're going to say it's this e in LP this long winded item here, and that's gonna be an EPA phone standard pro. And if I identify misspelling that I'm sorry about that and we're gonna go through here, that's we're gonna take one of those. That's a type of guitar. By the way that we are selling, we're gonna have one of those. It's gonna be $600 the amount then will be 601 time 600. There will be sales tax, and it's not calculating yet you can see this down here. If it doesn't calculate, then we can't obviously change it to whatever we need it to be and to calculate. Remember, we need those components that we discussed a second ago. I'm gonna click down here in order to to allow it to calculate. And there's the calculation. Now, once again, this is just a book problem or a, um just a practice problem. So we want to use the standards 5% rather than what it's calculated here based on the California tax, So 600 times 6000.5 is $30. So we're gonna use that to our needs, $30 we can now change it here, and it's gonna say you really want to change it? We're gonna say yes because it is a practice problem. So we'll give them that information and there is that. So let's go through here and and think about what it's going to dio. This is going to be an invoice. So we are going to increase the accounts receivable by 630. The other side of it will be sales. We're gonna have sales, however, of only the sticker price 600. The difference of 30. It's going to go to a payable account which will be sales tax sales tax payable. Then the other side of it's gonna be the inventory is going down. It's gonna be this inventory item, but not going down by 600. That's the retail price. It's gonna go down by the cost, which we don't have here, which we'd have to look at the item here to see the cost. We will probably take a look at that as we look through the financials. Then the other side of it would be that the cost of gets sold. The expense related to a selling the guitar would go up bringing that income down. And once again, we'll see that it won't be $600 but will be a cost related to what we purchased this guitar for. We're gonna save this and we're gonna record another one. So I'm just gonna close this after it's been saved. And they were gonna create a new invoice. Once again, we're gonna have another invoice that we will be creating before we take, and then we'll take a look at the financial statements so we will take a look at the financial statements. So our next invoice will be going to the client of Smith Guitars. I'm not sure we have Smith here yet, so we're gonna type in Smith and guitars. So this may be a new client. Let me spell it correctly. Here, actually is not. It's not a new Klein. If I were to spell it correctly. So Smith guitars. We have them there, that's gonna be, ah, continuing client in our records. And so you want to make sure that your spelling it correctly until you don't add new clients that Arnett unnecessarily added and were attacked like this? We don't have ah, mailing address. I'm gonna We don't have an email address, and I'm gonna use the same mailing address again. This is the only reason we're using the mailing address here is to calculate the sales tax . I know this mailing address will calculate this sales tax, and so that's what we will use. We will if you want. Of course, to set up this properly, we would want to make sure that we have the correct address were at the correct billing address were using to calculate the sales tax and that that we have this tax set up in the location needed to. Then QuickBooks will automate it. The online version just automates it there. We don't. I need to manually input the rate at this time. QuickBooks will set that out. So once that is set up, it's great because it'll it'll do that for you. So then we're gonna say I'm just gonna hit the plus arrow note that I only need to bring the date up one day. And to do that, we could just stay plus, and that brings it up one day and then 30 days later, is when it's due according to the terms. Then we're gonna scroll down and we have the product or item number. And if we select the drop down, we see the products that we have. This is gonna be a wildcat. So Wildcat is here. It's another type of guitars and EPA phone semi Hollywood. Hollywood likes according to this problem, and we're gonna get one of those for $400. Once again, the sales tax, not calculating yet. We can't just manually put it in there unless it does give us some calculation for us to do that with. If we select some other line, then it should do that calculation. There it is. There's the calculation that we can now change. If we pull out the trusty calculator, we're gonna say 400 times 5% or 50.5 we're gonna use $20 as our sales tax. So we'll just change this to $20. It's going to say it's not what we calculated. We're going to say That's okay, that's what we want to use. Why? Because it's a practice problem and the reason we are using this is because we wanted to just give it a nice, easier not exactly round or but Justus flat rate of 5%. And then we can apply the concept of sales tax to any sales tax or use tax that we are applying to. So then we have. That's that There's the 424 hour second envoys. Once again, what's gonna happen when we record an invoice? They're diff there deceivingly simple here because there is a lot going on in the recording of an invoice, meaning we know that the accounts receivable because it's an invoice meaning accounted stable is gonna go up by the full amount for 20. The other side of this will be sales, but it's only going up by the sticker price. You could imagine the price on the guitar on the sticker 400 the different, then being the 20 that's gonna be increasing a liability for sales tax payable. And then there's gonna be another side in that the inventory is going down. It's going to go down by this EPA phone. Semi hollow wouldn't how a body that we gave away in order to generate the 400 then the $20 sales tax for a total of 420. However, it's not going to go down by 400. That's the retail price is gonna go down by what we bought it for, and the other side will go up on the expense side for what we bought it for. And we'll have to look and see what that is as we go as we see this on the financial statements, they net effect on the income statement will be an increase of 400 minus. Whatever the cost was, which will be recorded in the cost of goods sold. Let's see those items. Now, by saving this and closing this and then go into some reports, I always save bad. We want to save this. Let's say they didn't quite save yet. Make sure it's saved before we close it. So if you got the safe item there and closing so we're gonna go to the reports, then left side. We're gonna run first the balance sheet. And of course, the balance sheet is right here. So we could just be selecting the balance sheet. One of the more common reports right up top. And we're going to say that we're gonna run it for the month of February over 20 1 to 1 Teoh 2 to 1. Well, 2 to 8 to one. So february 1st, 2021 to February 28 2021 we will run that report. So here is the report we are looking at. We had to invoices here, so we know that receivable they're going to go up. People owe us money for the guitars we gave and not yet receiving the cash here. Eyes are receivable. We've got Smith stuff store. We can start the music, stuff store and Smith guitars. So if we select either those, we should see an invoice. So here's the invoice for music store stuff, and it is on there for the total, including the sales tax of 630. So they always, of course, the total 633 go to Smith Guitars and select that item. Once again, they OS the total 431 not the 400 sales price. If we look at the other side, we typically think of it being on the profit loss or the revenue side. That's the revenue, and that's gonna be in the profit and loss changing. The dates to the date range were on 020121202 28 to 1. The month of February February 2nd 2021 to February 28 2000 to 21 is what we are working in on at this time. We're gonna run that report. The other side then will be in sales of product income. So here's the item note. If you're looking to do a comparison problem and we run this report for the whole month, the whole year to date, which would be January through through February. It'll be a little different. You'll still see the detail here, but this is just running for the one month as opposed to a two month time period. So we're gonna select this 2000 there. And if we scroll down, here we go. We got our invoice. 14 10 14 10 15 to music store stuff and Smith guitars. Looking at the amount amounts, however, we have 604 100 which I believe were different. If we select theme music store stuff for the 600 amount, it's not picking up the bottom line number. It's not picking up the 630. It's only picking up the 606 100 being the sticker price, as opposed to the sticker price plus sales tax, which is what is owed to us in and therefore in the receivable account of 630. We're gonna close this back out. We select the other item. We got the 400 selecting that 400. We have our invoice once again scrolling down. It's for 400 however, not 431 which would be the 400 plus the sales tax. And I am going to change this sales tax right now. Shouldn't be 31. We're gonna do that. We're going to 400 times 4000.5 which is 20. So I'm gonna change that now. I don't know why we didn't change that before 20. Maybe didn't save when it's click off its consider. You want to save that? I'm gonna say yes. And this is one thing you can do is go back into these items and and change the, um, some of it. And you want to be careful doing that because it can change change things, especially if it's in a date in a prior period, like a prior month or year. But we're going to say that there's the 420 it's gonna save that item, and then we're gonna close that back out. So that's this side. And they were gonna look at the difference, Which was that sales tax that's back on the balance sheet. So we'll go back to the reports up here. We'll go back to the balance sheet first report balance sheet. We're gonna run that, and we're gonna say the date is 0201 to 1 Teoh 2 28 to 1 and run that report. So here is the report. We're gonna scroll down to the liabilities section this time because we're looking forward . That's California State Board of Equalization. It could just say sales tax payable. That's what it is. But this is who we owe it to. So this is kind of like what you would think would be along in the subsidiary Ledger telling us who we owe rather than what it is, which is sales tax table. So it's a liability that we owe to the state for the sales we made. And they made us collect 5% on it so that we can then give it to them as part of the process. So if we select that item and we scroll down there, we have Smith guitars. Here's the amount. If we and those three up, it will add up to the amount of the 20 in this case if we close that back out and we look at the one above it, we have these three items which was for music store stuff and it will add up to that stuff will add up to $30 the sales tax. All right, Now, you would think we were done there, but we're not quite done because I'm gonna go back to the report. We also have the inventory is going down. We gave away a guitar, we had a guitar. It was recorded not as ah, not as like furniture and fixtures. Something. It was an inventory. Um, and that inventory is now going down because we gave it away. So if we select the inventory item and scroll down, we have the invoice. 10 14 10 15 music store stuff and Smith guitars and the amounts of for 483 120. If we select this 480 we will see an invoice without 480 on it. So this is QuickBooks and say, Hey, this is the form that made the 480 we go toe and there's no 480 on it. Why? Because it's really being generated from this item here. However, this is the retail price, and we're not gonna put the sales. Are the cost on the invoice, so it's really generated from here. But we can't see the cost. If you want to see the cost or where the cost is coming from, we can close this back out. And what is this? This is that long E an LP, and we can go to the sales on the left. We can go to products and services, and we can scroll down with this. Is this big, long one here said Steve, 600 I believe, was our sales price. And 4 80 then is the cost. So when we put this in place when we made the item the inventory item, that's when we put the cost there. This inventory items being used to create the invoice, however, the invoice only shows the sales price. QuickBooks knows the cost and uses the invoice to make the journal entry related to the cost, but doesn't show it, Of course, on the invoice back to the reports back to the balance sheet, changing the dates back to the month of February 0201 to 102 28 to 1 and running that report. All right, so that's gonna be the one inventory item. And of course, the same is true. If we go click back on inventories were back on the inventory detail. The same is too for this 320 the Smith guitar invoice. So this is the invoice. We made inventories going down by 320. When we select the 320. However, we don't see 320 here. We do see 400 the retail price for this guitar. QuickBooks knows what the other prices, which is 322 costs to us. But it's not going to be on the invoice. So we're gonna clues this back out. We're gonna look at the last location where we'll have this this information. That's the cost of goods sold on the profit and loss back to the profit and loss back to the reports and then the prophet in laws and changing the dates to 0201 to 1. Teoh 2 28 to 1 February 1st 2021 to February 28th 2021 run vata report. We then see in the cost of goods sold section so sales is increasing by the sales price and then cost of goods sold is increasing by the cost, and the difference is what net income is increasing by. So we're going to select the 1000 to 600 scrolling down. We've got 10 14 10 15 and there's the 4 80 in the 3 20 once again music store stuff and Smith guitars. Once again, if we select either of those items, we will then again see an invoice without that number on it, because the numbers really part of this number, but using cost, not sales price. So if we close this back out and we go back to our report, what's happening on the profit and loss? What's the Net impact on the Net Income is going up by the sales price. In the case of the Smith Guitars, $400 it's going. It's going down by the increase in cost of goods sold, which I believe for Smith Guitars was 320 wasn't I'm not quite three on 27 by the difference is kind of the net increase in net income for that particular invoice 73. 8.45 Advance Customer Payment: though. In this presentation we will record advanced customer payments within QuickBooks online. Here we are in the QuickBooks online dashboard. We will be continuing with the get great guitars problem. We're gonna record an advanced customer payment in order to think about that, we're going to select this drop down item here and think about the customer section over here in the normal process and what happens with an advanced payment or we can call it a deposit on a guitar. In this case, normally what happens is we're gonna create an invoice, and then we receive payment. And then we put that payment in the bank and record the bank deposits, or we have payment at the same time as the work is done and use a sales receipt. In essence, we can think of the customer bringing the guitar from the store to the front desk and making the payment at that point in time. Now, in this case, what we're gonna say is the customer went in so they want this particular guitar, but possibly it's in a different color or something such as that, and therefore we have to order the guitar and to do that we're gonna get a deposit. We're gonna get a payment from the customer before we do the work before we earn the money . Typically, in most accounting textbooks, that would mean we'd have unearned revenue. Meaning we have Teoh increase the cash and then increased Some other accounts usually would be revenue if we had earned it. But we have not, because we haven't given the Qatar yet. And therefore we should increase the liability called unearned revenue. In this case, we're actually gonna create a negative receivable. And that's kind of like one of the simplest ways to deal with this and be able to connect everything else. So logistically, it works well, although if not exactly gentle, accepted accounting principles and we'll have to make an adjustment at the year end if they're still one outstanding, as we will see. So let's see what this process will look like. What we're gonna do is we're gonna not have the invoice first or a sales receipt and go right directly to receiving payment. We're getting a deposit from a customer. We're getting money for work that has not yet been done. We're getting money. $300 for guitar. We will order and create a sales invoice for in the future. So we're gonna say there's gonna be a sales receipt. And remember what that means is basically we got money, so it's going to go into UN deposited funds. Ah, here. So we're not gonna put any email address? We're going to say that the date will be 02 to 1 to 1 February 21st 2021. We are working in the month of February, Year of 2021 payment method we're just going to say is going to be cash, no reference number. It's gonna go into UN deposited funds as opposed to the checking account, because we have it in the store and then we will take those deposits, group them together and deposit them into the bank at the end of the day, if you're directly depositing into the bank, then you can course choose the checking account here and skip that last step. But we do want to group it in the bank in the same format as they will be on the bank statements in our QuickBooks system. That's what this UN deposit funds helps us do, then we're gonna say the amount received. We can't just check anything off. Note that if we had some outstanding invoices, we typically would check off the outstanding invoice and say that $300 what's applied to this invoice that we made in the past and tie those things out. But we don't have an outstanding invoice because we are getting the deposit before the invoice unusual transaction. And I should say it's unusual, just really in most types of businesses, so sometimes of businesses, this happens all the time. If we so newspapers or any kind of subscription service, then we typically get paid before we provide the service, meaning. If we have newspapers, we probably get a year's subscription to the newspaper, something like that before we provide the newspaper and therefore should be unearned until we provide the newspaper. But for many businesses, if you're talking about a law firm or c p, a firmer bookkeeping firm, we do the work before or at the same time as we receive payment. So that's why it's a bit unusual here. In this case. It's unusual for this type of business because we typically get the money at the same time or after we do the work or provide the guitar. In this case, we're getting money before we provide the work or the guitar. So we're gonna say that it's $300 here, and that's all we're gonna have here Now, again, There's nothing we can check off to down here. So what's gonna happen to this transaction is we're gonna have the receive payment, is gonna be basically decreasing the receivable. That's what the receive payment does. And it puts the other side into some account typically un deposited funds or the checking account, whatever we select here. So that's what this form always does. But the funny thing is that it's decreasing the receivable when there's no receivable to decrease that would have been created by the invoice. That's the funny thing that's gonna happen here, is gonna create a negative receivable for this particular client. And that's gonna be the unusual circumstance. By the way, the client here I thought we had put the client up top is going to be string music, and there's gonna be a new client. So So no, it's not string music. Here it is. So string music. It says string music payment does not have haven't opened in voice to go with. So we got the $300 payment four string music and no open invoice and we're gonna say that's okay. It's gonna create that negative receivable and we'll see that looks that looks funny, but it kind of works logistically, so this can be used in practice. So we're gonna say save and new, and then let's see what happened. So we're gonna close this out. We're gonna go back to the reports left side. We're gonna go to the balance sheet. We're gonna change the dates to 020121202 to 1. T 8 to 1. That's the February 1st 2021 to February 28th 2021 run that report in the accounts receivable accounts. Then if we select the accounts receivable account, we will see the activity within the accounts receivable. When we see this $300 here and it's a negative 300. The funny thing is, it doesn't tie out to anything else. We don't see any invoice that ties this thing out to. We'll take another Look at that in the customer detail as well. Before we do, though, let's go back. We're gonna go back to our summer and see what the other side is, which will be un deposited funds. So we didn't put in the checking account. Even though we got payment, we got cash. We put it in the UN deposited funds. Until we go to the bank, there is gonna be the 300 here. If we select that item that will go back to this, receive payment item. So now we're gonna check out the customer payment. So we're gonna go to the customer detail. I should say, Go back to the reports and really see what we're doing with this, um, Receivable. That's negative receivable that's happening here. So if we go to the customer balance in detail, we're going to see all of the accounts receivable. Should add up to the accounts receivable balance that we had on the balance sheet. But it's gonna break out the information by customer in this case, and we could see this is all looks normal. Jones well owes us 399. We have the music store stuff, the detail for the two invoices owed to us. Here we have Tom's guitar or Smith guitars. Onus here, but then we have the string music and we have this negative item, so that shouldn't be happening. Really. That means that we have a negative receivable, which really means that people don't owe us money. We owed them money, and that should be more of a liability. It should be unearned revenue or some type of liability accounts, but it works well in the receivable because once it creates this customer balanced detail that we can organize all this in. And then once we create the invoice, it'll match up nicely in this report and just high this thing out and and that will show that it ties out so logistically it works. But from a financial until accepted accounting standpoint, as of this point time, this balance isn't quite right. It should be increased by $300 and the liability should be increased by $300 rather than having us a net netting this 300 out and decreasing the receivable. Now, once we get the invoice done, it will be okay because this will just net out and and we won't have a problem anymore. But if the cut off date we have to make financial statements by the end of the year, then and we have this 300 as we'll see not maybe not this 300 but we'll see a similar situation. Then we should do a journal entry and adjusting journal entry Teoh. Increase the receivable by this negative amount and then put the correct amount showing as a liability for what we owe. Because really, we owe this 300 back or we owe the guitar that we will give in the future once we complete the transaction. 74. 8.45 Bills - Track & Pay: Lo. In this presentation, we will track and pay bills within QuickBooks online. Here we are in the QuickBooks online dashboard. We will be continuing with the get great guitars problem. We're gonna be it paying the bills and tracking those bills to which we want to pay. So in order to do that, we're going to select this plus icon up top and go through the normal Bill Payne options we have here. And this is when we're gonna be dealing with the vendors section. So we've got these vendors, these of course, vendors being a name for who we are Pain. That's why we're gonna include them in this section. Typically, when we pay the vendors, we often use a check to pay them if we're going to pay them directly. But it's often useful to write the bills and then pay the bills at a later time with a check typically. But when we go through this process to the enter the bills and then paying the bills, we're entering the bills mawr close to the time that we actually consumed whatever it is that we are using. For example, if we're gonna enter the bill for the utility bill. When we get the bill, we can put it in at the point time. We get it, even if we're not gonna pay for it until a month later. And therefore QuickBooks will record the bill in the related expense closer to the period of time that we actually consume the utilities, which is better in accordance with the accrual process. Entering the bills first also allows us to look through those bills and haven't all in the system and tracked which ones we need to really pay first and track which ones were going to pay. So the difference between these two then would be that if we write a check, of course, it would decrease the checking account and record the other side and our example. The utilities bill. If we put it into the bill first, then it's gonna increase the accounts payable a liability accounts, and the other side of it will be the expense in our case, in our example, the utility's expense and then will pay the bill, which in essence, is just writing a check. But the difference between pain and bill and writing a check or just selecting right check and paying the bills is that when we select pay bills, we can have multiple checks that we're going to in essence, right at the same time, rather than writing checked by check. So what we're gonna imagine hear what we're saying is we already injured some bills. Now we're going to see those bills we have entered and decide which ones of those we would like to pay. So we're going to select the pay bills, so pay bills looks something like this. We're typically gonna pay from the checking account. So we are going to write a check when we say pay bills. We mean, we're gonna write checks, but it usually means we're gonna bright multiple checks, four bills that have already been entered into the system. So when we see this item here, it means that the accounts payable typically is going to go down. We're gonna write thes from the payable. Even if we're paying the phone bill, we're not going to write ah, expense to the phone expense, cause we already did that. We did that when we entered the bill. What we're gonna do is reduce the amount we owe reduced the payable amount when we pay the bill. And then, of course, the other side is gonna be where it's gonna be paid from, typically the checking account. So checking account, we're gonna say the date here is going to be the date of these 02 21 to 1 February 21st 2021. The check number should start automatically now, so we could have a ton of bills here, depending on what type of industry we are. Ad and we could be selecting, like, you know, 10 bills that were gonna pay at this point. But this is going to give us the lead number of the checks, and all the checks after that will follow. Now, if we're going to print the checks than this, we just need the lead number because the checks will still have a numbers on. It will still have to get pre printed, checked with pre printed numbers. And then we'll print the checks and all the other checks will follow that number as they printed metal ball being the same number in order if, however, were writing something like from a checkbook and vengeance entering the data into the system here, meaning we're not actually generating the checks or printing the checks as we record the system. Then we may want to just go in and manually put in these numbers because it might not record them all in the same order. But so so keep that in mind as we go. We're not gonna print the checks in the example problem, because we're not print toe checks here. So then we have these two items here. This is going to be the due dates, so this gives us a nice check. And if we could, we could change the ordering by selecting this item. And the due dates is usually a good one. We're gonna want to change order by or obviously that balance do would be a good one. Teoh. Order it by and we're gonna pay these. Basically one at a time. We're gonna pay the fender first. So this is gonna be this item if we're gonna just pay the entire amount. We're just going to say that we want to pay the 601 168. If you want to make a partial payment, we can put whatever the partial payment is, and it'll say it will keep the balance that will be. Do we see a quick calculation of our new balance down here in terms of the checking account ? So when we're gonna do this one at a time, we could check them both off and it would generate two checks. As we record this, we're gonna do this just one at a time at this point, and then and then take a look at what happens. So what's gonna happen here, of course, is the accounts payable is gonna go down because we're paying a bill, and the other side of it is gonna be cash, which is going down because we're in essence writing a check. So it's saving print, and we'll see what happens. So we're gonna close. I'm gonna close this out. And if we were to print this, we would have toe, you know, put the checks into the printer the proper way and print those out. We're gonna close this out. We're gonna go the financial statements. So let's go. The financial statements on the left side, we're gonna go to the balance sheet. We're gonna change the dates from 020121202 28 to 1 February 1st 2021 to February 28th 2021 run that report. If we now scroll down, we're going to scroll down to the accounts payable. So here's the accounts payable account. We've got 1200 in it. If we look at the activity, we're gonna select that item. Look, at of the activity, we see this bill payment. So, Bill payment with a check here. And that is four. This amount this 1000. I'm sorry. This amounts this 168. If we select that item, then we see the pay bill to print here. And so this is gonna be what we selected in terms of the bill Note, the pay bills screen may look a little bit different than between. We used to enter the information, meaning we have the name up here rather than just a list of checks to check off. Because now we're looking at it, really, Just as one individual bill that was paid one individual bill paid as opposed to a screen that we can check off multiple bills to be paid at one time, so we won't. Sometimes when we go back to these forms, it may like that the form may not look exactly like the input form we used because of the format of the input form. The import form we used here being one where we could check off multiple bills as opposed to this one. Just showing us that detail for the one bill that we checked off. So we're gonna close this back out. We're gonna go back to the report, up top, go back to the report. And so those are gonna be the other side of that? Of course, Is that checking account within the checking account? This one off? 46 25. If we scroll down, we have this check that was written for 168. We select that item, then here is our check and uncheck this print later and it will give us our check number there. So uncheck this number to give it the check number because we won't be printing the checks . So we're gonna just save and new and yes, and that will give us our item. They're going back to the dashboard up top for now, AP dashboard. One other area It might be useful to look at this is the check register, so the registers can be useful to look at this information so we could go to the accounting down at the bottom here, and this gives us our list of accounts. And if we want to see the detail here in any of these accounts, we typically that checking account is often ones that we're kind of used to seeing a register format from writing checks and and what not many of us at least, are probably used to a registered form. This looks kind of like our bank statement. Or if we look in online checking account, then it gives us kind of his register format. This running balance, which looks similar to a general ledger and that'll give us our there's our bounce there again 1 68 and our check number. It's a pay bill. So this is another area it that some people may find easier than going back and forth to their reports so we could have registers. I'm gonna go back for all the accounts here. So if we went to the accounts payable all the balance sheet accounts. At least we go back to the accounts payable. It's not as normal for most people, for a lot of people, I guess, to see the same register format here. But it's gonna be similar to a trial bounce. If we select the register here in the accounts payable, there's the 1 68 showing the paid amount here. Eso That's another location. Oftentimes it's really helpful for the cash counter. Look at the register. Many people find that a useful tool, but many of the registers, if you get used to look in the registers that could be useful. Going back and forth to the reports to seeing what is happening is also, of course, something I highly recommend doing so we make sure we know what is being input when we input it. 75. 8.55 Customer Payment On Account & Deposit: Hello. In this presentation, we will record a customer payment and deposits within QuickBooks online Harry or with the QuickBooks Online dashboard. We're going to be continuing with the get great guitars problem. We're gonna be entering customer payments. There's a couple places we could enter the customer payments. We could enter them up here in our items that have all the normals transactions. And we could go over here to our sables items on the left side and take a look at our options here as well. If we go to the sales to the left and we go to the customers up top, we'll see a list of some of activities and this is one area. We could have the received payments or get to the received payments. When we select the plus icon down here and go to the received payments, we would then enter the customer needed. If we go here, we can actually pick the customer, and this could be a useful tool for us. So note. What is happening here is we're saying that in the past, let's select the plus icon is tell the story and were selected plus icon up top were in the customer section and we're receiving a payment typically for an invoice that happened in the past, meaning we invoice to someone. And we did work and or delivered a guitar in this case. And then we're gonna get payment in the mail and we're gonna go to the receive payment once that has happened. So we're gonna invoice, and then later on, we're gonna receive the payment in the mail. Now, if we select this received payment item, then we'll select the customer and go through that information. If, however, we know who the customer is, we could go through here. In this case is gonna be music store stuff and see if we have our outstanding payments for them. We see music store stuff here we have the item of ah, they owe us 4 1046 27 If we look at this drop down, we can send a reminder, create a statement creating invoice. And of course, the default here is received payment. Because that's what we're expecting next at this point, considering the fact that they owe us money. So we're gonna say receive payment. We could select it from this item and that will populate some of this for us. It'll put the music store stuff up top, and it also it picks the current date, which we're gonna change. We're going to say the date is gonna be for our future problem. 0 to 26. 21 February 26 2021. We're going to say that the payment method is going to be a check. They check. We're going to save the check number. This isn't our check number. This is an optional field check number from check given to us and the UN deposited funds rather than the checking account. Meaning the received payment means it's gonna decrease the accounts receivable. The other side's gonna go into whatever account we decide here. Typically either the checking account or UN deposited funds under positive funds used when we're gonna group everything together, then make the deposit in the same grouping as it will be seen on the bank statement at the end of the day. Then we have the amount we're going to receive. Now this amounts being generated in this case from the automatic checking of these two invoices that are outstanding, we're going to say here, however, that there's only this one invoice that we're gonna receive payment for and not this one. I'm gonna uncheck this one. We're going to say we received 816 for this invoice. Now, if it was an amount less than that, of course, then we put something less than that, and we still haven't imbalance do for that invoice. In this case, we're gonna say we got the full amount and that is going to be it. Therefore, we're gonna say what's gonna happen with this? It's it's accounts. It's a receive payment. So it's going to reduce the accounts receivable by the 816 applied specifically to the customer of music store stuff. Then the other side of it is going to go to the UN deposited funds account to then be transferred to the checking accounts at the end of the day, when we go to a bank and so we're gonna save and new for that item. We won't look at the reports quite yet. What we're gonna do is enter another one of these and we'll see another screen here and then we'll go to look at the reports and then we'll record the deposit. So here this looks more like the normal screen where we don't have the vendor yet. So if I'm gonna close this back out just to show this, if it closes back out, the next one's gonna be for Anderson guitars. So we could select the receive payment here, or we could go to the other option the other way. We could do this, select a little plus icon up top, and we're gonna go to the customers and we want to go to the receive payments item so we'll go to receive payments. And then once we could select the customer up top. If I select the drop down and then here's our customers. And then we could just type in Anderson guitars. That's who we are receiving the payment from. And we can tap through this then so the date is gonna be to 26 21 once again. It copy that would save that date from the prior transaction payment type we're gonna say is a check. So I'm gonna states check check number is gonna be 532153211 scans gonna go to un deposited funds and we're gonna keep scrolling through here Now. We could put the amount here of the check or if it's the same amount as the check or as the invoice, this invoice, then we could check off the invoice and it will automatically populate that amount. If we select that invoice, then it will pull up the invoice that we're receiving the payment for. So here is gonna be the amount we got to 75. It's gonna be tied. Teoh that invoice. And here here is the amount that will be tied to that invoice. So that means that the journal entry will be that we're going to receive payments. Therefore, accounts receivable is gonna go down. So that means Anderson guitar no longer owes us. We're not going to show that they always This money has now been paid the receivable account going down. The other side of that is gonna go too un deposited funds. So let's save this. And let's check that out on the reports for these two items that we had to receive payments for, Then let's record the deposit. So we're gonna say save a new. We're gonna close this We're gonna go to the reports on the left side. We're gonna go down to the balance sheet and let's take a look at some reports. I'm gonna run. Report 020121202 28 to 1 February 1st 2021 to you February 28th 2021 run that report. So here is the report that we have run. If we scroll down through this, we have the UN deposited funds. That's one side of this transaction that we had. We put it not into the checking account yet, but into un deposited funds. If we select that item and scroll down, we've got these two payments. This 45 63 62 53 21 music store stuff. Anderson guitars for 8 16 27 and 2 75 If we select either of those, we will go down to that payment. Here is the payment for music store stuff that we had. And if it closed that one out and selected the other this to 75 here is the payment for ah Anderson guitars. So there are the tube closing this back out. We can take a look at the other side by scrolling back up going back to the, uh, report summary. And then the other side is gonna be in accounts receivable going down. So here's the accounts receivable. If we select the receivable and stroll down here, we have Anderson guitars, music store stuff. If we select either of those, we can see it's decreasing the receivable. If you select other those, we go back to our received payment and I'm gonna close this back out. We're back to the dashboard. Up tops were on the dashboard on the left side. And next, we're gonna record the deposit. So we put this money into UN deposited funds. Let's take a look that we're gonna go reports on the left and then go back to the balance sheet and we're going to see what's in UN deposited funds once again. So I'm changed. Dates to 020121202 28 to 1 February 1st 2021 to February 28 2021 run that report. So here is the report. Now, if we go down to under positive phones in the accounts total. Sorry. The other current assets, we've got 1641. That river represents money. That tip that we should have basically on. And we should have either checks or cash, like in the store, in our chip cash register or in our office that we plan on going to the bank and depositing . So now we're gonna imagine that that is happening. Moving them out of UN deposited funds into the checking account. That's what we will do now. To do that, we're gonna select these drop down, up top, and we're gonna go to the bank deposit now. No, just look at the flow. It's It's good to just remember the flow. Note that this bank deposit, typically it's kind of over here. It should be. You can think of it as mainly usually hopefully mostly part of the customer section because what happens is we get invoices in this case and then we receive payment, put in UN deposited funds and then we group them all together and put him into the checking account. Or we have a sales receipt that we get on. We make the sale the same point time and we then deposit that into the checking account. That's what's going on. Now we're gonna deposit into the checking out. So it's going to the bank deposit. And the reason it's not in the check in the in the customer section is because there are other types of deposits we could have. We could have the owner making a deposit. We could have taken a loan out or something like that. But those are more unusual deposits. Hopefully, mainly, most of the deposits are coming from customers from sales being made once the business is established up and running and rolling. Good. So we're gonna say that they posits going to go into the checking account. We're gonna change the date to go to 26 to 1 that deposit date because we are working in the month of February of 2021 in this practice problem. So then we have these four deposits that we have So two of them we have done at this time and two of them we had done prior to this time and all of them were going to deposit at this time. So we're gonna check all of the mouth were going to say We want deposit all of these and that's the point. So if we were to put these into our system one at a time in terms of depositing them one at a time and then group them all together and put into the bank deposit in one deposit of 6 1041 27 then when we get the bank statement, it's going to say we have had this deposit of 6 1041 27 we're gonna have four deposits that we're gonna have had together to match that out. The tide out to reconcile in the bank reconciliation. We would rather have the same grouping so that tying out that reconciliation process process will be easier. So what's this going to do then? It's going to increase checking account by 1641 27 it's gonna decrease. The UN deposited funds to zero, I would think, because that's hopefully what we had in there now, no, where we have these old pop up automatically because they were in UN deposited funds were using that account. If we had some other deposit, we have to use these This items down here, So let's record this and let's check out our financial statements and see if it does what we think it should do, as we just described a moment ago. So there is that We're gonna close this back out. We're going to go back to the balance sheet. We're gonna change the dates one more time to the month of February of 0201 to 10 to 2081. Now, if yours didn't go right back to the balance sheets and good reports, balance sheet dates February 1st, 2021 to February 28 2021 run that report. So here is the report. Checking account, top account. That's the one we want to check first. So let's take a look at that. And there is our deposit notice it grouped. It grouped it all in one number that that actually that's not the deposit. Here's the deposit and it grouped it all in one number. So it says deposit versus the check over here. And this, of course. We we went a little bit out of water. We wrote this check a while back for the loan payment, Teoh, Because is the practice problem. We want to demonstrate certain things in that order. But in this case, we've got a deposit here. There it is. If we select that item, then it's got these four components to make that one deposit. If we close this back out and we look at the other side going back up, going back to the report summary, that other side being under posited funds and scroll down to under positive funds QuickBooks online is nice. It still gives us zero. Doesn't check that that the fund doesn't disappear for us, which is good. It's not good if we want to not see zero balances for printing the reports. But it is great that it allows us to drill down and see the detail. So let's drill down and see the detail there. And if we scroll back down here, it's gonna give us that detail. Here's the four components of the deposit that make up that total deposits. So if we check off any one of these, we will see that same deposit of 1641 20 27 the four components of it, so that's gonna be it for That's gonna be the recording of the receive payment and the related deposit. 76. 8.60 Sale Tax Payment: Hello. In its presentation, we will pay sales tax that have been collected for sales made in the past Within QuickBooks online. Here we are with the QuickBooks online dashboard. We will be continuing with the get great guitars problem paying the sales tax at this time . First, we want to take a look at a report and see where the sales tax is at and then think about how we're going to pay the sales tax. So we're gonna go down reports over here, left side, scroll down to the balance sheet and run the balance sheet. And we will change the dates to go to, um 01 to 1 to go to 2081 February's 1st 2021 to February 28. This is the month that we are running this problem for If we scroll down, then to this were run that report, by the way. Then we run the report and then we scroll down and see what we have here. We're looking at the liability section and and we've been creating invoices as we sell inventory. In our case, guitars were required to collect the sales tax by the area that we are in, and we're putting that sales tax into a payable account that called California State Board of Equalization because we're recording the sales tax or most of the sales we have made have been in California. So this could just be like a sales tax payable account. It's a liability count represents what we owe. So here is our amount. Once that has been set up and it will all be there by setting up the invoices properly and collecting the sales taxes on the invoices for instructions on that, take a look at the prior presentation. At this point in time, we're saying that all those sales tax has been collected and we need to make the payment. Now. The payments gonna be really dependent, of course, on Where's Our location? Sales tax will differ depending on where we are at. And so the idea of sales tax against pretty straightforward. But the application of it will differ or very in terms of what's the percentage of sales tax which will just apply that sales tax percent to collect it? And then when do we have to pay? It is the other kind of tricky thing in terms of sales tax meaning? How often do we have to? We were collecting this money, of course. How often, then do we have to write the check to, in this case, the State Board of Equalization, or whoever is the person who is collecting the sales tax? And typically that could. It depends, really on the location and depends on how much sales we make sometimes. So standard rules were typically be that we might just require sales tax monthly or quarterly, or possibly even yearly. And that could differ based on location. And it could also differ if obviously, if we make more money than these, the age taxing agency will probably want that money sooner. So if our it could be the case that if our revenues over a certain amount of revenue depending on the location, then maybe they want to get paid, um, more, more often monthly or even semi monthly or something like that rather than wait until quarterly or even yearly, if there's not that many sales happening, they might be perfectly happy to say, Hey, you just pay quarterly or yearly. We're gonna be paying monthly here, so we're gonna have this amount that we're gonna pay. Now, this is for the whole time period up through the, um, currents date, which we're going to say is sometime in February If we want to just pay monthly, we just want the amount that is going to be paid for the month of January, even though we're in February. So January happened. Obviously, we had to collect all the sales tax for that time period. We have it now. Hopefully, and by the end of February, that's when that sales tax is due. So we're gonna write the checks sometime at towards the end of February 4. The sales tax collected in January, which means we really want to see this report what is due as of the end of January. I'm at the end of February, so we're gonna change this report. I'm Attention, Teoh one Or let's do this. Actually, I'm gonna just scroll down and don't change that report. We'll click on this item and we see all the detail here for the two months now. Of course, again, this amounts down here The stuff, the sales that happened in February. These are the current sales. If we change the date. Now, Teoh, the beginning date in this report and the transaction report detailed 20101 21 So january 1st, 2021 to February 28th and run that report. Then we'll see the items for January and February and really the And that's what's making up this to 23. So before this point in time, there was nothing there, and this was our first item. So what we want to do then, is really stop this at January. So I'm gonna change the in date now. Teoh 01 31 to 1. So january 1st, 2021 to January 31st 2021. Run that report. This is really the activity we want to pay in February. So this is what was collected or this what we got charged our clients for our customers for 4 January that we want to pay now. So to do that, the online version has this nice sale tax center over here. And so the tax centers on the left side. If we select this item, this is where we set up our sales taxes. We set up the areas in which we owe sales tax now because we're working this problem in the future. It's a little. We have a bit of a problem here because the sales tax is telling us we have to do this real time. So the sales tax is saying, Hey, nothing is due right now. Why? Because we entered all our sales as of 2021 so there is a bit of a timing kind of issue with the online. With the online version, you don't enter the dates that you want to pay for. It's basically saying that this as of this point time, there's nothing going to be Dio. So what we're going to do, then, is we're gonna actually write a check. If if we had this item set up and we're running in real time, then it would tell us what would be do at this point in time. And we could basically run the report and said, Hey, I want to pay for the month of, um January and then write a check. We'll just one that wind has, since all we're doing is writing the check now for what is due so that amount that system here isn't showing up because it's not. We're running a problem in the future. If we had not been, it would be saying, Hey, this is how much is due at this point in time. Do you want to pay it? And then we can go through and pay it through this process through this screen. What we can't see, here's our Our sales tax settings, which we set up as we set this items up, were monthly currently. So that will help us to basically track this and say we're gonna pay it on a monthly basis . And we got these three items that we set up in terms of who were paying in terms of sales tax. We went over this in a prior presentation. It really depends on you know where your location is that you're making the sales and where the the 1,000,000,000 addresses for the sales tax that you're you're setting up and then QuickBooks will set this up pretty pretty easily. If you have that information, Teoh ready to go? I'm gonna go back to the sales tax. Then we'll take a look at the report one more time. So here's a report and we could take a look at the liability of report. And this is really just another of the same thing that we looked at. So it's set up this quarter. We could set it up for this month and it will go through this items. But of course, we were working in the future again. So we're gonna change it. Teoh 0101 uh, 28 or 21 201 to go to 28. 21. So january 1st, 2021 Teoh, February 28 2021. The time period we are working in and then run of that report. And in essence, we should see the same. So I ran that report again. January 1st, 2021 to February 28th 2021. We ran that report, and here's the items that we have. So it's breaking out between the components of a sales tax for state. And we get this to 23. 37 again. Remember that that's really going all the way through February, and we're really just calculating the liability again. This is just what we saw on the balance sheet. What is owed. All we have is a payable just like a credit card payable or in accounts payable that we need to pay off Now. Specifically, of course, in this case, sales tax payable we need to pay to the state. So we really want to change this once again. Teoh 01 31 to 1 the end of January. And if we run that, we get the 1 23 37 That's the amount we want to pay off. So we're going to write a check for that. Now, again, we're not gonna go through the system to do that because the system is makes us have the state do that. We're just going to go through and write a check. In essence, that's all we need to do for what is due as of the end of January 4 sales tax. So to do that, we can go up to let's go to the plus item up here, and we're gonna go to the vendors section and we're going to just write a check. And we got the normal check process here so that the people were going to write the check. Teoh is the California State Board of Equalization. So here we have it here. California State Board of Equalization. This is just who were gonna pay the check tune and depends on who's collected are check in terms of the agency. We're going to set that up as a vendor. We're gonna say that is a vendor. And so we have the mailing address here. We're going to give it three date that we're gonna right. This is, as of the end of the month 02 28 to 1. February 28th 2021. It will be coming out of the checking account. We're not gonna print the check something unchecked that and it should populate a check number for us. And then we're going to say the other account, The other side that it's going Teoh isn't going to be an expense. It's going to be the sales tax payable. So sales tax table is what we wanted to get. And actually, it's not called sales tax table. It's called the California State Board of Equalization. You'll recall, as we went through there and looked at it, sales tax payable would be the generic name. The California State Board of Equalization is really just telling us who the vendor is within the name. So we're gonna pick that item. It's other current liabilities. It will be set up as you go through and pay the sales tax by the system. And then we're gonna go through here. We pride should put pay sales tax. And I could put anything there, though, and we're only gonna pay the 1 23.37 the amount we ran the report for for the month of January. And remember what's happening. We got the month of January that we're paying off as of the end of February. So we're writing the check as of the end of February for the amount that was collected in January and is now due at the end of February. So then I'm just gonna click off of this item. I'm not gonna apply to a customer when I can a bill anybody on it, and that will be it. So once we do this, of course, what's gonna happen? It's going Teoh, write a check, reducing the cash account, and then the other side of it's going to be reducing the payable account to the State Board of Equalization. So we will save a new for this Where the system told me that the check number is already being used. And sometimes when we just apply these check numbers, it it does that for, like, the last check number we went was out of order. So it picked. For some reason, it picked the next number off 10. 14 which has actually already been used. I think we're on. If we go to the check register, we could see which numbers the next number in line. And it would also be more parent. If we're we're actually printing the Czech numbers. We would have them in front of us, and we can make sure that those are tying out. But I believe we are on if this time 10. 16 as the check number. So it's tried again, will save a new on that. All right, we saved that. I'm gonna close this back out and check our financials, so we'll go to the reports on the left side. We're gonna start with the balance sheet, and we're gonna tap through the balance sheet. I'm gonna make it for the whole month or the whole time period. Two months of 101 to 1 Teoh 2 28 to 1. January 1st, 2021 to January or February 31st 2021 and run that report. So then, if we scroll down, we see the checking account. If we click on the checking account and scroll down, we've got the check that we wrote here. The 1 23 37 10 16 The check. If we click on that item and then, of course, we see our check. So here is our check. We're gonna close that back out. We're gonna go back. Teoh the report so back to the report summary and then scroll down to the liability Here is gonna be a liability down here. California State Board of Equalization. We only have the 100 owed now, And if we click on that, that's because we had all this activity that was increasing the balance here. And then, of course, we had the balance of to 23 37 which we then paid off, leaving only 100 leaving what was what was accumulated for the second month of operations. If we looked through the first month of operations of yours. It stopped here. If we stroll through just the activity for January, we get to this. Of course, 1 23 37 Because if we scroll back over, that is what happened through January. Here's the 1 23 37 And, of course, that's what we paid at the end of February, leaving us with the 100 which is what accumulated all this stuff for February would add up to that 100. 77. 8.65 Payroll Tax Payments: Hello. In this presentation, we will pay payroll taxes within QuickBooks online. Here we are in the QuickBooks online dashboard. We will be continuing with the get great guitars problem. We're gonna be talking about the payroll taxes and pain the payroll taxes in order to get an understanding of that what the payroll taxes are. Let's first take a look at the reports on the left side. We're gonna select the balance sheet, report the balance sheet report we're gonna run this report for the month of or that two months of January through February 2021. So 1012120 2 28 21 So january 1st, 2021 to February 28th 2021 run that report. We're gonna scroll down through the report and look for the payroll liabilities within the liabilities section. Here we have the payroll liabilities. Now, it's gonna be a lot of options in order to process the payroll so and the payroll will change depending on location, But the concept of the payroll will remain the same. So we're gonna go through the concept and then record the transactions here. The payroll could be set up within QuickBooks, and QuickBooks, who has different tiers of how much operations will be done through the QuickBooks system and how much operations should be done, will have to be done manually. And or there's a lot of payroll options that she could have outside of QuickBooks companies that specialize in payroll and could help you automate that process. We're gonna go through here as if on outside company has worked through the payroll, and it still means that it's not just weaken, just have them do the payroll, and that's it, because we still have to enter that information into our system. So no matter what happens, and even if we use an external payroll system, oftentimes the bookkeeper even needs to know a little bit more than possibly. If we were to run the payroll inside because we would need to, then you know how to record the journal entry and how to get that information into our books. So it's on our financial statements, so there's different ways we can run this what we did when we generated this payroll. We select this payroll liability item. We see these checks here for these individuals, Erica and Adam. And if we select those checks, those payroll checks, then we see that this was for Adam and we had the payroll expense amount the amount of the check being 3005. 39 33. But of course, that's the amount that they got net of what was taken from them in terms of payroll taxes, they actually earned 5 4083 33 then we took out the payroll taxes of 1044. And then we have that. The peril, expense and the payroll liability here being our side, the employer side. So let's take a look at the worksheet we had. And this would be similar to a worksheet that we would get from 1/3 party or one that we could generate within the system. Teoh tell us what's going on per employee. This gets really complicated, complicated very quickly, because if we have one employee or to employees, we contract this fairly easily. But once we get a lot of employees, this stuff starts to accumulate, and just them. No, the amount of information in the types of calculations we have to do, It starts to get pretty tedious. And if we have multiple states, then it gets more complex as well. Because, of course, the regulations will change. Worth showing here, just the information for two employees, Adam and Erica. And where this is a report that we would see, like similar to report that we might get from 1/3 party or of report that we could generate from QuickBooks. And it gives us an idea of word this information came from. Where did these numbers get there from In terms of the payable? Well, we owed Adam here we had Adam had the Social Security that we took out. He earned 5 4083 33 We took from him. Social Security, which is kind of a flat rate, typically was one of the federal program. And then we took from him another 5 4083 for Medicare, another kind of flat rate, typically generally type of tax. And then we have the income tax, which has a progressive tax rate bit more complex to calculate. Ah, and we took that out. That is remaining. That gave him the check that we just saw of 5 3039 33 So that amount here is this number minus this minus. This mine is this. Then we had to pay our portion of Social Security kind of match the Social Security, another 2 58 which is coming out of our account for the payroll taxes on the net, income of the employees and the same is true for Medicare. So we have our Medicare that we pretty much just match the Medicare for the employees side of things. And then, Erica, we had the same thing. Earn 800. We took Social Security 49 away and another 11 for Medicare, leaving 800 minus the 49 the 11. And then 110 for the income tax for a check of 630. Then we match the Social Security and Medicare. So what happened then is that we paid a cheque total for these two people of this 1 4091 69 2 checks went out for that amount in total. And then we took from them these in taxes, these came from them in taxes. And then these amounts are gonna be taxes that we took out for our our side. There are payroll taxes. So now what we need to do is pay those payroll taxes. This happened in January. And when do we pay payroll taxes? It's going to depend again on the system. If we it's where we are and how much how much petrol taxes we have, we could be paying monthly. We could be paying bi weekly Just depends. Or we could be paying quarterly depends on different circumstances in terms of location and how much the payroll tax is. What we're gonna do here is say that we're gonna pay monthly meaning the payroll was generated in the month of January, and we're gonna pay the month of January in payroll at the end of February. So it's the end of February. Now we're paying the payroll taxes that were collected for January, which includes self security, Medicare, income tax, FICA, federal income tax and the soul security and Medicare that we then collected for for our employer portion. So those of the checks that we're going to right now, Teoh, add those up. We're gonna put this in a couple ah, couple checks. It's all going to the federal government. These are all federal taxes. If we had state taxes, we have to pay those as well. But we're gonna break them up into their components to tax types, which is gonna be Social Security, Medicare and the federal income tax. It will actually write three checks again. That will kind of depend on where you're at and where, how they're gonna, how they're gonna group, which how you got to make the payments. Often time, you have to make him Elektronik payments. But we're gonna process the checks here in that format to write the checks for it. So these two are gonna be grouped together. We're going to say soul security and self security Over here. Those are going the same agency, even though one was paid for from the employees one from the employer. That adds up to if we look at the some down here 6 14 So that's what we're gonna write a check for for the 6 14 And we're gonna write that just to the ire s. And they were gonna write another check for this and this. The Medicare two portions 1 54 and then the income tax. There's only the employee side that's going to be 830 so we'll process those. So if we were to do that over here, we're gonna close this back out. We're back in QuickBooks every year we're gonna go to now, If we had the taxes set up, we would go to the payroll tax center. And if we have everything kind of set up for us, it would basically say, Hey, you have payroll taxes do of this amount as of January and it would calculate the same way that we basically looked at. And then we would go through the process and basically tell it to process a check as long as we had it said whatever the processing dates were correct saying, meaning, make sure to write the checks for monthly. So everything that was collected in January, we want to write the check in February, and then it would go through and process that information for us. We're gonna enter this check and we're just gonna write the check, and that will decrease the payable amount s. So we're just going to go to the plus icon up here, and we're going to say, Here's a check and we're going to write the check and I'm just going to say it's gonna go to the arrest of the Internal Revenue Service and we'll save. It's gonna be a new vendor. So we're gonna That's a new vendor and we'll save that animal tab through here. And we're going to say that the date of the check is going to be Oh, let's see. We're going to say that the date is 02 28 to 1. Let's try that one more time of 2 28 to 1. So that's the end of the February that we're making the check. But we're paying off the accumulation in payroll taxes for the end of January. We're not gonna write the check. We're gonna keep the check number there, and then the account that we're going to write it, too, is going to be payroll tax liabilities. So it's gonna be a liability account payroll tax liability. So make sure to pick up the liability and not the expense should be decreasing liability. It should have ah, small I there. But that's okay. We're gonna put the description. Probably be good to put paint off the month of January. I'm not gonna put it here. Probably should, though. We're gonna pay three of these. I'm gonna pay the, uh, 831st. Let's do that. We'll say at January, and this is going to be for the federal income tax just to have a memo here. And it's not gonna be taxable and billable to anybody, so we're not gonna a customer on it. We're gonna click on the other line to make sure that it doesn't record. And once we record this, then it will decrease the checking account and it'll decrease the payable account. So well, say save and new and we'll do this again. So that was for the f i T. Now we gotta do it for the for the Medicare, and we have to do it for the Social Security portion. It's all going to the ire s, but therefore three different components. So we're gonna do the next component, which will be the Internal Revenue Service again checking account. And it's gonna be it for the same date. Check number, correct. And we're gonna pay mountain. It's still January, but not the f i t. We're going to say this is for Medicare now that's Medicare, and it's no notice. It's memorizing what we're doing, which is great. But we still have some minor changes here, So it's gonna be for the 1 54 And if we click on the next line there we have it. It's gonna decrease the checking account by 1 54 and the other side's gonna decrease the payroll liability and we'll save and new on that. And we'll do one more of these for the soul security portion. Also go into the iris. But it's going to separate funds, and we know they're going to make sure that they keep this separate and manage it Paul properly. So it's kind of the good of the iris once again for the checking once again the date of to 28 21 the number 10 19 and payroll liability. Now it's January, but it's not for Medicare's for Social Security, and we're going to say that that was for 614. These these are the amounts that are being generated by the way from our worksheet. So the soul security is this. Plus this. The employer and employee portion adding up to the 6 14 the Medicare's this plus this adding up to the 1 54 and the income taxes just being pulled out from the employees at 8 30 So that's gonna be of that amount. And we're just going to say save and new there. So we'll take a look at the financial statements here and just before we do that, just note them. What we have done is record payroll, collect the payroll taxes and then pay the payroll taxes. And then, of course, we're gonna have to report the payroll taxes, and that's gonna be on the form 9 41 for in federal income taxes for the U. S. So then, and this is, you know, typical tax standards no matter where we're at. So if we go to now, now we go to the 9 41 What this is doing is saying, Hey, did you actually pay the taxes that we think you're going to know what you re some these things up and re calculate what the tax liability is on a court on a monthly basis in this case or quarterly basis? Sorry. In this case, and so at the end of each quarter will add this stuff up and this again will add up that the three types of taxes for the federal tax F I t federal income tax tell security, Medicare, and, uh and it will have the employer employee E portion. And it'll basically say, you know what? The bottom of this it'll say, Here's how much that you you, um oh, versus how much you paid and hopefully it should match because we're trying to do this very specifically and you want to do it very specifically. What? We don't want to mess a payroll because that costs problems. So it hopefully it should match up, and we have no difference. If there is a different, then we pay the amount due. So this is just the amount of the form that's gonna help us to report this and again, it depends on how we're gonna record this form depends on what we pay in terms of QuickBooks on how much they will automate that process to generate this form automatically with us. And if we have 1/3 party payroll company doing this fourth, they'll hopefully should report and help us generate this form on a quarterly basis or whenever our payroll tax forms are Do all right back. QuickBooks, we're gonna go the reports and check out what happened here and see if it does what we believe it should be doing. We're gonna go to the reports on the left side balance sheet. Let's take a look at the balance sheet and then change those dates once in 2010121202 28 to 1 and January 1st, 2021 Teoh february 28th 2021 run that report. So here is the report. If we take a look at the checking account, we should see our three checks that we have written. So if we scroll down written, we see the three checks here that we written. And if we scroll back over, we have the 830 for the F I T. Federal income tax, the 1 54 all going to the iris to the Medicare, and then the 600. And I'm sure that wasn't yet Medicare. That's why. And then the 6 14 for self security. And if I click on any of these, we'll see the actual check. Now, that's how the process is gonna be. I'm going to scroll back up. We're gonna go back to the report summary, and we'll go to the payroll tax liability, which is now zero because we paid it off. We haven't run any payroll for February yet, so we ran payroll in January and then we haven't running for February yet. So all we owed was what was collected in January. And now we paid off, January Pedro, and we're gonna run payroll taxes. And now we're gonna run payroll in February shortly. So if I click on this, then we see the federal taxes accumulating. And then, of course, being paid with our three checks here. Now, this is gonna be the process, no matter how we do it, whether we do it internally or whether we haven't someone else recorded or helping us out with that. QuickBooks does help us toe Summarize that reporting and make sure that we group the checks properly and all that, depending on the different types of payroll processes that we use, the more complex payroll gets, meaning the more employees we have and or the more states that we are working in, then the more likely it might be toe to get some more outside help with with the payroll as well. But no matter what the process is, this is This is the essence of what will happen and that same concept of us basically withholding and then pain is going to be applicable for many different things that we could implement in the payroll, such as retirement plans for one K plans insurance type plans if we have to pay union dues . If there's garnish mints all the same thing, we're just gonna basically say Hey, here's your check. You would have gotten $100 but we had the garnish. You are rewarded. Hunt something good pay pay you withholding or your or your Medicare? What Not your medical bill, your insurance for you. And we took that out so you only get, you know, $70 we're gonna pay the difference for you to these other areas that are owed for you and those going a liability. And then we pay them off with a check to whoever the check should go to in this case, the iris. But it could just as well be going Teoh. Whoever you know, if we're paying the 41 K plan, it's gonna go into some type of investment account and whatnot, so that's going to be the payroll tax is being made. 78. 8.70 Enter Bills & Pay Bills: Lo. In this presentation, we will inter bills and pay bills within QuickBooks online. Here we are in the QuickBooks online dashboard. We will be continuing with the get great guitars, problems entering bills and of in pain bills in the same presentation. There's a couple different ways we can inter bills. One, of course, is to select the drop down up here. And the other is we could go to this expenses on the left side. Let's take a look at first and then we'll see the broth drop down. So we're gonna select expenses over here. We have two tabs up top. We haven't expenses. Tab that we can see a detail and then we have the vendors, Tam. Now, if we're going to write the expenses to a particular vendor, we could go through this item and create the bill from this item. So this is one way that could be very useful for some people to go through this process If we selected the drop down for a particular item. So say we're paying ah particular bill such as the phone bill which will pay here at some point. We could select the drop down and have the bill that we're gonna write or just write a check directly to them. Remember, the difference between those two items will be that if we write the bill, we're not gonna actually write the check yet. It's gonna go into accounts payable and an expense of the phone bill in this case. Then we'll write a check reducing the accounts, payable what is owed and decreasing the checking account, writing the check at that point. So we're gonna go through that process. We How are how ever gonna just go through the normal bill process up top? So we're gonna select this plus item down here up here, and then we're gonna go to the vendor section and we have the same kind of options here. Remember that we have the bill and then the pay bills, which is very similar to just writing the check. By the end of the process, we will, in essence, have arrived at the same destination as if we just wrote the check. So what's the difference? Why wouldn't we just write the check? We're gonna pay the the month in bills, the utility bill, the phone bill, and what not so we write it, why not just write the check? Why enter the bills if we're If we're have all that all the items that we want to pay at this point in time, we might just want to just write the check. And then But however, if we have a staggered port in time and we want to enter those bills at the point in time that we get the bill meaning a PLO closer point in time to when we actually incurred the expenses like the phone bill and the utility bill, then we want to enter the bills. When we get them, that would be better, even if we're not gonna pay them at that point in time. Also, if we enter all the bills at one point in time, that is a system that will make them go through the accounts payable so we can track them through the payable even if we pay them on the same day. And it will also allow us to to pick and choose which checks we want in a pretty nice format, so that we can then prints all the checks at one point in time. So those are kind of the reasons why we would not just write the check but into the bill and then pay the bill. So the difference, of course, is that writing a check decreases the checking account, and it records the other side. The expenses were as entering the bill first puts it into accounts payable and the related expense for, like example, the phone expense and the accounts payable the liability going up. And then when we pay the bill, it's going to decrease the payable, meaning we no longer know it. And it's going Teoh record the decrease in the cash. So that's what we're gonna do here. We're gonna we're gonna enter the bills and then pay. The bills were selecting the Bills item. It looks very similar to a check format, except it's a bill and it says Bill the top. And when it says bill up, top note that that means that it's going to increase their payable accounts payable a liability, a current liability type account. So the 1st 1 is gonna be a Verizon. We're gonna pay the phone bill to the phone company that we have is Verizon. We select the drop down, then we confined horizon here and or start to type the text which will then auto populate. So we're gonna type in Verizon. There it is that we're gonna tap through this now. So I'm not gonna put the mailing address it should populate. If we have put that in already, would populate for us and the terms, we could put the terms here only going to say 30. It's doing 30 days and we're going Teoh build date. So the bill date, we're going to keep at 2 28 21 we might want again get more specific in terms of win the bill data is so that we record the actual expense at closer to the point time we consumed in this case, the telephone usage as opposed to the point time that we paid for four of the telephone usage. And then we've got the 3 30 here being when it's due 30 days later, and we're gonna go down to the account, then which is going to be the phone bill. So if we select the drop down, we could find it there and or type in telephone bill telephone expense. So here's the telephone expense I'm gonna add that and we're tab through here and the amount then is going to be for 365 Telephone expense. Now note that this is the second month of operations, and sometimes it'll auto populate this accountant down here. But we put the phone bill and last time as just a check because we were practising writing just to check rather than putting it into the to the bills first. But as we do this a couple times as we enter these bills, it's going to be nice that we can look at the last month of operations we could say, Hey, where did we put this? Did we put it into just utilities Bill? Or do we break it out into a phone bill that we break out a separate phone bill by location ? Possibly. We want to be consistent on that. And if we do this a couple times, it'll start to auto populate for us so it will have an information. And then we're gonna say the 3 65 is the amount, and that will be the amount of the phone building. And, of course, what will happen here once we record. This is gonna record the expense increasing the expense, reducing net income by the 3 65 the other side. Because of the bill, not gonna be decreasing the checking account, but increasing the liability, the payable account. So we're gonna say save and new. The next one's going to be for the Internet expense. And that's gonna be to spectrums and select the drop down. And we could find it and or type in the person or the company, A spectrum which I believe is a new vendor for us. I'm gonna type in, ah, spectrum as the vendor, and then we're gonna say tab, and it's gonna say, Do you want to add that we could add the details of the dates and whatnot, But we're not going to you right here because we just want to write a check or we're going to enter the bill Should say so. We're gonna save that scroll through. We don't have a mailing address terms. I'm going to say net 30. Once again, we'll put the standard terms here they is gonna be as of the end of month, February 28 2021 due date 30 days later and we're going. And by the way, if if it's not due within 30 tastes, obviously the terms you might have it to do on recedes or or, you know, whatever terms are appropriate to have that that will help. You kind of know when when you have to actually pay these when we go to the pay bills area . So then we're gonna have the accounts down here, and it's going to be for the Internet expense if we have that. So we get swiftly dropped down or drop up in this case, and we're gonna type in the Internet. I think it's a new one Internet expense. So I'm gonna put it into an Internet expense and then select tab, and this is another one we're gonna have to really decide. Do we want to add another expense? So I just want to put it into utility's expense. Should it be long in the phone bill expense? If it's if it's grouped up with that area, or do we want to break it out in its own area? There's no set rules that pattern. It's really gonna be up to the company as to how much detail that want the general rule or the general guideline would be that we want Tiu have some consistency. Wanted to be consistent time over time so we can compare month the month what is happening in particular accounts. And we want to be material. If something is totally in material, then maybe we don't need a separate account. Maybe we can put it into just miscellaneous or something like that. If it is material, then we want to break it out. Meaning it has a significant impact on decision making. It could make us change our decisions based on the accumulation of this information on the financial statements in a different expense account. Okay, so we're gonna say that it's gonna be an expense type account and the type of expense we are going to have. If we scroll the through these expense types, I'm just gonna included in a utilities type expense down here, so we're gonna put it into the utilities. It's gonna be the Internet no other description necessary. It's not a sub account of any other account, and we're going to save that item. Then we're going to say that the amount is going to be for 118. Not gonna be billable or taxable, Teoh. We're not gonna tax any other customer or build any other customer for that. And that will be the amount. What's gonna happen then and once again is gonna record the Internet expense of 180 it's gonna record not a decrease of the check yet, but on increased to the liability of accounts payable. So we're gonna say save and new once again, save and new. And we're gonna enter another bill, another bill in the month. And we're gonna have the utility bill now, for we're going to say the electric bill, which to us is the Edison Bill. So we're gonna type in once again, We could see that drop down and see we have the vendor here. There it is, But I like to auto populated by typing in medicine and then it ought to populate. So we're gonna tap through this. Terms were going to say once again, is net 30. They to 28 21 the due date, then 30 days later. 3 30 21 bill number permits number and then the account. And once again. We could put this into, you know, the electric bill at the electric expense work versus some other type of expense versus the gas, possibly or weaken. Group them all together into utilities, which is what we will do here. We're gonna put this into utilities, selecting the drop down. We could find it there. Or we can start to auto populates as I will do here against the utility's expense. There it is. Now note that I'm not putting expense in the description were just put in utilities. And that is something. Also, that is up to the bookkeeper. What type of consistency do you want? Different bookkeepers will do different things. Some people like to have expense on everything that has expense in the name. Some people say that all expenses don't need expenses because it's in the expense group. You don't need to put expenses. And some people just put expenses on those types of expenses that they believe need mawr description to them because there might be another similar type of account out there. So something like payroll, it would say payroll, and it would be an expense account category. But you might want to put payroll expense, considering the fact that there will also be a payroll liability account and they'll be a payroll tax expense account and a payroll tax, I but so there could be a lot there. So those air kind of guidelines you might want to think about terms of setting up your rules, Of course, what we're gonna do when we take up a company's follow the system of what has been done prior and then make minor changes as we go forward, typically to keep some consistency as we go forward. So 6 48 will be the amount and again, no customer, anything like that. What's this going to do? It's going to record the utility's expense, increasing the expense, reducing net income and the other side not going to the checking account, but go into the increase of the liability account that being accounts payable, What we'll do now is will record. This will take a look at the financials, see what is happening and then pay these bills. So we're gonna say save and new. I should just say save but saving new. Close this out. We're gonna go to the reports on the left side and we're gonna go to the reports and take a look at the balance sheet that we will run the balance sheet. We're gonna run it for the month of February. So it's gonna be 020121202 to 8 to 1 February 21st 2021 to February 28th 2021. Well, then, gonna run that report and then if we go to the it's not coming The checking account. We didn't write a check yet. What we did do is decrease or increase or the liability, and that's in the accounts payable down here. So here's the accounts payable account, and we, by entering bills, have increased this amount that is payable. If we select that amounts, then we see all these bills that here's the three bills we just wrote that is increasing the payable by 3 65 1 86 48 respectively. We got the telephone, internet and utilities as the split account or the other account that is being affected. If we select any of these, we then will find a bill that we have just written. So here's the phone bill. Here's Verizon and there that is gonna close this back out. And let's take a look at the other side, which will be the telephone expense, an expense utility's expense, which will be on the profit and loss statement. Let's go. The profit and loss statement. We're gonna go to the reports than on the left side profit loss. The report we want tabbing through the profit and loss. We're gonna put the dates of 020121202 to 8 to 1 February 1st 2021 to February 28 2021 run that reports. So here we have the report that have been run. And if we scroll down, we see the expenses. We got the interest expense and then the Internet expense, the telephone expense and the utility's expense. And, of course, if we select any of these, we then see the detail for the bill that we have written in this case spectrum, which is the Internet expense. Selecting that item, we find the bill, so I'm gonna close this back out. We're gonna go back to this report important to note here that the expense has been written here. We've increased the expense, decreasing the net income now toe a loss at this point. And ah, that has happened. Even though even though we have not yet paid these expenses, we haven't paid him. We just entered the bills at this point, and that is decreasing the net income. So what we're gonna do now is pay the bills so we'll go through and pay them, which will not affect net income again. Even though cash is going down, what it will do is decrease that liability we saw on the balance sheet the amount representing the money we owe to these various folks for telephone, Internet and utilities bills. So in order to pay the bills, we want to pay multiple bills. I'm gonna go back up this plus icon up top, and we're gonna go see we just put the bill in place. We're gonna pay bills. Now, this pay bills is a little deceiving because it's the same as a check, Really, Except we're gonna have multiple checks, so you could say multiple checks we're gonna write. It is really what's happening here. So we're gonna pay the bills and then it gives us these items that we have in place that our in built meaning. These are what the vendors that we owe, which we have set bills out for this amount. Here is what is populating or what makes up the accounts payable accounts. So every time we put something in accounts payable, we must assign a vendor a vendor that we owe, like horizon EPA phone Edison Spectrum, and so that we can track who we owe and have a separate subsidiary ledger as well as be able to generate a process for payments such as this. So it's gonna come out of our checking account. We're going to say the date payment date is going to be 02 28 to 1. We're gonna say the starting check is 10 20. Hopefully, that's correct, because their computers generating that and that means that we're just gonna pick whatever they pick on the first item. We're gonna assign that to the check number and go straight forward. Now, if we were to print the checks, then we would have the first check, which would have a check number on it already of 10 20 then when we printed the checks. It will then print in that order as well. If we're not printing the checks and we're writing them by hand and we're just entering this data into the system to track it, then we want to make sure that we assigned the right check. Number two, the three checks. That'll just make it easier for us. Teoh, do the bank reconciliation at the end of the month and track if there's any problems with the checks. So we're gonna check off the three items who it's gonna be. Verizon Edison and Spectrum. I'm not gonna pay the EPA phone. They're gonna have to wait for their 1200. Hope they don't get mad. There are major vendor. We don't want to get a mad here, but we're just gonna pay these amounts. Were little World a little light on the cash? Possibly. I don't know. We're just gonna pay these three. So once we do that, it's going to write three checks. What's gonna happen here? Obviously the checking accounts gonna go down by the 3 65 that 6 48 and the 1 80 in three different checks that will be generated to do that. And then the other side is gonna go down the accounts payable. Side reducing will go down by these three amounts as well as the subsidiary accounts representing the fact that we no longer Oh, Verizon Edison and Spectrum the 3 65 6 48 and 81 80 respectively. So this will be the items here, and we're gonna go ahead and save and print before we do that. I just want to point out that there's a lot of different kind of filtering options that can be used if we're with a company that has a lot of outstanding items that will be paid. And this could be the case that, you know, many people work in just the accounts payable area, just managing, you know, the cash loan, who they're gonna end up, who they could pay. And when they're gonna pay them. You can have a lot of filtering options in terms of which, which, which amounts are going to be passed. Do do you want to see all the amounts you just want to the amounts that are overdue right now, The ones that really need to be paid so you can't use some filter and screens. If there were a lot of items here to filter what needs to be paid using that screen. And here, of course, we only have four or so it's pretty easy to see. So we're gonna say, save and print these items, save and print and we're not actually going Teoh print them here, So I'm gonna close this help, and then we're going to go and see what happens. So let's go to them to the balance sheet first. So one of the reports the left side, we'll go to the balance sheet balance sheet. We'll change the dates of the month of February 020121202 to 8 to one. And that's February 1st, 2021 to February 28th 2021. And run that report. Here is the report here the checking account. If we select that checking account to see what's in it, we scroll down and we see our three checks the bill, the bill check here to Spectrum. And then here's ah, Verizon and Edison. I'm gonna go through each of these. I'm gonna choose the Edison here. So if we select the Edison, we see the Edison bill. No, no. If you haven't had a check number here, then we could add the check. If it says print later, When you want to add the check number, we can uncheck that and it should auto populate the check number so that if we close that back out, we could do the same for the others. If we go to Verizon, here's Verizon and it has the same check number. It should be different. I'm gonna check on that. And I'm gonna say, if this wasn't checking on, uncheck it. I'm gonna change his number 2 21 so that it has ah, different number. And this is kind of part of the problem. Obviously, if we wrote the checks, it would it would populate the check members in order as we write to the checks. But if we're just entering the checks that we wrote somewhere else, the check numbers can get a little tricky. We want to try to tie them out to the actual checks were writing because I don't give us a state to check an internal control over over the checks to make sure that no one steals our checks. The check number should line out, and it also helps us. Of course, when it is a problem with the check and one see if it cleared or not to have the right check numbers on that will help us toe to see if that did clear. So then I'm gonna say save on this one save and close. And so the transaction eighties linked to another. We're going to say yes, and that's OK. And then we're gonna do that one more time. And the last one went to spectrum. No check number. Here s so I'm gonna check on that and then this print check features here. I'm gonna uncheck that and it gives me a number. But that's really the starting number. That's the number that the check was going to start at. And again, that's just kind of like one of the quirks of of the process when we're not actually printing the checks, it's gonna give us that start in check. So if we're writing them by hand, we want to go back in here and just say, Okay, we want this to be 22 because that's the actual check. We wrote a check number that we wrote, and they were going to say, saving close. And we're gonna say OK, and there we have that item and we're gonna close that or go back to the report now another . If that's confusing another area, we can look that up that could be useful or faster. To do this possibly is to go to the accounts down here. We're gonna go to the register so we'll go to accounting. And the first account is the check register. So if we go and view the register, oftentimes that's a way that people like to see this we're gonna view the register, and then here's their checks. Now, if we hadn't had a check here, it would say to be printed there, and if we all had already written the check, we want to check the check number and just say, OK, that should be 10 2010 2110 22. And just make sure that's the case before we mail out, you know the checks. So then we're gonna go back to the reports one more time. Go back to the reports, check the other side. We're gonna go back to the balance sheet, change the dates to go to a 1 to 1 to go to 28 to 1. That's February 1st, 2021 to February 28th 2021 run That reports. Then if we scroll down to the liabilities section, we see the accounts payable here. That's what we are paying off. If we select that, then we can scroll down. We see our checks and we see the spectrum. The These are the payments here, so they're a little bit out of order. Here's the bill. Here's the payments Were looking for the not the bill that will increase the amount. We're looking for the cheque payment. So here's check 10 20 to 10 21 and 10 20. If we select any of those, then it will show us the check here. So if we scroll down, there is our items. So when it closed this back out, there's the Edison check Now, part of the reason it's gonna be a bit out of orders because it's It's an order by date. And so And of course, we wrote both the bill and the check on the same date. So if they were different in date than you would typically see the bill happening and then the Czech happening. What that means in terms of the liability account is, of course, that the bill is increasing the liability. So this is a life is what we owed before this bill and then it went up to here and then this check any cheque payment. And this, of course, is a bill payment check. It's a check with a check number that was paying off a bill, and then it's gonna have that decreasing the liability to here. So here is what we was before we wrote that check, and now we owed less money. If we looked at the report of the vendor detail, meaning who we owe by vendor detail, then it'll it'll show that we don't owe these people him anymore either Verizon, um, or spectrum. So we could take a look at that. We go to reports left side, and what we want to see is the vendor balance detail. So here's the vendor balanced detail report. Let's select that item, and if we scroll down, we'll see that we don't have in this case anything for Variety, Verizon or Edison or Spectrum because it's paid off. All that we owe A this point in time is the EPA phone the amount that is still outstanding . 79. 8.75 Enter Service Items & Invoice: flow. In this presentation, we will be entering service items and invoices within QuickBooks online. Here we are in QuickBooks online the dashboard. We will be continuing with the get great guitars problem. We're gonna be entranced invoices. And unlike most of the invoices where we have been having the sale of guitars, we're having some service invoices where we're gonna have guitar lessons. And in order to do that, we're gonna have to add some service items to invoice the clients for guitar lessons. So we're going to start by the entering of invoice his couple places we can go to inter invoices. One is this little plus icon up here with the customers and the envoys. The other I'm gonna click off of that is the sales item on the left. Let's try that to start off the sales item on the left and I'm going to go to the invoices tab up top within the sales item. And I'm just gonna create a new invoice. New invoice for that. Here's our invoice screen. Remember what the invoice does. It's gonna debit accounts receivable. That's what the invoice means in essence, that couches tables gonna go up when we make the invoice it aside will be revenue. And we're not going to be dealing with any cost of goods sold or the reduction of inventory because this will be service items. This will be guitar lessons rather than the guitars themselves. So we're gonna start by putting in a new customer. The customer is not here yet. We're gonna say its star, Lee. It's gonna be the customer. I'm gonna tap through that and set up. We're not going to set up the details in terms of the address. Just gonna save that. And we're not gonna put the email address here. We're gonna tab through the the mailing address would be great. However, it's not needed to create the invoice and it's even more needed if we were to sell inventory because it would be used to create sales tax. Our could be used to create sell sex, let's say, but in here we're not gonna have sales tax because the service item, which is not taxable in terms of sales tax for the locations were at so and typically it's often the case that service items will won't be subject to sales tax and usage taxes So we're going to say that the invoice date is gonna be 02 28 to 1 February 28 2021. In essence, we're thinking we're billing the clients for the guitar lessons that happened over the month of this month. We're building like, monthly in terms of adding up the time and setting up the bill for that time period. So we're gonna scroll through here, and then we have the product or service down here. And of course, we don't have one. Yet we have. This is the first time we've done the guitar lessons. Now we're gonna try to set up by standardized type of rate for the guitar lessons. So we're going to set up an item, set up a rate for that item so that we can build pretty much basically on an hourly type of bases. So we're gonna call this is Jodi guitar lessons. Now, this isn't in the system yet. Hopefully I spell this right. If I make any misspellings here, I but hopefully that's that's not in the system yet. That's gonna be a new item. So we're gonna tab through that and we're going to set up an item now, it's not gonna be an inventory item that we're not gonna be dealing with with inventory. And that's great. That makes it easier. And it's gonna be a service item in this case, the service of providing guitar lessons. So we're going to set that up and we're tapped through this. Uh, I saw this product service to my customers will keep this the same Jodi ITAR lessons. It's on there, and we're gonna say the sales price I'm gonna give it a standard price is not required here because we could populate this as we make the invoice, if it varies, but we're going to say it's 190 that's gonna be like our hourly type of rate. So we'll populate it with that. And then we're gonna say that's going to go to not sales, because that's typically going to be our sales for selling inventory. And we might want another sales. That would be something like a service fee here that will be charged just for the services as opposed. Teoh the sales or income, these air income or revenue accounts that would be used when we sell inventory and I think that's all the required fields that we need. I'm not gonna put the sales tax. We have no sales tax is not gonna be applicable and purchasing information purchases. But when I don't have any purchasing information, so we're gonna save and close that. So there it is. We're gonna tab through this. We're going to say that we have, ah, five hours. And so the quantity five at 1 90 or 950 and then we'll have the sub total, which is just gonna be that 950 No sales tax and therefore, what's gonna happen when we create this invoice? So I just clicked off of it to let it populate the fact that there's no sales tax here. Here we have the invoice. What's gonna happen? We are going to because it's an invoice. Increase accounts receivable, and then the credit is going to go to revenue, which is will be that fees account. And that's gonna be it. No other, no other inventory and no cost of goods sold. We're gonna save and save this and we'll do this again. We could just a couple times here s O for the service items. So we're gonna save that and we're not going to send it. We'll just save it and I'm gonna close this and we will set up another one. We're gonna have a new invoice once again, and we're gonna do the same thing just for another client. So we're basically adding up our time for the end of the time period and note. We're assuming, of course, at the time that were calculated. We're keeping somewhere else, like on an Excel spreadsheet where were saying, Hey, here's our client. Here's the time we spent with this client. There's a lot of different software that can be used. You can track the time within QuickBooks and actually link it Teoh invoices as well. But ah, lot of companies. Some companies find that really useful. Some companies find their own system useful really depends on how complicated your billing processes and how you want. How do you want that time to be tracked? If you want to monitor employee times, you might want to have a more regular system with it to check in and check out if you're just charging hours and you set a time of the client just by calendar, you might want a less rigour assistant something like just an excel sheet or even something on the calendar on Outlook or something like that that you contract this time in and then added together so you can build the clients on a regular basis. So we're periodically billing our clients. As of the end of the month here, we got another new client. This is the only first cause. It's the first month of operation we have, Diana. More teen is is gonna be our next client. Type that in their new clients. So we're gonna add the client. We're gonna save it as a customer, save them as a customer, said Diana, her as a customer will tap through this billing address. It's just gonna be the name. No address will tap through the same date. We're gonna build it all, keeping it in the month. So this will keep the revenue recorded in the month. The work was done and we're gonna tap through this. And once again, it's gonna be Jodi's guitar lessons, which we should have now. Now it's been populated and weaken type in that, and that will give us Jodi guitar lessons are, um should be an s, and that will give us the description and it'll give us our rate. And once again, we're gonna say five hours for Diana and we'll tap through that, and that will be it. So there's the 950 again. Our second envoys were just going through this and billing our clients as as of the hours that have spent at the end of the time period. So, um, now we have ah, Diana's here. It's gonna increase the account receivable. On the other side will be revenue, just as we set up when we set up this, uh, item for the prior invoice as we did it in the prior invoice note that we're setting up these these items as we go here. And if we wanted to modify the invoices, we can go back to the item list where we had originally entered our items and and adjust that. So we'll take a look at the item list in a second. So we're gonna save this one, and I'm gonna close this out When I close this one out. We're gonna do this one more time. It's a new invoice here, and we're to say there's another new client named Lynn Jackson. Lynn Jackson. We're gonna tab that through, Add the new customer to have me through. And, of course, once we have these customers set up next month, they will be there, and we won't have to add them again. No billing address is not gonna hurt the fact that we're not having sales tax. That that's good. Then we're gonna have the same product, which is or which is the service this time of Jodi guitar lessons. That's our item should be ness. And we're going to say that we have in this case 10 hours, so 10 hours for the month we're building for the month, keeping it in the same month, trying to record that revenue as of the end of the month, clicking off of it so it can record the sales and the sales tax. And that means once again it's gonna credit accounts receivable. I mean, sorry, debit accounts, our increasing caps, evil with a debit, and then it's going to increase the sales where the credit of the 1900. So we're gonna save that item now we're gonna take a quick look at the financials and then go through the same process again, Bill in another set of three. So first, let's go to the products or services. This is where we first entered our items, which could be inventory items, items that we sell or service items. So here's all of our items. We could have gone straight here and added a new item, as opposed to adding the item as we create the invoice. But if we scroll through these, we see our service items and ah, this is the hour. Here's the Jodi guitar lessons here that we have now added. Now it's got the reports. We're gonna go to the left hand side to reports, and we're gonna see the balance sheet first. So we are in the balance sheet. We're gonna change the dates dates being Let's do the month of February, So 201212020102 28 to 1 February 1st, 2021 to February 28 2021 running that report. So here is the report. If we scroll down to the accounts receivable, we see 9 4049 and accounts receivable. If we click on that item, then we scroll down. We see Star Lee, Deanna Martinez, Lynn Jackson for the amounts of 9 59 58 1900 respectively. We click on any of those we then see the transaction represented that they owe us. We're imagining that we sent out these in voice mail, these invoices. So we're gonna close this out and there's that. Then we're gonna go the reports and see the other side of this, which will be in the profit and loss statement. So we're in the profit and loss is do that a little bit slower reports profit and loss here . We're going to profit and loss. And now we're gonna change the dates. The dates are gonna be 0201 to 1. Teoh to 20. Go to 28 to 1 February 1st, 2021 to February 28 2021. And run that report. So here is our report. We got thes service fees, income. That's where we had reported the income in a separate income account. Then we are reporting the inventory income. We're going to select that item that 3800. And here are our three invoices. So if we click on either of these, we will then see the invoice. So here is the invoice, and it's increasing our sales. Were you close this back out? Do you want to leave without saving? Yes, we knew. And I'm gonna go back to the report up top vehicle, back to the report. And then if we scroll down, we see our items here. That's gonna increase. Of course, our income. Next, we're gonna run this back again, and we're gonna do this for another instructor of ours. It's gonna be Angela guitar lessons. So we'll run this back again. Same process. We're gonna count up the hours and we're sending out the invoices as of the end of the month. So this time, let's go to the plus item up top, and we're gonna go to customers and just add invoices. So it's a new invoice, and this is gonna be for another new customer. Jenny Jones, Jenny Jones tabbing through new customer. We're not gonna add the date or anything, although that would be a good idea if we were having customers so we can contact them. And what? Not out in the QuickBooks system, We might have their contact information in other systems as well. So, Jenny Jones, we got 30 days to 28 all right? And then we're going to say that the product down here is going to be Angela guitar lessons , and we're just gonna set this up as we go. So we're just going to say Ah and Djilas, First time we've entered this, it our lessons. And I'm just gonna correct the guitar here, and we'll tap through that once, getting not an inventory item. It will be a service item. Meaning we're not going to be dealing with, um, in the inventory costs, a good soul or reduction or tracking of the inventory. It which is nice. So we're going to say that the sales description once again will be Angela Guitar Lesson. We're going to continue tab, and through this, we're going to say that the sales price is going to be 150 for Angela's, and it's not gonna go to sales. That's the default. It's going to go. Teoh sales, the income service fee income, and that will differentiate the service income from the income from selling inventory. Our case guitars and this shouldn't to be taxable should not to be taxable. I hope I did that in the last one. But it shouldn't be a taxable items and and we didn't charge any sales tax and last time, so it looks like that was the case. So any gays there we have that we're gonna say save and close here, and then we're gonna tap through this. So now we've set up the new item, and that item will appear as we will see that we create another invoice and we're going to say that we have the quantity. We're going to say seven hours at 150 gives us 1050 when we want to click off of it in order to calculate the sales tax. And if that sales tax was calculated, then typically would have the sales tax checked here so we could check or uncheck the sales tax as we create the invoice. But if we set up the settings correctly, it should apply the sales tax or not as we go, and if we click off of it, that's when it typically will calculate. And the calculation will happen down here. And I think in the prior one we may I may have said it that item with sales tax, we could take a look at that. So we're going to say that this is at 1000 fifties that's gonna increase accounts receivable, and the other side of it will be sales. It's gonna be service revenue. So we're gonna save that. I'm gonna close this and let's go take a look at that other. The two items we've set up now I'm gonna go to sales on the left side were in products and services. Here's Angela guitar lessons. If we were to edit this item, we would see the information we have here that looks all good scrolling back down and see the other item we set up in terms of here's Jodi guitar lessons and notice. It does say taxable here so that that should be adjusted might be. Adjust it right there. I'm gonna go to the edit settings and scroll down and say it's it is not tax one. Untaxed them. We didn't apply any tax because it calculated a zero because we didn't have an address on the invoice. Probably is white calculated a zero. But, um, I'm gonna un apply it just so it will not be applied. And then we're gonna save and close. So there is that item. We'll continue doing this again, I'm gonna select a plus up top, will select the invoice, and then we're gonna have a new client. We're building out for Angela's hours years, So we're going to say Diana Miller another Diana was Diana Miller. It's gonna be a new client. So we're gonna tap through this, which, if we were to set up details, we would just collect those details here and that will give us more information. We would want to have their phone number, obviously, and contact information addresses any notes for the clients. It's really good, of course, to keep information about the clients run, you know, some notes that we can talk about them, talk with them about anything that's concerning within their lives or the business. And what not all good information. This is one area. You can have it, and we could integrate this with with other areas that have those notes as well. So on the clients especially. Probably a good idea to keep, you know, as much information, much contact information as many notes And what not as as possible, but to record the envoys. And we don't need that. And we're not gonna recorded here. So, Diana Miller, we're just gonna do that quick ad and just save that. So we'll tap through no email address and terms air good. The invoice date to 28. That's what we want. And we're gonna scroll back down here, and now this will populate automatically. We're looking for Angela guitar lessons. If we just typing, we could select the drop down and or type in Angela guitar lessons. It will populate here than quantity were saying six at the rate of 150 that's 900. No sales tax unchecked. I'm gonna click off of it in order for loud to allow it to calculate. There we have it. But 900. We're gonna send out this invoice. It's gonna debit or increase the accounts receivable and credit or increase the sales or service fees, the revenue account. So we'll save that item. I will do another one for Angela. I'm gonna close this up. We're going to go to plus item up top going to go to the invoice again. And we have another client called the Jill guns. Always. Who is cold? Jill controls Jill is our other clients. And we're gonna tab through this and we will say that again. We're not gonna put the details. If it was an actual client, we probably would want, if much details as we confined and we're gonna tap threw. And we've got the date here and then 30 days is when it's due. And then we're just gonna tap through and put our item once again, Angela guitar lessons so we can select the drop up or drop down and then type in on and it'll auto populates as well. And that's gonna be for nine hours. And that will give us 1350 if we click off of it so it will calculate. There it is. It's gonna increase the accounts receivable because it's an invoice and the other side will increase revenue or service fees so we'll save that item. So we're gonna close this out and we'll take a look at the financials. But first we're gonna set up one mawr set for Rebecca guitar lessons. So we're going to save plus item one more time for one more set of three, and we're gonna say invoice. And now we're going to say that we have another client work. We're adding up on our other guitar player or a tar lesson giver, which is Rebecca. And we're gonna We're gonna add up the hours for her clients that she's had done for this month. So we're gonna say, first she had Noah Davis as a client. We're gonna tap through that once again. We're not gonna have any that details were just gonna save that tabbing through 30 days. Net 30. So it's gonna be doing 30 days, and we'll keep this date as of the end of the month of the month we are working in, and then we're gonna have to add a new item, which is gonna be Rebecca. Good Tar lessons, Guitar list sons is gonna be our new item. Once again, we're gonna save that as it as a service item. So it's gonna be a service item, Rebecca, and maybe that's the way we have it here. So I'm gonna keep this billing there. And so we're gonna tap through this. We're gonna say that. Actually, I changed it. So we changed the service. The Rebecca here. So we're gonna stab through this, we're gonna say that Thesis Ailes information. We're gonna have the same information. So it's just copied here this time. Copy it and paste that and I sell this proximate to my customers. So we're gonna say that the hours they're not gonna be 100 for Rebecca, not to the sales, but two. We're going to select this drop up. We want it not to the sales, because that's gonna be the inventory item for revenue. It's still on income, type of account revenue, tepfer count, income or revenue. And we're selecting these service type, and it's not gonna be taxable, and that should be it. So we'll save that. And there we haven't so now and for some reason, didn't quite stay populated. So we'll hit the drop. Hoping will say Rebecca, and there's or item it'll populate for us. The rate is there were going to say the quantity. Now it's gonna be eight hours, and that will be 800 if we click off of it to make sure it calculates. Then we have 800. That's gonna debit once again, accounts receivable and credit revenue. We're gonna save that and close this. We'll make a new envoys clicking the plus up top go into the invoice and the next invoice will be This will be for Grace Matthew. So we're gonna type this out. That's our customer for Rebecca's guitar lessons again for the month of February. So we're gonna save that item. We're tabbing through this. Everything looks good. The date is as of the end of the month, we're building 40 in a month for Rebecca, our instructor, uh, for guitar lessons. So we're now going to select the service item we just set up for you. Select the drop up. We can see it there and or type in Rebecca and tap through. We're going to say the number of hours is six hours, and that gives us the 600. If we click anywhere off of that, then we have the 600 it's gonna increase the accounts receivable by 600 increased thesis service revenue by 600. So we'll save that and we'll do this one more time. So we'll close this up and we're gonna go back to the plus icon once again. We're going to go to the invoices last time we get to see this, and then we have to stop. This is all the invoice and we have for today. So we're gonna have to save Pam Smith is gonna be the new customer setting up, saving it tabbing through. We're gonna keep through the terms that end of the month. Correct. We're gonna have this go for Rebecca. Ah, guitar lessons. The service item. We could find that with the drop down or drop up and or typing in Rebecca and letting it auto populate tabbing through. We see the quantity of eight rate 100 given us thief 800. In order to get the calculations completed, we want to click off of it. And that will complete the calculation. This then once again, will increase accounts receivable by 800 increase the service revenue 800. Let's save that. Let's see that by closing this and going there to the reports on the left side and then running the balance sheet, we're then gonna change the dates the dates should be Oh, Teoh to 20021 28. Teoh, too. 28. 21. Let's do that. One more time should be 0201 21 to go to 28. 21. In other words, February 1st, 2021 to February 28th 2021 then we will run that report. Here is the report. If we look at the accounts receivable here, we should have some activity for this process that we've put into the account stable. Six invoices in total for three of our instructors that teach guitar those air. All three. That's all we got that teaches the guitar lessons. So here we have them. Ah, Star Lee span. Pam Smith, Diana. These there are new customers that took guitar lessons for the month. And those, uh, we have Lynn, Jenny Jones and Diana also three that took guitar lessons from another instructor and then Jill Gonzalez, Noah and Grace. We see the service income as the other account here. If we select any of these, then we will see our invoice. Here's our invoice for Noah and this was for Rebecca That's the service item that we can see what what was charged for. If we close that back out and we select one of the 2nd 3 we see Jenny Jones, we select that, then that's for Angela guitar lessons. And if we closes back out and select one of the last one Pam Smith, for example, we then see ah, the Rebecca guitar lessons here. So we're gonna close that out. We're going to see the other side now, and that's gonna be in the income statement or profit and loss. So we're gonna go to the reports. We're gonna go to the profit and loss report and change the dates once again to the month of February at 020121202 28 to 1 ah, February 1st 2021 to February 28 2021 run that to report. Then we see these service or fee income as opposed to the sales, which would be for the inventory that we're using this service or income account for. And this is for service income. Non inventory related. In other words, if we select this item, we then see our Diana, Dina Martinez, Lynn Jackson. The same information for these items that we have charged in terms of an invoice for guitar lessons for our three guitar instructors, they would go back to this report. These, of course, are increasing our net income even though we haven't yet received any of the of the cash yet because we we did the work. We are owed the money. And remember that QuickBooks reports this information at the point in time that we create the invoice, because supposedly that should be closer to the point time the work was actually done. And on an accrual basis, we report revenue when the work was actually done Later, of course, we will get the cash, not record any more revenue at that time, but decrease the amount oh, to US, decrease the accounts receivable account. 80. 8.77 Purchase Equipment with Debt: Hello. In this presentation, we will purchase equipment by financing that equipment with debt taken out a loan within QuickBooks online. Here we are with the QuickBooks online dashboard. We will be continuing with the get great guitars problem. We're gonna be purchasing equipment, but we will be purchasing it, not with cash, but with debt. This seems like an easy transaction, but it could be a little bit tricky because we can't use the normal tools were used in order to purchase something. For example, if we go up top and take a look at our normal tools, we could say we're gonna purchase something typically from a vendor. And if we go through these, we could say, Well, maybe we could use something like an expense to do it. But really, we're not buying an expense. We're buying a long term thing. We're buying equipment that's gonna last for a long amount of time. That's not quite right to do the expense. We can't write a check because we're not going to write a check. We're not writing any check, so we're not going to use that. Ah, Bill, It seems reasonable. We could use a bill, but If we do that, it's gonna put that into not really a loan account, but into accounts payable. And there's gonna be a two different things. The accounts payable account typically is gonna be a more short term thing. Something do within 30 to 60 days. Max. Well, where as a loan is something that we typically signed a formal agreement for, we're gonna charge interest on usually the amount is going to be larger, and we have some kind of payments that will have to be making on it. So we really don't want the bill because it's gonna put it while it puts it into a liability. It's not really the right one that we want. We want to put it in tow, loan payable that it's not gonna be the pay bill purchase order doesn't have any transactions related to it that's related to end inventory. So there's nothing here, really to tiu. Have this transaction take place. We're gonna purchase something. Ah, large piece of equipment, like a forklift. Let's say, or something like that, it looks like furniture here, and then we are going to finance it so we could do normally most accounts, probably would jump over to the journal entry and create a journal entry if we look at that screen. No. If we go to the journal entry screen, what we have here are debits and credits. Now, if you know debits and credits, this is probably the most easy place to enter. Enter this information, but if you don't and they don't like to account, so it's not too bad, even if you don't know Deputy credits. Well, but if you don't know, Deputy Currency could be a little difficult. So if you know, debit secrets is probably worried you would want to go for this. The general, the journal entry type transaction debuting what? We're gonna have this case, which will be the equipment account, the furniture and equipment and then credit in the we're gonna have loan account, which will increase the loan payable. We're gonna try to do it a different way just cause we're gonna be in putting this where we're gonna limit the amount of debits and credits. We know you know, debits or credits. It actually makes it a lot easier. A lot of ways, because you can you can use a lot of reports and a more efficient way. But we're gonna We're gonna try to put it in the other way. And just cause we're not using Devinsky credits, by the way, doesn't mean that you don't demonstrates aren't helpful and they're not gonna help you as you look through this stuff. Some of the most important reports or easiest reports toe look at will be the trial balance , and that's gonna be in the form out of a debit and credit. And if you look at these running balances but really using kind of a debit and credit type of structure, but, ah, lot of data input, we try to limit the debit and credit so that the input will be as easy as possible. The reason there's not a real form to do this data input is because it's unusual transaction, not not in that It never happens, like ever, or any company like companies buy equipment all the time. But it doesn't happen every day. In other words, so unlike on invoice, we make sales every day or we pay bills all the time. Therefore, there's no form that's really set up just for this item. It's also gonna be somewhat individualized in that the type of equipment we purchase is gonna differ because they're large purchases of different items and the loan terms could be different as well. So that's one of the reasons there's not a form. That's one of the reasons when that happens. When we have these types of transactions that don't happen all the time. That's when we have to know, Ah, little bit mawr in order to enter that information and see what's going on with it now, another way we could try to enter this is to use the registers. So that's what we gonna do here. We're gonna go to the accounting on the left side, and if we look through our registers, the checking account is the first register. That's one most familiar to most people that register format, but we have a registered for every balance sheet account, and the one the two accounts were dealing with will be the furniture and fixture account and the loan account, so we could use either of those and again, it's a little bit more unusual to do this, like if you do, if you know debits and credits, it's probably the easiest way to go. But But we can do this here. We could say, OK, this is the furniture and fixture account. And if I look at the register, I can say, Well, it needs to go up because we bought more furniture and fixture, And then I'm just gonna select the other side the loan in this register until quickbooks Hey, do whatever you gotta do to the other side to make this happen. So let's see how that works. We're gonna select this register. So remember, this is not the check register. This is gonna be the register for the furniture and fixture, which is an asset type of account. What we will do here is we will add a transaction. So we're gonna go up top and we're gonna select this drop down. No, there's not too many options, of course, for the transactions, because this is something that really the only transaction that you're going to use in order to affect this registered, typically going to be a journal entry. But the journal entry screen will look a little bit different. It won't have the the debits and credits, but plus and minuses. So we'll see that we'll go to the journal entry. And here is our journal Entry looks a lot like a check register as if we're entering a check into, Ah, register on the checkbook. But this is going to be not the checking account, but the loan account. I mean, the furniture and fixtures account and asset account. So the dates going to the 02 28 to 1 February 28th 2021 the end of the month. We're going to save reference. I'll keep the reference to its an automatically generated reference. We're going to say that the pay is going to be Office Depot, where purchasing from Office Depot, however, were not paying any cash. We're financing. It will finance the whole thing with a loan, not accounts payable. Not a short term finance, but a long term finance pain interest on it and what not. I'm not gonna put the memo here, and we're going to say it's going to be an increase now. It's gonna increase, meaning we're in the acid account of furniture and fixture. That's the account that will increase. The cost is gonna be 5000. That's how much we're purchasing it for also the loan amount. We're not gonna pay anything for it. So the other account is all going to go into the liability, not accounts payable but loans payable so we could find that in the drop down it's guessing it's going to be an expense, but it's not. It's gonna be a liability. I'm gonna start typing it in their loan payable. There's the loan payable and we'll select that item and there is it. So we're gonna save that, and we want to make sure to click that save and make sure it's on a separate line item before we move forward or else it may not. It may not save, obviously, if we don't do that, so you want to make sure we're off the line. We've hit the save item, and it's on a separate line. Now we're gonna check out what has happened in terms of the financial statements. What we expect to happen, of course, is that this being the register for the furniture nick fixtures, it should go up by 5000. That asset account the other side's alone. It's not an income statement account. Nothing's happened. Revenue or expenses. The loan is going up, and that's going to be the loan payable a liability account. Let's take a look at that. We're gonna go to reports on the left side. We're gonna go to the balance sheet and we'll take a look at the dates Will be 020121202 28 to 1 February 1st 2021 to February 28th 2021 run that report. So here is our report. If we scroll down through the report, we then see our information. I'm going to scroll to the assets first in the in the fixed assets we have furniture and fixed. We're breaking out here between the original amount. That was what was put in for the opening balance when we first started the company versus the activity. So furniture and fixture here and that will total up to this 10 3000. We're going to select the 28,000 here, the furniture and fixtures, and that will give us our activities. So we had 23,000 before this. Here is that 5000 that we just entered into bringing the balance to 28,000. If we select that 5000 then we're going to see a journal entry. And no, this is this is that journal entry screen. It's not going back to the register format that we saw before, but we entered within that were registered format, basically a journal entry and again, QuickBooks trying to say, Hey, we're gonna try to let you, you know, put up area. We don't need to know the debits and credits as we have here in order to enter that information. But really, this is going to be a journal entry format. There's no form that we can go Teoh that standardized. It's really just got to be a journal entry that's going to be entered into this format because it is unusual transaction or one that doesn't occur on a daily basis. So I'm gonna close this back out. We're gonna take a look at the other side, so will scroll back up to the top and go back to our reports submarine, and then the other side is going to go into the loan. So if we scroll down, we took out another loan here. So we've got the loan payable. If we select the loan payable and scroll down. We see this 5000 there. So it's increasing the loan. It was at 70,009. 41 before that. Then we have this bringing the amount up to 75 9 41 And no, we have these payments that are a bit out of order because way made these payments to show at the beginning of this problem. Ah, payment at the beginning of alone, but and then the payment at the end of the loan. So, in essence, we're grouping another loan and note. This is a different lone than we started with. This isn't all the same loan. We're putting it all in the same loan account, and then we're gonna have to make adjustments at the end of the month to break out one. You know, whether they are if we want to break out to loans, But we'll keep him in the one section saying loan payable. But we want to break out the short term portion of it. And this loan, maybe all short term, and therefore the whole thing could probably be broken out and put in the short term portion, meaning it's gonna be due within a year. Anything do with over a year should be in the long term portion of loan payable. Will address those issues as we go to the adjusting entries. Let's take a look at loan payable. Split. There is our journal entry. Once again note that there's no impact on the on the income statement here. We purchased one asset and and we perched it with a liability. We hadn't earned any revenue. We haven't incurred any expense we will and current expense as we allocate the cost of this furniture, not in accordance with when we pay for it with cash, but in accordance with. When we consume this furniture in the format of depreciation, we'll see that in the adjusting journal entry process 75,000. 81. 8.80 Payroll: hello. In this presentation, we will enter payroll transactions into QuickBooks online. Here we are with the QuickBooks online dashboard. We will be continuing with the get great guitars problem, and we're gonna be entering payroll data into the system. As we have discussed before, there's a few different ways to process payroll. It's really one of those areas you want to spend some time on to see how you want a process . The payroll, because it can be a complex system. Even a few employees can be fairly complex to process the payroll just because there's so many components that we have to deal with now in terms of with holdings and other types of regulations with payroll. So therefore, you want to consider whether or not you want to have the payroll to be done through the QuickBooks system. There's a few different payment options to do that. It's gonna be an Adam, in essence, to the QuickBooks system to process the payroll and decide whether you want Teoh work through that system in order to do it and or have some outside system, process the payroll for you and work that system. If you put the information into QuickBooks. The once the payroll is set up, we can go through the payroll system, and it looks something like this will enter this data into the payroll system for each of our employees and process the payroll. It's really the setting up of the payroll that's going to be the main problem, and then processing the payroll is not too difficult. Then we have the financials or the statements that we have to be in court the nine forties in the 9 40 ones quarterly, and that could be a little bit tricky. If there is a problem with those types of forms, then it can be a little bit tricky to try to figure out what happened if something's not reconcile ing properly and so therefore, even with a couple employees, it might be worth the time to take a look at some help with that and outside service to process the payroll and or federals get a little bit more complicated. You're dealing with multiple states or something like that, those air times when you might wanna look somewhere else to get some help with the payroll processing. This is the QuickBooks online system, just to give an idea or this is the QuickBooks desktop just to give an idea of what the payroll entering system would look like. This is the earnings for Adam. We have been the salary and in the with holdings. We're not going to deal with anything other than just the federal with holdings. To get an idea of what the with holdings will dio Federal with holdings will be the same for all of ah, these the United States. However, the state with holdings will, of course, change from state to state. The concept is the same for both with holdings of taxes as well as any other type of whether we went for one K or something like that. We're gonna remove that money from the Czech. However it's required for us. However, much is required for us to do that. And then we're gonna have his is the total amount earned in this case by Adam. This is what was pulled out. This is the net check. This is being calculated by the system. And if we have everything set up, then QuickBooks will, in essence, do this automatically do the federal and soul security and Medicare and we and we may not even know what's going on in the system. Will kind of calculate those those items for us as well as the employer portion. So security and Medicare, what we're gonna do is go through this and do this as if we're going to get the information from 1/3 party and then enter that data in. Even if we get 1/3 party to do this information to process the payroll, we still need to put it in our system if we're properly going to track the payroll within the QuickBooks system. So we're going to re calculate this one more time and get an idea of it just on an Excel worksheet, and then we'll talk about Well, what if we had 1/3 party do it? How are we gonna put it into our system? So here is excel, and we're just basically gonna process the same information we just saw that it might look like in a QuickBooks process. It looked kind of like a payroll stub that we saw. And now we're just gonna into that same information into this system. This is the kind of work shit you might get from 1/3 party if they were to process your payroll for you and then give you the information if we were to calculate payroll manually and then and process it in this format. So we're going to say that we have Adam here and we're gonna say that Adams total earnings humans a salary, so it's the same each month of 4583.33 Then we've got to pull out the soul security, Medicare and federal income taxes. Those are the three United States taxes that basically our payroll taxes that are required to be pulled out. Now, if we have state taxes, they could. They're gonna act in a similar fashion if we've got benefits like 41 K plan paying for health insurance and that kind of stuff. Same concept. We just need to determine how much Teoh pull out the check, and then we've got to reduce the check. These amounts are going to reduce the amount that they're going to get in terms of total payment. So this is what has actually been earned by Hamilton. Social Security and Medicare are typically kind of flat taxes. The rate meaning the rate is going to be somewhat standardized and the rate doesn't really matter because it could change. But the concept will be the same. And we're just gonna take this number times, whatever the rate is. And I think it's, ah, 6.2% right now. So let's try that for this calculation again. That could change over time. But we're gonna take this Times 0.0, 062 and something like that would be the calculation. And so we're going to say that that's gonna be the to 84 16 and then the Medicare is gonna be a flat rate as well. Typically. Generally, that's a general rule. I'm not going over all the rules for so security Medicare. But that's gonna be the general. I think it's like 1.45% so we would take then the total earnings times 1.45%. Ah, sorry 0.145 for 1.45% like that. And that would give us ourselves security of 66 46 then the income tax, which is what what we all owe at the end of the year, when we do our our income taxes. Or actually, we often get a refund at the end of the year. And the reason we get a refund is because the with holdings that we're taking here, taking now taking out of the paycheck typically often add up to more than what is actually owed for the year. So this is gonna be a complex. That's not just a flat tax we got. We need to know a few things we need to know marital status. We need to know how often we're gonna pay in terms of weekly, biweekly monthly, how often we process the payroll, in other words, and we need to know that the amount of income and then we would basically have to look at a table, have some computer system to help us to find out what the amount will be. We're not gonna go through that process. We're just going to say that it came out to be $720 So that means that the net pay then is going to be 4583.33 What he actually earned minus 2 84.17 minus 66.46 and that gives us the net check that we will have here. So this what he's actually gonna get that's what was actually earned by Adam. So let's do that calculation one more time. I'm going to say that equals that net check. Is this number what was earned minus the Social Security minus the Medicare minus the income tax that were taking out of the check. That's the check that will actually be received. So I make this green. This is what they're actually going to get. Now, you would think we'd be done there, but we also have to pay the soul security and Medicare, and we kind of like match it. You could think of it. Kind of like a 41 K matching thing. This this Social Security came out of a paycheck. Theoretically. And this So security is going to be coming out of the employer bank account or the the employer paying it not coming out of the employees check. It's gonna be the same amount. It's gonna be this soul security amount, and the same will be true for Medicare. Now again, there's some other kind of rules with caps. And what now with payroll taxes. We won't get into all that all the ins and outs of payroll taxes. But that's gonna be kind of a no overview of how we're gonna process the payroll. And that will be for Adam. Now note that that's not too bad, but it for one employee. But when we have a lot of employees, it starts to kind of it starts to accumulate. When we do this a bunch of times, it starts to accumulate. As we do the quarterly's. They could get a little bit more confused, a little bit more dicey. So we're going to say that we have now. Erica. I will do the same thing. Erica, we're going to say that she worked 20 hours times. Uh, actually, she worked 40 hours and gets 20 bucks on our So that's gonna be $800. Social Security. One skin is gonna be a flat rate 6.2%. So we're just going to say that earnings times point both 62 That's going to give us the 49 60 and then we say Medicare is a flat rate, so we're going to say that 800 times point. 0145 point at, which is 1.45%. And that's going to give us the 11. 60 there's gonna be I'm not gonna calculate the income tax, because again we need marital status. We need how much was earned. We'd need that. How often we pay, which is monthly. And then we need to look up, look it up in a table. So we're going to say that this is just going to be what it is, which is gonna be a we're gonna say, 110. So if we were to calculate the net pay, then we're gonna say Erica earned $800 and then 49.60 was taken out for Social Security, 11.60 was taken out for Medicare and 110 was taken out. Four federal income tax F I t. To give us net check of 6 28 80 So she's gonna get 6 28 80 even though she earned 800 because she owes these three taxes and instead of us giving them to her for her to then pay the fed makes us take it out of the tape paycheck before pain and giving the net check. So then we're gonna do that calculation One more dime. We're going to say this is $800 minus the 49 64 soldiers security minus the 11. 60 for Medicare minus the 110 4 federal income tax. You think we'd be done there, but we're not, because we have to have the employer portion Social Security and Medicare. So that's gonna be this item, the 49 and that's gonna be another 11 60. Okay, so now that's for the two employees. And we could think of this of employee by employee when we process the payroll check. Even if we were to do this manually and say this is the net check, we're gonna give toe Adam, we would need it. We would still need to track this data because we still need were we require, typically, by law, to tell Adam that this is the amount they got. That's the amount they earned. And the reason they're different is because we took so security, Medicare and income tax from the check, we need to give a pay stub so we can't just write him a check for this without giving him the detail of, you know, the pay step. And Eric has the same thing. We gave her that. We need to give her the detail. Now, when we enter this into the system, we could think of it is just one journal entry, one lump sum journal entry. This is the amount that actually is coming out of our paycheck out of our banking account. I should say, Ah, but we need to record all of this amount into our system in some way. We could think of that as one lump transaction rather than two checks, as it actually is. By summing these up. If we sum this up, we could say that the payroll total was 3 5083 33 That's how much the payroll expense was total for the two employees. The Social Security that we're gonna take from them totals the 3 33 77 the Medicare totals , the 78 06 and the income tax totals the 8 30 That means the net check is either gonna be this and this and or we can do the same calculation. The total check minus the soul security minus the Medicare minus the income tax. So that's gonna be the same number or this. Plus, this is the same number and in the self security that were gonna pay, we're gonna have to match and the and the Medicare that we're gonna have to match So you could see even with two employees, we can get this system the payroll system to kind of calculate this for us and just make thes thes numbers work. But it's most businesses probably don't fully kind of understand what the payroll system is doing and how how exactly these Social Security, Medicare and income taxes air are being taken out. And if the if the payroll system automatically does the calculation, that's great. But if But if there's a problem, it could be a little bit complicated to figure this stuff out because it's, you know, a little bit complicated of a system to figure out. In essence, we're gonna take this as if 1/3 party was to do this calculation. And now we got this. They gave us this and we're gonna enter this into our system now. We could do this by just saying it's one line item by doing a journal entry like this, meaning we would just basically debit the or increase. And we're gonna talk debits and credits here, but we're gonna increase the payroll expense by the 5383 33. And then we would credit the payroll liability for what was what was owed or what was taken out of the paycheck. Which are these three numbers here. So that's the 1 to 4. Um, 1 86 That's gonna be this item here. So if we summed up these three, it's 1 to 41 82. So one for 2182. I just changed this number was not correct. And who wouldn't say the net check then would be the net check here Now. If we did that, that would that would be fine. That would give us kind of like the detail of all of our employees grouped together. The problem. There will be a problem with that, however, in that we won't have the two checks that were kind of broken out separately, or the detail. And it's kind of nice to have the two checks because we could then, um, record these two checks and reconcile them when we've reconciled the bank account. So we're gonna actually put this in with two journal entries for the two employees, one which will say that the payroll expenses going to go up by the 4583 and then the payroll liabilities going to go up by the amount that we took out and then the check the net check will be the net check that will decrease. The checking account will do the same for Erica. We're going to say the payroll was that we took out this amount 1 71 for the payroll liability because we're gonna go that, and then the difference is going to go to the checking account, reducing the checking account by the check Now, then we're gonna do our side. That's what we are going to pay in terms of payroll taxes, which we're gonna match the payroll, the soul, security and Medicare. So that's the 350 for Adam that we're gonna have to match. That's gonna debit, Adam, and then and then credit the payroll liability. We're going to do the same thing for Erica. We're gonna match this, which is a 61 20 for the payroll expense and liability totaling this amount here. So that's the process. We're gonna go through with this and note that we have payroll expense here as the journal entry. It might be better called payroll taxes expense because these are the payroll taxes. These although their payroll taxes for the employees are not payroll taxes, really for the company, because this is all part of earnings, this is payroll expense. This is the wages expense. This is all their earnings, which this is their earnings that we took from them and pay their taxes. These, on the other hand, our is our money That didn't come out of their paycheck, that we had the match. So security, Medicare four in accordance with the with the policy with the law. So that's gonna be the difference. We're gonna go ahead and enter this now into QuickBooks when I take this data as if we got it from 1/3 party. This data an entered kind, like this journal entry, these two journal entries or four journal entries into the system. There's a few different ways we could do this. We typically would use a journal entry to do this. So I mean, most commonly, we would go down here to this plus icon up top and go the journal entry and record this Azaz a payroll journal entry. And we saw that journal entry well, in terms of debits and credits would have to use debits and credits to do this. Now, it might be possible for us to enter this in without the use of journal entries by just basically writing a check. And that's what we will attempt do here toc this process. So we're gonna have ah, check with a couple of different accounts that we will write with. So again, we're gonna try to avoid the journal entry. It might make things. Actually, I think it makes things more difficult to avoid journal entries if you know debits and credits. But it could be a youthful system t go through and note that as we not using debits and credits, if if you can understand how the deputy crowds are applied, no matter what system we're using, then that will help to just understand how the system works and how how weaken. Use Devon's credit to not use, not use debit secrets, even though the system is still basically using debits and credits. So let's go through this. And we're going to say we're going to write two checks to process these payroll. So I'm gonna select the plus item, we're gonna select the check, and we're gonna put this information first for Adam. But our employees, Adam and then for Erica. So we're gonna say, Adam, we could select the drop down and or just type in Adam. So there's Adam employees. I'm not sure it's spelled greatly, but that's how Adam told us to spell it. So that's OK, so we're gonna say, checking accounts going to go down and the mail address. We're not gonna have one at this time. We're gonna process this as of the end of the month, which is 02 28 to 1 the date, and then we'll enter this information into our system. Now note that the system memorized what happened last time. So it's got this this same kind of layout, which is nice. The numbers are going to change, but it will say this will give us an idea of what happened last time and, of course, accounting will be repetitive. Last time we did a payroll entry for Adam, this is what we did. And we can go back in here and kind of say, OK, what can I tweak to make this right? And of course, if this wasn't the case, but we know we did a payroll prior to this, we can always go back. That's the first thing we want to do. It's not always gonna be exactly the same, but we can always go back to the prior transactions. Say, hey, so we're probably gonna do something similar here. Let's take a look at what happened last time. So I'm gonna go ahead and uncheck the print later here because we're just gonna keep the check number, not gonna have a different check number. And then we're gonna tab through this and we're going to say that the payroll expense is gonna be the other side of this transaction. Now, we're gonna remember if we if we look at the Excel Sheet here, that he earned this this amount, that's the full payroll expense. But the net check should be this mouth. So we expect the net check to be this and the payroll expense to be that. And then we got to subtract these out of it somehow. That's what we're gonna do here. So we're going to say that the payroll expenses, the total amount that he earned, which that's actually right because it's the same as it was last time. Nothing's available. We're going to say the payroll liability. That's what we took from, um, the wages. That's these three things. If we add those up, that adds up to in this case, this 1070 62. That's what we took out of a paycheck. We're going to say it's negative 1070.62 and then we've got the payroll expense. Now, this is gonna be this is really the payroll taxes. And what we're talking about here is our side. That's what we matched, in essence for Social Security and Medicare. So that's what we're gonna put there. And that's gonna be ah, and this time it's gonna be 300 and 50.62 and then the payroll liability is going to match that. So it's gonna be a negative 360 300 350.62 So within our net check, then hopefully the amount should be that 351 to 71. Let's check that. So please grow up here. 351 to 71. So that's good. That's how much is actually coming out of our checking account. That'll be reducing our checking account by what we actually paid the employees. And then we say that the expense is actually this. So the expenses higher, That's what was earned. And then we reduced the expense by the payroll liability. So this is it. So security, Medicare and income taxes. If we left that where it wasn't we didn't enter these two data. We would still be at the same net check, because, really, these two amounts should kind of be a separate journal entry. But if we did a separate journal entry, we couldn't use a check because there's no cash involved with these two. So we're just kind of using this check to report record both the employee and employer portion. So now we're gonna say the employee payroll expenses, which really kind of should be payroll taxes. But QuickBooks typically groups, um, altogether. When we process payroll within QuickBooks. So I'll keep with their, You know, the way they typically do that. And that's gonna be a new increase of 350 for our portion of so security, Medicare, the employer portion. And then we got the payroll liability, Meaning we owe that. We owe that to the Fed. So these liabilities mean that these air what we owe to the Fed. This is what we took from our employees and therefore are holding on to that. We will now pay to the Fed at some point in the federal government. And then these are our portion. The matching portion that we took we didn't take from the employees that we have to match that were gonna pay to the government. That's gonna be the first check. And then we'll do this one more time. It's gonna be great. Now, one more thing here, the check number. For some reason, I don't think that's the latest number. I'm gonna change it to what I believe is the latest number of if I was to go check the register, I want to pick. Basically, the next check that is in line usually automatically fills out that Sometimes it gets it gets messed up, especially when we're not printing them. So we have to go check the check register and see if that's the case. So I'm thinking that's 10 23 according to our problem. So I'm gonna say save and new save and new. And we're gonna do this one more time and this is for Erica. So now, Eric M, we're gonna take our register. Data earned 800 but the net check the, um, al check that we want to actually record is gonna be 6 28 And the difference is going to be this Social Security, Medicare and income tax. So let's dive it, Erica. The unemployed were dropped down. We're gonna type in Erica and Eric, the employee Erica Robinson here. Not the customer, the employees. And we're gonna write the check here, and it's populating the correct payment date. That's right. That looks like the right number of this time. That's good. We're not gonna print it. And once again, it's trying to guess what we want to do. And it's saying that's what you did last time, and it probably will be much the same this time. But Let's go through that. We're gonna say the payroll expense, the pale expense. That's how much Erika earned 800. That looks good. And then we're saying that we took out the liability of 1 70 I believe it's slightly different. We've got soul security, Medicare and income tax at this time, which is 1 71 20 this time. So we're gonna change that. I'm going to say that this is gonna be 1 71.2 and then we've got that. So that would be it. Basically, that would give us our net check, and that would be it. But we also are gonna put in, Remember our portion. Just use this as a journal entry to record our portion of the employer taxes, which is the 61 20. So security, Medicare, employer portion. So we will take of those items, and we're going to say that this is slightly different. We're going to say it's 61 20 and actually, because I don't think the paper I don't think it was calculated quite exact last time, but 61.20 This looks more correct. OK, so that's gonna be it. And then the net check then should be this 6 28 80 So we're gonna go back over here and say the net check. If we scroll up, it's 6 28 80 So what is this going to do then? It's going to record that the payroll expense of $800 increasing expense reducing the net income, is going to say we took from Erica 171.2020 cents for her payroll taxes and are holding on to that and are going to pay for her to the Fed what she owes. And then we have our portion of the payroll and then and then the difference. There is gonna be a decrease in the checking account. So what, We're actually gonna pay Erica, and then we've got our payroll expense 61 20. That's what we are paying. That's another expense. It's more like a payroll tax expense that's going to increase the expense, decreased net income and the payroll liabilities that we didn't take from the employees, but still oh, in the format of payroll taxes, because it's kind of like a matching type of thing. Okay, so let's save that and let's check out that reports and see if that does what we think it just should do there. So we're gonna close this back out. We're going to go to the reports on the left side and we're gonna look at the balance sheet . Let's take a look at the balance sheet. We're gonna change the dates on the balance sheet to the month of February oak 20121202 28 to 1 and then run that report. Let's first take a look at the checking account. If we take a look at the checking account. Which way? We should see these two checks that we have written for our employees. So there's Adam Hamilton and here's Erica up here they're a little a little out of order, but that's because they're all of the same date. So here's Here's the Erica. It's an order by date and then So here's Erica And then there's Adam. And if we take a look, so if we if we look at either of those, that's for the check amount. And if we compare that out, then, of course, have to check amount that is reducing the checking account And obviously, if we take a look at either of them were gonna get back to our paycheck. Let's close that back out, and we're gonna go back to our reports, scrolling back up and go back to the report summary. So that's gonna be the the checking account. The other side, we typically think, is on the profit and loss. So it's going the profit loss, which is the income statement and profit and loss. So left side reports, profit and loss reports change the dates to the month of February, which is owed to 0121202 to go to 28 to 1 and February 1st, 2021 to February 28th 2021 run of that to report. So then, if we scroll down, we see the income, the payroll expense. Now, if we select the payroll expense, we're going to see two items for each employee within payroll for this month. One will be the payroll expense for the employees, and that's the total expense, not the amount that we took out here. So it's not the net check. It's the total earnings for in this case Hamilton. And then I were portion our payroll taxes that we paid our the two items. This one should be really payroll tax expense. But QuickBooks usually lumped them together, so we'll follow that convention. And then we have the total earnings here that are there. And the total earnings no kind of include the taxes that were taken out of the employees portion, these air. You might want to think of these as payroll taxes, but they're really part of this earnings of the employees. So those are gonna be that the items we have here. So we got em. Um, Hamilton, Adam Hamilton. Here's our payroll taxes and this is his total earnings. Not the pay check that Adam got total earnings. And then we've got the the Erica. This is the total earnings, and this is the Social Security and Medicare that we match on the employer side. So those are gonna be those items. And let's see one more component here. Let's go back to the balance sheet. We're gonna go back to the balance sheet, going the reports, we're gonna go down to the balance sheet, and we're gonna type in the dates of February once again. 020121202 28 to 1 February 1st 2021 to February 28 2021 run that report. So there we have that. And if we scroll back down, then we're going to see in the liabilities section that we have the payroll liabilities here. So payroll liabilities. If we select those items, then we're gonna see the payroll liabilities for Erica and Adam that we took out of the checks for these items. So this is gonna be Adams amount that we pulled out here. So if we take a look at her our table were saying that we pulled out this this in this from the check. So that adds up to that 1070 62. That's what we took from the check here. And then this is gonna be our portion that we have to pay for Adam in this case. And then Erica, this is what we have to pay are this is what was taking on Erica's check. And this is what we have to pay. These three amounts are payments that we made. So we these air reducing the liability and those air payments we made for the payroll. Ah, liabilities that were incurred in January. So we incurred payroll light bills in January of this amount. We paid them with these three in February. And then we occurred more payroll liabilities when we process the payroll in February because we're paying on a month by month type basis here. 82. 8.90 Rental Income Recorded: although in this presentation we will record a rental income in QuickBooks online. Here we are on the QuickBooks online dashboard. We will be continuing with the get great guitar problem. We're gonna be entering a rental income and to take a look at that. Were first gonna look at the financial statements on the income statement or profit and loss. So we're gonna scroll down here to the reports left side. We're gonna go to the profit and loss of section, and we're gonna find we're going to have the dates to be the dates of 0201 21 the month of February 02 28 to 1. So we're gonna be running this report the year were working as 2021 month of February and run that report. So you'll note here that we have different formats of income. Now note that a lot of companies will only have one or two types of incomes because that's all they do. They do what they do it meaning if we sell stuff, that's probably our main port of income. We buy stuff and we sell stuff, and therefore we would have all of our income grouped into the sales product sales of product type of income. On the other hand, a lot of companies do a lot of service only. So if we were a bookkeeper or a lawyer or something like that, then we were just a group all of our income into the service type of income. We're gonna add another group. And then, of course, we have a lot more expenses because we pay for everything else that we do typically. So the expenses typically will be outweigh. We'll have more account types of expenses, although we hope that the total of the expenses will be less than the total revenue that we generate. So it's going to be more groups of expenses, more types of expenses. Then there will be groups or types of revenue. But typically we hope that the revenue in total will be larger. We're gonna have another revenue type here, and that's gonna be that the fact that we have the service revenue, that's gonna be mainly air guitar service in our maintenance kind of stuff that we have in terms of the service here, and we're also going to include rental income now, so we're going to say that we have rental equipment, maybe amps or something like that, or guitars. Or we're gonna set up something off stage for someone or something like that and rent out some of our equipment. So we're gonna add another income type of area specific to the renting of our music equipment. Couple ways we could do that. If we want to add a new category here, then we could go to our accounts. We can go to my accounts over here, and I'm sorry. Go to accounting over here on the left, goto accounting and chart of accounts and add the new account here and note that that account needs to be an income type of account. So if we scroll back down, remember that this is typically in order by accounts, type, meaning, assets, liabilities, equity, income expense and more specifically, assets of cash, then accounts receivable than other current assets than fixed assets and then liabilities of accounts payable and more liabilities down to equity. And then finally, the income. So when we set this up, we want to make sure it's an income type of account that we are going to set up we're actually going to do this as we build the client as we collectively sales receipt will set up a new account and will also do that by setting up a new item. So remember, the inventory items are what are going to be on the sales receipt or invoice. So if we go up to the sales up Tom and we go toe products and services, we're going to say that these are our items that could be service items like our guitar lessons. Or they could be actually inventory items like the E L P. We're gonna have a rental equipment renting music equipment as our service item now which we could set up here as well as a new service items, so that then it will pop up automatically, or we can find it when we create a sales receipt or invoice to build a client for the rental equipment that we're going to be using. We're gonna do that at the same point this time, however, and just create a sales received and create an account to record this too, as well as the item that we're going to record this with, as we create the sales received. So that scenario is that we have somebody who is renting our equipment, and we're gonna collect the money at the same point in time as we provide the service and therefore create a sales receipt. As we create the sales receipt, however, we're gonna have to set up this new thing that we haven't done before. That's gonna be renting the equipment. Meaning we need a new account income account to record the equipment rental. And we need a new service item, so we'll do that at the same time. We're gonna say the plus item up top click this little plus we got customers on the left side. It's not gonna be an invoice. We're going to say it's a sales receipt because we're getting paid at this point, Time and word really delivering that the rental equipment at this point in time as well. So we're just gonna put it into the sales, the sales receipt, even though they haven't quite used the rental equipment yet, But close enough in the point in time. We're gonna have that here. So then we're going to say that the if we select the drop down, it's gonna feed for music store stuff. So that's Ah, re occurring customer. So we're in a music store stuff. If we tap through this, there's the billing. We're going to say that the date, then is gonna be the end of the month of February or 0 to 28 to one February 28th 2021. We don't really need an address here because it's not calculating the sales tax and sales tax. Typically, wouldn't will need an address in order to help that calculation. This is a service item and therefore shouldn't have any sales tax calculated for it. We're going to say that the type of payment is gonna be cash and it's gonna go into UN deposited funds. Remember that when we have the sales receipt, that, in essence, is what it means is gonna say that cash is going to go up in some way cash in this case, the way being un deposited funds not checking account, because we're gonna group it all together at the end of the month, what kind of a day? And then group them in accordance with the group and we put into our system. And then we're gonna have that product or service. And this where we're gonna have the new product, we're gonna type in here rent music equipment. Now, this is a new product or service. If we were to select the drop down, we're not going to see that Proctor service as as if we if we select this brought drop down , We see all this other stuff meaning guitars and our rental equipment and our other sales type items service items such as guitar lessons. But there's a new one. We don't have that. They're so we're gonna set it up now. I'm going to set this up, and it's not gonna be an inventory item. It's gonna be a service type item is gonna be the rental service. So we're not actually providing inventory and therefore don't have to deal with cost of goods sold or tracking that inventory. So that's nice. And we're going to say there is that there's the name we're gonna just scroll through. This is gonna be sales information. I'll put the same thing. We're going to say that the price, um and the price may very based on the type of of rental equipment we have and we might want to try to standardize that. We might want to say, Hey, here's our package deal, which is work We're gonna kind of say here, If you rent this equipment all in one group for one kind of show or whatever, then it will be a package deal. Or we might want to go through and break it out and say, Well, here's how much it is for renting just just this amp versus this guitar for so much time, period. And what not so we can see how to go through this. We're just going to say it's 4500 here. We could also leave it blank and try to decide that as we create the sales, we see it on a on a step by step basis as well as we go from deal to deal with. The deals will will vary from from time to time based on the type of negotiation we have, and then we're going to say it's not gonna be taxable, so I'm gonna uncheck that, and that's gonna be it. So we'll save and close this and it'll populate for us. So there's the sales receipt and There's one thing that I don't think we did quite correctly. And that is that I think it's going Teoh the wrong sales account. It's going to the sales account that is for the sale of equipment. And we'd like to set up that new sales account. So I'm gonna say, this is This is not quite right. I don't really want to record this yet. I'm gonna go ahead and close this. I can't go back into it now. I can't go to that service item because I already saved it, but we could still edit it. So I'm gonna go ahead and close this item here without saving it. Well, I'm gonna go back and re input that information. We're going to go to the sales. We're gonna go to products and services and see if that product has now appeared now. So we're in sales on the left, products and services. We're gonna scroll down and we're looking for this item that we have set up, which is the rent of the music equipment. Here it is, right there. Rent of the music equipment and what I want to know specifically is like did I put that into the correct sales account. So when I click and edit this and if we scroll back down, you'll see the income account. It's going to its sales. What we really want to set up is a new account. We'd like to put it into the, um, a new account called rent music equipment or something like that. So something like this is what we would like it to be. We're going to see if it lets us set that up. So I'm gonna tap through this and see if it lets it set it up. And I want to say save and it's in It won't let me add that account. So we're not allowed to hear toe add this account in the set up process. So what we're gonna do then, is add this account to the chart of accounts and then we'll go back here and make this change. So I'm gonna close this back out. We're gonna go to the accounting on the left side, and what we're gonna do is add a new account, were and select a new account up top, and we're gonna call that account a other. The category will be an income type of account. So it's not a bank account. It's gonna be an income type of account. And we're going to say that the detail type is going to be a service income type of account , and it's not gonna be just service or income. We want to make it specific to break out this type of income. This type of service, which is gonna be the rental of the music equipment. I'm not gonna have any subcategory, and then we're just gonna save that item. So now if we scroll back down to our income accounts scrolling down, we have the rent, music equipment, the sales and the sales of product income and in the service fee income. So it's gonna be items we have now. I'm gonna go back and see if we can make that change to the item list because they wouldn't let us add this account as we create the item. So we're gonna go back to sales up top, we're gonna go to the product list, and we're gonna go back down and find this product that we set up, which was a rent music equipment. So we're gonna scroll back down rent music equipment, and I'm gonna edit that item and scroll back down, and it's got going to sales right now. And this is the income account now. It wouldn't let us change that before to make a new income account, But now that another income account is set up, we should hopefully be able to select that income account. So we've got the sales, the sales of the shipping, and right above it, we have the rent music equipment. So now we're able to select that item. We're gonna say rent, music, equipment, save and close that. And then we're gonna go back to the creation of the sales receipts. So I'm gonna select Li plus item. We're gonna go to the customers and we're gonna create this sales receipt. And I'm just gonna enter the same data we had before get back to the same process and we've just populated the same data. So music store stuff. Here's the date to 28. Cash is gonna be the form of payment UN deposit funds already populated. And then we have once again rent music equipment. Same item here. We've just adjusted that now so that the item will record now, too, the proper income account. So if we click off of it, then it'll calculate this out. Note. There's no sales tax here. So what's gonna happen when we record this? Then we are going to be saying it's a sales receipt. Therefore, we're giving some form of payment. We're getting cash. It's not going to the checking account, however, It's going into the UN deposited funds that will increase. Then the other side of it is going to be some type of revenue account. And that's what we changed. We changed it to the rent music equipment type revenue account, and that's driven by, of course, this service items. So that's kind of what the new thing was here. We created a service, a new service item that's going to a new income account, and this 4500 then will appear on the profit and loss in the new income account, driven by the item here that we have set up. So let's save this and go take a look at that. So we're gonna save this. We're gonna close this, then we're gonna go to the reports on the left side, and we're gonna go to the balance sheet will change the dates from 20121202 28 to 1 and run that report scrolling down. Then we're going to look for the UN deposit. If I didn't go into the checking account even though we already got paid, we put it into UN deposited funds. So here's the 4500. If we select that item in UN departed funds and scroll down there it is music store stuff, sales receipt. The other account, the split account will be rent, music equipment and income statement account. We select that 4500. Then we see the sales receipt. Now let's take a look at the other side. The new account we set up, it's gonna be exciting. What clothes that out. We're gonna go to the reports on the left side, and we're going to select the profit and loss going into the profit and loss statement changing the dates to the month of February, which is 020121202 28 to 1. That's February 1st, 2021 to February 28th 2000 to 21 run that report. So here is our report, and now we have another income account. So we've got three types of income the rent, music, the sales and the service feed. Now note you might be saying, Well, the rent music might not be what we do most of time. And you might not like the order of these three accounts here. You might say I'd rather have, you know, one of these other ones on top for whatever. But no, you can't really do that if it's within the same income account type, because within here it is then ordered by by alphabetical order. So it's first and ordered by the format of the income statement, which is income cost goods sold that expenses and then within here it's in order by the name of the account. Now we could change that by by signing account numbers, possibly. But that can kind of complicate things, So just be aware of that. Here's our new account. Though it's in the rent income, it's in the income section, therefore increasing income and therefore increasing the net income as well. If we select that rent music equipment, then we see our sales receipt here. If we select that sales receipt item, the split go on the other side, going to UN deposited funds, by the way. And if we select that 4500 then we see our sales receipt. 83. 8.95 Comparative Financial Statements Feb: hello In this presentation that we will generate and analyze comparative financial statements within QuickBooks online. Here we are with the QuickBooks online dashboard. We will be continuing with the get great guitars problem. We've completed entering data for the second month of operations into our problem here. And we're gonna take a look at some financial statements here. Those basic financial statements typically being the balance sheet and the income statement . We're gonna take a look at a little bit of an adjustment. Look at some comparative financial statements for the two months that we've entered, including January, February of the year were working in for our practice. Problem will also take a look at another report, which will be the transaction detailed by date. So if you're following along with this information, you can use that report for great report to really kind of see if the information is in there as it should be. It looked it looked, gives us some information as we go. That's great to analyze how things were going, what the actual input is happening through the system as the input is happening. Basically, by date, no matter what the input is as opposed to the financial statements, of course, which will group that information in accordance with the rules of financial statements. So let's go to the balance sheet first. So we're gonna go to the left side over here looking at the reports, and the main reports will be our financial statement reports. First off, that's going to start with the balance sheet, so we're gonna select the balance sheet now before we go through the dates and everything. Note that what we're really saying is the week enter data as of the end of February now. So when we think about a balance sheet were typically thinking of it as of a point in time . That's what a balance sheet is. And really, we only need one date in order to say what that balance sheet is. So the one day it would be as of February 28th in our case, 2021. So let's start with that and say, We're going to say that it's just one day 02 28 to 1202 28 to 1 same day, the end of the month and the month of February for the year were working in February 28 2021 2 February 28 2021. And we're gonna run that report. So here is the report. Now note it gives us all this data as of one day because it's not trying to show us what's happening over time. It's tell us where we are at that point in time. So no matter what beginning date we have here, it will always show that same ending numbers. So we'll give us some evidence of that real quick and and seem where any kind of deviation might be from that. So as of this point in time, as of the end of this month to February 28 2021 we have cash or the checking account of 99 to 10 people always money. 4 10,049 and inventory, prepaid insurance, short term investments, some money that we haven't yet deposited into the bank account. We've got the fixed assets in terms of furniture and fixture, and that gives us our total fixed assets and total assets here. Note that if we were to report this in some other format, we might want to remove things like such as the zero here on remove that account might want . Oh, but it's great that QuickBooks has this because it allows us to drill down on that. So that's just some formatting things within QuickBooks as we take a look at these end of the year financial statements. Also, we have this UN deposited funds. It's in essence, that's cash we haven't deposited. So on a balance sheet, we may, if we were going to a justice and report it to someone, we may make that and adjust that to the checking account in order to have just one cash account. We may even call the checking account not a checking account, but cash and cash equivalents. So these air some slight deviations that we might have if we were thio more formally put together the financial statements, possibly take these numbers and group them a little bit differently in orderto report the financial statements. And if we scroll down the bottom, we got the liabilities. We got the accounts payable. We got the credit card. We've got the State Board of Equalization again. Another thing that's a payable. It shows exactly who we're paying too. But really, this is a vendor. So if we were to adjust the financials and report this to someone, we might just call that something like sales tax payable some type of payable such as that , um out of out of scope agency payable again. It's zero here, so we may not put anything there. We've got the payroll liability amount here. So that's how much is owed for the payroll liabilities. Typically, much of it being payroll taxes that we owe that we've either taken from the employees and or our portion of the payroll taxes that we owe to the state. We've got the loan payable that we have here. This we're going to take a look at probably adjusted a bit because there's gonna maybe be of short term portion in a long term portion of that loan payable that gives us our total liabilities. And then we have the equity section. The equity section has the opening balance, which we removed. If there is an opening balance, that looks kind of funny, we probably want to get rid of it, because that's really kind of like a plug number that QuickBooks uses in order to make things work when things don't work with things were out of balance and that we had that when we first started the business, because that's how QuickBooks allows us to enter those opening balance. And QuickBooks just makes it work with an adjusting entry. So we remove that and thats zero at this point. Note that if if your numbers if you've been following along with this and your numbers don't match exactly here, then of course we'll take a look at the transaction by detailed report. And that's the one that you can really go and look at each transaction and try to say, OK, what is going on wise is not exactly the same. So then we got the owner investment. That's the money that the owner has put in to the company. We've got retained earnings that the accumulation of money over time that has not yet been given back out to the owners in terms of draws or dividends, and then we've got the net income. This is an unusual number here. Net income on the balance sheet not typically reported on a balance sheet because it's typically included in the net income QuickBooks breaks it out, and I think the main reason is that they're trying toe show how these air related. They're trying to say, Hey, this net income is related to the profit loss or income statement. Now you might be saying, Well, you probably it's a good question to ask. Well, what is that Net income? Given the fact that where it's only one day, we only have reported this. If we scroll all the way back up for one day, so how can we have net income for one day? And typically, QuickBooks will kind of pick the period of time like a month time period and report income over the months time period, even know we chose one day. And that's gonna be one of the things that's unusual about the way the balance sheet is gonna be reported here. And we have a similar issue with the owners investment that these air really timing accounts that typically are broken out in timing statements like the statement of Owners Equity and the income statement. QuickBooks is trying to put him in there to the bouncy to to tie everything out, and to do that, they have to make some timing adjustments in what is typically a point in time statement. The balance sheet. Now we know we're in balance, of course, because the total at total assets appear where those total assets that total assets up here are equivalent. That's what the company owns in terms of measuring it in cash are equivalent to the liabilities and equity. Who that who the company owes those assets to, who has claimed to those assets. Ah, third party and then the equity section, meaning the owners. So that's that's gonna be the balancing again. If yours doesn't look exactly like this and you been following along, we'll take a look at the transaction detail and then you go back here and take a look at this again. What we want to do now is make some adjustments to this. First, I want to just point out that if I change this date range to the 1st 0101 to 1 meeting the whole year to date and then run that report. We have no change here. And as in the cash accounts, and most of the accounts are all going to be the same because the balance sheet is as of a point in time now, the exception to that rule could be down here. And this 6 43 which actually didn't change. Because QuickBooks, no matter what we put on that beginning date, is really kind of putting the year to date number because where we are, Ah, fiscal year company, meaning we have a year of January to December. So it kind of kept that 6 43 no matter what date range we're putting in, even though this is a timing account, So so you might be asking, Why do we want a date range here? Remember, there's a couple different reasons. One is that if we want to drill down on these numbers, if I want to see what happened in the checking account, if I click on this, then QuickBooks can jump right to that date range that we had rather than us having to go back up here and change of the date range. That's really the manger advantage when you're just looking at a normal balance sheet of having two dates on the balance sheet. Eso. Typically, it's not something normal, but it helps with this kind of process. If we go back, Teoh the report summary So here is going to be our reports some right now let's make some adjustments. Let's customize this a bit and see if we could do a comparison I'd like to see last month compared to this month. To do that, we're gonna scroll up and we're gonna go to this customized sections that we will testimony eyes this reform and I'm gonna change. Change the dates back, Toso. We wanna have it. 02 28 to 1 to over 2 28 to 1. So it's as of that first as of the end of the second month. So we're gonna say this is the second month of operations that we are dealing with now, you would think if we wanted a comparison of January and February, we would wanna have Ah, january 1st through February. But what we're what we're going to say instead is that we have the month of February and then tell the system that you want to pick the prior month to it to compare to it. So let's see how that works. We're gonna have all this is gonna be the same up top. We're gonna select this drop down if it's not selected already, which is rows and columns. And then we have the totals Onley selected, meaning it's going. It's gonna take whatever date range we have right now and total it up as of the in date. As of the point in time of the financial statement, we're gonna change this two months. And what that will do is it's going to say whatever the range is, we want to break out the months of that range. So if we were to have, for example, January and his date range through February 2028 there'd be two months involved. And QuickBooks would take the end of those two periods, meaning January 31st and February 28th the end of the two months and compare those two. Now we want, ah, something a little bit different. We want Teoh compare the previous period, so we're gonna select the previous period comparison, And what's that going to do is it's going to take. This is the month of February Indian in February, and we want to compare that to the prior period, which in this case is January. So by selecting this side. It's a little tricky because we're not really setting the date. Ranges here were saying, Here's the end of the second month and then we want you to compare it Teoh, or compared to the prior in this case month told it by by the months here and the fact that we have this checked off. So let's run that will do this incrementally, and then we'll go back and we'll add the changes here. So we're gonna run that and we see that we have the current month. It says a February 28th 2021. This is the current month, which is the 99 to 10 for cash, and then it gives us the prior month. Now note this is the balance sheet as of a point in time. So this is where we stand as of the end of February. This is where we stood at the end of January. So we're gonna add to this now. We'd like to see the difference between those two. Where was the difference between where we stood in between January and February and we'll have a percentage change. So those are the changes we're gonna adjust now, so we will customize this report. We're gonna scroll back down, and we'd like to see a change in terms of total dollars and a change in terms of percentages. And then we're gonna say, Run that report and see what we have there. So here's what we have. If we if we pull out the calculator and see what happens then we're going to say that, really, this is just taking the difference here. So it's gonna be the 9 91 0.56 and the current minus the 94 436.17 That's the difference in dollar amount. Now that difference in dollar amount is great because it will give us our dollar amount difference, which very useful. But we can't really compare that to other companies very easily. As much as we could compare the percentage changes, often times so that the way to get the percentage changes to say the difference here and divided by the original amount, that's where we started. This is where we ended. So here's the change. We're gonna divide that, just divided that by the original amount, which is the 94 for 36.17 And that gives us if we move the decimal two places over 5.55%. That's how this percentage is being drawn. So we have the current period, the prior period, the change and the percentage I'll scroll through this slowly so you can just kind of see the comparison. And then we're going to export this report to excel, and then we'll do the same type of analysis in the profit and loss report. Okay, so there's that. I'm gonna scroll back up, we're gonna scroll back up, and we are going to export this report to excel. To do that, we're going to select this item here. We export, and we're gonna export two excel right there. And here is our report. I'm just gonna open that up. Here it is. I'm gonna put that up here. So there is our report and a nice, nice format. Four s. We can go ahead and save that. Something to say file on the left side. We're gonna save as browse to where we want it. I'm gonna put it in this Excel docks number eight, and we could change the name it's got the name of the company. And then the balance sheet I'm gonna keep it is, as is you might want to put actually the date and then call it a comparative balance sheet . I'm just going to keep it as it since it's the only report we have there now and then we'll close this back out, and I was run the same thing for the profit and law to do that, we're gonna go to the reports on the left side, over here, and we're gonna go to the profit and loss reports. As we've seen in the past, we're gonna change date here to the month of February, which is gonna be 020121202 to 8 to one. That's February 1st, 2021 to February 28th 2021 run that report. So here is what we have note that as we look at the profit loss, the date range is actually makes kind of more sense that we record it up here because we're really talking about the month ended in this point and actually that the name that QuickBooks uses up here just February. It's really the month of February, and we have to. You know, it's not just into February. So does kind of say that it's February, meaning the whole range of February, not just February 28th. And so if we scroll down here than we've got our information. Which doesn't make sense on Lee from a standpoint of a range of time meaning February 1st to February 28 as opposed to the balance sheet, which only makes sense, really, as of a point in time, which is February 28. In other words, the cash account is what it is as of the end of the month, whereas the revenue accounts here, these revenue accounts are only what they are for a time range for the month beginning in February 1st to February 28. These add up to that. The total revenue adds up to the 15 800 cost of goods sold is what we had to expand in terms of guitars in order to generate the revenue. Now, note that this number is only really relevant to or its best compared Teoh the sales that we had for product inventory right here. Sales of product. And ah, lot of our money, of course, this service income from in this example, which is the fees earned for the the the guitar lessons and the rental equipment that gives us our gross profit. And then we've got our other expenses. Note that there's, of course, more expense categories, typically in a company than there are expense can or income categories. However, we hope the income categories are larger in total. Here's our total expenses down here. Then that will give us our net income from operations. And then we have our other type of things. These are things that are not normal to the business, so that's still income. But it's not up there with the other income because typically we think of interest. Income is something that we're not in business to do, which has happened, earn some interest income, and it shouldn't be up with the other income. Now, the interest expense probably could be down there as well, but we're just gonna follow the format of ah, of the problem as it is shown here. So that's gonna give us then. Are that other income and our net income for the month here So this is gonna be our total. Now, we would like to see a similar comparison that we saw on the balance sheet. Meaning we would like to compare the January and February side by side. So to do that, we're gonna go back up. We're gonna run. We're gonna customize the report, customize the report. Now we want to see January and February. But again, we're only going to show the month of February, and then we're gonna tell the system. Hey, I'd like to see the prior month as well. So we're gonna scroll down here. We've got the totals here. This time I'm gonna keep that here. And then we've got the paid prior period comparison previous period. So we'd like to see the previous period here. And of course, we have the current month. So the previous period will be the prior month, and we're gonna select that item now if we just check that and then run, it will do this incrementally again. And we see the comparison of the current month, February to the prior month, which is January. Now that's great. But of course, we also want to see the comparison in terms of dollars and percentage change. To do that, we're gonna scroll back up, customized report. We'll scroll back down and we want to take the dollar change and the percentage change. Then we're gonna go ahead and run the report and there we have it. So now we've got the difference here, of course. And that rent. There's nothing in January and there was 4005 difference. 4005. In February, we had 2000 sales of product income versus that 2467 gives us a negative change decrease of 4 67 and then the fees earned 9003 versus the 508 positive change here. Here's our totals for the sales, and here's our difference. Now this percentage again. If we calculate this percentage, we're going to say that the difference here is the 15 8 minus the 2975.4 or 12,008. 24 60. Now, if we take that number and divide by the current the previous month, where we started from this divided by the 2975.4 gives us our change. We gotta move the decimal over, so it's actually have 431% increase, which obviously is very large. And that would make sense because it's a first month of operation in January in the second month here. So there's a huge difference because of the first and second month of operations. If we take a look at our cost to get sold, it's a more modest, normal looking type of change where we had the income, the first about 16 year zero minus the 1950 That gives us the 3 50 If we divide that by the original number divided by the 1950 we get the If we move the decimal over to places 17.9% . So that's gonna be The reason we have these percentages is that we can't really compare this dollar amount to other companies very easily that have a different scale. They might sell a lot more or let less than they than we do, but we can compare that percentage change more easily because that should change in relation to their scale, and therefore it could be a lot more telling number. That percentage could be very useful in that wait So we're gonna go ahead and print this out. So again, I'm going to scroll through this one time so I can compare this out, and then we will go ahead and export this one as well to excel. So we're gonna scroll up top. We're going to select this drop down and just export two Excel. Here is our report. The format looks good. So we're just gonna go ahead and save this as we did with balance sheets and move it up a little. It we're gonna just go the file tab. We're gonna save as browse, locate where we want to put it on the computer. I'm gonna put it in this Excel Docks folder, and once again, we probably should be changing the name. I'm gonna keep the name just be what we've been doing before, but it's got the name of the company and then the profit and loss you might want to put the date of the profit and loss there. You might not need the name of the company. Ah, there as well. So I'm just gonna go ahead and save that, and then we're gonna go and close this back out now If either of those reports that didn't high out and you've been working through this problem, the next report is the one you can really take a look at and see the activity and see exactly where we might have a problem. Now, if, of course, you have to systems you can go through and you can click on these items and drill down on the activity that's gonna give us activity by account sorting type so you can see which number were often if we were side by side working on two system, that would be a great way to go through this. We can see you know it's cash different. Well, what's different between the two cash accounts? But if you want to see all the transactions by transaction, no matter what account they are in throughout a certain period in this case the month of February we can look at another report to do that. And so we're gonna go to the reports called a transaction list by date reports, and it's actually down here. We could type it out, but it's actually right there Transaction list by date, so we want to run the transaction list by date. Now we're ready. Ran one for January. And so if you're January numbers, if you beginning numbers are wrong, then, of course, that the February numbers are gonna have a problem as well. But we're just gonna run this for February here. So we're gonna say, 02 So it's gonna be 0201 2120 to 28. 21. So february 1st, 2021 to February 28th 2021 run that report. So here is our report. This will give us all the detail will have and will give us the date. It will give us the type of transaction, the number, the posting, the name, the memo and then the account and the split account, The other account involved in the transaction that if we scroll over on scroll into the right, then it will give us the amount. So what we want to do is compare this this stuff out. We want to compare basically the amounts over here. It could be a little out of order because of dates. It's first in order by date, but then by something else after date. So if it's a little out of order, that's OK, as long as it's in the same month than your month should be good. If something is not there, then you can troubleshoot by going back up here and changing the date. So if you change the date to before this date and after, then you can go through and say, Okay, is there anything, for example, that is input as of, um, after February and March, or sometimes after March? Well, if there is, then it's probably the case that it should be in February because we haven't input anything after February. If there's anything prior to that, that should be there, that is in a prior date, possibly in the current date of when you're working this problem, then it's probably the fact that the system just picked that date because it's the current date and we're working up practice problem that is, of this date, and you can go in there and just change the date. You can actually click on it and double change it. So if that were the case, you could just click on any of one of these transactions, find the source document and then change the date in a real life problem. Very careful. You want to be very careful to change dates that Aaron Prior periods because you'll mess up the prior period. But in a proactive problem that's going to be kind of an issue. And it's a common issue because, of course, we're working in a future date. Ive and the systems always gonna be wanted. We working in a current date, so we're gonna close this back out. So let's go through here, and you can just take a look at the numbers and just take anti these out. If you're working through the problem to your numbers, run this report and see if you can just click this off here and take it off to your side. And if there's anything on this report that is not on your report than you want to consider , if it's a date problem and then we can try, Toe added, If there's anything on your reports that's not on this report, then the question is, should it be there? And maybe it belongs to the prior month that we worked in January and checked the January from the prior from the prior month. So these were we could should be able to go through here and just take anti off each of these amounts from this statement. Teoh your statement and it should look exactly the same again. The ordering could be different, but the amounts should be the same as we go through here. So you want Just check these off for the entire month of February and you could once, if there's any differences, you could look at these splits and whatnot as well. If you check all those off and there's nothing here that's not on your statement and nothing on your statement that's not on here and you're beginning numbers were right mean you're correct. As of the end of January, then your balance sheet and income statement should be correct. I'm going to scroll back over and do the same thing for the for the dates and the transaction type so you can kind of check these two off and see if they tie out as well. So here's our dates and transaction types. You just want to check these two things off, and if there's any, if the numbers all tied off, But you think that there's a transaction type difference. Then you want to go through these items and just make sure that transaction type is the same. Ah, and if again, if there's any differences, you could go through any of these and just check on him. Go in there and see if you can make any adjustments to them. So those are gonna be those items are gonna scroll back up, and then we are going to export this to excel. So scrolling back up, we're going to select the export item and export two Excel. Gonna enable the editing. And here is our report. Now I know this report. You might want to do some format into If I click on the page layout this second square, you'll note that the layouts it doesn't print on one page for the landscape and we would really rather it do. So I'm gonna go back to the normal, and then it gives us these little lines. It'll show us where it's gonna print at, so I'm just gonna go through our order of operations to kind of fix is typically you want to go to the page layout and you want to change the orientation from. So we're in the page layout tab and then page set up group, Select the orientation and change it from portrait toe landscape. That's the first thing you can dio now. The next thing we can do is try to delete some columns that makes it a little bit difficult because they merged these cells. So I'm actually not going to do that. What I'm gonna do is kind of force it Teoh work by adjusting the printing options, which is the last thing you want to dio to make this work because it will adjust the kind of like a font size and everything. So we would rather fix it to fit on one page wide by adjusting the, you know, the size of the font manually and or the column size or deleting columns. But we're going to go hit and then do the last resort thing, which is gonna file tab and we're going to go to the print options. And then and obviously, if you're just gonna give this file to somebody, it's not a big deal. But if you're gonna, um, if you're gonna print to the file, then it's a then it's a problem, then you So I've changed the image so you can see the drop down a bit better. So if you select this drop down down here that no scaling, then you're gonna say fit sheet toe one page. You don't really want that one. If you select that one, notice what a little deals will fit toe one page. But it will also fit one page long. And if you have a very long document, then that's gonna be it's gonna be way too small. So it's safer to go to fit to all columns to one page. And what that will do is make sure it's fit one page wide, but it could still be more than one page long. In this case, it's the same because because just of the dimensions of this report, But if it was a really long report, we could still have a couple pages long. That's fine. But what we don't want tohave is that it's too print on two pages wide. Now we're just going to say that that's gonna be the formatting we want. We're gonna go ahead and save this by going to the file tab once again and save as we're gonna browse to the location we want to put this, we're gonna put it into our same Excel Docks folder Here. Here it is. Get great guitars. And there's the name of the report again. We might want to change it to the dates, changed the dates and save it as a date format, but we're gonna keep it as is and save that report. 84. 9.10 Bank Reconciliation First Month: Hello. In its presentation, we will enter the banker reconciliation for the first month of operations into QuickBooks online. Here we are on QuickBooks online dashboard. We will be continuing with the get great guitars problem. We're gonna be entering bank reconciliations for the first month of operations. For this problem, we have entered data as a new company or a company new to the QuickBooks file and entered beginning balances, then transactions for the month of January and February. We have not reconciled either January or February. Although we have entered data for both months now, we're gonna go through and we're going to reconcile the bank accounts first for January and then in another presentation for February. Both of those two months are gonna have their own kind of problems. The first bank reconciliation we have often causes more problems because we have to get that beginning balance, right? And often times there's some transactions that take place before we start entering the data into QuickBooks. And we're going to deal with that beginning balance in orderto figure that out and and see how to deal with that once that's been done than the second month of Operation will be easier in that format in that we will not have that. The beginning balance should be correct after we do the first bank reconciliation. So the first bank reconciliation usually has most of the difficulties when starting a new business. Once that set up once that's gotten in place and is correct, the reconciliation process actually gets a lot easier as we go. So the reconciliation process What? What is it going to do? We're gonna go to the reports here to look at it real quick. We're gonna reports on the left side. We're gonna go to the balance sheet report. Now, we've had two months of operations, but we really just want to see as of the end of the first month, because we're reconcile in January 31st. So we're gonna type in 01 31 21201 31 to 1. Meaning just the day of January 31st 2021 to January 31st 2021. Remember, the balance sheet is as of a point in time. So then we're just gonna run that report, and it will give us our balance sheet for that date for January 31st. It wouldn't matter if we put January 1st 2 January 31st because really, it's just going to give us that checking account balance as of a point in time as of the end of the time period as of January 31st. So we have at that 0.4 94,036 17 in our QuickBooks system. What we want to do is verify that amount. Make sure that it is correct. How do we do that? One way is that we can compare it to the bank. The bank is a huge check against our our our system to make sure that we are doing things correctly because the bank is really 1/3 party that actually records all of these transactions again on their side. And they're they're an uninterested third party or third part of it's not directly affiliated with the company, and they're basically just double checking all of our numbers. So therefore, if we can just check and take anti what we have in the checking account to what the bank has in the checking account, we have some a lot more verification. So after the double entry accounting system itself. This verification method is this second best internal control. We have one of the biggest defenses we have against making an air one of the biggest safeguards. We have to feel assured that our financial statements are correct. So we're gonna look at these transactions and say, Is that what is on the bank statement? So if we get the bank statement as of this date, obviously when we get the bank statement, it'll be sometime after January 31st because they'll have toe enter all the data and give us the bank statement. Also note that if we if we do have an electronic system, that's great, and we could see things happening real time and everything. But we really want to reconcile as of the bank statement date, because that will give us a distinct line of this. This is what happened in this month of operation, and that'll give us a timeframe for on which weakened into the data and reconcile the data . So we would we really want not just online stream of of transactions, but a statement saying, Hey, this is what happened in the month of January and that's gonna tell us the bank statement typically will say, Here is our beginning balance. Here's what you started with And here's the activity additions in terms of deposits, checks, rather withdrawals. And here's the ending balance. So note that this is the key number. This is our any balance 1094 15. You would think as of January 31st that would be what is on our books as well. And as we just saw, it's not now that could mean that there's an error and we have to adjust something. Or it could mean that it's just timing, differences, timing, differences, meaning that we have inter transactions that have not yet cleared the bank. So the general rule is gonna be this if it's on the bank statement here. Oh, by the way, obviously, we're gonna have other data here. Here's the deposits that are gonna make up the total deposits number here. And here's the checks and other draws, other deductions that make up the total number here to get to our indie number. What we're gonna do is just take anti all these off, and it's a bit of a tedious task. That's just something that we got to do to just check everything off. And if something is on the bank statement and not on our books, the typical rule is that the bank statement is probably correct, and we will have to fix our books, meaning if we see some transaction here, that's on the bank statement, such as a check or something like this. In our case, it will be a withdrawals and service charges on the bank statement and they're not in our books bank statements, probably right. And we're gonna have to make the adjustment. If, on the other hand, it's on our books and not on the bank statement, the general rule is that it's going to probably be a timing difference, meaning If we had a check, say, for check number 1 10 11 for some amount and it was written on 1 31 Well, maybe it just didn't clear the bank yet, and it hasn't cleared, so that's not really a the Banks fault. But we're going to say it's kind of like an air on the banks that are books air, right, because we know that that check was written and that will be the reconcile ing item that we will have the same with the deposit side. So once again, we're going to just check it off that all of this stuff as we go through this and as we do that, if something's on the bank statement not on our books were probably could have to fix our books if something's on our books, but not on the bank statement. It's probably just a timing difference, meaning a check that's been written towards the end of the month that has not yet cleared. That will be a reconciliation item. That's what we're gonna use to construct our bank reconciliation. So let's take a look at what this looks like. I'm going to go back to the reports to get to the bank reconciliations. We're going to select this cog up top, and we're going to go to the tools and we want to reconcile. So we're on the cog up top in the tools section we're going to reconcile, so we'll select that item. I'm going to scroll down and select the normal reconciliation process. Now note there are gonna be times that we can ah, link are our books to our bank books and that could be great, because it what it really does is it saves us time from taking and tying off certain transactions, and it will be able to kind of take anti those off for us. But we really still need to know what is happening. It'll it'll save us time of just taking in time. But we still need to go over the whole kind of process just to see how the bank statement works. Otherwise, the the automation that could save time may actually just confused mawr rather than save time. So it's not gonna be something that the automation typically is not gonna be something that's just basically gonna mean that you could just press a button and the whole thing does it, and you don't have to do anything. It could save time by basically taking a time out. Certain transactions that can be verified on both sides while regret we reconcile. And what we're doing now, of course, is we are entering everything in the books ourselves, and then we're having looking at the bank as a separate bank statement and manually going in there and taking and tying off the items. Eso that's that's gonna be the difference. We're going to go through this through that kind of manual type process. When you link the bank account, you can kind of pull over some of those transactions. And then, of course, the system can automatically take him time off because they were pulled over directly from the bank statement, so we won't get into that. Now we want to know the theory, though. No matter how you tie this thing out, you're gonna have to have some idea of what a bank reconciliation is, what it does for you and how one is constructed. And then you can kind of work on making the process faster and more efficient. So this is gonna be the items were going to say that this is gonna be the checking account . Typically, we're gonna we're gonna reconcile any kind of cash account, so checking account typically will definitely have to be reconciled. Now, the first thing that we're gonna do is the beginning balance Here is 25,000. This was the beginning bounce that we first started when we entered the first check, the first opening balance into the checking account. Now, if we had not done that. Meaning if we didn't put in this 25,000 we didn't know what it was. But we knew we had a checking account balance before we started. Then that account will be zero. It'll be zero right there and what we'll have to dio in that session. If that's something that you're dealing with in a different problem, then you one way to deal with that is to just keep that zero and then check it off as one of the activity items. So when we go through it, you'll check off the 25,000 as the beginning balance. And that's one way you can kind of work around that first month of reconciliations to be able to reconcile that first month of operations. So for us, we've got that 25 in there, and that's one of the things that's kind of a problem. Sometimes for that first bank reconciliation. Okay, so then we're gonna have the ending balance. So the Indian balance we're going to say is this 1094 15. So that's the get the 1094 15. And the date is gonna going to be 01 31 to 1 is going to be the date. Now, those are gonna be the required fields that we're gonna have to have in order to complete the reconciliation process. These numbers, of course, need to just match what's on the bank statements. So we got the beginning balance in the Indian balance, which matches the beginning balance in the Indian balance. So that's that's the requirement before we could move forward. If we don't have that the case, then it's not. The thing won't work. So those the requirement that we have it as of the date of the financial statement of the bank statement and then this information down here is not required. And I actually think it's better not to use these fields at least when you're learning, because they can kind of check things off. And it's just like a ghost check. You don't really feel you didn't actually physically check it off so it can confuse you when you're not in balance, meaning if there are service charges at, for example, here we have banks, service charges we could put that into that section. We could put that right here, and it'll charge of the bank charges automatically and kind of check it off. But it's also something that I would rather go in there and physically check off in the bank reconciliation process just to know if I'm not in balance, that that's one item that's been reconciled the same could be doing If we had interest income in the bank statement, we could check that off right here. So I'm not gonna do that right now. I'm gonna I'm gonna reconcile. Go forward without that and then we'll go through and just take anti everything off. So we're gonna start reconcile ing. And here's what our reconciliation kind of worksheet looks like, what we have down here, we have all selected. So we have everything selected at this point. If we scroll down, we see the activity, and this is really just going to be the register, the general ledger or the transaction detail within the checking account. So here's everything that we have in our checking account, and we're comparing that to the bank balances. So up here we have the statement ending balance. This is what is, um, on the bank statement that we just saw in the any balance as of the end of January. This shows the cleared balance which is equivalent to the beginning balance, because the beginning balance is what has all we already know that that cleared the bank that was on the beginning balance of the bank. And now we need to check off everything else. And as we check things out here, it will reduce the difference. So we need to get We need to get basically this 25,000 up to the 109 4 15 we've already checked off. In essence, if we look at our bank statement 25 we've already checked that off. So that's done because it's are beginning balance. Now we're gonna check these two off, but we're gonna do it line by line, item by item. We're gonna check every item off once we find all of these, then are cleared. Balance will be the 1094 15. That's all we're doing here is our the balance that we've checked off. We're gonna go through and check off every other item that's on the bank statement and by us selecting every item that makes up the beginning balance and the additions and subtractions. We will then have a cleared balance. The amounts that we have told the system that has been on the bank statement that will be equivalent in our books to the bank statement of that. What's the point of this? Then we will have some things that are not checked off some things that are still unchecked off. So this is the check. So we check it like that. Something's will still be not checked, even within this date range. And those will be the items that will be uncleared and therefore the Adams that we're going Teoh be part of our bank reconciliation. We will then create the bank reconciliation which will show the difference between our balance, what we saw on our balance sheet and the bank statement, which is this balance here. So here's our difference. At the end of the day, this should go down to zero. Okay, so now we're gonna go through this, we're gonna do the step by step. This shows all the transactions here that we could go through and check off off times. It's easier to adjust this to have either payments or deposits and do this one by one because that's how the bank statement often is. So here's the deposits over here. We could find those first and then find the withdrawals. Otherwise, you're I just kind of goes back and forth between the two columns, and that could be a little bit more difficult. So even if your bank statement isn't formatted in this format, in your debits and credits or in your deposits and checks are both on the same line, you may want to do all the deposits first and then do all the checks first so that you know which way you're going and keep everything as straight as possible as you're doing this. So I'm gonna close, is back up, and I'm gonna change this. Just two payments. Now, you also have some some other kind of filtering options, which could be useful, meaning you could filter by date. You may not wanna have anything that's going to be past the date of our reconciliation, meaning I don't really need stuff in there that's going to be past January 31st because this is a bank reconciliation as of January 31st and if I wrote a check after January 31st it should not have cleared the bank, so I should be safe. T pull out anything that's in February because it shouldn't be part of the report. So you have those filtering options and some more filtering options, but the main ones, they're gonna be these items. If you filter through those, that's usually Ah, good. Waiting to go through this. Now, when we've when we look at the payments, we have a little bit more option than we do with the deposits. Meaning we have to check. We have the reference number, which is the check number. We have the account, which may not. It's not gonna be on the bank statement. That's not gonna help us much. And then we have the payee and then the memo and then the amount. So the amount and the check number will tie out, and those are two great indicators here. The date you would think, would be a great indicator, but note that the date will never tie out because the date eyes always gonna have to be sometime later than what we put it in our system for on the bank statement. So if we wrote this check on 14 It would have to go into somebody else. They would have to receive it. Then they'd have to go to their banking deposited, and then they were pink would have to talk to our bank before it's on the bank statement, and so it's always gonna be a bit later, so the date could help, but it it's not gonna be as useful as you would think. The Czech numbers really helpful. And the payment amount, of course, is what the main thing work untie out to. What we'll do now is a lot of jumping back and forth. Between this screen are QuickBooks screen and the screen, which is our bank reconciliation. What we're focusing here on and the bank statement of the bank statement is this items and we're gonna look at thes and just take anti them off. And as we find these items on the bank statement, we will highlight the's. What we're doing is we're really trying to tie this to the bank reconciliation, and that's a subtle but important distinction. We're really going from here the bank statement to the QuickBooks file. So you're going from here to the QuickBooks file? Not necessarily going from the QuickBooks file back to here so you could kind of go back and forth. But we're really trying to find these items on the bank statement. And if these items remember are not on the on the books on our books, then we're gonna have to add them. So here's this amount. We've got the date of 1 14 Not gonna help us too much, but the check number and the amount 12,000 and 1001 So here's the the amount. Here's the check number and the dates gonna be different. Notice. It's It's always gonna be further up on the bank statement. It's gonna be later all the time, I should say on the bank statement. So we found that. So I'm gonna highlight this item. I'm just gonna make it green. So check that off. If it was a paper pencil, we just check it off for highlighted and then check it off here that it has been found. And again, I'm going back to the to the bank statement and we're gonna say, Here's this item 100 to 16,000 we're gonna go back here 100 to 16,000 again, The dates gonna be different. That's okay. We're gonna check that off, and then I'm gonna go over here and highlight this. Say, we found that here's the 101 003 7000 on the bank statement going bait back to the bank, to our books. We see the 7001 003 Also note that I might have messed up the terminology a few times here . If we go back here, I would consider this to be our books. This is our register. This is our books. I might call it the bank reconciliation sometimes, but this isn't actually the bank reconciliation. This is what we're going to use in order to generate the bank reconciliation. So if I mess up that terminology, this is the reconciliate ing 18 process, the reconciliation tool that we're gonna use to create the bank reconciliation. That will be an actual report that we'll see at the end of this process. So we're gonna go back over here, and we're going to say that we found that 7000 and we're just is a tedious process. I know if you have a long bank statement with a lot of transactions to take some time, but it's not too bad. Even with a lot of transactions, it doesn't take too much time. And it's really a huge internal control. So it's worth doing most of time. So we got 1004 and 400. So if we go back over here 1004 400 again date different, That's okay. We're gonna check this off, Then we're gonna go back over here and highlight that and say, we found that one. That's good. And then we've got the 10055 98. So we're gonna go back over here. 10055 98. Check that off again. These air written and on the 25th and they cleared on the 31st. And no, there's no rhyme or reason. Asked you how long it takes if you if you're wondering Well, what's gonna be the difference between the date on our books here and the bank statement? You can't just say it's gonna be a week or so because it depends who's given the check. Do they might hold on to it for, like a month you could hold on at four months and then and then cash it sometime down the line. So you really just don't know where you could give it to someone? They're going to go right to the bank, cashed out right away, so it will always be later, but we never know what it's gonna be. It's always gonna be later on the bank statement in the books, but we never know exactly when or what. So we found that 5 98 Now we're looking for 1008 at 2 60 at 6 20 Ah, went so notice. We're skipping some. We didn't see that. We didn't see that. That's okay, cause I'm schooling from the bank statement to the books, Not the other way right now. So we're gonna skip these. We found this one. That's 620. Check in that one off. And these are not gonna be in our calculation here because what we're really trying to do is figure the difference here between these two items and we're gonna tie those out. And the ones that we don't check won't be in that process. So we started off with 25,000 we're going to get to this 109 for 15 by checking off everything that is in this calculation of 25 then thes items that are making up these differences to get to that. Okay, So here's this one. We're highlighting that Megan a green. Next one is on. Ah, 10 10 15,000. So it's not onto intended the check numbers. 10 10. So going back here we see the check number 10 10 again. We're skipping a few. We're down here. This is the one we're gonna We're going. Teoh. It should be this one. Let's check that one more time. It should be 10. 10 15,000. Note that something went wrong with the check number here because this one had a pay bill and the check number wasn't assigned, which is what went wrong. But then we kind of have to go by the amount here, and we might want to check that out and say something. Something funny happened. Let's check that out. And once we verify it, we'll be checking out. It must been the check number this bill check didn't print because we are recording this and we're writing the checks outside and then entering the check numbers here. So it's possible for our check number to get get out of whack as opposed to If we were actually printing the checks from the system, that wouldn't happen. So then we here, we're gonna say, Oh, man, it's off. But that's the right one right there. And then I'm gonna go back and say we found that one, and then we've got these two items which we're not gonna find, because if we go back over here, I'm gonna say, um, I don't see the 80 or that other too. And that means that these are gonna highlight as yellow going to say that's not there. And we know that's gonna happen because we know this one's gonna happen because I don't know how much the bank's gonna charge me until they took my money already and told me that they took it by giving me the bank statement, which shows them taking the money right so that and I don't know that happened. I know that I know that I'm gonna have to reduce my books for that. So we're actually gonna have to make a journal entry reducing our books by that 15 and then this is a withdrawal. So I'm gonna kind of imagine that we took money out of the bank and we didn't tell the bank or we didn't record it in our books and we don't know exactly possibly what it's for. And therefore that's the That's the other 80 that we're dealing with there. So those two we're gonna have to deal with, we're gonna have to fix our books. So we're not going to be checked out off. We're not gonna be able to reconcile until we make a journal entry until we record until we recognize the fact that we yeah, we do owe this money and we took that out and we're not gonna get it back. So we've got to reduce our checking account by that. That's the benefit. One of the benefits of reconciler silent is that we reconcile and and understand that we have those transactions we have to record, which we would otherwise have missed. Now we're going to the deposit side. We're gonna check these off, so if we go back over here, I'm gonna go from payments to deposits now. And here is our list of deposits here. Here are our list of deposits here. Once again, we're gonna go from the bank statement to the books. Now, note that we have a little less to go on here because we don't have a check number, and we know the date doesn't help us too much. But the date should be a lot closer for the deposits. Because if I went to the bank and made a deposit, it should only take a data, like three days for the bank to clear that cause it's my bank or deposit. We deposited it at that bank as opposed to a check that went to somebody else. He went to some other bank and then had to cash the check. So the deposit, the date is actually a lot more helpful than the checks. It should be pretty close. If it doesn't clear within three days, we could probably go to the bank and ask about it, whereas the check could take like, a month. And we you know, we might not know. So we're just gonna go by date and amount. Also note that we're hoping that this grouping matches the grouping with which we entered the deposits into the bank. Ah, account in our books and the UN deposited funds remembers what helps us to do that we put in UN deposited funds. Then we went to the bank and group them all together in the proper grouping. And that's gonna hopefully help us to tie out to what the bank statement says. So here's the 50,000 and we're gonna go back over here, and here's the 50,000 there. And so we're gonna check that off and then go back here and say we found that one. So I'm gonna make that green. Here's 65 going to go to the here. Look for the deposit. Here's the 65. Looks good. Check that one off. Gonna go back to our statement. We're gonna highlight that. Here's Ah, 6 28 We're going to see if we could find at 6 28 There's the 6 28 We're skipping this item . That's okay. And we checked that off and going back. We found 6 28 highlighting. And then we've got the 20,500 going back here. We're looking for the 25. 20,005. There it is. Okay, there are items. Now we've got this one. I So? So We've checked all those items off, and we don't see this item here. Ah, and that's okay, So So now we can check for we'll note on this hide. We found this item. The only items we found on the we have not yet found on the bank statement on our books are these two. So that's 80 and 15. 80 and 15 is 95. That's our difference. That's what we're gonna have to fix in order to reconcile properly now way then can think about what's on the books. That not on our bank statement What's on our books and not on our big statements in terms of deposits is this item that happened in January and it was 9 55 There's a deposit on the books, not on our bank statement. Those were not going to do anything about because we're hoping we're assuming that that is because of the timing difference. That's gonna be our rec unsettling item. That's gonna be what the differences between the bank balance and what's on our books, what we saw on the balance sheet. So that's one of the differences that are there now. If we're worried about that, we're trying to say why it didn't. It's clear it's been three days. It should have been a deposit on the 28th 29 30 31. Then we can go to the bank and say, Hey, I mean, is this gonna show up on the February bank statement that this clear in February? And if it does, if they say yeah, if we see it in our transactions in February, then it's OK. It's just timing difference. It'll be on the bank. Reconciliation will see that once we reconcile on the payments side. If we scroll down, we've got a lot more of these. We got this one was on 1 28 1 28 didn't clear, didn't clear, didn't clear three checks. 10061007 And once he was there were nine. But again, they were all kind of towards the end of the month, and a check could take a lot longer. Not too clear. Could be like a month, the pin on who we give it to. If we give it a check to someone who doesn't typically deposit very regularly. Then you know, if they hold on the check a long time, then it could very well be that these haven't cleared. We're not too worried. We may not be too worried, depending on who the recipient is of these checks that they haven't cleared yet. If we want to know if they've been cleared or not, or if if they're still outstanding again, we can call the bank and say Hey, in February, did they clear? Because remember, it's it's sometime past January 31st at this point that we're doing this and so we can call the bank and check it out, see if those have cleared yet and then take a look at that. So those were not worried about We need to reconcile this difference. That difference being made by what's on the bank statement, the 80 and the 15 that's not on our books. So we got to enter that. So we've got a withdrawal and we've got a bank service charge. So what we're gonna do is we're gonna go back, Teoh our accounting over here. We're gonna go to the chart of accounts and then we're gonna go into our checking account. We're just gonna enter this information into the register. So we've got our checking account, We're going to select the register, and we're gonna adds a new information to the register. If we selected this drop down, we got a few different options on what exactly we want to put in place. We could make a check, but it's not exactly We're not gonna check number. So we could try this expense item down here because it's not gonna check number, So we're gonna have a expense item. I typically make thes as of the end of the month that they're in. So I'm gonna put the date of 0101 uh, end of the month 31 21 January 31st 2021. No reference number. Sometimes you can put, like, other online or something like that if you want to reference the fact that it's on the bank statement. Ah, the payee. I'm not gonna put a p e. It's gonna be that the bank You could put your banks like Wells Fargo or Bank of America or something like that. Memo, uh, again. Yeah. I mean, you could put the memo. I'm gonna put this $80 but we don't know exactly where it's going to you. I'm assuming we took out the 80. We spent the cash somewhere. Hopefully, business related. We're gonna assume it was business related, but we don't know exactly what it was. Some put that they're going to say the payment was for $80. Okay. And then the account we're gonna have now. Then again, if this $80 that we that we spent here if it was pulled out for personal use If we think we took it out of the business account for personal use, we shouldn't put it on an expense. We should put it in something like draws and that will not affect the income statement. If, however, we believe that we took it out for business purposes, then we should put it to some type of expense. If we don't know what that expense is, we might put it into something like miscellaneous expense, which is what I'm gonna do here. We're gonna put that into miscellaneous expense. So I selected the drop down and typed in miscellaneous and found and got miscellaneous expense. It's in the other a expense category down here. Uh, if you don't have that, then of course, type it in there and you can add that expense as we go. So we're gonna save that. That's the one transaction. Now, the other thing that happened is we had banks service charges, so bank charges. So I'm going to say the same date again. I'm just gonna I'm not gonna put any of the memo here. The payment was 15 and we're gonna put the 15 here, and it's gonna be something like bank service. I mean, selected, dropped down, and I'm gonna type in Thank. And then we got bank charges. That looks good. So I'm gonna say bank charges and that's gonna be the one. And make sure to save it before you go anywhere else. We're gonna save that information, and there are those two items. So now when we go back to the bank, reconciliation it, we should have those reconcile ing items there, So I would typically then go back to our accounting and the reconcile here. So I went to a counting on the left and then we went to the reconcile. I'll item and we see the checking account, and we're going to resume the reconcile ing. So I'm gonna resume reconcile ing and then we want to take a look at mainly that just the payments. So I'm gonna go to the payments and we should have two new payments that are now appeared here. So if we scroll down, we've got this 15 in the 80. That should make up our difference of the 95. So we're going to select the 15 and the 80 bringing the difference down down now, you might be thinking more. 15 isn't that much compared to this thing? Why couldn't I just We could have forced it to kind of reconcile without that note that you'd really want to get it down to like the dollar if you can. Because if you don't, then you kind of defeating the purpose of the bank reconciliation. Because if this numbers off from our bank statement, Teoh the books by anything, Even if it's just a dollar, it may not just be that there was one deposit or one check for $1. That's probably not the case. We probably don't have a check for a deposit for a dollar. It's probably the case that there was a check and a deposit or multiple checks and most deposits that didn't get checked off. So if we're exact, if it's exactly on key, then that means that you know everything that's that's on the bank statement is checked off , and that gives us a really good verification. That everything else is is in there properly, If robbed, even by just a dollar or so. It could very well be the case that that dollar represents multiple things that are throwing us off, meaning multiple transactions that we may not be recording correctly. So if you're forcing it toe work, then you're kind of, you know, it kind of defeat in the point. The purpose of it. If you get an exact then it's really a good indication and it has toe work. So because the beginning balance tied out and we're just checking everything off from here to our books, and if it's not on our books, then we're adding it. So it has to work cause it's the same numbers. The same numbers air here as are the ones that were checking off, and if they're all the same numbers, they have to add up to the same amount. So that's gonna be that. And we can go ahead and reconcile now. So we're gonna finish this item. So we're done. We're gonna finish this. This isn't the bank reconciliation, By the way. This is just the worksheet to create the bank reconciliation. So it says success, your reconcile successfully. We're gonna view the report now, And here's the reports that we have. So we've got the statement beginning balances and the checks and the deposits have been Here's the cleared balance That's gonna be, in essence, the bank balance. That's our bank bounce as of the end of the month. So that's gonna be that. And then this portion right here is really kind of the essence of the bank. Reconciliation. Meaning this is on the bank. This is our books. This is the register balance. This is what we saw in the balance sheet when we first started. That's what What's what? Every week we recorded, this is what the bank recorded. The difference then is this 3 15,074 3 15,073 Those are the checks that we didn't check off . Those are the checks that were written in January that we didn't check off. And we know exactly what those are because those are the things that we didn't check off. Those are the things that we didn't say. Hey, these air specifically items on both our books that tie exactly to the bank statement that we're still done in the month of January. That's exactly what the difference is. So we know exactly what that difference is now and then this. They like to give us the, um, current data as well. So these are gonna be transactions that are after after the date, which isn't isn't the main thing on the bank rate. This is really kind of the main part of the bank reconciliation. And then we're gonna have the details down here. So if we look at this number here that unclear balance 15,073 with then, of course, the question is, what does that consist of? If we keep scrolling down a big, it's gonna be the unclear checks and payments. As of 1 31 21 here's the 16 29 33 then the unclear deposits. So the real difference that we're looking at is gonna be these two items. Here's the checks. One Oth 16 29.33 minus the the deposits of 9 55.50 that's the 15. 73 83 that we see up here. 15 73 83. So that's the main thing we have all of all the rest of us, these three numbers and that detail is really the essence of the bank reconciliation. This stuff is just is just added information that could be useful. But this is on the bank statement. We don't really need it here. This is on the bank statement. We see that here and then this is the bank statement number. And then this is on our books. We see that on our books, The rial, What we're really after is this number here, and that's gonna be the reconciliate items that the items that have not cleared. Now this gives us the more detail up top. This gives us the checks and payments cleared. This is what this is what has clear during the time period. Again, these amounts are gonna be on the bank statement. So that's not the main piece thes the d 85. 10.10 Loan Payable Adjusting Entry #2 Short Term Portion: Hello. In this presentation, we will enter a loan payable adjusting entry. This will be the second adjusting entry adjusting for the short term and long term portion of a loan within QuickBooks online. Here we are in the QuickBooks online dashboard. We will be continuing with the get great guitars problem. We're gonna be entering the short term and long term portion of alone, talking this time about a loan that has both a short term and long term portion to it and has payments that includes monthly payments that we will need to break out. No, to do that, we're gonna first go to the reports down here. So we're gonna look at the reports on the left side within the reports. We want the balance sheet. We'll select a balance sheet. Changed the dates too. No one, No. 121202 28 to 1. And we will run that report. So once again, the date if we school up here, it's gonna be January 1st, 2021. Teoh, February 28th 2021. We're going to be what we have done so far is entered data for two months and we're gonna do the adjusting entries. We're gonna make their financial statements correct, mawr correct on a cruel basis in accordance with rules Such a gentle accepted accounting principles. One of those rules, of course, being to break out in the short term and long term portion of liabilities. So if we scroll down to the liabilities here, then we see the liabilities of down here liabilities. We have the current portion of the liabilities and the long term portion of liabilities. So what we have been doing in terms of the loans is putting everything that is a loan into one account called loan payable. And that account is in the long term section. Last time we broke out one of those components of the loan payable in the long term section to a current portion. The loan payable can be a bit tricky, and it can differ from company to company and how you really want to set up your system. Some people will want a different loan account for each loan that they have, because they like to track and different account within the register. When we actually make the financial statements, however, we typically want to put the loans, group them all together, and then we still have to break them out into a short term portion in a long term portion. What we're doing here is we're going to put this loan accounts all into this loan payable. So within the accounting department, we basically said whenever you take out a loan, you know, put the put the amount or the other side of it into the loan payable. So we've grouped all the lone payables here We are then going to support that or back this number up by having the subsidiary ledger type accounts and the loans, the actual loans where we can break out the amortization tables and figure out what numbers support this amount. How do we back this up? Well, we look at those amortization schedules, so if we select this loan account, then we're going to see the activity. This is what has happened. There shouldn't be too much happening within a loan account note, because we don't. We're not gonna take out a whole lot of loans, and there's not gonna be a whole lot of payments. They might be monthly payments on a loan and that means we could have ah, monthly amount in terms if we were looking at a year's worth of data. But we're not gonna have things that are happening all the time to the loan payable. So should be even if we have a few loans out there. Not too bad of G l to take a look at. So if we go through here, we see that we started out for 22,000 loan. We increased the little by 50 to 72,000. We made a payment, we made a payment bringing that balance down. And then we had the 5000 which is actually a different lone. This is another loan we took and we put it in the same loan payable account. So now this loan, PayPal has two loans in it. One, which is the 22 the 50 admit making the 72 the 5000. This 5000 turns out is only a six month loan, and we adjusted for that. Actually, we put the loan in here, and then we adjusted it out here. So we did in adjusting entry. This is the adjusting entry. This was the US putting the loan in place, and we moved this loan to a short term loan payable because it's all due within one year. So now what's left in this loan payable is just is 22 the 50 that makes up that 72,000 were going to say this is one big loan. We're gonna look at the loan term for that 72,000. Then we have these payments of the 1059 the 1063. And the question there is Are those payments accurate? Meaning? Did we break out the right portion of interest in principle to to make these payments to this loan amount? If, if not, then we're gonna throw justice loan balance to whatever the proper balance is. So there's two things that need to happen here. One we need to say, What's the short term and long term portion and break out that short term portion and two, we need to verify whether or not these payments here have correctly allocated between interest in principle. If they have not, then we're gonna have to go back and adjust that allocation in terms of how much of this payment was interest. How much of it was principal to do that? We'll look at the amortization tables. So we're going through a bit of excel work will actually put together an amortization schedule just because that makes it easier for us to read the amortization schedule. And oftentimes, when you take out a loan, they don't give you the amortization schedule. What they will give you it. Say, if this was like a car loan or a mortgage type loan, they were going to give you the loan amount. They're gonna give you the payments that you're gonna make now on this one. Unlike the prior loan we looked at, this is gonna be a more standard loan term for most individuals who have may have to make payments. They make a monthly, there's an interest portion and there's a portion that reduces the principal amount as opposed to the last loan we had, which is very common within business loan, which is we just get a net a dollar amount 5000 in that case, and we pay back the full thing plus interest at the end of the time period. So this one, we're gonna we're gonna take the loan 72. That would be in the terms of the loan. 60 payments in the terms of the loan and in the rate would be in the terms of alone. What they What they might not give us, though, is the amortization table which will create down here. They will typically give us the payment amount. But I'm gonna re calculate it just to show you the next little formula that we can use within Excel. Because it's a fairly common calculation that you could use its one of all the things that excel does. This is one that it's worth, you know, memorizing or knowing that it's there. So what we're gonna do is calculate what the payments are. Note that if you have any three of this information, you can figure out the last piece you can figure out the last component, the last component in this case being payments. So the question here is gonna be if that's the loan amount, 60 payments and this is the rate than what is the payment amount going to be? We're going to figure that out. We'll use a formula used excels little formula calculator to make it a little bit nicer. This is This makes things a little bit easier. What we want is a payment formula. What's gonna be a payment if I know all this stuff and that should be the PMT? If I select that it says calculate repayment for a loan based on constant payments and constant interest rate. That's the one we want. We'll select. That gives us a little calculation box, and we're just gonna put the information in the box, as it has instructed us to do so. We have the rate, the interest rate per period. That's gonna be this 5% however, that 5% iss for a year. So whenever you hear a rate typically means per year and we have 60 60 payments and we're gonna assume that's months monthly payments that says monthly payments so per period would be that 5% yearly rate divided by 12 to make it a monthly rate. So this is the monthly rate notices really small monthly rate. That's why we don't work in monthly rates. We typically work in nearly rates, and I have to adjust in. So any time you see an interest rate, it typically means a year unless expressed otherwise. And then we're gonna say the number of payments will be 60 this time and we're gonna actually make an equal payment each time, just like we would on a mortgage or like a car payment or something like that. Present value. We're going to say that that is going to be the 72,000. The amount of the loan. We don't know the future value that or we don't need. Teoh use the future value. That's what it would be at the end of the loan. And so we're gonna leave that blank. That's why it's not highlighted. It's not required for every type of calculation. So then we're just gonna say OK and see what it says. There is the loan payment amount that we're going to be using. No, I like to see this in a positive number, roughly with negative number. So just flip the sign on a formula, any formula, pretty much you just double click on it and then I'm gonna put a negative right in front of the front of the formula. So I'm just gonna put a negative, and that basically says, you know most by the whole thing, towns, negative one. And so if we just say negative pmt all that enter, then it's gonna flip the time. So if you don't really have to do that, that calculation will be with you and most loans. What won't be there, however, is this payment schedule. So if we want to break out the interest and principal portion, we would have to go through this payment schedule in order to do that. So we looked at this briefly before. I'm gonna do it a bit more quickly here to break this out. We're gonna need this schedule one to break out the short term and long term portion and to to ah, figure out what the current long term portion of alone is. So we're gonna say that payments are all gonna be the same. They're gonna be this in out. I'm just gonna say equals that amount. And then on the second sale, I'm going to say equals this and that Lets make copy it down and what it does, it lets me copy it down. And then if I just if I wanted to change it, I could just change one number. So then I'm gonna put my cursor right on that little dot auto, Fill it down, left click, drive it down. Autos driving it down. And then once we get to the bottom, Dr Phil does the calculation for auto fill auto fill. So the same number all the way down, Then we're gonna calculate the interest. So the interest would be calculated as we're going to take the 72,000 times 5% 50.5 And then that would be for a year divided by 12 divided by 12. That'll be the interest amount. Now, if we did that the way we saw it in the calculation it was 5% divided by 12. Is the rate very small rate for a monthly rate times 72,000. Same 300. So let's do that here. We're gonna say this. We're then gonna point to this 72,000 up top. So we got the 72,000 were to multiply that times the 5% which is pointing and clicking. That's J two times J. Vore. And then we're going to divide that by 12 and that will give us our 300. So that's gonna be the amount of interest. If this is our payment and that's the interest, then we can calculate the reduction of principle, which will be the difference between the two. So the difference is going to be this amount right there, minus the interest portion of 300 remaining. The principal will go down by that amount. So then we're going to say, Well, what's the new principal now? And after the first payment, then, Well, the old principal amount was 72,000 minus what? It's gonna go down by 1059. So I'm gonna do that one or 22 more times, and then we'll just copy and paste is down and we'll see what we're gonna do with this. So now we've got the interest again. Note the interest will change because we have a new principal amount. So we're gonna say, now we're going to say this equals the new principal amount, not that amount up there times the same interest rate, 5% divided by 12 because that percent is a yearly li percent and we want a monthly percent and tab. So it's a little bit smaller, a little bit less, and therefore, if the same payment is there, and we have a smaller interest portion of it. Then if we subtract these two out, this minus that. The payment minus the interest means that the principal went up a bit. Me, Me, The principal reduction, I should say, went up a bit, meaning that principle itself, the amount that we actually owe after the second payment will go down. So let's do that. We're gonna say it's the 9 70,041 minus that principal reduction portion gives us the new amount. Let's do this one more time, and then we'll just copy this down. So now we're going to say this equals the new principal times the interest rate 5% divided by 12. And then we're going to say that's the new interested. If we subtract out the payment minus the interest, we're going to say this equals the payment minus the interest, and that gives us the new principal reduction. Then we're going to say the principle then is going to be the old the principal minus. The new principal reduction gives us our new principal amount. Now we're gonna try to copy this down. It's gonna have a problem with it, and then we'll fix it. So we'll highlight these three cells. Gonna put our crystal right on that auto fill box and left, click and drag down one. So and we see this something really bad happened here. Something un correct. Let's just say, Well, if we double click on that, then this number did what we wanted. We wanted take that number, but not multiply times that we want a multi times to 5% meaning this number shifted down as we wanted to, but this number should We wanted to stay at the 5%. So what I'm gonna do is I'm gonna delete that and we need to fix this cell to make it so I can copy it down. So if we double click on that that 5% it's gonna move down. If I copy, that's formula down, don't want that to happen. That is sell J four. So in the formula and J four, we're gonna put a dollar sign in front of J dollar sign in front before. That's just that's just a formula that's just a code. In essence, in Excel to say, don't move that sell down When I copied down. Don't move that cell. And so we're gonna say in terms and it will test this out again. We'll highlight these three, and I'm gonna auto fill it down. There's the auto fill box, auto, Fill it down And that looks about right. So now we're gonna copy it all the way down to the 60 payments. I'm gonna put my cursor on auto fill, and we're gonna autos gonna drive it all the way down on Dr Phil's gonna do the calculation So we're gonna auto fill all the way down here and until we get to 60 payments once we let go, this should be zero at that end of that. So that's it. So that means that it's basically we've done this correctly. So now we have an amortization table, and we know the payments are all the same, but notice way down here, the interest portion is away. Almost nothing. And it's almost all principle that were pain. And that brings us to the zero point shin, as opposed to appear with the same payment amount, a lot more interest, a lot less reduction in principle. And that's because, of course, the balance is going down as we go. So what's the point of this? Well, now we know that where we at this point in time, we've made a couple payments. If we look at our Excel here, or QuickBooks file back to the QuickBooks file, we've made these two payments. So what we're saying is, we're after We're looking at this after the second payment, and we're trying to determine how much how much we owe at that point in time and how much is short term versus long term. So, first, are these payments correct? Oftentimes, they're not because the the person making the payment may not have an amortization schedule . So they may put the entire payment here, or they may put the entire payment Teoh interest expense. If and if this was not correct, which ours looks, it looks correct. See, this was broken out to the 10 59 and the 10 63 That's 10 59 10 63. If we look at that payment, if we click on that and look at the payment we was broken out, the actual payment was for 3 1059 which is the 3 1059 and it was broken out between interest and principal. So we're so in this case, we did it right during the payment portion, so I closed that back out. We did it right during the payment portion. But it's common to set up a system where you basically tell the account department or we do it ourselves. And we say, Hey, I'm just going to write the whole amount of the payment to the principle of reduction and then adjust it at the end of the time period or have my C p A or my adjusting tax preparer help me fix the loan amount at the end by adjusting for the amount that should be interest . So that's one thing we need to do. And then next thing we need to do is recognize the fact that whatever the balance is 59 8 78 if we go back to the Excel, it should be 59 8 78 What's the current portion of that balance that we need to break out? And that's where we are now. So we're gonna We're saying that we've done these two these two payments have happened and this then, is the balance that we're dealing with. So this is This is the balance we have at this point in time, and that's correct. That's what's in our books here. So it looks like the payments have done have been done correctly. That's our Indian balance. So now our only question is, what? How are we gonna break out between short term and long term portion? So we know that we're going to make, um, 12 payments. So you would think I could just add this up. 123456789 10 11 12. Think that's 12. And that would add up to 14 9 46 Or, in other words, if we just took this 1359 times 12. That's how much we're actually gonna pay in the next 12 months. So you would think that's a current portion. It's 12 months. That's what we're gonna pay. However, this payment includes the interest and principal, and remember that this interest portion hasn't happened. We haven't incurred it yet. It's kind of like paying rent before we live. We're not going to record a liability for something that we haven't incurred yet. Maybe it would be like recording the fact that we're no, we're gonna use the office building in the future, so we should record the liability now for the future use of the building. We know we're going to use this money in the future. And so we should record a liability now for the future use. No, we're not gonna record a liability now because it's a liability means that we have used something and incurred ID. So what we need to do then is break out. This is what we're actually gonna pay. But we only we only owe at this point in time the principal portion, we only owe this amount. So we need to just break out the principle. That's why you need the amortization schedule. So we need to take 12 payments of principal this plus this plus ist and they're not all the same. Unlike the payment which makes it, that makes us a little bit more difficult to do. So I would say +123456789 10 11 12. Those are the current portion. That's what we owe now which we will be pain within the next 12 months. If we some those up, then I'm just summing up the current portion. I'm just equals. The sum of those yellow items were just adding those up. That's the current portion, and that means we'll be left with this. This is basically the long term portion. So as of this point time, if we subtract this out, the 69 8 79 minus this amount will be left with this amount. That's gonna be the long term portion. So this is our total amount. This here is current. And this then, well, actually, let's do this up here. This is current, and this is long term. And then this is the total, which is the sum of this Plus this. So there's there's are basically or break out. Here's where we're at. Here's the 12 months current portion. Here's the where will be at the end, the long term portion. That's what we'll be at. This will be the total that will be at at the end of the next 12 months, and it'll be what's due after 12 months. As of this point in time, if we add up the current and long term, we get to the total amount that's owed at this point. So what do we need to do? Their 69 8 79 In the long term portion, we need to break out 13 109 of it to the current portion. So we're gonna do that. We're gonna go back over here, typically, to do that, we do that with a journal entry, so I'll just show you that. And then we'll actually use a registered to do this. So we're gonna select the plus item, the journal entries in here. Here's the journal entry, and typically we would we would have to increase the loan payable current portion with a credit for the 13 109 and debit or decrease the loan term loan payable for the same amount and that would that would do it. We're gonna try to use the registers here just to practice using the registers. Just to show that QuickBooks you can do stuff with the registers and use less debits and credits. If you know debits or credits, this would be the easy way to do it. If you don't know deputy credits, it's really good. It's really whether you know, him or not. If you know, debits and credits is really good to try toe, see how it would work without debits and credits. See other ways that you can input it. And you can kind of figure out how Teoh set up systems to help work with people that might want to work in a different format that don't want to see the debits and credits, even though QuickBooks will be using debits and credits and we'll see that will use the register, and QuickBooks will still make a journal entry. So we're gonna go back over here and we're gonna go to the accounting and we're gonna go to the chart of accounts and we're gonna look for either the short term or long term portion. We typically deal with this chart of accounts when we deal with cash up top, right cash. But any any account that's a balance sheet account QuickBooks makes a chart of accounts for so we're gonna scroll down. It's an order by type. So these air assets and then liabilities and then we want I'm gonna go to the long term liabilities. That's the one that has the 69 8 78 And remember that matches what's on our what's on our table right here. 69 8 78 So we're gonna select that item, and it's like the register, and we're gonna have to decrease it. So I'm going to say there's only two options here. There's a journal entry. We're gonna make a journal entry, but we're gonna use the register to do it so that we can try to eliminate deputy credits. So we're going to say, 02 28 to 1 is the date always at the end of ah, of the period we're working on is the adjusting type journal entries. No, payee. I'm gonna just call it and adjusting entry for the memo. We're gonna decrease it by this yellow portion, the current portion 13 109 So we're gonna decrease it by 13 109 and then the other side's gonna go to the long toe the loan payable long term portion. We could select the drop down to find it and or type in loan payable, and then we want the current portion and it should say appear in the account type that sets the current liability. So current liability, and that's gonna be it. We're going to save that. And then once we do, we see the balance is 56. Something over here can't see building 56 7 69 That is this balance. That's what we are at the end. That's what we want. That looks good. Let's go the current portion and check that out first in the register that in the financials, we're gonna go back here going to check the loan payable for the current portion. Swelling up here is the current portion. It's got this 18 109 And if we select that item and scroll over, we've got 18. 109 Here's the 13 109 So here's the 13 109 That's what we want. The other portion. Of course, if I, um, hide this is the 5000. So the 5000 plus 13 +109 is the 18 109 or should be. Yeah, that sounds right. Yeah, that's right. Let's take a look at on the financial statements as well. So we'll go to the financial statements. We're gonna go to the reports on the left side. We're gonna go to the balance sheet. We're gonna change the dates. 2010121202 28 to 1. And that's January 1st, 2021 to February 28th 2021. Run that report. So then we're gonna scroll down. We're looking at the other liabilities section down here. We see the liability section down here. Here's the current portion. Here is the long term portion. So note we have two loans in our case grouped together, but we have to still break them out. So we're gonna we're gonna put all the loans and group together, but then we still have to break him out between short term and long term, and we're gonna have to back that up in some way. We're backing that up with our schedules over here. Here's a 5000 loan. It's all short term because it's all doing six months. Here's the other loan for it was for 72,000. We now owe 69 8 78 on it. Therefore, the current portion is this amount, plus the five or the 18 +901 that is going to be the current portion here. If we click on that, we see the activity. There's the 5000 we moved up here. Here's the 13 109 If we select that item, then here is our journal entry and note. Once again, it goes to a journal entry, even though we put it into the register. So it's crediting the current portion, increasing the current portion of a liability and debit in the loan payable long term portion to decrease it. If we close that back out, that's the current portion scrolling back up, going back to the report back to the balance sheet. If we then go down to the long term portion, click on that. It's a bit more complex of looking thing here because we have the payments in here as well . So we had that. This is the first loan, minus thes two payments that would give us the loan balance in that larger loan. And then we have this other loan that we put in place here that we put into this account. Then we took this loan out and that account and, um, and we have moved the short term portion of the $72,000 loan. All of that. At the end of the day, if we check off all of that and try to figure all that out, we're going to say, Well, what should be in there? It's only a long term portion at 69 8 78 So if we go in here, it should be left with. He's checked out. Should be left with. I was wrong on that. Sorry, it should be left with 56 770. So we go back here 56 769. It's a dollar different. That's that's rounding. So that's gonna be this balance. And again, you go through here and kind of check these off. In order to do that, you got to say, Well, here's the 72. Here's the two payments. They were correct there only because they're only the principal portion. We moved this one out, so I have to cross that one out so it's gone. And if we if we figure that out, we say OK, that should be left. That's what is at the Indian balance after we have the current portion. So here's the current portion. Here's the long term and you can kind of work that out. So it could be a little bit tricky if you got If you got a lot of loans, I'm gonna go back to the to the bank statement. And it's also a little bit tricky to work through the through the accounting process in terms of the adjusting process versus the normal day to day input. Meaning if you go back to the normal day to day input. Um, and it's a different department they might be saying. Well, what did you do to my loans? Payable. Now I got this to loans payable. What do you want me to do? Going forward? You might want to reverse that. You could do the reversing entry and just have one loan payable account so that so that you only have it all back in this one account and then just adjusted each month. Or you might just say, Tell your accounting normal accounting department pages keep posting it the way you're posting it into the loan payable, and we'll just keep adjusting the current portion out at the end of each month 86. 10.15 Short Term Loan Payable Adjusting Entry: Hello. In this presentation, we will enter a loan payment adjusting entry to break out the short term and long term portion of the loans payable within QuickBooks online. Here we are in the QuickBooks online dashboard. We will be continuing with the get great guitars problem. We're gonna be breaking out the short term and long term portion of the loans payable. In order to do that, let's first take a look at the short term and long term portion by. Go into the reports on the left side and we're gonna open up the balance sheet civil selectee balance sheet and then we're gonna change the date range. We have the month of January and February that we were working on. We're gonna be entering these adjusting entries as of the end of the second month of February. That then will be our cut off date. I'm gonna make the range for the full two months, which is a 101212 02 28 to 1. So it's gonna be the for the full rancher. This will be a point in time, but of course, we want to be able to drill down on the numbers and see the full two months of activity as we do. So so then we will run that report. So here is the report that we have run. We're gonna scroll down here and see what we have. We're looking for the loans payable account down here. We've got the loans payable were in the liabilities section. Remember that the loans PayPal is different from the accounts payable in this typically more of a long term loan. So accounts payable being do within 30 to 60 days being normal part of operations loans payable, typically being doing for a longer period of time and often having interest charged to it now notes that although with alone is a long period of time, it may not be a long term loan. It may still be short term in terms of the current versus long term portion, because 60 days or 30 days is really what accounts payable are normal business processes for normal purchases, but that the loan could be something for, like, three months or six months and still be under the threshold of one year in order to be current. It's also possible for us to have different loan, so the loans could be a little bit tricky. When we do these adjusting entries, some companies will have a lot of loans on the books, and our question is, Do we want to break out the loans and separate accounts? Do we want group them together, as we have done here all in the one account, This one account has multiple loans in it and then try to break out the short term and long term portion. That, in essence, is what we're going to be doing in this loan process. Or do we want to break those loans out in the different loans? It's also possibly have to look at the terms of each and every loan really, too, because the loan could be financed in a way that, like most finance, would be for like, a car or something, or or a mortgage type alone, where we pay off some of the interest and principal with equal monthly payments. But it's very common for other loans to to have different types of formats. It might be that we're going to take a loan out, not pay interest or principal until the end of the loan, and we have different types of formats of the loan. So we'll go over some of those issues as we take a look at this note. What we told basically, the bookkeeping department. One way we can deal with this is to say, bookkeeping department. Oh, our accounting department. Whoever's actually recording the lone when the loan was taken out might be easier for you. Just tow have one loan account. You put that loan into this one loan account, and then we're gonna go in and adjust it for the short term and long term portion, which could differ after every payment it could. It could differ after every payment and as time passes, so let's take a look at the activity. Here's the 74 8 78 and we could see that it started. If we look at the detail here, we started with the beginning balance of 22. Then we took out another 50. Then we made a couple payments here, and then we took out another 5000 to increase the loans with loan. We owed 22. Then we increased the loan by 50,000 and then we made a payment, bringing it down, and then we took out another loan of 5000. So our first question when looking at detail like this is, Well, are these all the same loan? Are there different loans that we just, you know, just in terms of the one loan? Is that some kind of line of credit? We have to get the policies to back up this information. We're going to say that this is 50 thes two loans are the same. The $72,000 loan is, in essence, one lone and the second loan were going to say is another loan. That's the loan we took out on equipment. So we're gonna look at the terms for this loan, the second loan first a shorter one and figure out what to do with it in terms of short term and long term portions. And then we'll go back on and adjust. This loan, which is a bit more complex, is a bit bigger loan. So first we'll take a look at this loan and just look at the terms of it. And oftentimes what we need to make the loan makes sense is an amortization schedule. So we're gonna actually put together an amortization schedule. This will be a simplified amortization schedule within Excel here. And then this will lead us into the next amortization schedule. We will have for more complex type of loan note. When you have alone, you're typically gonna have low amount that interest rate, the number of payments, and then they might give you the amount due in this case at the end of the loan or the number amount of payment amount Do. In this case, we're going to say that the loan and by doing that, what we don't have typically is an amortization table A lot of times, and we might want to put that together and say, Well, what's gonna happen over time in terms of the table? So what we're gonna dio is take this information and make it a table out of it and make some look at it in terms of a table, and then we'll use that to make our adjusting journal entry. So here's our our loan terms. So we would just take this from the loan document, putting it into our excel sheet. There's our loan. 5000 months, six months rate at 6% Now we're gonna assume this one's a bit different than a normal, like car loan or mortgage loan. It's going to be more like a business loan where we said, Hey, we're gonna take out 5000 will pay you back in six months. We need the money now. I don't want to pay monthly payments. I want I want to use it until the end of the time period. And then we'll pay you back at the end and they're gonna say, OK, well, you pay us 5000 back plus the interest of 6% as of the end of the time period, which means that we're gonna have to pay back the principal here, plus the 6% interest at the end. Now, first off, right away, we can tell that this is all gonna be short term because it's only for six months, and it's not. It's not for over a year, so the entire loan is gonna be a short term loan, so we know that right off the bat. But there is this idea of the fact that we're gonna have to pay more than 5000 at the end. And so let's calculate what that interest is and discuss whether or not we should put 5000 into the current portion or what we're actually gonna pay within six months and how that how that plays out. So we're gonna calculate the future payment I'm gonna use on Excel formula in order to do this and then we'll do this with the table. So this is you don't have to know. That's Excel formula, but just some added information. If you want to take a look at him a couple of ways we can do that. We want to know what the future payments gonna be. So we've got 5000 loan, six months and then interest rate is 6% and we're not gonna pay any of it. Interest or principal tell the end. So what we want to know is the future value on what's going on, what's gonna be worth at the end, what we're going to pay. In essence, we could use a couple different formulas. I'm gonna go to the formula tab up here, and you can use this insert functions that could help out. And what we want is a future payment or future value. We should call it. That's gonna be the FV value. So I'm gonna select that and will give us a nice little input box here. And we could say that we just filled out the box. This is gonna be the rate, so I'm gonna take that rate now. The tricky thing is that that rate is a yearly rate, and we would really want to make it a monthly rate. So I'm gonna take that rate and divide it by 12. That's kind of the trickiest thing to dealing with interest for most people because, um, when we see him interest rate, we just don't really totally understand that the interest rate really means a year. Typically, if no one says anything about an interest rate, they say that mortgage rate is 5%. It means 5% a year, and we only want to break it down to a period mint interest rate, which is a monthly period. So we have to take that yearly rate and divided by 12. And they were going to the numbers of periods were just going to say is six here and then we've got the payments Now the payments were actually going to say there are there no payments during those six periods? That's a bit tricky with this this type of calculation, cause there's what this same calculation will be used when we have annuity payments. And that's why we have, um, zero there. What we do have is the present value then and these two aren't always there, depending on the type of calculation. That's why they're not bold ID. But in this calculation, we need it. So the present value is what it's worth today. This is how much it is today, 5000. And if we have that information, note that you have a little box down here that'll tell you what you each of these say we're going to say that that is it. We're gonna say, OK, and then it'll give us the amount that will have to pay. So we got the $5000 loan. We got 5000 today. We're going to pay back after six months 1 5052 I'm gonna make this a positive number by just putting a negative in front of the F, so I'm gonna put a negative. That just means take that multiply times negative one and that'll flip the sign. So here's our number of payments now for us, there's a couple issues here. One is, you know, is a short term or long term. It's all short term. And then because it's only six months and not over 12 months and to what do we do with this interest amount? Do we put the short term? I mean, we're gonna have to pay 1 5052 in in this time period. And so do what do I put that in short term? Or do I put the 5000 and note we're gonna We're gonna use probably the 5000 because we don't yet. Oh, the 1 52 That's gonna be kind of like rent. It's kind of rent on the money. So even though we're gonna pay 1 5052 it's not a liability at this point in time, because time has not passed. The six months hasn't happened yet, so that would be like pre paying our rent. That would be like pain, the interest or saying we owe the interest. Before we lived in the home, this would be like saying if we put the 51 52. It would be like saying we owe the 1 52 before we used the money. Now we're gonna We're gonna put the same information into an amortization table and get to that same number one to re calculate it just so we can see how that immunization table works. And two, we're gonna need this later when we calculate the interest amount and then three, it'll look better. And this will give us a little idea of how different loans work. And we'll we'll be able to compare and contrast this when we do a more complex alone that's more similar to like a loan payment that we pay monthly. So here we're gonna say, there's gonna be six. There's gonna be six time periods and we usually call those payment amounts. But there's no payments were not gonna make any payments in this particular low until the end. So the payments are really zero. These air really payments. Probably not best term of it, but we're gonna use the same term because we're going to use that term when we look at alone that has regular monthly payments, and then we're going to say that the interest amount is going to be the amount that we're gonna have to owe or increase in interest every every time period. So the interests will be calculated as we have the 5000 up here. 5000 principal times, 6% 60.6 That would be 300 a year because that interest rates per year. If I want to break it down to eight month divide by 12 that's the 25. When we did this calculation, note what they in essence, did. There they took the 0.66% divided by 12 got the interest rate, which is really small, which is why we don't really use monthly interest rates. And the typical standard is a yearly interest rate and then multiply times the 5000 which is the 25. So we'll do that. Same thing down here would say the interest equals this 5000 times, 6% divided by 12. So that's the interest. Now the principal usually is a reduction in principle. If we were making payments and again, I'm formatting this as we will see when we have a loan that has monthly payments in this case, the engine. The principle is gonna go up. It's an increase in principle. That means that we had 5000 and now it's increasing 25 25. So after one month, we actually owe 5025 now, because this interest has accrued, we're gonna have to deal with that. But we're not gonna put it into the loan payment payable. We're gonna make another accountant say, Hey, we owe interest. In this case of $25 that we have not yet paid, we'll deal with that in a later ah, Justin entry. So we're going to the same thing here and now we're going to say that we have 25 though the principal goes up times 6%. So it's it's so divided by divided by 12. So it should be a little bit higher If we put if we add decimals here, we'll note that it went up just a little bit because, um, because we increase the principle. And then if we subtract this out, then this minus. This would be that in our principal Now is gonna be this. He's gonna increase by another 25. And if we keep doing this now, know what? The principal went up a little bit. We're gonna multiply that times 6% and then divide by 12 and then divide by 12. And it went up just a little bit again. And then we're gonna subtract this out so it's gonna increase the principle, like so Now we can copy and paste. This formula down should look very similar. If we do it just one time, I'm gonna highlight these three cells, put my cursor right on that little dot and scroll down. And it doesn't do exactly what we would want. That doesn't look right. So if I click on it, we're gonna say this cell looks right. That cell looks wrong. The cell moved down. I don't want to move down. So how can we fix that? We're gonna I'm gonna delete this now. We'll put workers were back on this one. And what what we're saying I'm double clicking on that this cell right there. I want to keep it the same. So in order to do that, we use what we call absolute references So that Selby five so within be five, we're gonna put dollar signs dollar sign before the B dollar sign before the five. The dollar sign does not mean it's ah, money value. It's for whatever reason. Excel uses the dollar sign as a kind of a code to say, Don't move that sell down. This basically says do not move to be or the five when you copy and paste the cell. So we're gonna say OK, and then copy this down. So I'm gonna drag it down just one first and then it looks correct. That looks like what we want. And so then we're just gonna drag it down to the end. And there we have it. There's the 515 to which matches what we got here in the Excel formula. So this gives us a little bit more visual of how we got to that number rather than just a formula just kind of spitting that number out at us. It gives us a little bit more verification that what itself did here was correct. So we're gonna use this, this table and a few different things. We're gonna one use it. Teoh record the interest that will be do that accrued interest that has not yet been paid that we do Oh, and we're gonna use it in order to adjust the short term and long term portion of the loan , which is all short term. In this case of the 5000 after Justin entry, we will do now, and we'll use this comparison to a more complex loan or different loan where we do have monthly payments that will have a interest portion and principal portion. So what we're gonna do now is we're just gonna pull out that 5000 that were determined was all short term and put it into a short term loan in the current section. Here we are, back at our QuickBooks. I'm gonna go back to the balance sheet. So here we have our loan payable down here. What we really want is another loan payable up here. We want a short term loan payable up here, so we need another account. It's just gonna be loan payable short term, or we can call it a loan payable current portion, and we're gonna pull that 5000 up here now. Once we do that, we're not done yet because that we got that other loan in here that may have a short term portion as well. So we're going to this one loan at a time, and we're gonna go to do that. We could add the account first so we could go to my accounts down here and then we want todo I'm sorry. We want to go to a counting down here, and then we got the chart of accounts. We want to be on the chart of accounts and then we want to create a new account. So I'm gonna create a new account, and the account is going to be a liability type account that we're going to select the other current liability type of account and then in the detail type, we're going to select the loan payable type of account. So it's the loan payable, and we're gonna say it's a loan payable. And what kind of call? It's just to differentiate it. The current portion, something like that. Current portion buckets fill it right. Maybe we don't need portion. I'm just gonna call it current. Now this this is again another thing that will just be in terms of your preference, whether you want to put current or not, when you see it on the balance sheet, it will be under the current section. So we won't really need to say its current because it will be in the current section. If you see it on something like a trial balance, however, or when you're making a journal entry, it might be useful to see the current portion because it's not gonna be in the context of a financial statement. So it's really up to up to you as to whether you would want how exactly want to name it, whether you want a name, it current or not, or just let it land where it lands. It will be in the current section as opposed to the other loan payable we have, which is in the long term section. So we're gonna save and clues that. And now we're gonna make our ingesting entry now, No, normally, and we will use some debits and credits some journal entries here. Ah, and so normally you would go up top and you would have the journal entry that you would want to enter this journal entry in the others section. So we went to the plus item in other journal entry. Typically, these adjusting journal entries at the end of the time period would require the use of deputies and credits. They're not kind of like normal transactions that the QuickBooks has a form for that. You would just do every day and therefore have a form. For that, QuickBooks would just set up and basically haven't input screen where we would not need to know deputy credits. So if we were to do this, we would have to increased that the current portion with a credit, which would be the 5000 credit and the current portion, and then debit or decrease that long term for 5000. We're gonna try to do it here with just a the Registers, just to see if we if we can do it that way, and just to show that it's kind of the same thing to do it that way. So this would probably be the easiest way to do it. But we're gonna work with the registers as long as there's only two accounts in the adjusting process, because it's it's possible to do that way. So remember that when we when we look at the the registers, we usually think of the checking register, so I'm in the accounts over here when the chart of accounts we usually work with with the check register. But quick looks has set up a register for every balance sheet accounts. So we're dealing with a balance sheet accounts Rather than go into the journal entry, we could work with the registers. We have one set up for the loan payable already. So if we go down here, that loan payable, here's the current loan payable, and then we had the long term loan payable. So if we go, the long term one hears loan payable that we had set up before it has the 74 8 78 in it. We'll see what's in there now. So I'm gonna go to that account and here's our detail. So this is kind of like our Geo, and it has that 74 in it. We need to decrease this one and then put the other side in the short term. So no, we can kind of think of it here Without the debits credits, we could just say, Well, that's one needs to go down, and the other one needs to go up once we get to more than just two accounts affected, Then these registers become more confusing than journal entries, and I'll just go to the journal entries. But when is only two accounts? It is possible to use these registered. So I'm going to say that we want to add a journal entry knows there's no really other option here. We have a transfer in a journal entry because that's typically all you really got on a loan payable because it's not a normal transaction as opposed to cash. Where you have different types of things, you can write a check, you can enter an expense and all this other types of options. So we're gonna say journal entry, and we're gonna date the journal entry as the end of the second month 0 to 28 21 as all kind of adjusting entries are basically majestic. Naturally, we're not gonna have a payee or a memo. We're going to decrease it by 5000 and we might want a memo saying this is adjusting entry or something like that, at least adjusting entry, and then we would want to be down here and we're going to see the other side. Where's the other side? going to go to the current portion. The other account we just set up. So we're gonna say this one's going to go down and do whatever you need to do to the other side, which is gonna be increased, the other loan payable. We could select that by selecting the drop down and or typing in loan payable and then the current portion current liability as opposed to long term lie, Billy. So we want the current loan table. Then we'll make sure and save that. And then we're gonna go back and we could check this out one in the register. So if I go back up to the register and we go and look at that other loan that we set up, which was a liability, accounts down here, it's an order assets, liabilities, equity income. Except here's the current portion. There's that loan payable, and if we select that register, we'll see that it has now appeared here because of of the other entry that we just made. We also look at it on the financials as we will. So let's go to the financial statements. We want to go to the reports. We want to go to the balance sheet and we're gonna change. That dates once again from 0101 to 1 Teoh 02 28 to 1 and run that report. We're going to scroll back down and we see that in the loans payable. We have the 5000 there. There's our current portion and here's our long term portion that went down. If we click on the current portion, if we select that detail, we will go to what? A journal entry? Not not not the Register. And because again, what? What we put into the register was a journal entry. So this is what Quickbooks thinks that this is like the default form for something that has no other form for QuickBooks. QuickBooks doesn't. There's no check that does this. There's no invoice. So it goes into the last kind of resort, which is a journal entry, and we could see that we debit the loan payable to decrease it, and we credit the loan payable current portion to increase that amount 87. 10.20 Accrued Interest Adjusting Entry: although in this presentation we're gonna record and adjusting entry for accrued interest within QuickBooks online. Here we are in the QuickBooks online dashboard. We will be continuing with the get great guitars problem. We're gonna be entering accrued interest and Justin Journal entry. In order to take a look at that, we're first going Take a look at reports. So we're gonna go to report on the left side. We're gonna look for the balance sheet. We're gonna take a look at the balance sheet, and we're gonna change the dates. 2010121202 28 to 1. So january 1st, 2021 to February 28th 2021. We're going to an adjusting entry for accrued interest now that this is going to be something that will be more of a standard of Justin entry. So if you're in a county, if you take an accounting class or something, you'll have these standard adjusting entries that you'll have if you're working in the business area. If you're a business owner, then this is the adjusting interest. Give you a better idea and they're gonna be required to be what you need often times if you're going to get a loan, or if you're working with someone who wants to get your financial statements on a cruel basis, then you'll have to do some of these adjustments. And these are gonna be the typical type of adjustments that you'll make in order to to be on a more of an accrual basis accounting, which is typically better for decision making. So that's gonna be a minor adjustment here, so but it can't be significant, depending on the size of the loans. So we're gonna have the standard adjusting interest. Just note that most of them have one balance sheet account in one income statement account because they deal with timing, and most of them pretty much never deal with cash. So unlike normal journal entries, which always, I mean at some point in the cycle, every cycle, sale, cycle, purchasing cycle, we deal with cash. When we go Teoh these adjusting entries, we typically don't deal with cash. We're dealing with some a cruel thing that is going on some timing difference that we got to be dealing with. In this case, we're dealing with the account so It's important to know that because in when you go, there's always going to be one income statement account one. Balance your account, and you can kind of figure out which of these accounts need to be adjusted. So if we go through these, we can figure out which accounts typically need adjusting. And in this case, we're scrolling down to the loans payable. We talked about the loans payable before in terms of the current and long term portion of the loan amounts. Now we need to talk about it in terms of what is due for a loan payment or, I should say, in terms of interest on a loan payment. So we broke out the short term and long term portion before, but now we're thinking about Is there is there any interest that we owe on the loan for which we have not yet paid? So to do that, we're gonna take a look at our amortization schedule, and again, this is another area where you pretty much have to have an amortization schedule, that kind of figure, this type of stuff out. We broke out the short term and long term portion, so that's kind of like the really the difficult part, often times in terms of the loan payments. Now we're gonna try to take a look and say, Is there any of this loan payment that should just be a short term or has already been incurred? So if we go to our loans, we've got these two loans were focusing here on this short term, long this $5000 loan. We took out a $5000 loan. And the thing about this one is we don't pay either the interest or principal until the end of it. So at the end, we're gonna pay back. There's 1 5052 What we're going to say here is that a month has passed, so this month has passed. We didn't pay anything because we're not gonna pay until after six months. So but now, really, the balance is going up. It's really oh at this point time 5025. Because one month has passed and we have the rent or the you kind of think of it as rent on US borrowing or using the money. So we borrowed 5000. One month has passed a month. The rent on that money. Not the principal not paying back the original amount. 5000. But just the use of it is $25. So really, we owe 5025 right now. Now, what we don't do typically is go in and say Okay. What? We're gonna increase the loan principal on our books to what is really owed 5025. We like to break out. What is the loan amount? The principal amount of alone versus what we owed due to interest. So what we're gonna do is make another liability account and say there's accrued interest of only 25 at this time. Now, I know 25 isn't a big number, and obviously it's not material to a lot of businesses to have a $25 amount, but the same principle would be there, no matter how large the loan is, interest can be very significant and we could have a significant amount. So the constant will be the same. No matter what the dollar amount will be. If you're dealing with larger loan amounts than the dollar, amount could be significant to decision making. So we're gonna use this to make our adjustment. So what we're gonna do is we're gonna go back over here. It's gonna be current. We're gonna go that interest within the next years time, period. So what we want is another loan payable here That's going to be some type of accrued interest. I usually typically call it a payable account because that's just what I like to call the liability. So I call it a interest payable account that will have up top and then the other side will be interest expense because we actually used the interest. It's kind of like if we lived in the or if we used the office building and we pay rent on it, we've consumed it already. We owe the rent. We've consumed the rent, We owe the rent, even if we haven't paid the rent and therefore it should be an expense. Here we have used the money. We've been having the money. We've consumed it in terms of use for our business and therefore we oh, that rent on it in this case, the rent being called interest expense. So that's gonna be the other side. Will increased expense, decreasing net income. So to do this typically for any adjusting entry, we've clicked the plus icon up here. We typically would use the journal entry in order to record these to the journal. A tree right here that would be using debits and credits. And we would debit the interest expense and credit a new account we're gonna set up, which is going to be, ah, interest payable a liability of current liability. Now, if there's only two accounts affected, though, I'm gonna even enter the Justin entries into a register in order to show that it can be. You know, you can use the registers to do journal entry type of activities once we get it might be even more difficult. However, to do that, just if you know the debits and credits you want. Probably use the Democrats, and we will see debits credits no matter how we do it, even if we entered into the register, but and we'll see that. But it's good to to try to use non debit credit to tryto set up systems so that we can have different people doing the data input, not possibly know debits and credits in order to do so. So we're gonna close this out and we're gonna try to go to the register. We will go to the registers. We will do it. We're gonna go to the accounting on the left side, and we want to be in the chart of accounts up top. Now, first, we know that the chart of accounts we typically loot used the cash account. But obviously we're not going to dealing with cash. We could choose any other balance sheet account income a statement. Accounts typically won't have a register because their temporary. So we can't go to interest expense, for example, because it's a temporary accountant, register isn't the same. So we need to set up the permanent side of this adjusting journal entry, which will be the loan payable account, and then go into the loan payable register and we can enter the adjusting journal entry from there. So to do that, we're going to say we want a new account and we're going to call it a, um, other current liability type of accounts. That's an other current liability accounts type, and we're going to set it up. It's going to be it's not quite a loan payable, so I'm gonna put it into other current liabilities. Other current liabilities. So, uh, and I'm not gonna call it other current liabilities that we're gonna call it interest table . So it's gonna be an interest payable account, no description, no sub account. So it's another current liability, Other current liability detail, interest, payables What the name will be. It's not a sub account of any other type of account. We're gonna save that saving close. And then if we scroll down to find that it's an order typically by account type, so assets and then specifically the asset of cash and then accounts receivable than other current assets, then fixed assets and then liabilities, specifically current liabilities or more specifically, accounts, payable accounts, credit card accounts and then other current liability accounts. And here is our interest payable. Nothing's in it right now, and we're gonna go to the register and put the first transaction in it through the register . So here it is. We're going to select the drop down now and note there's only only option would really have is a journal entry. So we're gonna enter a journal entry type of transaction, but not using debits and credits using the, you know, that plus and minus registered kind of format that QuickBooks will set up for us all adjusting entries will be as of the end of the month as of the cut off date, which is 02 28 to 1. In our case, February 28 2021. I'm gonna keep the reference number. I'm just gonna type in the memo that it's in a Justine entry and the loan payable is going to the interest payable is going to increase. So it's gonna interest by a huge $25 amount and then the other side, we just needed to say where the other side is going to go and it's going to go to an expense. We're incurring an expense, so I could select the drop down and find it and or type in interest expense. So here it is, interest expense. Make sure it's of expense type account and okay, and then we're just gonna save and close that we'll see that the 25 now is in our liability account here and now we'll go to our reports and take a look at the other symptoms. The other all of this will take a look at the panel sheet and the income statement. So first the balance sheet, but we gotta reports left side. We're gonna go to the balance sheet amounts down here. The balance sheet. I can't balance sheet. Report the pound cheat. Financial statement. Clegg on the balance sheet. We're gonna change the dates too. No one, No. 121202 28 to 1 January 1st 2021 to February 28th 2021 run that report. So here is our report. There's a date range. Once again, we're really looking at just the end here. February, That's our That's our date as of date. But it's nice to have a full two months so we can see any activity in these accounts. If we scroll down, then we've set up a new liability. It should be in the liabilities section, and if we scroll down, it should be in the current liabilities and interest payable. There it is. Interest payable $25. So we've increased the liabilities here. We owe more money. We owe $25. So if we think about our loan, then we have the current portion here. If I click on that current portion, there's two things that make up this amount. Ones are $5000 loan, and two is the current portion of the longer term loan. So we have the $5000 loan here. If I scroll back, I'm gonna go back to the report summary. And then we have, ah, the 25 years. So that's 505,025. And that's really if we look at her and position table, that's the amount we Oh, we 0 5000 principal plus 2 $25 of interest. So that's the amount there. If we look at the other side, which will be on the income statement or profit and loss statement, we will go to the reports on the left side. We will select the report of the profit and loss selecting the Prophet and Laws. We're gonna change the dates to once again no one, no 1 to 1 Teoh 2 28 to 1. That's January 1st, 2021 to February 28 2021 run that report. So here is the report. If we scroll back down. We should see that we should have interest expense. Here's interest expense. 621 in it. If we select that, then we scroll down. We see that 25 there. So here's our journal entry for that 25. If we select that journal entry notes, it goes not to the register but to a journal entry. So even if we use the register, if we look at the detail, if QuickBooks cannot find a form that it uses like a bill or invoice that drives the transaction or deposit some like that, then it's gonna default to the register. So I mean, it's gonna default to the journal entry. So even though we entered into the register, there's no driving form. The register isn't really a document that QuickBooks uses, and therefore QuickBooks wants to drive it with him with a form with some kind of data entry form, and so that the default, if there is no other one if to go to the journal entry and used debits and credits, so notice that everything uses debits and credits if it affects the financial statements. But QuickBooks is able to use different forms, so we could just input things easier without using them. But it's easier if we know debits credits of Betty's here. So here's that. Here's the debit to the interest expense Notice it didn't put the debit on top. Why? Because of the way we entered the information into the into a register. So it just did, in order of when we entered in the register. Notice it doesn't matter, but it might look a little funny to people that are. You have been trained relentlessly that the death of Chico on the top all the time and the credit to go on the bottom. It really kind of depends on the format. But any case we debate the expense and we credit the interest payable there. And there is our journal entry. Obviously, I'm gonna close that out. I'm gonna go back to our report and that then is going to increase the expense by that 25 decrease that net income by that 25. So note that the 25 is not really significant, even though this is to this financial statement. But the interest can be significant, and this principle will be applied to other types of things which will be significant as well. These adjusting entries, your financials, our financial statements aren't quite gonna be right. That could be significantly off if we don't do some of these adjustments. 88. 10.25 Invoice AR Adjusting Entry: Hello. In this presentation, we will record and adjusting entry for an invoice or accounts receivable within QuickBooks online. Here we are in the QuickBooks online dashboard. We will be continuing with the get great guitars problem we're doing adjusting entries here . These are gonna be the entries at the end of the time period that we're going to enter in order to be more on an accrual basis in order to have the financial statements correct. As of the point in time that we're gonna issue the financials, typically the end of the month or the end of the year for us the end of the month of February, what we're gonna have is the idea of an invoice that has been entered. But we need to pull it back to the date in which the work was actually done. And to see that Let's take a look at first the balance sheet report. We're gonna go to the reports on the left side. We're gonna look to the balance sheet, selecting the balance sheet. We're going to select the date ranges of 010121202 28 to 1. That's January 1st 2021 Teoh, February 28th 2021. And run that report. We're going to say that we're gonna issue our financial statements as of February 28th the end of this month, and therefore, this is our cut off date. We want to make everything right, as close to an accrual basis as possible, to make the best decision making on it and to be able to pry provide the most correct numbers as of this point in time. So these are gonna be the adjusting entries in order to do that. What we're saying now is that there's going to be in a Justin entry related to an invoice which one account affected will be accounts receivable. We're going to say that the invoice went out in March. However, it should have going out in February. And let's kind of look at the scenario in terms of the drop down here to walk through what could be happening through an invoice and why this might happen. So we're gonna select E plus icon up top looking at the customers over here, we have the normal process of what's gonna happen. We have an invoice and then we receive payment. And clearly the invoice happens when we when we do work typically. So if we think about a service company, oftentimes if you think it about a law firm, a c p, a firm, any any kind of company that's gonna provide work and then invoice the client, it's quite possible that we are not going to get around to the billing of the work for every two weeks. Pot, meaning we might do work for a week or two weeks and then have to collect everybody's hours in the office and create an invoice based on the hours that were worked. And that means that the point in time that we create the invoice were Imagine our cut off date here being the end of February. It's quite possible that the work was done in February and we didn't collect the work because of the two week time period it takes for us. Teoh, Before we do our billing process, our building process could have happened sometime in in March, so in this case, we're saying Well, the work happened in February. The envoys went out in March, so to be in a perfectly accrual basis. That's not exactly correct. What we would want to see is, um, everything that is done in February be build in February. So note that QuickBooks records revenue when the invoice is created, which is closer to an accrual basis than when cash happens. However we still it's not perfect. It's just still a convention that the system has to use something to trigger that time, period and the invoices was used. So because it's still not perfect, we got to go in there and fix any kind of problems like this. Like the invoice was created that after the cut off that even though the work was done before the cut off date, Soto further illustrate that what we'll do is we'll actually create the invoice and we're gonna create the invoice, not for the month that we're working on, but for the time period after we're gonna create the influence for March for work that was completed in February and then we'll see how we're going to adjust for that. So to do that, we're gonna go to the plus icon up top. We're gonna go to an invoice, and we're gonna create a normal invoice And it's gonna be for Sam that guitar man's and then select the drop down type and Sam. And there we have the invoice. We're going to scroll through this. We've done a few invoices. I'm not going to spend a lot of time on the creation of the invoice. We're gonna add an address down here because the address is gonna help us to calculate the sales tax. Now, obviously, I'm not being consistent with the addresses here because I'm really only adding them in order to help us calculate the sales tax. So we've got to have some type of address and set up the sales tax for that particular location for the sales tax to be calculated. And then we can adjust for that after it's been calculated. Okay, so we're gonna say Net 30. We're going to say that the invoice date is gonna be sometime in March. So let's make it 03 0 to 21. Through that one, we're done. What happened there? 030 to 21. So that's Ah, March 2nd. Let's make it the third. Just make it the 3rd March 3rd 2021 So that's the month after. So we're issuing this invoice the month after the cut off date. But we're going to say that that it actually happened before that time period. Eso it happened in March. We're gonna still in this case are guitar now. I talked about a service kind of item, and and I think that makes a lot of sense for most people. When they think about all you have, the billing process is always gonna take, you know, sometime after the work was actually done, we're gonna use an inventory, however, because that will give us a little bit more complex journal entry Teoh to do a reversing journal entry on. And so because about the deal with cost to get sold and inventory now, the inventory, the same thing could happen. So for whatever reason, if we look at the shipping document, which is usually the driving document as to when the product changed hands and the shipping didn't actually happen and I mean, the shipping actually happened in March, even though the invoice wasn't as our in February. Even though the invoice wasn't issued until March, then the same thing is the case. If the shipping documents shows that it happened. I mean, we actually delivered the guitar in the month before they cut off, which is February, and then we didn't invoice until this March. Then we should really pull that back, and that's what we're gonna be doing here. And that's kind of like you could think of. This is a typical kind of audit procedure as well as an adjusting type procedure. We look at those invoices that have going out the first few days after the cut off date and then check the shipping documents that documents that would show when the actual of revenue should have been earned in accordance to revenue recognition principle, and then making the adjusting entries as well do here for for that amounts. So there's gonna be an E L p. It's gonna be an EPA phone, Les Paul, one of those and $500. And if I click off of it, it should then calculate the sales tax hopefully down here. So there we go. There's the sales tax. Now, remember, we're just gonna be using a simplified just 5% sales tax because we're not. We want to make the problem kind of universal remember sales tax All you do on sales tax or usage taxes, take the the amount and then multiply it times. Whatever rate that whatever taxi and authority you're dealing with is making you charge on it. So we're gonna take 500 in our case. 5%. Nice. Kind of not exactly even, but nice standard rape. So I could say $25.25 dollars is the sales tax. Were going to say yes, that's okay. We want to keep that other. It's gonna be a practice problem. So we'll tell quickbooks that. And there we go. Okay, So here's our total of 525 that we have down here. So remember, if we look at this invoice, we'll take a look at it. But it's good to think about it. Whenever we record anything, the invoices going Teoh increase the accounts receivable by 5 25 it's going to increase revenue, but only by 500. It's gonna increase the payable the difference of $25 which is a liability. And it's gonna have a cost of goods sold for an amount for this guitar, but not the retail 500. Some other price, uh, will be the cost of goods sold and the reduction of the guitar inventory by once again, not the 500 but something other than this, Like, 400. I believe it's gonna be with the cost of it. So let's save this, and then we'll take a look at it. So I'm gonna close this back out. We're gonna go back to our reports now, This report, um, we're gonna We're gonna see the report for the month after our cut off date. So I want 03 Um 012 1203 31 to 1. So the month after this is March, this is when that invoice was entered. And if we scroll down, we've got accounts receivable. We select accounts receivable. We see this invoice. So this is the invoice that went in there, uh, after the cut off date, and we think it should not be in March. We think it should be pulled in 2 February because that's when the actual guitar was shipped. So if we go back to our report, Thea, other side of that is gonna be on the income statement, but we'll look at the liability as well. We'll look at everything on the balance sheet, and that's going to be a California state Board of Equalization because we owe the sales tax. So if we select that item, so liability, we see this adds up to the 25 that we saw on our envoys. And then if we go back one more time, we're gonna go back. We also have the inventory going down. So if we scroll up to the inventory and here's the inventory acid, if we select that item, then here Here's our invoice again and it's reducing the inventory by 400. Remember, that's not on the invoice. If I select the invoice, that's not on the invoice with 500 but the cost was 400 we'd know that by looking up the item to see what, what their cost. Waas went close that back out, and we'll take a look at the other side, going back to reports to the profit and loss side of this. So we'll go to the profit and loss and we're gonna type in the dates of March 030121203 31 to 1. So this is the month after the report, our cut off date of February 28th and we will run that report. And then here's our Here's our 500 again there's the 500 that's our invoice that's creating it, going back to the report. And then there's the related cost of 400 cost of goods sold that will be the same invoice. So what we earned on this was, of course, 500 went up and then 400 went up in the cost of goods sold, bringing the net income up by the net of $100. So this $100 then this 500 revenue in this 400 is amount That should be in the prior month . It should have happened before the cut off. So what we need to do is we're gonna enter a journal entry. That kind of mimics this invoice that will be the same thing as this invoice before the cut off to make it correct. Now, when we do that, the reason we're doing that is because this 500 should be in the prior period. Now you might be saying, Well, why don't we just change the date of the invoice. Typically, we don't want to change the date of the invoice because it'll kind of mess up the normal accounting process. For example, if it was a billing cycle that we had and the billing cycle happens every two weeks, we don't really want to mess with that cycle. That cycle works, and that's that's part of the cycle. Is nothing wrong with that? Nothing actually went wrong. It's just that we're gonna make in adjusting entry to be more cruel at the end. So there's kind of two things that happened, the logistics of just the bookkeeping and then us going in and make any adjustments to to the system in order to make him right in accordance with a cruel principles. As of the end of the time period. So were just gonna basically record this again, but with a journal entry as of the cut off date to put that 500 back in before the day before March, which it will be there on our financial statements as we believe it should, because that's when the revenue was actually earned. And then, of course, we'll have to do a reversing entry because we'll have that in their two times. So that's what we're gonna do now we're just based going to repeat. We're gonna repeat what we did exactly on this invoice, but we're going to do it with a journal entry. Now, typically, before we did some some information, we did some of the stuff without register. But this one's a bit complex of a journal entry. So there's not much we can do to get around the fact that we're just gonna have to injure the journal entry. So we're gonna use debits and credits this time. So I select this item up top. We're gonna go down to the other. We're gonna go down to the journal entry, and we're just going to record that, like this exact journal entry we had. But we have to do it as of the cut off date, so it's gonna be 02 28 to 1. That's the end of the month were working at, and we're gonna enter this information. So remember, this is going to be the journal entry. This will be what a journalist is when we create an invoice. So this will give us a better idea of what invoices doing, which is basically recording the invoice again, but with a journal entry. So when we were recording on invoice accounts receivable goes up. So I'm going to select the drop down and or type in accounts receivable, and that's gonna be a debit balance. So we're gonna it's gonna go up with a debit because counts tables of debit balance and to make it go up. We do the same thing to it, which is a debit that's gonna be 500. And we're going to say, this is I'm just gonna call it adjusting entry. And we do need a name here because if we don't have a name, then QuickBooks will not let us record two accounts receivable because it won't allow it won't be able to without a name. Create the subsidiary Ledger, meaning Tell us who we owe by basically the council. Siebold represents people owing us money, and the system wants to make that subsidiary report telling us who owes us money, and it won't be able to do that unless we have a customer name. So we have to have something here, even though it's just in the Justin entry and our customer was Sam. The Guitar Man's were type in Sam. They could tell her man, and the other side of that we have accounts receivable. And then typically we have sales or revenue. That's gonna be the other side of this, so I'm gonna call it sales or revenue. I believe we call it sales of product income. So what's like that item? And and actually that this amount here, what's 500 was a sales price, and then it was 25 was the was the sales tax that's 525. This item here, however, was only 500 because that's the sales price and increased with it with a credit, because revenue always has a credit. And so we just increase it with a credit. And we don't need a name there because sales doesn't need to be applied out for the use of a subsidiary ledger, and then the difference is going to go to sales tax payable. So if we could select that would find that drop down, it's gonna be a liability account. And here it is this the California Board of Equalization, because that's who we're paying our sales tax to that's gonna be the 25. And that would be it if, um, you know, if it was a service company, basically, But we also have the cost of goods sold and the inventory to deal with. So we're going to say that the cost of goods sold, which is an expense cost of goods sold here, is gonna be for the $400 amount. As we saw, it wasn't on the invoice, but we went and saw it when we recorded that invoice 400. And then we have the inventory is going down. So this is gonna be the inventory. It's an asset. It's gonna go down by 400. So here's our journal. It's a big so you can see that this is what's really being recorded every time we make an invoice, and it's a bit of more complicated than you might think at first glance. So we've got accounts receivable, which is an asset. Assets have debit balances. It's going up because people are what's more money. But by the full amount of the invoice, 5 25 then we've got the revenue. Revenue is a credit balance account and it goes up with their credits. So we go out, we go up by doing the same thing to it as it's normal balance. What's a credit? And we're gonna credit it again, making it increased by the 500. The difference between the two is the sales tax that we collected. Sales tax is gonna be a liability account payable in its California Tax board payable, which is sales tax payable. That's who we owe. And it has a credit balance because it's a liability. We do the same thing to it to make it go up, which is a credit. And then we have the cost of goods sold, which is the expense related us to us consuming the guitar so you can think of the income statement accounts as being the sales and the expense. So this went up in terms of revenue. This is an expense that's going to go up. The net of the two is gonna be the net increase the net income, which is gonna be what we got for it, minus what we purchased it quarter of the 400. It's a debit balance because it's an expense and it only goes up in the debit direction. So we're increasing it with a debit and then we've got the inventory, um, which is an asset account, and it's got to go down because we gave away the guitar and therefore we're gonna do the opposite thing to it as it's normal balance, which is a credit. Okay, so we're going to see if we can record this. It might tell if we didn't have this name here. It would say that we couldn't recorded because we don't have a name. It might require us to have a name here because this is the type of a payable account. Might want a list. Let's go ahead and see Well, say save. And it's going to say, What did it did record that? So we're good. So now let's go through this. And we recorded this as of 2 28 and see what happens, closes back out and we're gonna go back to our report. Let's go to the balance sheet first, and we're gonna go to reports on the left. We're gonna go the balance sheet, and we're going to select our balance sheet as of 2 28 to 1 and 02 28 to 1. Let's make it so let's make it 0101 21. So january 1st, 2021 to February 28th 2021 then we will run that reports. So here's the report we have. So if we go through this once again, the accounts receivable should have going up with a journal entry now. So if we select that item and we scroll down, we should see, as of the the 31st we have our Justin entry. Here's our Justin entry. If we use journal entries, it's nice and quick books because then it'll it'll give us that a journal entry format. Whereas if I just entered an invoice, it wouldn't differentiate that it suggested entry. So here is ah, the amount. And if we select that item, of course, then we go to our adjusting entry. Someone close this back out and note that if we if we change this date range to the in date of this transaction, reports 03 ah, 31 to 1 and run that report and we scroll down. We're then going to see the fact that we have this basically in there twice. It's here, down and in March, and it's here in February. So this makes it correct as of the end of February, but as of March 3rd, it's gonna be in there two times. And that, of course, is a problem. Not a problem for financial statements as of the end of February. But it means that we're gonna have to do something. That means we're gonna have to reverse this as of the first day after our cut off date. That's how we're going to deal with this. We'll do that later. How ever? Because right now we're just worried about getting our financial statements correct as of the cut off date. So we're gonna scroll back up, We're gonna take a look at the other side of this. Let's go to the reports and go the profit and loss. So reports profit and loss report. We're gonna change those dates once again, Teoh 101 to 1 Teoh 0 to 28 to one and run that report. We swirl down. We have the ah, sales or product income. If we select that item, we should see our adjusting entries right there. There's are adjusting entry. It's increasing by 500 not the 5 25 because it's just the sales amount, not including the sales tax. And once again, if we change this transaction report, I'm just gonna hit the plus arrow a couple times to the third. Then run that report. We will see that we'll have that in their two times. So same scenario were correct as a February at the end of February, But as of March 3rd, it's in there two times and we're gonna have Teoh adjust for that. We're going to reverse, in essence, this entry in order to do that in order to make that adjustment. So we're gonna scroll back up, we're gonna go back to the report, and then we're gonna go look at the cost of goods sold. If we select that item, scroll down. Here's our adjusting entry. Um, it's got the 400 in it. And that, of course, is our journal entry again. Are Justin Journal entry? If we select that, here's our Justin Journal entry. And if we increase the date range once again up top to March 3rd, run that report, we scroll back down and we see that we have it in there two times. So this is It's not wrong having in there two times. It's correct as of the end of March, because it should have been in March, so we pulled it back into March. But now it's gonna be in there two times. As of the end of of ah, we pulled it back into February, so we pulled the bag in the February from March, and then it's gonna be in there two times as of March. The financials are right as of the end of February, and then we're gonna have to reverse it as of the first day of the next month so that it doesn't double up, because this one this is fine for our normal purposes, to just record it in March in accordance with our normal process. But it's not exactly general accepted accounting principles, so we want to keep the two things separate. We want to keep the account department to do their normal cycle to record the invoices as they normally do with their process, and just make the tweaks that we need to make when we're actually reporting formally our financial statements. So then we're gonna go back, gonna go back here one more time. And if we take the difference and now it's let's look at the last piece, which is gonna be on the balance sheet. So here we know that sales went up by 500 costs of good up sold one up by 400 the difference is 100. So the difference is an increase to the report, the net income that we are reporting on for this time period, February. Ah, here. So that's gonna be our adjustment. We'll go back to the reports on the left side and take a look at the other two components in the balance sheet and change dates from a 101 to 1. Teoh Ah, 2 28 to 1 January 1st 2021 to February 28th 2021. And run that report. If we scroll through this report than the other sides of this is going to be, the liability liability is gonna be that California State Board of Equalization selecting that item we owe. If we scroll down, it's gonna be made up of this amount here that 25. If we select that, that is our Justin entry here. If we close that back out and we go back to our report, the last piece is going to be the inventory. So the inventory is gonna be an asset up here. Here's the inventory asset. If we select the inventory acid and we scroll down, we see our adjusting entry here for the 400. So if we select that item, it's not. It's not the sales amount. It's the cost of goods sold that we have there. So if we close that back out, that's gonna be it. So we done a journal entry pulling this information and go back to the report into our financial statements. As of the cut off date and note, of course there is a It's gonna be perfect for us right here. And this is kind of a problem between the adjusting kind of department and the normal processing department. As as of the financial statements did, Justin department says, Hey, we're good. The financial statements are correct as of 2 28 but if we don't do anything to kind of make it go back to fix it back to the normal just processing system for the normal accounting process. We're gonna run into problems because it will be recorded two times and we'll deal with a reversing entry process, which is one way to deal with that process at a later presentation. 89. 10.30 Accrued Interest Reversing Entry: Hello. In this presentation we will enter a a reversing entry for accrued interest into QuickBooks online. Here we are in the QuickBooks online dashboard. We will be continuing with the get great guitars problem. We've been taking a look at adjusting entries those entries needed at the end of the time period in order to make the financial statements mawr correct on an accrual basis. As of the cut off date and our gaze February 28th the end of the month that we will be reporting. We're not gonna take a look at a reversing entry because there's a bit of tension between basically the adjusting process, which often happens by another department, possibly on outside C p A firm and the normal cycles that take place on because to the two things have slightly different objectives. So just from a logistical standpoint, we may not do things on a perfect accrual basis, and that's just the way the system is best set up sometimes. And then the adjusting process is going to say, Hey, we recognize the fact that the system isn't fully set up on an accrual basis because of logistical reasons, and we're just gonna make those adjustments as of the end of the month to make it more on an accrual basis as we report those because that's the best reporting process. So that being the case in order to get to to sink these two things up, some of the items that we had just four will have to reverse for in order, Teoh. Keep that separation between the normal logistical just accounting process and that adjusting process to tweak the financial statements to be completely correct as of the end of the time period. So what we're gonna do now is a reversing entry and to see that we are going to go to the reports on the left side. And I think the best reports look at the profit loss. So we'll look at the profit and loss statement and see what we did in terms of the adjusting process and then why we might need Teoh reverse that. So we're gonna put the dates here of 0101 28 to 02 28 to Limited Limited Again. Let me do that again. No one No. 1 21 Teoh to 28 21. So that's the period were working in January 1st, 2021 to February 28 2021 run that report. So here's the report that we are looking at We're concentrating down here on the interest expense. We had some interest expense that we recorded here. And if we select the interest expense item, we're focusing in on this $25. Now, I know that's not a large dollar amount, and this is probably in material for most companies and whatnot, but the heat concept remains the same no matter of the dollar amount. And so just imagine, obviously that that is a material amount, and we want to make these types of adjustments. So what we've done here is the adjusting process, As you recall, we looked at this in a prior presentation is we said, Hey, here's the loan. Ah, $5000 loan and we don't pay anything interest or principal till the end of 1 5025 One month has passed and therefore we recorded the fact that we owe the interest just like we owe rent. If we had been using the building, we owe rent. Whether we have paid it or not, we consumed it. We owe it. If we if we talk about the phone bill, If we used the phone for the month whether we paid the bill or not, we still incurred it and we should be recognizing the expense at the point in time it was incurred in accordance to the expense recognition or matching principle. So we went ahead and said, OK, we haven't paid this 25 yet, but it's been incurred and therefore we recorded it here. So this $25 then back to the QuickBooks here This $25 represents money and interest expense that was created by a journal entry, which we didn't actually make. We haven't made a check. If we click on that, then there's no money. We didn't that is the credits, not going to cash. In other words, it's just a payable. So we're just recognizing the fact that we incurred it, even though we have not yet paid it. So that's that's fine right there. But when we get back to the actual payment, I'm gonna close this back out and go back to the financials. Ah, the payments gonna be made at the end of this time period. Six months and they're gonna pay this 1 5052 What we want is to not have the normal process of the accounting department have to deal with reversing our $25 A cruel when they make the payment, we want them to just be able to say, hey, make the payment in accordance whether whatever system we've made up, which which would be just to pay this out credit, cash and debit, the loan amount 5000 and the difference going to interest expense without having to worry about what? What would you do with our A cruel thing. And so So that's what we're gonna do. We're gonna reverse our our adjustments so that when it goes back to the normal accounting department process, they don't have to look at that 25 say, What is this? Where did that come from? That I don't recognize this. It's not part of my normal cycle, and that will reverse that. So that's our That's our goal here. We're gonna get rid of this so that it will go back to the normal process. As of the first day of the next month. So this happened in February. It's gonna be the first day of the next month in March that we're going to reverse this now . This is not a perfect system. Should recognize this up top up front. It works well again, like kind of logistically, it works well. But what it's gonna what's gonna happen is it's gonna end up with having a negative expense as of the first day of the next month until we actually make the payment and those two things will net out. So what? We'll talk about more what that looks like once we do the reversing entry and then say why we would want to do that. And, you know, is there a better system? Should we be in a better accrual system and what the pros and cons are of the systems? So to do this, what we're gonna do is reverse this as of the first day of the next month so that the system that they don't have to worry about this $25 and note that the 25 is also if I go to reports over here on the left side and we go to the balance sheet. Run the reports. We're gonna go the balance sheet, and we're gonna make the balance sheet as of 0101 21 Teoh 02 28 to 1 January 1st 2021 to February 28th 2021 run that report. If we scroll down here, we're going to see a similar transaction. And we see this 25 that 25 will be remaining there even after we close out the month of February will still be there in March. And so we're gonna reverse that as well. So again they can Department might be going. What is that? I don't even know what That 25 you know, interest expand wise that there because the adjusting department put it there and in order for them not to have to worry about that when they do what they're loan payments, we're just going to reverse it here and make any adjustments we need to make as of the end of each time period that we were report that as of the end or the cut off date of each month, So let's reverse that, and then we'll talk about that a bit more to reverse it. If we click on this item and we select this item, all we need to do and a reversing entry is just the opposite of what is here. So this is a debit to the expense that will credit the expense. This is a credit to payable, so well, debit, it will just reverse it and will do it as of the first day after the cut off. So as of the first day of the next month, as of March 1st. So we're actually gonna do this because we didn't do this with a journal entry. We put it into the register so well, when there's only two accounts affected, will do it with the register and then we'll take a look at it and it will actually create the journal entry. So we'll do it in those two formats. So we'll close this back out and we're gonna go to the registers, So that's gonna be over here On the accounting side, we've got the accounts up top and note. There's two accounts affected on expense account and a liability account. The lie. But the expense accounts will not be here because it's temporary. Typically, eso the liability accounts what we gotta work with, which will be interest payable in order by type. So assets and more specifically, cash and then receivable than other assets, then fixed assets and then liabilities, including accounts payable, credit card, other current liabilities and then equity accounts. And that means we passed what we're looking for him, which is the interest payable. So that's the interest payable right here, and that's what we want. There's a $25. We're going to go to the register, so we'll select the register here, and there's only that one item in it. We're gonna add something new, and there's only one thing we can do pretty much. And that's, ah, journal entry or transfer. But pretty much we're going to a journal entry. And remember, the date has to be the first day after the cut off. So here's the cut off date. It's gonna be 0301 to 1, and we're just gonna do the opposite of what we did here. So it's just gonna be here. I'm gonna call it reversing entry, and this was an increase down here. So now it's gonna be a decrease. The liabilities going to go back down because we're going to reverse this and the other side is going to be interest expense. So I'm gonna select this. We could find it there and award just type in interest expense. So here we have it. It's an expense item. Now, this is gonna be really funny because we're going to be recording the negative expense recording Basically a credit to an expense and that normally almost never happens is really kind of unusual situation, but we'll kind of explain why we would want to do this. Okay, so we're gonna say, save on that. And there we have it. So we have recorded that if we go back to the reports, then back to the reports, we go to the balance sheet and we caught. We select the balance sheet as of O to say no one 01 21 Teoh to 28. 21 and we run that reports. So it's January 1st, 2021 to February 28th 2021. We're still going to see that down here. We'll see that 25 right there. But then Of course, if we scroll back up and we add the date, I'm just gonna highlight this and plus the plus one to go to 31 So the first day of the next month and run that report. And if we scroll back down, we should no longer see that 25. It's now been eliminated. So the interest payable. If we select the detail, then we scroll down. It was their right before the month ended, and then it went, and then it went away. So we put it there because we needed to make the financial statements right. And then we reversed it the day after the financial statements were generated and created. We'll see the same thing on the reports here to the profit and loss. So we'll go to the profit and loss report and we're going to say the profit and loss. We've already seen it in the time period that has within the cut off date, let's have the first month after now, which is going to be over 30121203 31 to 1 to the mark. The month after the cut off date, March and we're gonna say, Run that reports. And this is kind of a funny thing that happens here. So we've got this $25 which is the negative expense, and that really shouldn't happen. It's not like you can't really have a negative expense. That's that. That would be like income relates. It's not a negative expense. So the reason we're gonna have this is that it will net out, like at the end of the time period, when the bookkeeper makes this journal entry and actually just records. This actually makes the payment as they will. They're gonna credit cash and they're gonna debit the loan and then credit the expense by 1 52 This 1 52 here. And once that 1 52 nets out against this 25 that's already there, then it will actually be correct. It'll be correct as of the point time that the bookkeeper makes their normal kind of loan payment adjustment and it'll reverse out at that point in time. So that's gonna be the pros and cons that we have here. It's gonna be it's pretty much wrong right now. Um, because but it'll be correct. As of the point in time that the bookkeeper does the next transaction. And so the bad side about that is it's not perfect, a cruel until that happens, the good side about that is that the bookkeeping department, when we do these reversing entries and this will become more clear when we do like a payroll reversing entry or the invoice which reversing entry the normal accounting process doesn't after revert doesn't have to deal with anything different than their normal process because of our adjustments. So So this process then means that everything's gonna be correct on accrual basis as of the cut off date. And then because we make the adjustments then and then we have some adjustments that are gonna be not correct when we're not at the cut off date because of the adjusting process and that reversing process. And that's that's just the logistics of the way we're gonna have to work it. So that will keep a good separation between the adjusting department and the normal accounting cycle processes because they have two different goals in sometimes In some cases , Theo Justin department, too, make the financial statements perfectly correct on the cruel, the normal accounting process to run, AH, most efficient, logistically sufficient accounting cycle process, and this will keep those to kind of processes rolling along and still achieve those two goals. 90. 10.35 Accounts Receivable Reversing Entry: So in this presentation we're gonna enter a reverse, an entry related to accounts receivable within QuickBooks online. Here we are in the QuickBooks online dashboard. We will be continuing with the get great guitars problem. We're working on a river. Seen entries here in the entries that we are reversing are some of the adjusting entries those entries made at the end of the time period, usually a month or year. In our case, the month of February, we're reversing those in order to separate the two functions, one being the normal day to day processing function to move logistically well as compared to the month in process to make the financial statements in accordance with the accrual principle as closely as possible to see those concepts. Let's first take a look at our reports here on the left side when it first go to the balance sheet report and we're gonna take the report for our range of dates, which is 010121202 28 to 1. That's January 1st, 2021 to february 28th 2021 run that report. So here's the report that we have now. Remember, our goal here is the dates up here again. Remember, the goal that we have here is to have everything correct as of the cut off date. So we want everything correct as of February 28th that doesn't mean we're not concerned about any other date. It just means that that's the date we're making the financial statements as of and therefore we want to make everything completely accrual based. Correct. As of that date, something's logistically work Well, to not exactly be in accrual basis all the time, one of those things might be our billing process. So our billing process, we might say, Hey, we got a bill every two weeks or so because we have to count up all the all the bills and all the hours and then build somebody. And the time it takes to do that might mean that our normal processing cycle, maybe two weeks later, after we actually do the work. The problem with that is that from on a cruel standpoint is that QuickBooks recognizes revenue when we create thean voice. And if we created the invoice in our case in March, when the work was actually done in February. QuickBooks would record the revenue in March when we really needed in their February. We need the increase in the receivable in February. Even though the invoice didn't go out, we earned the revenue and people with that money at that point in time. And the other side is the revenue side. We earned it. Now, in our case, we have ah, we ship guitars. So we would typically look at the point time the Qatar was shipped to the owner on If that happened in February, even if, for whatever reason, the invoice went out in March, we should really have that recorded in February. So that's the adjusting process. So in the adjusting process, we pulled that information back here. So if we take a look at the accounts receivable and scroll down, we will have an adjusting entry here for I believe this is the one. This is for an invoice that we recorded. We've recorded a journal entry, which is, in essence, an invoice journal entry. So if we make this day to go out a bit, I'm gonna make it only hit the plus arrow a few times, go to march let's make it 10th or 11th and run that report. Then we'll see. The full story here is that this invoice actually happened in March. So this invoices in March and the story is that it should have been in February because that's when the work was done, even though the invoice didn't go out until March. So if we selected this item, this is our journal entry. That is, in essence, the journal entry that will be pulling this information back. Meaning accounts receivable is gonna go up just a normal. This is the journal entry for a normal type of transaction for an invoice with inventory accounts receivable is going up. Sales is going up. The fact that we owe sales taxes going up constant it sold is going up and inventory is going down. This is actually a pretty complex journal entry, even though it's just a nen voice. The invoice is something that everybody makes any kind of sales clerk makes the the invoice . But what actually is happening when you create the invoices a little complex and to set up what is happening and corrected if there's wrong, if there's something wrong and it is adjusting entries really gives a better idea of what an invoice is doing. So that's gonna be this side of it. So I'm gonna close this back out, and so you can see that that's this. Pulls it back in two. The correct time, period in that we pull it back, Teoh the month of February. But then we have this problem in that it's in there twice. So here it is, here and then we have it here by March. So it's fine for our cut off date as of the end of February. But by the time we get the march, now we have the invoice in their and our adjusting their tree. And so we have this conflict between making it right for an accrual basis. As of the cut off date and the logistical basis, we might have had a good reason for whatever entering the invoice. Ah, little bit later. So now we gotta do something to fix that. And what we'll do is just reverse the entry. So we're going to another entry as of the first of March, not the third when we're not gonna try to make it exact in the point in time. That means there's gonna be three days with financials are wrong by this invoice, we're gonna accept that just as a logistical reality, we're just going to say, hey, the benefits of just making it all the reversing entries as of the first are greater than tryingto Teoh make every day. Correct. And so that's how we're gonna work this. Let's take a look at one more side of this. I won't take a look at every aspect of this adjusting journal entry, but we don't wanna look at the, um, profit and loss eyes. I'm gonna go to the reports and we're gonna go to the profit and loss. And within the profit and loss, we're gonna type in the date of 0202 28 to Yeah. No, no, that's not right. That's not right to go to 21 0201 21 February 1st, 2021. 02 28. 21 February 28th 2021 run that report. Okay, so here we have our cut off time period again. We're gonna run just looking at this month and obviously our cut off date is the 28th. Once again, this is a timing statement. Meaning it needs a beginning and an end. And we're talking about something of a sales item. So sales, because we had we sold inventory. So we're gonna take a look at this 2500 and if we scroll back once again, we see the 500 for this journal entry. If we select that item, that's us pulling in. This is that same journal entry increasing the sales amount as we did accounts receivable. We see the same thing and cost to get sold in inventory. And if it closed this back out, if you want to see the full story, I'm gonna make this a little bit in March again, Go to go towards March, go for a little bit in March and then I'm gonna say march 9th and run that report. And then if we scroll back down, we'll see more of the whole story here where we had the 500 made its correct. As of the cut off date, which is the 28th maybe I should make one of these sales a little smaller. So we stopped going back and forth like that. So that is as the 28 as of the third. Then we have the actual invoice. So we're correct as of the end of the end of the month, but we're not correct for a couple days. Well, on the third, what we're gonna do to fix that is having a Justin entry on the first of the new month. All right, let's go back to the profit and loss and let's check one more thing out, and that's gonna be the cost of goods sold account. And that's gonna be the expense related Teoh this journal entry that we're gonna be working with. And here it is again. Note. It's $400. So I'm gonna take a look at that. That journal entry, Same one. This is the one we're going to river. So we've seen it a few different times. Now, this is the one that we're going to reverse number. Just recording this journal entry is a little bit complex to think about how to reverse it . It's easier. Just a look at this one and then do the exact opposite. Meaning, you know, we increase the accounts table with a debit So we're gonna credit it. We increase sales with credit, so we're gonna debit it. We increase the tax with a credit, so we're gonna debit it. Cost of goods sold has a debit. So we're gonna credit and inventory went down with a credit. So we're gonna debit. We're going the opposite for the whole thing. Now, if you see this in a book problem, they will probably adjust the ordering of the debits and credits in the reversing process so that the debits are always on top in the creditor on bottom. But it's probably easier. Just a mirror this exactly. So, however, you thought to put this here, just do the exact opposite. Same ordering of accounts, but reverse the debits and credits. So that's what we will do now. So I'm gonna clues this back out and no, we're not going to use a register because this is a complex journal entry, and the register may be able to handle this, but it's a little too complex to try to try to use the register. The journal entries are really the best way to go. No one. You kind of have to know debits and credits to really do a transaction like this properly or at least as easily as possible and properly. So we're gonna go to the journal entry. We're gonna go plus toe, ever gonna go down here to journal entry, and we're gonna change the dates here to the first day of the next month, which is 0301 to 1. All of our reversing during journal entries will be as of the first day of the next month. And if you could just memorize that last or just think about that last journal entry we looked at were just reversing that the first thing that happens in an invoice, we think oven invoices increase in receivables. So we're going to decrease receivables with a credit. So we're gonna type in accounts receivable here's accounts receivable, and it's gonna be credited for the cost, which was 500 plus the sales tax of 25 or 5 25 I'm going to call this a reversing, reversing entry, and somehow the caps lock went on. All right, we fixed the caps lock problem, and now we're going to be on the name. Now we have to have a name with accounts receivable because, uh, the QuickBooks will not let us record two accounts receivable, typically because it'll say, Hey, you know, I need to have ah, I need to make up a subsidiary ledger by customer. And I cant do that unless you have a name here. And that's gonna be a customer name, typically. And I think it was string music that this invoice was four. I hope so. That will be the one that we will select. Actually, that's not correct. It was Sam the Guitar Man, Sam the guitar Man. So once again, we got accounts, receivables the account and it's gonna be a credit. Teoh 5 25 It's a reversing an entry for Sam the guitar man. All right, then, the next side, we typically think of all right, typically, think of the other side going Teoh the, um, sales or revenue account. So the sales typically goes up with a credit, causes a credit balance accounts, so we're gonna do the opposite in debited to reverse it. So we're gonna call it to sales of product. We're gonna debit it for the invoice price, which is $500.500. It's gonna be a reversing entry. The difference, then, is gonna be the sales tax. Sales tax is a liability, typically going up with a credit. So we're gonna do the opposite and we're gonna debit it now. Ours is gonna go to the California State board because that's what Quickbooks called the account California State Board of Equalization. And we're gonna debit that for 25 Gonna be a reverse an entry, and then we have the other side of it, meaning inventory is going to go down. And the related cost of goods sold that's gonna be cost get sold, has a debit normally, So we're going to the opposite and credit it. So we're gonna typing, cost of goods sold, and that's gonna be cost of goods sold. It's gonna be a credit for 400. That's the cost, not the sales price. And then the other side is the inventory, which would typically be going down with a credit. We're gonna do the opposite and debit it so the last piece will be the inventory. Um, so we're gonna call it inventory. It's an asset account. Asset accounts was it would been going down with the credit. We're gonna deputy it. So here's the full journal entry. Remember, this is the reversing oven envoy so that we don't see this too often. But if you can get this reversing oven invoice, you really are having a pretty good understanding of what an invoice is and how it's recorded. So an invoice typically will increase accounts receivable with a debit, and we're doing the opposite and credited on invoices. Will typically increased sales or revenue or income with a credit. We're going to the opposite in debited. An invoice will typically increase the payable we have, which is a credit, and we're going to the opposite in debited on. Envoys will typically increase the cost of goods sold the expense for the cost, not the sales price with the debit. So we're going to the opposite in credited, and an invoice will typically decrease the inventory for the inventory we sold at cost with a credit. So we're going to do the opposite and debit it. So what? Save this and see what, See if it does now, remember the date here, uh, somehow change. It should be 0301 to one. So it's the first day of the next month. So we're going to save this and see if it does what we believe it should be doing. So we're gonna save this and see what happens. We will close this out. I'm gonna go back to our financial statements back to the reports here on the left side. We're gonna run the balance sheet and will change our dates once again. 2010121202 28 to 1 and run that report. So here is our report. If we take a look at one of the accounts affected, such as the accounts receivable account, we will then see the activity. And remember that we saw that activity down here related to our A Justin entry. The 5 25 Try to make this a little bit smaller. If I can grab that, it's gonna be the 5 25 we then are gonna just this as of the first day of the next month. So what we're gonna do if we pull this in here on 2 28 is scroll back up and we're gonna increase the date once again a few times. Teoh, let's say 38 and run that report scrolling back down. Then we'll see that we've got the 5 25 happening up here on ah to 28 then we're reversing it as of 31 so it could then be recorded again with the actual invoice. So let's talk about that one more time. Remember that it was originally recorded here. This is when it first happened in time in March, and it should have been in February. So to make that work, we made an adjusting entry to pull it back into February. But now it would be in there two times by March 3rd. And therefore we reversed it right after we made the financial statements. As of the end of the month, February, we just reversed it right here. We didn't do it on the third. Exactly. We could have tried to do that, but we'd rather just make all reversing entries. As of the same day the first day of the next month, we reversed it here, noting that it will be wrong for three days. That's okay, uh, and then we're gonna have it appear here again on on the filtered. And that's when the actual invoice is recorded. So I'm gonna scroll back up and we'll see the same format in the other accounts that will be affected. I'm just going to take a look at the inventory account. So we're back here on the balance sheet, will take a look at the inventory account and see the same activities. So if we go into the inventory No, I've shortened some columns a little bit. It's a little finicky sometimes with the QuickBooks online, but just you can you can adjust those and go back in and out to fix those as you please. And then we have the journal entry down here. So remember we pulled this in and decreasing the inventory by that 400 that's our Justin entry. And now if we increase the date a few, a few Ah, a bit to march that you do it march 7th and run that report and then scroll back down. Then we'll see the full activity. We pulled it back into the end of the month, March 28th and then the actual invoice happened on the third. So if we had that in there twice, we'd have these two negatives inventory would be going down to times, and that's not quite correct. What we should be doing is what we're going to do to fix that is reversed the inventory right here with this 400. So it made it correct. We pulled the decrease in the inventory to the correct month. Then we reversed it as of the first day of the next month. And then the actual invoice happened. Let's see that same thing on the income statements. I'm gonna go back to our report. Then we're gonna go to the accounting down here. I'm sorry. We're gonna go to reports, reports on the left, and we're gonna go to the profit and loss this time, and we'll see the same thing with the sales account and the cost of goods sold. So we're gonna make this as of the month of February 020121 2/2. 28 to 1 February 1st 2021 to February 28 2021. And run that to report. So if we scroll back down, we see the sales products. That's the one we want. So we're gonna select that 2500 and once again, I went in here in just the columns a bit. So if you scroll, if we scroll down, we see the 500 here. That's the revenue related to the adjusting journal entry that we pulled in to this month. We did that with a journal entry, not an invoice, because the invoice would happened in March. If we if we increase the date a little bit to the next time period, that should do it. The fifth run that report and we scroll down, then we'll see that we pulled it back into March with this journal entry. The actual invoice happen on March 3rd. So remember the order of when this happened and then the dating order. It happened in time. This actually happened first, but it didn't happen until March 3rd, but the the inventory was actually delivered sometime in February. Therefore, we at a later point in time entered this journal entry as of the end of February so that we can then record this revenue in February. And then we reversed it as of the first day the next month so that we can keep this original invoice that we originally it entered in March 3rd. So it's gonna be the process there will see that one more time in one more account. Then we'll stop this. The next is gonna be the cost of goods sold. So we're back on the profit and loss reports. We're looking at the cost of goods sold the 2000 selecting the cost of goods sold. We see that 401 same thing. This is the 400. Increasing the expensive cost, a good soul, decreasing net income. We made the sale and therefore the related expense should have happened in February, even though the invoice didn't go out until March. And therefore we need to bring this back into February. And if we increase the date just a little bit once again, toe like March 5th or so and run that report scrolling back down will then see that this one remember happened first in time. It's increasing the cost of goods sold, decreasing the net income. But the date is later, of course, because even though it happened in first in chronological order, when we did it, um, it was the date was after the actual inventory was delivered and Therefore, we needed to pull it back in to Martin February. So we did the adjusting entry to pull it in February and be correct as of this financial statement date. And then we reversed it as of the first day after the financial statement date so that this invoice that we had entered originally will now be the only thing affecting the financial statements as of that point in time. So it's just the timing difference that we're dealing with here, and we're trying to differentiate between just getting things perfectly correct as of the financial statement and just doing the things logistically as they're done for the normal accounting cycle. 91. 10.40 Prepaid Insurance Adjusting Entry: Hello. In this presentation, we will discuss the Justin entry related Teoh prepaid insurance within QuickBooks online. Here we earned the QuickBooks online dashboard. We will be continuing with the get great guitars problem. We're gonna be doing the adjusting process related to insurance here to discuss that The adjusting process. Let's go. The reports were man gotta reports down here on the left side. We're gonna start off with the report of the balance sheet. The financial statement report of the balance sheet clicking on that item. We're gonna be running this report for the two month time period of 0101 to 1 January 1st 2021 202 28 to 1. That's gonna be the time frame. We are working through January 1st, 2021 to February 28 2021 run that report. Here's the report that we have now and what we're doing on these adjusting journal entries . So these are gonna be the types of a journal entries that we're gonna make as of the cut off date. As of the date we make the financial statements in this case, the end of the month of February 28th are golden is to make the financial statements as correct as possible on an accrual basis. As of the cut off date of February 28th the prepaid insurance is one of the standard types of adjusting entries will have in practice and in textbooks. Remember, when we look at these adjusting entries, we typically have one balance sheet account. This is the balance sheet and one profit and loss or income statement accounts, and we typically will not be dealing with cash, which is a bit unusual because when dealing with non, uh, Justin entries normal entries. In other words, we often deal with cash. So here we're probably not going to dealing with gas, and we're gonna have one balance sheet account. One income statement accounts. If we look at the balance sheet accounts were dealing with, we're dealing with prepaid insurance and the income statement account. Then, as you may have guessed, will be insurance expense. So what we typically do when we set up the system, if we're planning through the system, is, we'll tell the accounting department or for the county department were going to say we're gonna post any insurance payments to not insurance expense, meaning we're gonna credit cash and debit or the other account will be not insurance expense but prepaid insurance and asset account not a profit loss, not on income statement, not a deduction of net income account. And the reason for that is that prepaid insurance will be something that we pay for before we get the consumption of the insurance before we use the insurance policy. And typically, a lot of businesses will pay significantly in advance, meaning six months in advance to a year in advance. And therefore, if we write off that whole payment in the time that the payment is made, it could significantly impact the financial statement correctness. Because really, we way we should be allocating the expense on a monthly basis as we're consuming the insurance rather than when we paid for. Now, if we had recorded this as an expense, then we have to do like the reversing the reverse of the adjusting entry we will do here, meaning we would make some of it prepaid, as opposed to having the whole 11,000 written off. Whenever we wrote that the payment off in eso here were typically. If so, if we can planet first, then and plan for the adjusting process, we're going to say, hey, put it into prepaid insurance and at the end of the month or the end of the year will just fix it to make it whatever it should be by doing this adjusting entry. So what we're gonna say here is that if we click on this prepaid insurance and see the check was written here, it's a check that was written for 11,000. If we select that check, then weaken. See the check? And here's the actual check. Now we're gonna assume that this check was written for a nen tire years worth of insurance . So we have to look at the policy, of course, to determine that we're going to say this is a year's worth of insurance. I'm gonna close this back out. We're gonna go back Teoh report. And so what we're going to say now is that there has been one month has passed since we purchased this insurance, meaning we consumed one month. So it's a fairly simplistic calculation. We're going, We're going to say that that we're just going to say that there's a weapon dials and that we paid for 12 months. Now one month has passed and therefore no longer one month's worse of that is an asset and one month has been expended. So we'll take that and divide it by 12. And that going to give us the 9 16 66 this will be and we're just gonna round to 917. So this is gonna be the journal entry we will do. What we're gonna do is we're going to say that this needs to go down by one months, Went, which is 917 and that the related expense account needs to go up by the 917 for the month of February and therefore bring that income down by 917. That is the transaction we will do now. Typically, we would do this by selecting the plus Aero down here, it's a it's a plus icon, not really in a row. We're gonna select a plus that changes to acts. And typically we would do a journal entry here because it's not just in journal entry, and typically all journal entries are done with the Journal entry. But there's only two accounts affected here, so we're actually going to try to use a different process so that we do not need the debits and credits were going to use the registers if there's only two accounts just because we can, and then when we go back in here, we'll see that QuickBooks still created a journal entry. But we can do this with the register. So if we were to do the journal entry, as we'll see when we get back in the journal, entry will debit the expense by 917 and credit the, um, prepaid insurance by 9 17 bringing the prepaid down, bringing the expense up and reducing net income by the expense of Mountain. But we're gonna that with the registers. So we're gonna close this back out and attempt not to know the deputy credits as much or is to use the registers. And if you are good with debits and credits, then the attempt is to better understand the system here so that we can see multiple ways to enter this information. So then we're gonna go to the accounting on the left side, and we are in the chart of accounts here, The first tab on top. Typically, when we look at the register, we think of the check register. But any account that's a balance sheet account will typically have it register. We're dealing with two accounts here. Insurance expense, which is an income statement. Accounts and therefore not a balanced account, may not have a register, and then the other account we're gonna be dealing with will be the prepaid insurance. So we're gonna look for the prepaid insurance, which is gonna be an acid. It's in order assets liability equity, incoming expense assets, then being checking accounts receivable and then inventory prepaid expenses. Here we go. That's what we want. We want the prepaid expenses, other current assets. This is the one that's the one. So it's got 11,000 in it. As we saw on the balance sheet, we're going to select the register and work with this item. So there's the 11,000. We're going to create a new item here. It's not gonna be a deposit, not a sales receipt, not a received payment. No refund, no transfer? No, we have to use journal. So it's gonna be a journal entry even though it's not gonna look like the journal entry, We just look like what we've looked at. So it's gonna be a journal entry, however, so all adjusting journal entries will be as of the end of the month. By that, the cut off date, which in this case is owed to 28 to 1 February 28th 2021 the payee. I'm not gonna put up a e the memo. It's gonna be in a Justine and Treem and get a few capitals there that are probably unnecessary or most definitely are unnecessary. And then we're going to say that we are going to decrease it because it's 11,000 increase and we're gonna make it go down by that months. Worse that has been consumed and therefore should not be included anymore in there in the prepaid amounts. So there is that the other side's gonna be insurance expense. We could select the drop down and find it and order type in insurance. And then it's gonna be the expense over here in the type of account. So it's insurance and expense in the type, so we're gonna say OK, and we'll save that item. And there we have it. So it should be saved. Here it is. So now we're going to go back to our reports and see if it does what we believe it should do. Which is to bring down prepaid insurance by the 917 representing 11 months still there and then go up on the expense side for insurance, bringing down net income reports. Left side. We're gonna go to the balance sheet report balance sheet report under the reports, and we're gonna change those date ranges once again. 20101 21 202 28 to 1. That's February 1st, 2021. I'm sorry. That's January 1st, 2021 to February 28th 2021 run that report. So here is the report. We're going to scroll down to the assets section for the inventory acids. I'm not inventory prepaid insurance assets. There it is. We have 8 10,083 in it, and that should be 11 months now. So we're saying that if we took the original 11,000 divided by 12 because that's for a full year and we want to see how much it is per month. That would be 9 16 We used 9 17 we rounded to 9 17 and there's 11 months left that have not yet passed and therefore are prepaid and in that sense, an acid, something we're gonna consume in the future. If we take that 9 17 and multiply it times the 11 months that are still remaining, we get 10,087 which is close to the 10,083. It's off by the rounding because we rounded up by the to the 9 17 rather than having the pennies there. Let's take a look at it. If we drill down on the prepaid insurance, then we'll see that 11,000 here. And then we see our adjustment for 9 17 leaving us with the prepaid amounts of the 10,083. If we select this 9 17 which is note a journal entry, even though we entered it into the register, it's adjusting entry here, and we select that item we see not the register, but an adjusting journal entry in a journal entry form. We see the debits and credits, So this is the form this is the default form that QuickBooks have to go to because there's no other document that it's gonna be used. There's no bill. There's no invoice. It has to use a journal. QuickBooks want some type of form, some type of journal as the last scenario, if there's no other form. Also note that the way we entered it into the register because we use the prepaid account, it said that we decrease that first. We did that first cause we used that register. That's the way QuickBooks sees it. And therefore QuickBooks put the credit on top. Which again, if you're an accountant student, then you're probably that may look funny to you because yours I think that the debit should be on the other side and note that that's just a convention, really, And usually the software does that. It makes you kind of put the debits on top, usually when we make journal entries or look at the G O. But it's not something that always happens, and it kind of depends on the software as to what's going on and when the debits will go on top, this one, because we use the register in the format that we did well, they put the credit on top. And no, it's just a convention. And it doesn't matter which one goes on top of debit or credit as long as they're in the debit and credit columns. So we're gonna close that back out and we'll take a look at the other side, which will be on the income statement or profit and loss. We're gonna go to the reports on the left side, and we're going to select the profit and loss report. We're looking for the profit and loss reports, and I'm gonna run that for the two month time period. Once again, which is gonna be 010121202 28 to 1. That's January 1st, 2021 to February 28th 2021. And run that report. So here we have the report here. We're going down to the expenses area where we have the insurance expense. Here's the insurance expense. It's got $917 in it, which was one month's worth of expense that, of course, increasing the total expenses and therefore decreasing the net income. This is important to note on these on these adjusting entries. Note that often times as you'll see, if you're in a public accounting, you'll end up making the net income a lot lower than it was originally when you got the work because of these adjusting journal entries. Ah, and the And so it can be significant here when we go through this process because it can't and it typically test end up reducing the net income, often times making making ah, the books look worse than they originally were when they brought it. But they have to be done because, of course, this is part of the process, so that 9 17 was consumed and therefore is an expense in bringing down net income. If we select that insurance item, then we can go down here and we could see that 917th. If we select that item once again, we will then see our journal entry that was generated when we enter this information into the Register. Four Prepaid insurance 92. 10.45 Depreciation Adjusting Entry: hello And this presentation, we will enter an adjusting entry related to depreciation within QuickBooks online. Here we are in the QuickBooks online dashboard. We will be continuing with the get great guitars problem. We're gonna be entering adjusting journal entries related to depreciation and property, plant and equipment to go over the process. We will first take a look at the financial statements, the balance sheet in particular going to the reports down here. The left side reports and then we're gonna go to the balance sheet, report that financial statement report, and we're gonna put the dates for the process or the period of time in which we will be recording and at Justin Journal entry form, which will be 0101 to 1 January 1st 2021 to go to 28 to 1 February 28th 2021 run that report. So here is gonna be the information. Here's the date ranges. We will be going to We're gonna be doing the adjusting journal entry processes and the adjusting journal entry processes will be as of the cut off date as of a point in time. Typically as of the end of the month or year. In our case as of the end of February 28. Remember that most adjusting journal entries. And this will be a typical one when we will see in practice as well in textbooks, and that will include a little adjusting journal. Entries include typically one balance sheet accounts. This is the balance sheet and one income statement account, which is, or the profit and loss accounts. And so this is gonna be no exception here. We're gonna have one balance sheet account, one income statement accounts, and they typically do not include the checking account. We're not dealing with cash when we do the adjusting journal entry process for the most part, almost always so cash will not be involved. If you go through that, you kind of think through which of these accounts we need to adjust as of the end of the month to be more properly on an accrual basis. And one of those accounts that we need to adjust at the end of the month is clearly the furniture and fixture account. So this is gonna be the property, plant and equipment QuickBooks calls it fixed assets. That's one name for it, but it could also be called appreciable assets those that typically need depreciation, although land is usually in there and it's the one that doesn't appreciate or ah, it could be called the fixed assets or property, plant and equipment, all names for basically the same thing. They're gonna be things typically tangible things, things that weaken touch and things that will be consumed over a longer period of time. Then just the current period of time, and therefore we put him on the books as an asset. Now, when we put him on the books as an asset, they they're typically not thought of as something that we would expense. I mean, most people think of a large purchase of furniture or something like a forklift like equipment like that, or building as something that even if we paid cash for, we would record as an asset just because of its size. So but conceptually, that's a little bit more complicated than maybe we might think at first glance, because if we paid for something, the question is, should we? You know, we're crediting cash or were decreasing cash. What should the other account be should it be a furniture and fixture expense account which would decrease net income and be part of the profit and loss? Or should we put it on? It's the balance sheet account, and typically we put these on as the balance sheet account because they're large amounts and therefore because they're large amounts, we know that we're buying them as an investment for a longer period of time. It's not just gonna affect this time period were buying it for multiple time periods within the future, and therefore we shouldn't just expensive because it will really mess up our net income calculation if we just if we just expensed 103,000 we would probably have a loss for the month in which we did that on. That would be a fairly significant, not really reflect the actual thing that actually happened even if we paid cash 103 because we really bought this furniture and fixture. These fixed assets, these property, plant and equipment not for this one month, not for this one time period, not for this year, but for hopefully for multiple years into the future and therefore, in accordance with the matching principle or expense recognition principle, we should put it on as an asset and then expensive over the time period. Now, the other thing that makes this one a little bit strange is that you would think then, as we did for prepaid insurance, we would just reduce the prepaid insurance directly, as we did hear from 11,000 to 10,083 record a prepaid insurance expense. If I mimic that same thing here, we'd say, Well, why don't we just decrease the furniture and fixture account and then recorded furniture and fixture expense? And that would be perfectly reasonable thing to do. However, that prepaid insurance, it's really pretty straightforward as to how much has been expired or not. We know exactly what the policy is and how much time it took to expire. But here it's really just an estimate. I don't know how long we got. We bought 103,000 worth of firm turned fixture. I don't know how long that we're actually gonna use that. If we do really well, maybe we'll replace it sooner. We don't really know. So we can, however, doing estimate all we can do is make our best estimate and because it's an estimate, we're not going to write down this account directly. We're gonna create another account, which we call a contra acid accounts called accumulated depreciation. So the balance sheet accounts gonna be called accumulated appreciation, which really is just matched up to this account, and we're just going to match it up and say, Here's the debit half of it. Here's the increase half of it, and then the accumulated appreciation is gonna be the credit half or the decrease portion. And if you want to know the book value, you've got to take the cost minus what we estimated the decline in value or the accumulated appreciation to get the cost. So that's what we're gonna It's gonna be a credit Teoh accumulated appreciation and a debit to not furniture expense, but depreciation expense. So whenever we see depreciation, it's related to one of these kind of fixed assets, in this case, furniture and fixture. We're going to a quick calculation on it when we won't get to in depth in terms of how to calculate this. Oftentimes it's complicated because we have a lot of furniture and fixture. A lot of different type of things involved. And therefore it's not just one number that we're just going to appreciate. We probably have multiple different things that we have to appreciate that we bought at different times. And we typically even have different appreciation schedules for our books versus our taxes . So we often need help from a C p a. From to really get this number correct, but we'll give the concept of it. It's really important to know some concept of it, because if we don't account for depreciation, we're not really recording things properly because it's one of those things again that will reduce the net income and make us look properly worse than we then we would have if we had not been thinking about the fact that are fixed. Assets are declining in value over time. So the way we're gonna do this is this is just gonna be a straight line, just a quick calculation, as if all this is one piece of equipment that we bought at the same time just for simplification purposes. So we're going to say they have 103,000. We're going to subtract up the salvage value. That's what we think we can sell it for at the end of the useful life after we were done using it, we're going to sell it for scrap. Pacey, basically. And that'll be the salvage value could be called scrap value as well. Minus B 10 1000. That's gonna be our scrap value. So we're gonna appreciate, then 93,000 and we're going to say that this stuff's gonna last 10 years. How do we know that was just a estimate, which is guessing that it's gonna last 10 years divided by 10. Now, if you're wondering, Well, that seems kind of random. I could just use any number. It has to be a reasonable number. And for taxes, it's gonna be more specific. There's more regulations in terms of exactly or different regulations in terms of exactly how many years you can appreciate certain items for. And so that's gonna be 9300. So what we're saying is, after one year, we're gonna reduce this by 9300 in terms of value. Ah, we're just doing one month here, however, so we're gonna take that then and divide by 12 and that's gonna be 775. So what we're gonna do is we're gonna say one month has passed. We're gonna reduce this 103,000 by 775 the amount of the appreciation that we are estimating for this amount. We're not gonna do it directly. However, we're gonna create another account. Contrast it accounts a negative asset account that's going to be ah, accumulated depreciation account. As with all adjusting entries, that typical way to do this would be with an journal entry. And so if we go at the top, we would hit this plus icon and we would go to the journal entry, the journal entry and it would look like this and we'd have the debits and credits that we would then be recording. We're gonna try to do this since there's only two accounts affected, though with a register we will get back here to the journal entry. We will see what the debits and credits are. But if you know debits and credits, it's good to see multiple ways that we can enter this information. If you don't know debits and credits, it's good to see the registers to see that you can do a lot of this stuff, basically, with the registers, it really depends on who you talk to as to how they're going to go through this. Typically, we would use journal entries because typically, the adjusting process will be done by the accounting department outside C p A. Firm or something like that. But we're going to use the registers, which will basically be the same thing, and then go back here and see what the actual journal entry will be. So we're gonna close this out and we're gonna go to the accounting on the left side and within the accounting we want to look for on account. Now we're in the chart of accounts by the way chart of accounts. And we can't do anything to the depreciation expense account because it doesn't typically have a register. All balance sheet accounts typically will have a register, so we need to go to the through the accumulated depreciation account. And if we scroll down to the furniture and fixture, we have this depreciation. It's a fixed asset. It's really an accumulated depreciation account. So this is this is the one we're looking at. It's really accumulate appreciation. They put appreciation here, which is kind of kind of deceiving, because if you just see depreciation, you might think depreciation expense. But the account type here is a fixed asset type account and accumulated appreciation. That's the one we want. So we're gonna select that view, the register, and we're just like the drop down. And we're gonna say all we have here, the only thing we can do pretty much of the journal entry or transfer. We're doing a journal entry. And so it doesn't look like a journal entry. There's no deputies and credits, but once we enter this, it will default to a journal entry form. When we go to it and take a look at drill down on the financial statements to it, we're going to say all adjusting journal entries will be as of the end of the time period that cut off date. In our case, the end of the month of February 28th 21 February 28 2021. We'll keep the number. No payee memo is just gonna be a Justine entry. Somehow the caps lock happened here. Tree, Remove the Catholic. Okay. And then we're going to say, and now it's a little deceiving. It's a little difficult to know what the increase or decrease is on this one, because it's it's a contra asset account. So it's gonna it's gonna do the opposite thing. Teoh Ah, normal account. So I would think that it would be an increase to this account. Will have to check it, though it will be an increase to this account of the 7 75 which will decrease the the assets now the QuickBooks. Because again, this is like an area where the deputy credits would make more sense and be easier for us to know if we're using Devinsky credits. Because QuickBooks might say that it's an asset on it's gonna happen. It's gonna have a negative balance, so it needs to decrease. So we're gonna we're gonna check it. We're gonna put an increase in there, and then we have to go on verify, and there's only two accounts affected. So we'll do some testing on this and then go back here and adjust it if we need to. So we're going to say that the other side's gonna be depreciation expense, so we're gonna select the drop down and then I'll type in there. I'll see it here depreciation. If we type it in there, here it is other expense to other expense. So we're gonna say that's the one depreciation expense and that's it will save that item. And now let's go to war reports and see if it does what we think it should do. And again, it should be bringing down the net income. If it doesn't, I mean, it should be bringing town the assets. If it doesn't, then this increase. We've I've interpreted it incorrectly on it, saying we'll take a look at we're gonna go to reports on the left side, and we're gonna go to the balance sheet report and then put our date range in here, which is gonna be over 10121202 28 to 1 January 1st 2021 to February 28 2021 run that report. So here is our report will then scroll down to our fixed assets area. So here it is, fixed assets, and we have the 20 so that the 75 28 are fixed assets, and then the appreciation, which should be really accumulated. Appreciation is the 775 and it looks like that is actually increasing the balance instead of decreasing it, and therefore that when we put in that increase, it's basically it should be increasing its A credit balance account. So you would think that it would be increasing in the credit direction. But QuickBooks sees it as an asset. So when it increases, QuickBooks sees it as a as a decrease. And that's kind of a problem with not using debits and credits with with using plus and minus or increases and decreases. It doesn't always makes sense. You can kind of see it two different ways, whereas debits and credits you don't. So I'm gonna select that we're gonna have to adjust it. I'm gonna click on here and go into their Here is our adjustment. So it's going the wrong way. And when the select that item, I noticed that it doesn't take me to the register. It takes us to the journal entry. But that's okay. There's only two accounts affected, so all we have to do is reverse this. So this is this is actually the expense here, and it should be debited. And here's the furniture and fixture. The reason this happened is because we went into the furniture and fixture register, and we told it that it should go up, which it should go up in the credit direction because it's a credit balance account. But QuickBooks sees it as an asset account, and therefore all assets normally have debit balances. So QuickBooks sees it as, um, it's going down because you're decreasing the total assets. So that's okay. We're just gonna justice. We're just going to say that this needs to be the credit. 775 And this needs to be the debit. 775 Now, if you're used to debits and credits, you're probably thinking, well, the debit needs to go on top. Doesn't need to. Necessarily. QuickBooks has had, as we've seen in prior presentations, ah, a few times where it actually generates journal entries where the credits on top. It really depends in this case on when we enter the register, which register we were using. Also note that this this accounts not as specific as it could be. If you select the drop down, it will say it's a depreciation expense up top. And that's the one we want because it's an expense category and then up top, you'll see furniture fixture and then depreciation, and you might be used to seeing accumulated appreciation typically used. But we're just gonna keep this item. It's it's given you the category in the subcategory here. That's that's the way it's being displayed. Their note. Also, we have the credit on top you might be used to have in the debits on top. We just suggested what was there to in order to to adjust it. There are many areas where QuickBooks actually does put their credit on top if we asked, we've seen in prior transactions, so it's really just a convention to have to have the debits on top. But if you're working a book problem, obviously that the debit will will typically go on top. And if you were to generate this as a journal entry rather than using the register, you wanna have those debits on top. So we're going to save this. We're gonna save this item and clothe this out, and there we have it. So now it's showing us the negative here, and then if we go back to our report, you know, back to the reports up top and scroll back down. We have these two amounts make up our total furniture and fixture, which was the 103 minus of 7 75 gives us the 102 to 25 in essence showing us that one month of appreciation has expired. So we'll show in our reader to things here. Here's what the equipment costs these two amounts. And then here's what we think it went down by in terms of decreasing value due to just appreciation, decline in value and therefore the net amount is given here. We're gonna look at the income statement side by going to the reports on the left hand side , the income statement being the profit and loss reports, checking out the profit and loss reports changing those dates once again, Teoh 010121202 28 to 1 January 1st, 2021 to February 28th 2021. And run that report. So then, if we scroll back down to the expenses area, we'll see the depreciation. Now it put it in tow other expenses down here. I'm not totally sure it should be going there rather than just the normal expenses of top, because it probably is a normal type of operations. But that's the way the chart of accounts was set up to put it into the other expenses. So you'll note that we have, ah, couple tears in terms of the groupings of expenses in accordance with the financial statements that the reports that we generated that were given to us as we constructed this account. Most of these accounts set up already as we set up our books. Eso we've got the net income mines to cost that gets sold. Giving us the gross profit minus three expenses gives us the total gives us total expenses and in the operating expenses, these being operating expenses, those that we think are going to be most applicable to the normal business operations. And then we've gotten, um, uh, other income as well as other expenses to get down to our net income or loss. In this case of the 1000 and 88 the depreciation, of course, increasing the expense, decreasing that income 93. 10.45 Unearned Revenue Adjusting Entry: So in this presentation we will record and adjusting entry related Teoh Unearned revenue within QuickBooks online. Here we are in the QuickBooks online dashboard. We will be continuing with the get great guitars problem. We're doing the adjusting entries process working in this case with the Justin entry related to unearned revenue in order to discuss what that is and how we will deal with it, we're first going to go to the reports down here on the left side, within the report's section. Then we're gonna look for the balance sheet report selecting the balance sheet report and then change the dates. Do the dates were working on the two months of February of 2021 for this particular problem ? 010121202 28 to 1 January 1st 2021 to February 28th 2021. We are working the adjusting entries as of the end of February. That's our cut off date. The cut off date for a Justin entries typically being at the end of the month or the end of the year. In our case that month, being February 28 2021. So now we will run that report. So here is our were balance. She reports Remember, we're dealing with these adjusting journal entries, and the adjusting journal entry here in particular to the unearned revenue, will be one a little bit different than our normal rules and a little bit different than the problem in most textbooks, however, something that logistically does happen in practice. So normally we say that the adjusted entry rules will have one balance treat account, one income statement Accounts and cash typically will not be affected within the adjusting process. However, in this area we're not gonna have one balance sheet account in an income statement account because it's a bit different situation than what most textbooks will set up for unearned revenue. So to explain that first will scroll down here, too. The liability section, typically ah, book problem will say that when we record under and referee, what happens is that we will have a cash that was received in our case. We're going to say that we got money on a guitar that we have not given, meaning we got a deposit, a security deposit. So we got money before we did the work in this case delivering the guitar, and therefore we have revenue that has not yet been earned. It's gonna be earned in the future upon delivery of the guitar, and therefore we're gonna debit, cash or increase the cash account and the other the other side, you would think, would be revenue sales revenue of some kind. But we can't credit revenue under the revenue recognition principal, cause we have not yet earned it. And therefore we should credit a liability called We could call it a deposit or we could call it honor and revenue for the fact that we have not yet received it yet. So we have a sly ability, meaning we would owe that money back. If we got a $300 deposits, we would over that $300 deposit back until we finish the service and hopefully deliver the guitar. And not then we're not gonna give it three and a deposit pack. It'll be a part of revenue, and then we can record that as a revenue account debt or debuting or decreasing the liability and crediting or increasing the revenue account at the point in time that we record the invoice. So that's how in a book problem then the adjusting entry would be the question as to how much of that unearned revenue has now been earned and therefore should be reduced, the liability reduced and the revenue increased for that amount that has been earned. Our problem here is gonna be a little bit different in that what we did is we work from a logistical standpoint, we're saying, Yes, I put the liability down here in under an revenue. It's not gonna be controlled under the receivable accounts. And the receivable accounts are where we have our detail in terms of, ah, the customers. So even though this is really kind of a payable over liability, we would really rather track it along with all the other receivables which has tracked up here in the accounts receivable. Because doing that allows us to match out and run reports by customer to see invoices matched out to deposits and payments. Whereas if we record the deposit in a liability count, becomes more difficult to run like a customer report and see that matching process. So one way to deal with that just from a logistical standpoint, which isn't exactly proper and something we would then, of course, need to adjust for it. This time is Teoh is basically debit cash. Um, when we get the revenue and credit liability, I mean accounts receivable account here, which really doesn't make sense from, ah, cruel basis because it makes a negative receivable. So that would be what What happened here? We got a negative receivable. Now, if you look and this accounts receivable, you're gonna say, Well, that's not a negative receivable. It's a positive 10,974. That's what people owe us, and that's true. But there could be some amounts in there that actually represent deposits that we haven't earned, like deposits that we owe back. And to figure that out to find out if there's anything in that amounts, that's really a negative ah, accounts receivable or should be a liability, we can run the customer detail report, which basically shows the same number by who owes us that money. So here's Here's what is owed to us by customer. Let's see who owes us that money and break this out. So we're gonna go to reports on the left side and we're looking for something like a customer. Balance of detail. So here we have it here. The customer balanced, Detailed report. That's the one we want. So we will run that. So here we have it. So now we're gonna adjust the dates up top. So we're gonna look at all dates. We're gonna look at the custom date range, and this is an as of reports, so we only really need one date, and we're gonna make it as of 02 28 to one. If we don't, it gets the most current data and that. And we included one invoice in our data that was passed the cut off date. But we really want to see it as of the cut off date because there could be activity, of course. Passed the cut off date in any particular problems. With 2 28 21 they cut off date. If we scroll all the way down, then we get the 9 10,074 That should be what we just saw on the balance sheet. Now what we want to do is go through there and see if there's any kind of balances that look kind of funny, meaning their negative balance. A negative receivable would really be a liability account. It be kind of in here backwards, so this would be 600. So that means that they always 600. This is Jenny Jones. Was this 1050? I think this customer Jill owes is 3 1050 If we keep going through this, these all look like normal balances. Except, of course, this item here said Negative. And there's nothing else matching it out. All we have is this payment standing alone and what we typically would see is an invoice and then the payment, matching it out to close out. Ah, that invoice to match it up with. And it's not typical that we have a $300 payment with no invoice and therefore have this negative amount. So the total then, of course, it still represents the fact that people always money people was 10,974. But really it should be $300 higher because it's being reduced by this kind of negative receivable, which should not be a receivable but really should be under and revenue. So once again, why put that in there? Well, once we get that once, we actually do the work. Once we deliver that guitar, then we can make the invoice after we make the payment and match it up to this deposit. And everything will be great because and we will be able to track that here, and we won't have that problem anymore at that point in time. However, the fact that this happened right at the cut off date means that we have this issue and it's not quite right at the cut off date. If we delivered the guitar before the cut off date, as we have in some of these other unearned when we had deposits on guitars in the past, it would have solved itself. The timing difference would have been been dealt with within the time frame, and we wouldn't have a problem, but because this had not yet cleared, had not yet finished and cut off date. We have this issue here, so to be proper, we need to take this out of this. This account, meaning we need to increase the amount people will us increased the accounts receivable and recorded as a liability like a deposit or an unearned revenue. If we look at this payment, if we just click on this payment and see if we recall entering this information, we have a received payment amount here and for music store stuff. And you'll note that typically when we have a received payment, we have the 300. We have an invoice, we check off, and we have no invoice here because it was a deposit. So what we're gonna do now is make this adjustment. So I'm gonna close this out normally to make an adjustment to we would go to this little plus icon up top and we would go to journal entry because it is in adjusting journal entry for the most part, even though it's a bit unusual compared to some of the others that we've had and that there's not one validating account, one income statement accounts, but to balance sheet accounts, we're gonna first take a look at the chart of accounts. We're gonna add the new account that account to being unearned revenue that will be needed in this journal entry within the chart of accounts. And then we'll come back here and we will enter this journal entry note that we've used registers for a couple of these end that passed, however, were not going to use the register here because we're dealing with the accounts receivable and we need some added information, typically the customer to make that work and that kind of mix the register a little bit more difficult to use, even though we only have the two accounts here. So even though we only have the two accounts were gonna be basically recording it here in the journal entry rather than using the registers, I'm gonna close this bag out. We're going to go to the registers, which will be under the accounting, and we want to be under the chart of accounts up top. The accounts will be in order by type. So the other accounts gonna be under in revenue. Remember, it's gonna be a liability type of account, so we're going to say we want a new up top and then we're gonna put in the type of account , and we're going to say that it's gonna be an other current liability type of account, See if there what kind of detailed accounts we have for the other current liability. I think it's just gonna be other current liabilities, but let's just check and see if there's anything better. We're sticking with other current liabilities here, and we're gonna change the account name and we're gonna call it Unearned Revenue under earned revenue. There won't be any subscription. It's not gonna be a sub account of anything else. So we're just gonna save that item save and close. Now we're back at the chart of accounts accounting chart of accounts and know that we were going to do this by the registers. We had the registers over here and we could enter Ah, a lot of transactions with the register. It's a little bit more difficult, even though there's only two accounts affected here to use this register because the accounts receivable makes it a little bit more difficult. The accounts receivable Red Register because it uses customer's needs to have a little bit more information to make sure that when we enter information into the accounts table, it will be recorded not only in the GL account. Book will be recording all other accounts and need the customers, but register here is a little bit different. We could also use the under and revenue register, which is the one we just made because they're both balance sheet accounts. So here's the new account we just made. Its got the zero balance. It's gotta register here. But again, Because of that added complexity, we're just gonna go down to the default, which is typically the way journal entries or adjusting entries will be made, and that's just with a journal entry. So we're gonna go up top and enter. We're going to deal with the debits and credits here. It's not too bad. There's only two accounts. So whether you like debits and credits or not, that's Ah, the pros and cons will be using debits and credits and learning those processes, and this is typically the way the adjusting entries will be put in place. So we're gonna go the plus side. I'm going to go to journal entry, and we're entering the debits and the credits. Now what we're trying to do is increase the accounts receivable by the 300 because it had a negative receivable. Accounts, tables and acid account assets have debit balances, and we need to make it go up the way you make something go up as you do the same thing to it as it's normal balance. That's how I typically go through this process at least, and therefore the accounts people needs to be debited to make it increase. So I'm gonna choose ah, accounts receivable. And here it is, accounts receivable. And we're gonna debit that for $300 were to put in the memo that it is an adjust in entry if I could tied. And then we do need a name here. We gotta have a customer or else accounts people will not be able. Teoh record this quick will say I can't recorded accounts stable until you tell me who owes us at $300. And remember, we had the customer here, which was string music type and string music. You can select the drop down and find it and or type in string music. The other side's gonna be the new account that we set up that account of unearned revenue. Once game, we could select the drop down and or type in unearned revenue. There it is. It's an other current liability type of account. We already know that we're gonna credit it, and it automatically puts the credit in there because we debit the accounts receivable. But if we think through that, let's think through it and save whom does that make sense? Owner and revenue liability accounts the liabilities going up because we owe somebody of his $300 even though they're a customer, because they gave us money. We haven't given them anything yet. We owe them either the 300 or the guitar. Therefore, the liability needs to go up. Liabilities have a credit balance. We need to make something go up. I do the same thing to it as it's normal balance, which in this case, the credit balance would mean that we do the same thing of another credit to increase it so that be the transaction. Now again, it's a short train. There's only two journal entries. So if you went the wrong way with it, then you just need to go back in here and do the opposite meaning. If we had credited the receivable indebted the 100 revenue then and it went the wrong way, way had, then we'd go back here and just change it after we're done. So we're gonna. And by the way, obviously accounting software like QuickBooks allows you to change things. Other software, which would be more proper not to allow you to change things. We'd actually have to reverse it. With two entries, we have to re have a have a reversing of the air, her entry, and then have a new entry. But QuickBooks will allow us to make changes. Whether you approve of that or not, it does. And so you could go back in here and fix that Typically. Now, before we're recording this, we're gonna go up to the date up here, which we probably should have done at the beginning. That should all be done as of the end of the month. So our month they cut off being 02 28 to 1. So that's the end of February 2000 and 21. So we're gonna go ahead and save this and then take a look at our reports so we'll save that item, will close that item. Then we're gonna go to the reports, which is gonna be on the left side. So we're looking reports on the left. We're gonna look at the balance sheet here. And we're gonna change our dates to the current time period that we are working on, which is a 10121202 28 to 1 January 1st, 2021 to February 28th 2000 21. Then we will run that report, and we're looking at the two accounts affected. One will be the accounts receivable account. Let's drill down on that. Take a look at it. Selecting that item scrolling down. We should see an adjusting journal entry. It's number 10 here, I believe for the $300 that's the one. That's the one. So we're gonna select the 1 300 and that you take us back to our journal entry. There it is. Closing this back out. Whether that 300 do it increased their balance here. So it increased our accounts receivable balance. We believe that makes sense. It might make more sense when we take a look at the accounts receivable by customer, the customer balanced detail. In other words, I would stroll back up and take a look at the other side. We're gonna go back to the report back to the balance sheet scroll down on the other side, Which the new account. We set up that account of unearned revenue, unearned revenue. So we set that up in the other current liabilities section here it is under in revenue. There's the $300 in it. So it increased the liability. Meaning we now owe this money back. Yeah, again, that it might sound funny because we're talking about a customer here. We're like, we don't over the customer money. They give us money. But remember, they gave us money before we did. The service in this case gave them the guitar. They give deposit. So we really all that money back in a similar way that if was a rental property or something than the deposit would be something that wouldn't be returned at the end with, theoretically should be. And then here we have this item. If we select it, then we then see our $300 journal entry once again. Let's take a look at that one other report, which is the customer balanced detail and see what it looks like on the customer balance detail. So we're gonna go to the reports on the left side we're gonna check out that customer balanced detail, which is right there if it's not there for you to go ahead and type in customer balance detail and we will run that report and we're gonna run it by the date we really should. It's gonna be as of the end of the time period, all dates, basically. But we really should run it as of the cut off date, which is 02 28 to 1, and then run bat reports. And as we do that, if we scroll down, we should be matching down here. Here's our 11,000 to 74. Here's the 300 that we have. That was like a negative asset account. And then here's the 300 that was a journal entry that basically nullifies that it increased the total balance. And it says that it matched out this amount here, and so we're correct. Now, as of the financial statement date, this this is to where it should be. It's been increased by the 300 we created what should have really been there, which is a liability Now. Note, however, that you might be saying, Well, that's all well and good right now. But now what's gonna happen? You know, later on, when you actually have the invoice and eso we have two different objectives. Here's ones the accounting department, the adjusting departments objective to make the financial statement right as of the cut off date which we've done. But unless we do something else, unless something else happens, we've kind of messed up the normal logistical proper process which was working fine, except for this kind of issue at the end here. And in order to fix that, we're gonna do reversing entries. Not a perfect process, but a process that kind of works logistically it except right those two goals. And we have two different processes working to do two different things. And two sets of people work in those different processes by using the reversing entries will which will, in essence, just reverse what we did here as of the first day of the next month, which will be the first day of March in our case, 94. 10.55 Journal Report & Financial Statements: Hello. In this presentation we will generate reports including a journal report and the financial statements, including a balance sheet and income statement or profit and loss within QuickBooks online . Here we are in the QuickBooks online dashboard. We will be continuing with the get great guitars problem. We're gonna be generating reports at this time. We've entered two months worth of data and that's through February. And now we're gonna be entering reports as of the end of February, including the financial statements as well as a general journal to see those transactions that we made specifically the adjusting journal entries within a journal process. So we'll take a look at the balance sheet and income statement first and see if those things match up. Those statements match up to what we have. If you've been following along with the problem, and then we'll select and look at the journal and see as a way for us to test whether or not we have some of the information in their correctly and have a way to go through that and check our balances if needed. So we're gonna go to the reports on the left side and we'll start off with the standard balance sheet and see what we have for the balance sheet. Now, the balance sheet is as of a point in time, I'm gonna put the month of February, which is 0201 to 1, Teoh 2 28 to 1. That's February 1st, 2021 to February 28th 2021 run that report. So here's the report for the month of February. We're gonna go through these and just check the accounts. If you've been working along with the problem, it should tie out. If it doesn't, that's OK. We'll go through that reports and the detailed reports and try to see exactly where we are off by so that shaking account is gonna be our first account within the assets section. It is, of course, a current assets. And then we have the the accounts receivable than the other current assets, including inventory, prepaid insurance, short term investments, UN deposited funds. Then we have the fixed assets, which would include the furniture and fixture and the related accumulated depreciation. I know it does say depreciation. Here you might be used the term accumulated depreciation. That's just gonna be the way QuickBooks set up the chart of accounts. You can adjust that if you choose to do so. And then we have the liabilities and equity sessions, starting with the liabilities and starting with current liabilities and starting with the accounts payable that first the current liability, then the credit cards payable with the visa card and then other current liabilities. California State Board of Equalization. That's gonna be our sales tax. Note that if you were to report this somewhere else, I mean to make the financial statements and give it to 1/3 party such as a bank, we may want to re calculate this is actually the vendor that we pay the sales tax to. It might be more appropriate to just have sales tax if you have more than one ah vendor than it would probably list out to more than one vendor when really we could group them into a category of sales tax. We have interest payable, loan payable and ah, out of scope agency it. Zero balance here again that we're gonna have some of the zero balances that will be generated by QuickBooks, which is great because it allows us to drill down on it. But when reporting the financial statements to 1/3 party, we might want to eliminate those. One way we could do that is to export the information into excel and make those types of adjustments. We got the payroll liability and the unearned revenue. Then we've got the total current liabilities long term liabilities. Those do after a year over a year, period of time is here. And then we've got at the equity section. We zeroed out the opening balance equity. We probably want again. Remove the zero balance when we form at the financial statement and then the owners investment. How much the owner put in vs the retained earnings. How much has accumulated over time and owners pay for personal. This is like draws what the owner took out, and then we have the net income. This is another section that is a little bit odd in terms of how they break everything out here, including the net income might be something that we don't want on the equity section, and a traditional balance sheet of the net income would be just port of retained earnings and how we want to break out the owner investment might be different. Teoh. We might want to, ah, group that together with something like retained earnings or, um, and the same could be true with the draws. We might want to keep the draws in there or group them somewhere else. If we have a statement of retained earnings, that's typically where we would have this adjustments, meaning the net income, the beginning retained earnings and investments and draws activity. So obviously the total assets we should be equivalent to the liabilities and equity. And that will be the case because QuickBooks won't let us do it. Otherwise, we'd have to do something very unusual in order for that not to be the case, but the total assets and liabilities and equity may not exactly tight what we have here to what you have. If not, then we'll check the adjusting journal entries in terms of the journal report, and we will check the transaction details Teoh trying to drill down and see what the problem is. So we're gonna go ahead and export this. I'm going to select the export button and we will export two Excel. So excel here is going to be our financial statement report for the balance sheet. The format looks good. So we're just going to save this by going to the file tab, going to go down to the safe ads and we're going to browse to where we want to put this on our computer. I'm gonna put it into a folder called Excel Docks 10. And we could change the name. I'm gonna keep it just as the default here, which gives us the name of the company and then the balance sheet. We might want to put a date, and we may not need the name of the company, but I'm just gonna keep the default. So we're gonna say, Save that and I'm gonna close this back out. Now, we'll take a look at the profit and loss or the income statement type report by going to the reports on the left side. We're going to select the profit and loss reports, profit and loss reports, and we're gonna do the month of February, so we're gonna say 0201 to 1. Teoh, go to 28 to 1. Do that one more time. 02 28 to 1. So That's February this 0201 to 1. That's February 1st, 2021 to February 28th 2021 run that report. So here we have our report for the month of February We've got are various types of income , including rental equipment, sale of guitars and service income. Then we have the cost of goods sold, giving us the gross profit which would be income on its cost to get sold, the cost of the guitars that we are selling. And then we've got the other expenses here, and this will give us the kind of normal expenses. And if we subtract that out, that will give us the operating income. And then we've got our other income, the income that is not kind of port of operations, but is something that isn't how we typically make income, including interest income, and that's gonna be increased. And then other expenses, which is depreciation, which may be something that we would wanna have included up here. But we are following the format of the set up of the accounts given to us by QuickBooks. When we set up this account that gives us the net other income and then we've got the net income. So in essence, it's really just revenue minus expenses. But we have a couple sub categories within the format of this income statement, a multi step income statement, and that's going to give us our net income. So again, if your numbers don't match up here, then we will go through and check a few of the detailed reports to see what we can do. Now we're going Teoh export this to excels. I'm gonna select this item and go to export two Excel. Here's our profit and loss within Excel. The format looks good. So we're just gonna go ahead and save this by going to the file tab, scrolling down to save as we're gonna browse to our computer where we want to save it, we're gonna put it into Excel docks 10 and again, we're gonna keep the name. Here's the name of the company profit and loss. So we'll just save that and save that, as is, that will be our second report. We're gonna close this back out next. We're going to take a look at a journal report. There's gonna be something a bit knew that we've taken a look at that will focus in on those adjusting entries that we input. So we're gonna take a look at that and then we'll take a look at the transaction detail report, which will give us a list of our transactions that we have done thus far. So we're gonna go to the reports on the left side and we're gonna look for the journal. So I'm gonna type in a journal and we're going to select the journal report and see what we have here. So here is our journal report. We're going to select the month of February, actually, just gonna have one day as of the cut off date. So all of our adjusting entries were made as of the end of February. That's going t 02 28 to 102 28 to 1. So February 28 to February 28 we only got that one day because we're really looking at just those those adjusting entries. And this is if you working with the Gestion entries either as an outside c p a firm or if you're working at a company and you have ah cp a firm or someone doing the adjusting entries. This is one way you can kind of focus in and look at just those adjustments made typically at the end of the time period, in this case, the end of the month of February. So here is our report. Now that's going to give us all the detail, and it's in journal entry form. I'm just making the sales a little bit smaller so that we can see the detail over here. You see that we have all the transaction types in terms of a check here, and we see the activity for the check. But we see the activity in terms of debits and credits rather than ah, form of just a check or by in terms of accounts showing individual accounts. So we have the debits and credits, in this case, the checking account here, going down the loan account, being a debit and the interest expensive debit. Here's a check to the California Board of Equalization. We credit the checking account and debit the payable, in essence, the California Board of Equalization. So here's the trend. If you don't understand debit secrets, that's OK, because we're gonna most of them are really gonna have to accounts when kind of figure it out. But here's a bill. And here's our same kind of activity in terms of of deputy credits. Now, typically, ah, lot of QuickBooks users won't use a debit and credit format because we may not fully understand democrats. We don't want to. We don't want toe, um, present deputy credit to somebody else because most people don't know that debits credits, but these are gonna be the building blocks that we use, and some reports are going to be very useful to use the debits and credits. So what we're gonna do now is change the transaction types because what we wanna do is just really see those journal entries, those adjusting entries at the end of the time period. So we're gonna go back up top, and we're gonna make some adjustments to this report. We're gonna customize this report, and we're gonna filter this report, and the filter is gonna be by transaction type. So we're gonna select transaction type and within the filters we want, I'm going to scroll down. We're not gonna have the checks in the invoice and all the bills What we really want is just those journal entries, because those air what we used for the most part to enter those end of the period adjustments. A lot of times we used the register, but even when we used the register, we use the type of journal entry. So we're going to select the journal entry, and that's will reduce the transaction types to just those formats. So this check, for example, will go away once we select run report. So we will run that report and then here we have it. So here's our journal entries that we have and these air mainly our adjusting journal entries, not all of them. For example, this 1st 1 here was the purchase, and we made on with alone, and there was no other form to do that. So the QuickBooks defaults Teoh, the journal entry when there's no other form to do the normal type of transaction. But we have all these adjustments here, and these are the adjusting journal entries, which we put a memo on most of those there. We attempted Teoh to differentiate the adjusting journal entry process is So here's the adjusting journal entry related to the loan. Another one related to a loan. The interest payable accrued interest adjusting journal entry here is the one that we had an invoice that was made after the closing date. That should have been three Income was earned before the closing date. Uh, insurance, adjusting journal, entry depreciation, adjusting journal entry. And, um, the unearned revenue adjusting journal entry. So these these air them. If you go through here, see if you find these items. If these items aren't on your worksheet, you've been following along with the problems that might be a date issue. Meaning we may have issued this at some other date either the current date or Internet as like a reversing entry in February 1st. So what we're gonna do is print thes out, and then we'll take a look at the reversing entries that we entered the first day after this time period. So we're first gonna print thes so we're gonna go to exports will export them to excel. So here are the reports. Now, we could take a look at the layout and see if they all print on one page. I'm gonna go to the page layout. We're down here the page layout is one way to get there, and that will give us our printing options. So you'll note that it's cut off if we were to print this. So I'm gonna go back to the normal view now a normal view, which is this little icon here and now it gives me kind of like a line to say, Hey, that's where the printing is gonna happen. And we don't want it to print there. So meaning If I went to the file tab over here and we go to print, then you see it it it prints really messed up. So if we were to print that and give it to someone, that would be very ugly, we wanna have it one column wide. We could force that to happen using this item down here, but we would rather adjust the columns if we could, because that won't make the text of the fonts all kind of different funds. So we're gonna go back over here and we're gonna first thing to do is we're gonna try to make it a landscape instead of portrait by going to the page layout. We're gonna go to the orientation within the page Set up item, group, orientation, landscape, and that looks like a does it. So that puts the printing option over there and we're good. Now, if we're not gonna print this were OK, but if we're gonna print it, we want to do that note. It still makes the cut off, like right in the middle of a journal entry. We might want to do something about that, but I'm not as concerned with it being more than one page long, as long as it fits on one page wide. So that's how how will leave it at this point, we're gonna go ahead and save this file. We're gonna say save as. And we're gonna browse to where we want to put this report so we'll put it in the Excel docks once again. Now, this one, we're gonna need a date because we're gonna have to run this as of the end of the month and will run one as if the next day, the next month we're gonna put 02 28 to 1. That's gonna be the end of the first month. And we might want to put yours. We can't put dashes if, because of the date formatting within a Windows program, so we'll go ahead and save that one, and I'm gonna close this back out and then we'll run this one more time for the first day of the next month. So I'm just gonna highlight the date and set and select the plus item plus to the next day and I'll tab over here and I'll do the same plus the next day. So we want now march 1st to march 1st. Now, if we scroll down, we're going to see the reverse an entry. So these are the ones that remember we put in place after the first day after the close of the period. And that's to separate what is going to go on in terms of the adjusting process and the goal of the adjusting process to make the financial statements exactly correct on accrual basis as of the cut off date. As of the date, we make the financial statements as opposed to, like the normal accounting processing, the normal accounting cycle, which is there to be as logistically simple as possible. So the goal of the normal accounting cycle while we do have a cruel principles in there, all else equal. We would rather be in a perfect accrual basis then they're not. However, from a logistical standpoint, there's a some things that that were going to sacrifice being a perfect accrual basis all the time in order to make thanks logistically correct and so to accommodate those two things. That's why we have the adjusting process. And that's why we might have some of these reversing entries so that the normal accounting department doesn't see are adjusting process and say, What did you do to my accounting books? This isn't this doesn't jive with what I do on a month of my face is. So we're gonna reverse some things to have those two processes be separate and still achieve the goals that we want these air those adjusting those adjusting journal entries as of the first day of the next month to put it back into kind of like that original place that we're up. So we have the interest payable and the interest expense that we reversed the under in revenue reversal. And this is the invoice reversal for an invoice that was sent out in March, even though the work was done in this case. The inventory shipped in February, so we brought it back to February. Now we're reversing it in March, so these are gonna be those three adjustments. We're gonna go ahead and print this one out or export it to excel, so we'll scroll up top. We're gonna select the Export and Export two Excel Choice more open that Excel document up . We'll see if this fits on one page. We're going to select the page layout over here, down on the bottom of the page layout item and we'll see that it doesn't quite fit on one page for the columns. So we're gonna go back, Teoh the normal set in. And then there's rightward the page. Let's gonna be That's not good. So we're gonna go and change that. We're gonna go to the page layout up top in the tabs, Then we're going to go to the page set up and the orientation and we will change the orientation to landscape, and that just barely does it. So that puts it on one page. That looks good to me. So we're gonna go ahead and save this so we'll go to the file tab, we will save as we're gonna browse to the computer to see where we want to save it. I'm gonna put that in Excel docks 10 will select that. And once again, I'm gonna change the date here to be, uh 03 period of one to one. So it's as if the first day of the falling month, and we'll just save that item. So there we have that. I'm gonna close this back out, and now we will see the next reports, which are going to be the transaction detail reports. So we're gonna go to reports on the left side. We're going to scroll down, and we're looking for the transaction list by date. We want the transaction list by date. So we're gonna run that report if it stopped there in the same order. Just type in transaction list by date, and we will run that report. We won't see it for the month of February, so I'm gonna make it as of 0201 to 1. Teoh 2 28 to 1, and we're gonna run that report, and then here we have Is that gonna be that information once again I've messed with the sizes of the columns, a bit t get there. It's a little It's a little tricky to get it to slow sizes so you can see everything on one column, but it is workable if you work with it for a while. So this is gonna be the report that's gonna give all the activity for the month and it'll listed out by date it will give us the date. It will give us the transaction. The name on the account that split, the other account that's affected and the amount. So this is a great one for kind of like for Grady. And it's a great thing to be using to see the activity, to see the activity that's happening in in order by date rather than by drilling down on the financials, which is probably what we normally do, which will give us kind of a trial balance or a general ledger or transaction report by account, type and then date. So this is gonna so if if anything was off in your financial statements compared to ours, if you go through this transaction report and you find anything that is on here, that's not on yours. Then you want to basically Ah, just that one thing to check. However, if the dates, then you want to go to the dates and put a date that's way back in history and way forward to see that if there's a problem with the date it might have tried to, you might have recorded something the current date instead of changing the date, which would be a common error, considering the fact that we're working a problem that's not at the current date. So that's gonna be one of the issues that that happens in practice to it's always a date thing. And if you're beginning, balances are wrong. Then that happened in January data. Then you know we have to go back to January and run the same transaction report we did at that point in time. Other than that, if something is different in terms of the numbers, we can select any of these items and because it's a practice problem, we go in there and change it. You have a lot of flexibility and QuickBooks to change things in practice. You want to be very careful changing things at a later date, especially things that are back in time. So we're gonna close that back out. So then what you want to do is just go through here and check the probably the amounts first and just go through each of these amounts and check them off that we have the same amounts on our side as we do in the report here. And once you've checked all of those amounts, then I'm going to scroll back up the next item. The check would be the transaction types. So you want to scroll down and check those transaction types and see if those air all tying out and if everything ties out here, then the financial statements should be working. Now, note that some of these adjusting journal entries are not showing up. So if that's the case, then we went over those in the journal entries, so you'll see those in the journal entry activity. Okay, so we're gonna scroll back up, we're gonna go ahead and export this report to excel. We're gonna go ahead and export to excel and open up that report. So here we have it, and I'm gonna check the printing over here. Once again, I'm gonna go to the page layout to view the second little box down here. And it's not printing, Of course, The way we want it, we're gonna go back to the normal view and that typically puts the print lines in here. So we have a big issues with the printing here, So Well, just that a couple different ways. One, we're gonna go to the layout, tap up top. We're gonna go to the set up page set up, and then within the orientation, we're gonna change it from portrait to landscape. That's the first thing you can dio now. The next thing is, we can just try to just call him so I could go up to the columns here and makes him call in smaller. I could make this column smaller. I don't have a whole lot of memos. In general, we might be able t delete that I could make this column smaller. So all injuries grabbing it right in between these these columns here and just this one needs to be larger, and that one will be larger. Now, some of these you may be able to delete, but the fact that this cell here is merged could be a problem. So if I tried Alexei, I don't need this memo column. I could try to delete that, and it actually let me there. So But notice that cell is all a one here, so it could cost problems in some of those areas, so we're pretty close, so I'm just gonna make this one a little bit smaller. We probably don't even need a at all. I can't delete that one because it will try to delete that emerged cell. So if so, if I tried to leave that whoa, it did it. But then it got rid of the title. So I'm gonna undo that. And I'll just make a really small We'll just make that one really small and that when they have that one, by the way, because if you scroll down, sometimes there's a total down here that's not on this report. So that, to me, is pretty good, because it's all on one page of this way. And then if you scroll down, it's more than one page long. But that's OK, so I'm gonna go back to the print just to check that out, and we go to the print item down here. We could see the preview area and you can see that it's on one page there and then has a second page. And it's just but it's still the same data going down on. There's no breaks in the columns Now. We could try to add the headers up top, but I'm just gonna leave it as is. If there was a problem, we can go to the scaling option here, and it's just it's off the page. But you want to fit one that says it says fit all calls to one page a little down past the screen. But we're not going to use that option anyways unless it's a last case resort and we're not gonna do it this time. Why? Because it changes the font size drastically, and it could. If you have multiple reports, make it look not as provisional. So then we're going to save this. We're gonna say file save as, and we'll browse to locate where we want to save it. As I'm gonna put it in Excel Docks 10. So Excel, Doc 10. I'll just keep the default name that we have here and save that item, and that's gonna be the last of the reports 95. 10.55 Unearned Revenue Reversing Entry: Hello. In this presentation, we will enter a reversing entry related to unearned revenue into QuickBooks online. Here we are on the QuickBooks online dashboard. We will be continuing with the get great guitars problem. We're gonna be looking at reversing entries which are reversing, adjusting entries in order to talk about rivers and entries and how they will work. Let's first look at a report by going to the reports down here on the left side. We're gonna go into the balance sheet reports nobody will select the balance sheet within the balance sheet will change the date range to that range that we're working on, which is a 10121202 28 to 1. That is January 1st, 2021 to february 28th 2021. And run that report. Now, when we do the adjusting process, those are gonna be those adjusting entries at the end of a period at a cut off date typically being the end of a month or year in our case, the month of February. So our cut off date, it's February 28th. We're doing adjusting entries in order to make the financial statements correct as of the cut off date, and in doing so we have one specific goal, and that's to make the financials correct on an accrual basis. But we have another goal, of course, which is just to enter the data in an efficient way. And those two goals are often done by different departments, or at least in different cycles or processes. So once we do the adjustments, sometimes we might want to set up another process in order. Teoh allow those two processes to be different and not have the adjusting entries mess up the normal functioning of the accounting process. So for this, we have the adjusting journal entry that we're going to be working on. So we first need to know what the adjusting entry was and then reverse it now the Justin entry for Under and revenue as we discuss when we did the UN in revenue. Adjusting a tree is a little unusual in that Ah, we're in this case. We're using QuickBooks in a bit different way than you might see in a textbook, the under revenue being something that we had to add in the adjusting process because we increased this, and it's a liability account for this unearned revenue. And the reason we had to add it here is because we had put it relating to a customer into a normal, um, accounts receivable. So it was in a negative receivable here, and we pulled it out of the receivable and broke it out into a liability account. The reason we put it into the receivable account is because it kind of logistically makes sense for us to group up the receivables because then we can track it by customer. But it's not exactly correct on a financial statement basis. Therefore, when we correct the financial statements or make the financial statements, we should correct the financial statements by breaking out the unearned revenue. If we were working a book problem, then the under in revenue typically is something that accumulates upward as we receive payments that we have not done work for yet. Then we do the work and we had just the under in revenue down Teoh the work that has been done. So there's kind of two different types of issues that could be involved in the internal revenue. In our case, we got a deposit from a customer and we entered that deposit as a negative receivable. In order to get a better idea of that, let's go to the customer balance of detail reports. We're gonna go back to reports on the left side. We're gonna go to the customer, balance a detailed report and see what we have there. We're gonna change the dates up top of that report to a custom date range and that date is gonna be the end of February. So we're gonna make it over to 28 to 1, and we will run that report. So here's the report that we have. We've got all of our customers listed down here, and if we scroll down to the bottom, then we'll see what we're talking about. Here is the item. Here's our original payment that we got before we did the work. And before we did our adjusting entry. That's all we had. We had this negative receivable, which isn't correct because, uh, it's making our receive will go down by 300 it shouldn't be about what should be happening is a liability should be going up by 300. We like to do that because then once we have the invoice, it'll match up nicely on this report by customer, and we'll see the customer invoice match up to the payment under string music, which is perfect. But until that happens, it's not quite right. Once it does happen, it will be right. So we didn't adjusting entry to fix it here. So we did this and fixed it. And we when we said it's back to zero and we made a liability of it. And so if we select that item, here's what the journal entry looks like. There it is. Now we need Teoh not mess up the normal process. How this is great. I'm gonna close this bag out for the financial statements because this number is actually the correct number. It shouldn't be $300 lower and we should have a liability. But from back to the logistical standpoint, we would rather have a nen voice match up to this amount and have this amount disappear at that point in time. So one way that we could do that is we can do what we call a reversing entry. It will just reverse this exact journal entry as of the first day of the next time period, and that'll basically put it back where we want meaning where we got everything the way we want it. As of the financial statement date and in the first day after it, we're going to reverse it and go back to where we were at before we made that adjustment, which is not quite right. But we'll be right once we issue the actual invoice. So once again, let's take a look at this journal entry, and all we're gonna do is reverse this. So we increase the accounts receivable and with a debit or we deputy of Receivable And we credited the onion revenue, reversing it. Of course, we will just do the opposite of that. We will debit theon in revenue and credit that receivable, but will do so on the first day of the following month. March 1st. So it's close this out. Let's do that adjusting entry. We're gonna scroll up top. We're gonna go this plus icon up top, and we're going to select the journal entries that were selecting the journal entry. And we're gonna make this a journal entry as of the first day the following month 0301 to 1 . That's March 1st 2021. Now we are dealing with debits and credits here. We're not going to use the register, even though there's only two accounts because one we typically do to use a journal entry rather than a register for these types of transactions in two Ah, the accounts receivable accounts a little bit tricky. It has a couple things in there that are a little bit tricky, including the fact that we have toe include a customer which kind of muddies the waters to use register. So we're gonna do a journal entry here to do this. What we're gonna do is say the accounts receivable is actually going to go down because we're going to say that we have a negative receivable. So Accounts Table is a debit balance account because it's an asset, and typically to make something go down, we do the opposite thing to it as what it is, which in this case, would be a credit. So the credits typically go on the bottom, so that will stick with the convention here and put this on the bottom. It's gonna be a non. So that's gonna be accounts receivable. Accounts receivable will be the account, and the amount of the account will be 300. And it's gonna be a reversing entry, have been reversing and tree in the memo. And then they debit The top account with a debit account is gonna be unearned revenue already know it's gonna be a debit because we credited the accounts receivable. But we also know that under and Revenue has a credit balance and we need to make it go back down to zero on the way to make something go down as to the opposite thing to it, as it's normal balance, which in this case, would be a dab it. So we'll select the drop down and we're gonna type in unearned revenues that we're gonna type in unearned revenue, tabbing over. That's gonna be a debit. And then we're going to say that the name is gonna be once again the description of reversing entry now the accounts receivable. Well, we do have to have a name down here, or it will not let us post it. And if we want to see what's happening on that subsidiary Leger, we do need the customer account, the subsidiary Ledger being the customer balanced detail. And I believe it was string music that was the customer that we were dealing with. So string music is our customer gotta have that in the receive. A lower probably will not let us post not needed on the unearned revenue side. Because this account isn't applied to specific customers in the same way that a receivable account is. Let's go ahead and save this and then goto our reports and see if it does what we think it should do. So we closed out that journal entry, and now we're gonna go to the reports on the left side and take a look at the balance sheet first. So we're gonna go to the balance sheet and see what we have. So let's look at our normal date range. First, the dates will be from 0101212 to 28 to 1 January 1st 2021 to February 28th 2021. And run that report. We stroll down. We got that accounts receivable account once again, the 11,000 to 74 selecting that item and scrolling down. Then we will once again see that journal entry 10. In my case, $300 If we scroll back up and go back to the report summary and look at the unearned revenue side of things, we have the $300 still on the books. Now we're going to get one day later. So we're gonna go back up here and change the date. Just got selectee plus one Time to go, Teoh February or March 1st, 2021 run that report. And if we scroll back down, then we see the accounts receivable changing 9 10,074 If we select that item, then scroll down. We should see the reversing entry here and you'll note that that just basically pulls it back out. So we've reduced the total in the accounts receivable. Back down for that item, just basically reversing the exact thing that we put in the adjusting entry scrolling back up. If we look at the other side going back to the report submarine and then scrolling down Teoh unearned revenue, we then have zero in unearned revenue. If we see the detail, then we can see the activity. The 300 went on the books at the end of the month so that we were correct as of the cut off date and then the first day after it was reversed so that it's back down to zero. And it's really being recorded in the accounts receivable, as we have at the beginning, as is good logistically, if not completely correct. Ah, from a ah, a cruel standpoint. So now let's go that one other report and check this out one other way by go into the reports on the left side, we want to go to the customer balanced detail, and we're gonna keep I'm just gonna keep the dates here because it's gonna keep all the activity. And so we'll keep all the activity, including through March. And if we scroll back down, we see then the original payment we had and then the 300 adjusting journal entry. And then we had the reversing journal entry. And so remember what happened here. The payments. What really happened here is that's getting $300 for a guitar we haven't yet produced. And so there's no invoice to match it to. Here's us reducing that in order to make the liability and bringing it back down to zero. And here's us as of the first day of the next month, basically putting us back to where we started at so that we can run forward logistically correctly from here. And everything from this point is not quite right, but will be once we enter the invoice. When once we get the guitar and ship it, then we'll apply the invoice out here and it'll match up nicely and everything will work well. 96. 11.10 Budgeted Profit & Loss: Hello. In this presentation, we will create a budgeted profit and loss within QuickBooks online. Here we are in the QuickBooks online dashboard. We will be continuing with the get great guitars problem. We're gonna be looking at a budget, specifically the budget related to a profit and loss or income statement type reports in order to get started, will first take a look at a financial statement for the income statement and talk about the budgeting process. Then we'll go in and create the budget. So we're gonna go to the reports on the left side. We're gonna go to the profit and loss. Here is the profit loss and or weaken type in profit and loss into the window. There, we will then select the date. We're really gonna look at the month of February so 0 to 28. Let's make it go to one. 21. This is gonna be the month. We will be working with 02 28 to 1. And so it's gonna be February 20. It's going to be February 1st 2000 to 21 due February 28th 2021 we will run that report here is our report for the month of February. Now, when we're thinking about the the budget, of course we are gonna be budgeting forwards and we won't get into all the concepts of different types of budget ings and tips, ways that weaken budget, the best ways to think about budgets. What we will say is that even though we should be projecting into the future, really, the first place we start often times is going to be something of what happened in the past . So we're looking at our income statement. We're looking at what will happen in the future, and the last month is a decent starting point to think about what will happen next month. So that's why we're starting here. We're just taking a look at our income statement. Here's our revenue, cost get sold and our expenses. What we will do is now create a monthly budgeted profit and loss and and think about and project what we think's gonna happen in the next month and in the rest of the year here, using that budgeting process. Now again, that being said, the fact that we use past data to project out in the future That's a very simplified budget . We really want to adjust for that and make any kind of forward looking adjustments to to say things like increasing in revenue or what other type of expenses or or things we might be investing in in the future as well on. And we'll take a look at how to do that. Some of those changes just in terms of logistically, how do we put that into the system in terms of QuickBooks? So we're going to start the budget here. To do that, we're gonna go up top to this little cog item, and then we are looking for the budgeting option within this information. So we've got the budgeting options under tools and budgeting. We'll select that item, and so we're gonna add our first budget. So if if you don't have anything in here yet you'll have this little add button. We're gonna add things in the first budgeting option. We're gonna make this a bit generic. We're just gonna call it the budget, and we're gonna call it 2021 and I want to change the date to the realm that were working in where Of course, There working in the future, so it would probably be picking the correct date range if we were working in real time and current time. We here are gonna be going January 2021 to December 2021 and we're gonna have a monthly budget that we will be entering and we're gonna have data will not be pre filled. Now, this options that kind of nice that it will give you that information. I say, Do you want me to take the data from last year and put it in here? And then you can kind of make adjustments from there that could save time. We're just gonna build it from scratch and just show how toe put this information into the system from scratch. So what we have here as we can see our income statement amounts. We are dealing with the income statement. Now there should be a preview item across the screen. And then if there's a next button down here, you want to select the next button and then we'll have the actual input screen so we'll have the budget up top. Then we'll have our income statement. Amounts will be able to put the input information. Here we are, in essence, putting this information kind of copying what we had in February, that being our full month and we're gonna put that in for the full year all the way January through December and I'll give us, ah, years worth of data so we can compare month by month and year to date information. So we're gonna scroll down here and the first item we're gonna have a sale of products. So we're gonna have a lot of blank some blank items because this is taking everything from our chart of accounts for not using some accounts. We might want to go to the chart of accounts and clean that up on delete some of those items. But we are just going to go through here and into the data that we have information for, So we're gonna say 500 Teoh the sale of product income. Now, if we believe that number is going to be static all the way through, we could just select this little icon and that will basically copy it through to the end and give us our total if we believe it's going to go up in value. As we do here, we're gonna say there's a 15% increase. We're just gonna have to go. We're gonna go through here, just tap through this and say that January it's gonna be bad. And in February it's gonna be 5 75 and then 661.25 tabbing through this. 760.448 74.511005 point 69 1156.54 1330.215 to 9.52 and 1758.95 and then 20 to 2 0.79 So we're just gonna copy through the whole thing and and put in those adjusted numbers within the system. The last one here is gonna be to 3 to 6. So it's a bit of a tedious type of activity. All we did there is basically increase, I believe, by the 15%. So we're saying it's gonna increase by 15% through the process, and as of as of now, we gotta put that information in their manually. So if it's the same number all the way across, we can enter the same number. If we have Teoh adjusted for increases or decreases to the budget, then we're gonna need to make those adjustments. We're gonna do the same for the rent of music equipment. We're gonna say that it's 1000 we believe for January. And if if we wanted to just copy that across again, we just copy that across. But if we think it's gonna go up or have a change in this case, we're gonna say it's gonna go up by $1000. Then we'd have to actually go through here and tap through it. Say it's 2000 here and then if we tap through this information. So I've just made those adjustments here 1000 2000 7000 were thinking it's gonna increase by that $1000 all the way through. Ah, this process. Then we had the service income. So we're gonna have service income down here, and we're gonna budget for the service income starting with 2500. And once again, we're going to say we could just copy it across. But if it changes will have to manually input that. So we copied it across. It would look like this. If we make the change, we're gonna go in there and increase it by $500 for each month. So we've entered that information again. The best way to do that as well. Just to tab through this, you want to tap through and just enter the data through as you go next time we're going to go is the cost of goods sold. So we're gonna take a look at the cost of good souls were gonna scroll down a bit and get down to the cost of goods sold, and it will have the same information. Now the cost of goods sold. We're gonna increase it in the same format that we did the merchandise sales because it should be linked to the merchandise sales. So if our profit margin is the same all the way through, then we should have a similar increase in the cost of goods sold as we do for the sale of merchandise. So we're going to stay here. It's 400. And again, we could just copy that across like so. But it's gonna increase as we did the increase which I believe was a 15% increase for the merchandise income. So this is going to increase in a similar way to 460 tab, and then we'll tap through this information as well. So here's our information for the cost of goods sold. Now we're gonna go down through the expenses, which are typically a little bit easier because they typically are. Things that we can just copy across will typically be the same. For month to month. We're gonna start with the banks. Service charge is gonna be 120 that we're gonna estimate and I'm just gonna copy that all the way across. We have the 120 all the way across. Then we've got into that. We're going to say that there's depreciation, so I'm gonna scroll down here now. The depreciation we put down here, I'm going a little bit out of order to the other expenses. So I'm gonna say that one is going to be next, and I'm going to say that is going to be 775. And then again, we'll just copy the depreciation across. We're gonna then go back up and hit enter. So it goes back down to the next road. Then we are gonna be looking for the insurance eso in insurance expense. When it's scroll back up, Just look for the insurance expense. And here we have it. So January insurance expense we're gonna say is 1000 and I'm just gonna copy that across so 1000 and go all the way across and enter, and then the next item is interest expense, and I believe that's up top. We put that up here, so interest paid Well, same interest expenses 300. We're gonna copy that all the way across and enter, and then the next item is the Internet. So Internet expense right here. And we're going to say that that's gonna be 150 will copy that all the way across the 150. Then we have payrolls and we'll scroll down here the payroll and will say that's gonna be 6000 and copy that all the way across. Then we have telephone with select enter. So we're on the next line or else it gets kinda kind of messy. Then we're looking for the telephone expense. Telephone expense is going to be down here and that's gonna be 360 and we'll copy that across for the telephone expense and enter. Then we'll have the utilities. I'm gonna scroll down to the utility's expense, and that's gonna be down here Utility's expense. And we're going to say that 650 copied at across and enter. So if we scroll back up, we've got the payroll and then we have got the utilities. So that's what we're gonna enter. There's a lot of empty cells here, and we're not. We're not gonna put everything into every category one. We might not be using that category. If we're not using the line Adam at all, we might want to eliminate it and to it might be something that's not really significant to the budget, for whatever reason and in terms of dollar amount might not be large enough for us to be budgeting for. And so we're just going Teoh, keep it as is here, we'll save this will take a look at it. And if we need to make any changes, will come back here and make those changes. So we're gonna first say, save this information and then we'll go to the reports. I'm gonna close this back out. We're going to go to the reports on the left side here. We're gonna type in budget, so we'll type in budget into the window. We're looking for the overview, first of all, So we're gonna take a look at the budget overview and will select this report. So the date ranges that we have here, we're gonna say are going to be, will say for the quarter of a 101 to 1 Teoh 03 31 to one. And that'll give us a quarter's worth of information. And it is the budget. That's the correct one. And let's run that report. And here we have our budgeted information for the three month time period January, February and March. And we have the total of course, some in these up for that quarter period of time. It is looking like an typical income statement, a typical profit and lost. Here's the net income budgeted for the three months and quarterly. Now, I'm gonna go ahead and go back in here and change this bank service charge. We're gonna say, OK, we made an adjustment we think after going back and forth, as typically will be done off the times when budget in, we're gonna make a chance. I'm gonna change this 1 20 Teoh, $30. So to do that, we're gonna go back to this little cock over here, and we're gonna go down to the budgeting. So we're going to go to the budget item and we'll select this budget. That's the one that we want to edit. I'm going to say that it's on the right side. We're gonna edit this budget and then I'm gonna look for that bank service charges to see that we can go in here and make any type of adjustments of this 120. I'm gonna go through here and just make that 30 and copy that across, and that will give us a new total. That'll be the only change we'll take a look at right now and we'll just enter that, make sure we're on the next line to make sure it saves it and then save it and then close this back out. And then we're gonna go back to our reporting by going to reports we're going to select the budget. Uh, budget. It's gonna be a budget overview we want and the date range. Once again, we're going to say that's going to write a 10121203 31 to 1 January 1st 2021. Teoh uh, March 31st 2021 the first quarter. And then we're gonna run that report. And then we've made this adjustment down here so we can go back and forth in a justice $30 make any type of adjustments we need to dio within these budget budgets, and that'll adjust the total net income as well. Let's go ahead and print this thing out. So we're gonna go to our export it we're gonna export it. So we will export this to excel. We're gonna open up that Excel document, and here we have our information. Now we're just gonna save this. We're going to save this Teoh where we want to put this will go to file Tab. We're gonna go to the save as within the file type, and we're gonna say browse to locate the folder we want to save in. We're gonna put this into excel docks. 11. So what? We're gonna name the folder. It's gonna have the name of the company and its got the name of the report. We may want to adjust this and shorten it down. Take the name of the company out, possibly put the date first. But I'm just gonna keep the default here, so we're gonna keep that default. And there is the budget overview. A report. The other useful report is, of course, the budget versus actual reports. So what? What we budget what we think was gonna happen compared to what did actually happen? This report then would be run after the time period has been run. So we have some actual data there, so we, of course, have actual data for January and February. So we will run a budget. So we're gonna go over reports on the left side, and then we're gonna type in budget, and you should have the tea reports budget versus actual, the one we want at this time. We're gonna select that budget first is actual, and then we're gonna scroll back up top. Really want the 1st 2 months, not the full quarter, because we only have two months of actual data that we have input at this point. So we're gonna say 0101 to 1 Teoh 2 28 to 1 January 1st 2021 to February 28 2021 run that report. So here we have our information January and February, and we have our detail and it gives us some nice information in terms of what actually happened. This is from the data that we input. This is from the budget that we input for January. This then, is going to be the difference in terms of dollar amounts and then the difference in terms of percentages. So this is really important to have both of those. It's nice to have both of those because thes percentage changes we could then use to compare to similar companies and you know that have different dollar amounts, whereas the dollar amounts wouldn't be as comparable to companies of a different scale of a different size. We don't have the same information for February, and then we have the total information given us that comparison as well. So a report like this can look pretty intimidating to look at this kind of report because it's got a lot of numbers on it, but it's not. If you take it one piece at a time, it's just on income statement, and then it's gonna have the comparison of the actual income statement, the budget to income statements, the difference between the two and then the percentage. Now the percentage is a little bit different than we might think. If we're comparing like to income statements, we would take the change. This would be like the change if we were going from January to February and then take the take the change divided by the original member here, we're gonna take the actual number of which happened 2467.4. That's what actually happened and divided by the budgeted number 500. And this case, if we move the decibel two places to the right, 493. So that's obviously a lot different in January January, our first month of operations, so the budget might be look a little bit different. So then we have the 508 divided by the 250 and that will give us our our change here. So 20.32 And and again, I know we put this information into the budget just basically to show how to put that information in. So the numbers may not be exact comparative to this particular business or the best budgeting process that we could have had through this. And, of course, if it's the first month of operations, that's ah could often be the case. That could be a lot of changes, and in that time period, the budget might not be the most stable of things. But in any case, that's the comparison. We're gonna go ahead and export this to excel as well. So we're gonna select the export option. Export two Excel. Here's our worksheets, and we'll open that up. Here is our budget versus actual report. If we take a look at the printing options here, it's always a good idea to look. The printing options will go to the page layout on the bottom, right? See what that looks like? There's a big line or cut right between the middle of it. That's not good. So we're gonna go back to the normal view and we see that's where the page breaks gonna be in. We would rather not have a page break right down the middle of the columns. So first thing we did to try to fix that, we're gonna go to the page layout view. We're gonna go to the set up tab, select the orientation and move it from the portrait to landscape. So here's the landscape. Orientation does a better job. It's almost they're not quite their best way to fix it from here would be to kind of adjust the columns, but it looks like there's kind of a lot of data. It might not be doable. We're gonna use the kind of cheat function here. We're gonna go to the side, and we're gonna try to force this toe work by going to to the side. I should say we're gonna go. They filed tab, and then we're gonna go down to the printing options, and I'm gonna I'm gonna pull this up just a little bit on the window cause we're looking down here to the scaling option. I'm gonna pull this up just a little bit, so weaken, Then scroll down and see the scaling option. Here it is. It's gonna have a drop down. So when we dropped down, we don't want to fit to one page necessarily. I'll choose that. Just a show. If we do that, it makes it very small, possibly. And we might want more than one page long. It fits on one page wide. That's what we want. But I don't really care if it goes to pages long. So I would rather fit fit Teoh All columns toe one page, not the entire thing. And in this case, it works out to be the same. But it may not. If it had a lot of data going from the up and down portion and there we have it. Now, note that if you use that option, you don't really have any control over the font size or anything. If you're printing multiple reports, then your father's gonna be all messed up and different sizes. But it does fit on one page, and that's better than having two pages. So that's what we're gonna go with. We're gonna go back to this area here and now let's save this. We're gonna go the file tab once you can never gonna say save as and then browse for the location. We want to put this information. We will put this into Excel Docks 11. That's gonna be where we're going to save this. I'm just gonna keep the name the same. We might want to adjust it in practice to put the athletes to shorten. This would be probably pretty good, but I'm gonna keep it there. That's just the default. It's a shorten it. I would suggest having the date and then removing the name of the company, possibly and whatnot. So anyway, save that. And there we have it. So those are the two reports budget versus actual and overview.