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Progress invoice example for R&D

QuickBooks Online 2023 progress invoicing example number two Revenue recognition for month number two get ready to earn the skills needed to boost your bank books on up with QuickBooks online 2023. here we are in our QuickBooks online test company finally started up in a prior presentation noting that we're currently in the accounting view as opposed to the business view you can toggle between the two views by going to the Cog up top switch the view down below we're gonna now duplicate some tabs to put reports in like we do every time right click in the tab up top to duplicate it right click in the tab up top to duplicate it back to the tab to the middle reports on the left we want to open up that balance sheet report gonna tab to the right as that's thinking even though it's done thinking reports down on the left hand side this time the prophet and loss report closing up the ham Boogie changing the range from 0.10125 so let's go to 0.606 325 and I want to see this one on a month by month side by side let's run it there we have it we recorded some of the cost of goods sold support accounting instruction by clicking the link below giving you a free month membership to all of the content on our website Broken Out by category further Broken Out by course each course then organized in a logical reasonable fashion making it much more easy to find what you need than can be done on a YouTube page we also include added resources such as Excel practice problems PDF files and more like QuickBooks backup files when applicable so once again click the link below for a free month membership to our our website and all the content on it last time let's go to the tab to the middle close up the ham Boogie change the range 010125 to 06325 I want to see this one by classes classes because it's a classy report a lot of classes a lot of class going on here all right in any case we're gonna go to the first tab now and then we're gonna go down to the to the projects on the left hand side we're currently working on Project number two and let's recap our process by going to our Excel worksheet so we can see it in like a transparent format and then we'll record it over here in the QuickBooks so we did an estimate and we recorded the estimate no financial transaction happens with the estimate but we then came up with a billing structure and we build them for the ten thousand dollars which was a deposit but we didn't actually record Revenue related to the ten thousand dollars because we're trying to recognize marriage Revenue in relation as as the job goes and and somewhat like a complete percentage of completion kind of Concepts so then we said that we're going to record actual costs that happened with like an expense form so we actually paid for materials labor and overhead for 1318 which we categorized into cost of goods sold because it's going to be into this basically project that we're going to be having and so we have recorded thus far the the accounts receivable for the deposit and then we we got the deposit in the checking account and decreased the accounts receivable and then we have the expense for the cost of goods sold and and the checking account went down so now we want to recognize the revenue not in relate not on a cash based system but in relation to the expenses so if I so one way we can do that is I could say okay here's the total expenses that we have the percent of completion of the job if we think the job is still going to cost us a total of 76 923 is that 1318 we've spent thus far over the 76 923 which gives us a 16.92342 percent complete and then if I think I'm going to get revenue of one hundred thousand then the revenue in relation to the 16 would simply be the hundred thousand times that 16 nine two three four and so on so we're going to think that Revenue should be recognized matching out in this same time period for for that 16 923 so from a journal entry standpoint that's quite easy so I could say okay well that makes sense I'm going to say that that's going to be 228 it's not so easy when we get to QuickBooks we have to kind of think about how we're going to do that but journal entry format we're just going to say all right that's going to be Revenue I'm going to put the revenue on top because that's the first thing like I think about it's like we need to recognize Revenue that's the whole point even though it's a credit on top I'm going to say there's the credit to revenue and then the other side I'm going to put into what we're going to call this work in progress account so work in progress account negative this item notice where it's not going to go is to we're not going to put it into accounts receivable we're going to create this account of the work in process type of account which you can think of as kind of like uh an inventory type of account so now we've got the work in process and this billions account that we have to basically track in our system all right if I record this I'm going to say all right in r eight R8 we're gonna say that is going to be 16 000 increasing in the credit Direction puts us out of balance until we finish it off in R5 by saying this is going to be equal to the 16 923 Back in Balance indicated by the green zeros and we have our Revenue recognized of the 6923 this is actually net income because because the credits are good on the uh on the income statement so that's like a good number that's our income uh number okay maybe we can add some conditional formatting down here just to make that more clear I'm going to format this make it look a little bit more fancy I'm not going to make it red for the negative numbers and then I'm going to say that we want to say conditional formatting and if this thing is greater than zero if it's greater than zero we want it to be red but if this thing is Less Than Zero less than zero we want it to be green because it's good boom so there we have it so if this went if this went negative or if this went positive it actually turns red oh the fanciness there's too much green okay anyways enough of that let's go back on over and do this in QuickBooks it becomes a little bit difficult to do in QuickBooks because I don't want to do it with just a journal entry because I I'd like to do it in a format where it's going to be showing up on the projects I want to use the forms when I can and so that the transactions will also be showing if I go to the sales item and the customers over here so in customer number two so I can see like the the items that are happening here so usually we record Revenue with an invoice so I'm going to make an invoice that I don't plan on giving to the client it's going to be an internal invoice just so I can record this Revenue recognition so I'm going to say all right invoice and let's do it for this is going to be for the second project and notice I can pull in now I don't want to pull in from the estimate this time and but instead and we could by the way you could come up with a system to pull in from the estimate and then and then think about the percentage of completion or something like that you can you could come up with an idea of that but I've been I'm using the estimate in order to follow along with my actual billing schedule to send it out to to the clients so I'm not going to use that instead I'm going to pull in the billable items which I I put in with a 30 available item with a 30 markup so let's just re let's just remember that for a second before I record it do you want to leave I want to leave I want to leave okay let me out let me out so then if I go into the projects over here in Project number two in the costs of goods sold we've got our expenses so when I recorded these expenses we we turned on the billable items and then we said we wanted a 30 markup so this is what it cost us and then we did the 30 markup which is basically the same calculation that we did over here because because our our markup is based on a 30 markup so if I was to increase each of these line items you know by 30 percent then it's going to get me to that to that 16 9 23 as well so that's where we should be at so I'm going to say all right let's go back on over after the recap the cap has been read so there's the recap and let's go back to our projects so I'm kind of moving around all over all right and then I'm going to say new invoice new invoice project number two pulling in the billable items but not the invoice not the estimate closing up this thing so it's not in the way all right this is as of uh 0228 muy B to the n b n in other words and down here it pulls in the information so here's the materials when we use the billable items it pulls them in at the rate and then it creates this this other markup account which is a little annoying because now you've got this separate account for markups that's going to be recording but this material thing is the item so this is going to be reporting based on the the uh item as opposed to just going into a billable like revenue account so that's nice but this is going to go into a markup account so so and if you don't like the markup account then you cannot use the markup and then you then you can manually put in the amounts that are being charged or you can put in the cost and then have a markup account that you assign you know down below however you want to structure the invoice but this is one way to structure it and the total adds up to the 16 923.40 which is great because that's the revenue that we want to recognize for this month but we don't we don't want the other side going to accounts receivable because I'm not trying to invoice based on when we do the work I'm trying to invoice send in the invoice to the client meaning I want to build a client based on the schedule we came up to before so we have this two kind of phase thing of we're using the invoices ing to the billing structure to send to the client and this invoice is just to record the revenue and I want the other side to go to to a work in progress account so what I can do down here is I can just say okay the invoice is going to increase accounts receivable these are all going to go to income accounts would be the general idea and then I want but I want to zero this back out which means I'm going to reduce the amount that's going to accounts receivable and instead put it into our work in progress account okay let's see all you all we have to do that sounds complicated but all we have to do is say add an item here I'm going to make it either non-inventory or service let's just say service item it's going to be work in progress you're a work in progress I know I've been in progress for some time now I don't think I'm ever gonna be out of the in progress stage whatever and then the account that it's going to go to is going to be up here and then we're gonna say this will be what do we want another current asset account let's say other current assets and then it's kind of like an inventory account but I don't want to record it as an inventory account here because when I do sometimes the QuickBooks won't let me do some stuff to the inventory account because they think I'm going to track inventory in it so don't do that so I'm just gonna put some generic other current asset and then call it work in progress all right so then we're going to say save it and so okay so now work in progress and I'm just going to say this is going to be negative of the total so just to zero it back down 16 9 23.4 and so this is going to go to job number two so now we have nothing if the invoice increases accounts receivable but there's nothing going to increase accounts receivable because it's zero instead it's going to increase the revenue accounts based on these items and the other side is going to be going to this work in progress account that's the plan all right all right let's do it then let's do it enter and uh and then if I go back on over here we can say all right let's see what happened K plus o k Pas oh we got the work in progress account that shows up that looks muy B to the n so there we have that and then the other side is going to Revenue income statement account so if I run the income statement now we've got the so notice that put it into a markup account and then the sale of prog product uh so because the sale of product is what we we assign the items to but it comes out to a total of Sixteen nine twenty three forty which is what we want which matches out to the 13 18 in the same month that we want it to be matching out with right so that this is the revenue that we're going to assign to that basically you know the related the related cost and and then we've got our work in progress account here and our Billings account which will ultimately uh have to zero out they'll match each other in essence and zero them out at the end of the project now it's very nice again that the classes break out these two work in process and Billings account because if I was to say this is for the full year 123125 then it's nice to be able to to say okay this is the work in process that's being allocated to this uh This Job And so that and so then I can see what's being allocated I could also do that by going into the work and process account and sorting in here by customer so then if there were multiple jobs in here and whatnot I could sort it by customer and I can get my my totals that way as well but I think that redundant so you don't really need the classes because you can do it that way but I think the redundancy is nice and the fact that the classes can break out uh in that way is good if I go to the tab to the right I'm going to duplicate this one and just show this in terms of classes so if I go from a one to uh 12 3125 and I want to see it in terms of classes run it so now you've got the class tracking for you know class one and class two and there's the total for the year which is very nice because again that's a little bit more robust than the than some of the project reports sometimes Angie and the project reports don't have oftentimes the balance sheet you know capacity over here now also if I go back to the first Tab and I look at this from my sales page and my customers and I go to customer number two it gets a little bit confusing because you've got these uh invoice that was generated but notice the invoice is basically marked off as paid you might put in the memo that this is like an internal uh invoice but you can kind of tell because it has a zero balance anyways so so it doesn't really mess up the internal bookkeeping as much and doesn't like show up as open that you need to send it out you might say this is internal or something like that and save it and close it and you know then you've got it like in the memo here that this is like a revenue recognition uh invoice so that is that one and then uh we'll continue on with this process uh next time and we'll do that we'll do that for the next couple months and then we'll see how what what happens with that work in process account and the Billings account you know at the end of this whole process