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Retainer invoice example for R&D

does your law firm get paid before you  perform the services for the clients   well then you should watch this video  how to record receiving clients payments if you have any questions about this topic you  can leave them in the comments section below and   i'll do my best to help you and of course if  you feel the video helped you i hope you will   click like and don't forget to subscribe to get  updates on new videos that come out all the time   law firms get paid a little differently from the  average company payments are usually received   before services are rendered to the clients   each payment changes the balance in the chart of  accounts and the balances of the individual client   and those are two separate sets of records  in your quickbooks online for example   let's imagine on january one we received six  thousand dollars from alan arby who gave you   check number six one six one for future  services rendered and to make things easy   let's imagine that you immediately deposited the  check into your operating bank account so what   would change in the trial balance at the moment  that you record this very first transaction well   you have more money in your bank account so cash  in chase bank would increase at the same moment   you owe money to the client in the form of future  legal services and the amount owed to the client   in the future for legal services that you owe them  would increase because if they pay you before you   do the service you owe them more services in the  future at the moment that you received payment   you should also be aware that the customer's  individual balance would change in the customer's   records aside from the trial balance and the  chart of accounts so let's take a look at   this transaction we do receive payment now before  i record this i'd like to click reports custom   reports and go to the trial balance so that the  trial balance will show the results immediately   after we record this first payment to record any  transaction you go to the top left where you have   the plus sign next to the word new click once and  you see all of your client related transactions   are in this left column here we then click  receive payment because you received the payment   from the client now you have to put each fields  piece of data very carefully you have to choose   the correct client click the pull down click on  the client uh this is just reminding you that you   that you're getting paid before you render the  service and it's a warning because usually it's   the other way around and we can close this warning  because we know the context of what we're doing   so we can go forward i'm going to use the year  2021 because i'm recording this now at the end of   2020 doesn't matter the payment method is check  and it's check number now you must look very   carefully to make sure that you're recording it  into the correct bank account cash in chase bank   is the operating bank account and the amount of  money that you received was six thousand dollars push tab now we've recorded every piece of data  that we need to at the moment that we receive   payment from the client if we click you know click  the pull down arrow and then go up to save and   close this is just again reminding you let's click  don't show me again because normally you would   have an invoice before the payment but usually not  if you're an attorney so we click save as a credit   and at the moment we look at the trial balance  cash in chase bank shows up for the first time as   six thousand dollars and unearned legal fees shows  up for the first time as six thousand dollars   now we have only checked the results in the chart  of accounts we should also check the customer   records click reports and first we should go to  transaction list by customer transaction list by   customer right here and basically it just lists  one transaction for six thousand dollars but if   we click reports and open invoice we see that alan  has a negative balance because he paid in advance   and quickbooks considers a customers who customers  money who pays in advance as a negative number   because normally a positive balance in a normal  business with a normal customer would mean that   the customer owes us but a negative balance for  the customer means we owe the customer for future   services now let's take a look at example two  on january 2nd we received 8 000 from betty   boop who gave you a transfer directly into  your chase bank account transfer number one   two three four five so what will be the result  well cash and chase bank will increase from 6000   going up by 8 000 and it will become 14 000 and  unearned legal fees will also increase because   we now owe more future services as a result  of getting paid before we perform the service   so let's go ahead and record this 8  000 from betty same thing we click new   receive payment change the date to the date that  the money went into the bank account make sure   it goes into the correct bank account make sure  you choose the correct customer betty she doesn't   have any invoices which is normal for a law firm  but not a normal business so we close this out   the payment method was you know you can just  leave it blank and just put the transaction number and now the money amount that betty gave us   push tab 8 000 now that we have  carefully put each piece of data for this   payment from betty we click save and close  and you can see that the open invoice reflects   that we owe betty eight thousand dollars in future  services we also still owe alan six thousand   dollars in future services so the total unearned  that we owe to all clients is fourteen thousand   and if you click reports trial balance  you will see that unearned legal fees   is equal to the total balance of all  clients fourteen thousand dollars our third example involves candy charles  let's imagine on january third we received   eleven thousand dollars from candy charles  who gave you a transfer to chase bank   number zero nine eight seven six and clearly this  is for future services rendered so let's record   it the same way we did the others we click new  receive payment we choose the correct customer   we know she does not have any invoices so  let's close this we make sure the money is   being deposited to the correct bank account  we make sure we put in the correct number uh whatever and the most important thing is the  money amount eleven thousand dollars push tab   on your keyboard to save one field without  saving the entire window and closing it out   now that we put every important piece of  data we click save and close and you can see   we now have candy charles in our list of customer  transactions you can check the accumulated totals   by clicking reports and go to open invoice and you  see that the current balance of all three clients   equals 25 000. that's the total that is currently  unearned from clients so if we click reports   and we go trial balance unearned legal fees  is properly stated at twenty five thousand   and so far what we've recorded as bank  transactions equals twenty five thousand now   here's the beautiful thing you can open and change  any transaction directly from the trial balance   you see right now these numbers are summary totals  of all the transactions that have been recorded   in the accounts but if you  are looking at a summary total   and you wish to see every transaction that  adds up to that total all you have to do is   double click the number and you will get a list  of every transaction that adds up to that total   it gets even better when you look at a list of  transactions in a report you can click anywhere   on the line of any transaction double click  and you will go right back to the very window   that that same transaction was recorded in once  you go back to that window you can make whatever   change you want and if you change a money amount  as soon as you click save and close the results   in the reports will change immediately this  report came from the trial balance reports   trial balance double-click the summary  number to get the detail of every transaction   double-click anywhere on the line to go back to  the same window that you recorded that transaction   and change whatever you want you can also open  these transactions by clicking reports transaction   list by customer and they're listed here the same  way as long as they're listed one by one you can   click anywhere on the line of the transaction and  go back to that same window and change anything   you need so fixing a mistake in quickbooks  online is easier than erasing with a pencil you