Create an Invoice Online for Inventory with Ease

Create an invoice online for Inventory

in this presentation we will create an invoice and discuss the impact on the financial statements the balance sheet and the income statement or profit and loss within QuickBooks Online for more accounting information and accounting courses visit our website at accounting instruction dot info and now here we are in our get great guitars file we will be entering an invoice the item of an invoice is pretty self-explanatory we'll take a look at it however in a few different areas so we know what our objectives are 1 if we select this plus item up top we're going to the customers and we will create an invoice why because it's a bill we're gonna create a bill we either did work a service or we had sold inventory and therefore want to build a client and expect to receive payment at some point in the future as opposed to something if we are at like a cash register right now where we would sell a sales receipt which means that we're gonna get payment at the same point in time before we go into the invoice let's take a look at the financial statements and get some concepts some idea of what will be recorded because note now everything we record here will typically be affecting the financial statements in some way the balance sheet the income statement the profit and loss it's good to keep in mind what that effect will be it'll give us a better idea of what is happening what it's going on how to set up this information how to think about what we have set up is working in order to record the information so let's first go to the reports on the left side we're going to go to the standard reports we want to take a look at that balance sheet so we'll open up the balance sheet and we are going to change the dates once again to Oh 101 1 9 12 31 1 9 that's January 1st to December 31st 2019 run that report what's the goal of the invoice on the financial statements is 1 we're gonna say that accounts receivable goes out that's what the invoice is doing it says someone owes us money so one thing that's gonna happen is the accounts receivable will go up the other thing that's gonna happen is inventories got to go down because we sold inventories the inventory is gonna go down those are two of the main effects on the balance sheet will also discuss sales tax but I don't want to get too ahead of myself on that will discuss the sales tax it's kind of like a tweak in the process because the tax is always complicate things so we'll talk about that more next time or once we record the invoice now let's go back to the reports and think of the other side that's gonna be affected that being the profit and loss profit and loss let's change the date back to 2018 just so we have some information in the profit and loss so we're gonna say oh 101 1 8 to 12 31 1 8 January through December 2018 run that report note what's on the profit loss is income and expenses and what's gonna happen when we have an invoice incomes gonna go up why because even though we haven't gotten money yet we invoice the client we did the work we delivered the goods or we did the service and therefore earned the income so income is going to go up with an invoice and also cost of goods sold the relation of the inventory were given away if selling inventory will go up as well the net effect income going up and the cost of goods sold to sell the expense going up the net effect being the subtraction between the two the effect on net income or gross profit so let's record an invoice and we'll come back and see what will happen keep that effect in mind or at least in the back of mind as we enter this we're going to go to the plus item up top we're going to go to the invoice note that as we enter the invoice most people don't need to know all that information however when setting up the QuickBooks file we need to know it to set up the invoice to set up the information for the invoice to make that data input easy and to be able to interpret what's gonna happen on the financial statements and therefore read the financial statements we need to know have some idea of that as well so we're gonna first start off with the customer the customer name and we're gonna add a new customer actually this customers here already anderson guitars so as we type in anderson it'll populate for us that's the one we want anderson guitars we're not going to add the email address the bill address will be the same we don't have any other information in terms of a billing address just a name that's how we will keep it the terms is going to be when they're gonna owe us so net 30 means this is the date of the invoice then 30 days is when we expect payment if we're not paid within 30 days it's past due we may take some other action or we're concerned at that point maybe looking for a collection action at that time so then we have the invoice date we're gonna say is on the 12th of January 2019 a year we are working on the due date when this will be due is going to be on February 11th and that's going to be calculated by QuickBooks because it's the 30 days after the invoice date if we needed specific shipping information we can add the shipping information we will not be adding anything in that field at this time we're going to continue down to the product or service so we'll enter the product or service that was sold we're gonna say that this was a guitar so it will be a product we're gonna scroll all the way to the bottom and say that it will be this Steinberger solid-body so that will be a type of guitar that we are selling and we're going to select that that's going to give us the product ID the product service ID the description of the quantity of the rate note once again that these is going to be given to us by the products and services the items the inventory items that we set up once that's done notice how easy this is to fill in how easy it is to fill in the invoice we don't need to know anything about the input of the product or service or the product in this case and we don't need to know what the effect is on the financial statements however to set up the items we do to set up the data input easily we do to understand the financial statements we do it will be taxable so we have the tax information as here with the check mark if we click down here it will then add the tax it's calculating the tax for us so there's the 410 there's the tax this is a practice problem so we just want to make this 5% as a generic tax and generic sales tax therefore we're going to select this sales tax item we're going to override the sales tax we're gonna put it in there at 5% which is twenty point five twenty dollars and fifty cents and then we're gonna say the reason is other and confirm the override and close and there we have it so that's what we have now if we think about this when we record this we're just gonna send out this invoice that's all we're gonna do we can email it we can print it we can give it as a PDF file or we can send it however it's also going to make a transaction on the financial statements and how what will that transaction be well we know that this is going to be an invoice and that means the invoice itself is the form that's controlling accounts receivable the fact that it is an invoice means that accounts receivable people owing us money will go up the account representing people owing us money it will go up by the full amount owed including the sales tax of the four hundred thirty dollars and fifty cents the full amount of the sales price and the sales tax that's what we are charging that's the cheque we expect to see at some point in the future from the customer as they receive this invoice within 30-day time period the other thing that's going to happen is sales is going to go up sales is going to go up but sales is only going to go up by the sales price the 410 that's the only piece that we get to keep the $20 will not so we've got accounts receivable going up by the 430 sales revenue income income statement account going up by 410 the difference of the twenty dollars and fifty cents is something we don't get to keep and therefore something that we collected don't get to keep we owe it to someone in the future a liability account a liability to sales tax payable or some type of payable typically that will then have to pay to the government whichever government is Church in a sales tax in this case we're saying it is New York the state of New York the next thing we're gonna have here is that we're sold inventory inventory is gonna have to go down then because we sold it now the inventory going down is not going to go down by any number on this sheet it's gonna go down by whatever we put into the Steinberger item the cost of the item so note that this journal entry is going to record a transaction with numbers that aren't even on the invoice because of course we do not want to include the cost of the guitar on the invoice we just want to include the sales price however we would like to invoice to drive the cost so just know whenever we buy anything at a store typically the cashier if their if their job is just to be a cashier they don't know what the cost is to the store possibly they may not have that information they don't need it all they need to know is the system is then telling them what the sales price is and the system will record the cost if it's sophisticated enough to do that if we're using a perpetual system so the cost of goods sold will bring inventory down by that by the cost and then it will also record the related expense the cost of goods sold all of that's being recorded by this very simple form this invoice if we scroll down we have the similar options as we have with the other forms we can print the form and we can send it as an email we here are just going to save and close at this time so we're going to say save and close now we'll go to the reports and see what happens so if we go to the reports on the left side we're going to open up that favorite report once again that balance sheet report we're gonna change the dates up top to Oh 101 one nine to twelve thirty one one nine the year that we are working on and we will run that report so here we are on the balance sheet now let's consider the effect on the balance sheet now first off the checking account isn't affected cash isn't affected we didn't get cash we basically you can imagine us sending the invoice out we expect to see receive a check in the mail that account the check in the mail account we expect to receive a check in the mail account is accounts receivable so accounts receivable is the account representing people owing us money if we then select that going from the end result back to the forms we see then our invoice here is our invoice Anderson guitars if we select that item for Anderson guitars then we go into the invoice that we have seen if we wanted to update or edit the invoice we can't do so in that fashion we'll then close this back out and what's the other side I'm gonna go back up and I'm gonna go now to the other side which is on the income statement of the accounts receivable that's typically how you would think of the journal entry the account related to accounts receivable on the income statement or profit and loss is called sales or income or revenue I'm gonna do a little bit of a trick here to try to get two screens open so we can bounce back and forth between the financial statements what we're gonna do is go to the top and select this tab right click on this tab and simply duplicate this tab so I'm going to duplicate this tab so that now we have two tabs up top with QuickBooks in it this one's gonna have the balance sheet I hope to go to this side and have the income statement actually I'll reverse that this one has the balance sheet name up top so I'm gonna pull this tab to the right of it and then I'm gonna use this one to create the income statement so let's do that we're gonna go to the reports now on the left if you can't do this to tab thing that's okay you can just go back and forth between the balance sheet in the income statement or profit and loss as it's called in QuickBooks now we're gonna go to the profit and loss our other favorite report we're gonna go up top and put in the date range of a 101 1 9 to 12 31 1 9 January through December 2019 and run that report here we have it the sales up top there's the 410 the sales 410 note that if we go back to the balance sheet then the accounts receivable if I go back into that detailed report was 4 430 not 410 so if I go back to the income statement and profit loss other tab income statement why is this 410 let's click on it here's our invoice if we select that item remember that people owe us the full amount of 430 including the sales tax but we only earned 410 the other amount is supposedly just not part of the sales it's part of what the government's gonna get in in terms of our transaction so that's gonna be the $20 so we only get to record revenue of 410 so I'm gonna close this back out and we'll go back to our report what's the difference then sales tax where's that gonna go that's back on the balance sheet so if we go back to the balance sheet sales tax where is that recorded where's that $20.00 and so much back to the reports that's gonna be a liability because we owe it to somebody so we'll scroll down in our case it's owed to the New York Department of Taxation it's owed to whoever we owe to so it actually is giving a line-item it would be kind of nice if it just said here that it was sales tax payable that's what it really is this right here is the vendor who we owe to but it's being more specific in in the balance sheet it's telling us this is who you're gonna owe to if you're in another state or another country then you're gonna have you know whoever you owe to QuickBooks is gonna put that there it's trying to be very specific about this information so that it can track it very specifically taxes being a bit more complicated to work with so if we click on that $20.50 we're gonna see that invoice once again so here is gonna be our invoice for the Anderson if we select it then we see that that $20.50 it's broken out down here in the sales tax now it's got two different levels because of I believe that's the way New York works I actually don't live in New York so New York has very complicated taxes is probably the more most complicated or one of them so we're gonna scroll back up and we're gonna go back to the report summary so we're back to the balance sheet now the next thing that happens with this invoice is that inventory must have gone down because that's that's why we have the invoice we gave inventory and at that point in time when we earned it we're gonna decrease inventory here's the inventory account if we select inventory we should find this again here is our invoice now note here this is what's funny there's a decrease in inventory of three hundred and twenty-eight dollars and it's due to this invoice that's the form that's driving it but when we select the form we don't see that amount on it so it's not there why because we don't want the cost on here we don't want the cost of what we purchase the inventory for how does QuickBooks know what it is then how would we know how that number came about well we're gonna have to go back then when it closes back out and to do that we would have to go back to the sales items and then go to the products and services and say well what did we sell with the Steinberger holiday hollow-body so this one down here so there's there's the sales price but if we add if we go to edit then we can then see how much it we paid for it so we can scroll down and would say oh yeah there's there's the 328 that's what it cost so note most people won't do that most people don't know that when they enter the invoice because they're just doing the data input but the invoice has to be set up that way we need to know how it's set up and we need to know what that set up is important for so that we know how it's going to affect the financial statements create and fix any problems when they so appear when they arise the other side of that then will be on the income statement so if we go back to the other tab where our profit and loss is it's gonna be the cost of goods sold there's that 328 again so notice there's multiple accounts here that are balancing out it's not just two accounts that are recorded from this invoice we have what five accounts but they're an equal number of debits or credits or increases or decreases however there's a balance in however you want to think about that if we go to the cost of goods sold you'll see that we have that cost of goods sold here as well so I'm going to close this back out we're gonna go back to the reports and last thing we want to look at is going to be the accounts receivable by customer just so we could see how that tracks as well so if we go to the reports on the left side and then scroll down we're gonna say who owes you we want to say who owes us money and we want to do the accounts receivable detail report here's the accounts receivable detail who owes us money we'll select that item and that's as of a current date so it's as of today and we will see within there we have our three hundred and forty four hundred and thirty fifty from this invoice that increases the amount that anderson owes us and we can see that the total amount owed to us is twenty thousand nine thirty if we go back to the balance sheet remember that this has to tiled is the supporting document to the balance sheet so let's go to reports and let's go to the balance sheet change the dates up top once again to O 101 one nine to twelve thirty one one nine and run that report just recall that this accounts receivable twenty thousand nine and 30 back to our accounts receivable report matches the total here and now it's broken out not by date not by transaction detail not by a general ledger but by customer who owes us the money including the invoice that we've just created the four hundred thirty fifty cents which we expect to receive in the mail within 30 days in ance with the terms of that invoice for more accounting information and accounting courses visit our website at accounting instruction dot info