QuickBooks Desktop 2023 estimate. Let’s do it with Intuit QuickBooks Desktop 2023. We are in QuickBooks Desktop sample Rockcastle construction practice
file provided by QuickBooks going through the setup process we do every time maximizing the homepage to the gray area view drop down open windows list on the left hand side reports drop down company and financial looking
at the P and L Profit and Loss tab for the rains change from a one a one to four to 1231 to four, and that’s January through December, we’re going to customize it so we can go to the fonts and numbers and change the fonts on up to 12. Okay, yes, please.
Okay, one more time with the reports drop down company and financial this time the balance sheet standard, going to change that date 1230 124 to match up with the profit and loss,
customize the report fonts and numbers and change the font to 12. Okay, yes, please. And okay, that’s what we do every time gonna go back to the homepage.
And in prior presentations we’ve been focusing in on the customer cycle, which could also be called the sales cycle, the revenue cycle, the accounts receivable cycle, looking at the flow of the cycle and the forms within it,
noting that at the end of the cycle, we’re hoping to have a deposit that’s going to be going into our checking account. The normal accrual cycle will be with the invoice. So that’s the starting point for the accrual cycle.
Typically, the invoice being used when we build the client or is given an invoice to the client for work that was done for which we have not yet received money.
And that would be for an industry such as an accounting firm bookkeeping firm law firm, or landscaping typically, where we have to do the work first track the accounts receivable.
Now we’re going to take a step back and look at the estimate form. The estimate form is often used when we’re thinking about a job cost system. So like we have here, with the construction company, if you have a job cost system, that’s usually one in which you’ve got not standardized units, but rather more customized units.
So whatever you’re doing that has more customization to it, the more likely then you’re going to be using some kind of job cost system.
And then you might need an estimate, because if you have a new customer or client, they might be asking you how much something will cost.
Because not everything is exactly the same, we’re gonna have to basically run an estimate for it. So the estimate will look a lot like an invoice. But the estimate is not an invoice, the estimate is going to be an information return.
And that way it’s similar to the purchase order, you’ll recall that the purchase order didn’t have a financial transaction. In other words, no impact on the financial statements, balance sheet income statement, or profit and loss, the estimate is going to be the same,
we record it for informational purposes, it’s going to be tracked within the system, it can be used to later create an invoice.
But the estimate itself is not actually going to have any effect on the financial statements. Because we haven’t received any money. And we haven’t done any work at that point in time. It’s just an estimate for things that might be happening into the future.
So if we go into the estimate, then we’re gonna see the details go back to a prior estimate. So we can see one that has been populated looks a lot like an invoice, we’ve got the information related to it on the right, I’m going to close out the icon for now or the carrot.
And we will populate it similar to an invoice we can imagine someone calling us and if it was a construction job, then obviously we would try to figure out all the components to it,
that’s when the estimate will become quite complex. As you can see here, you got a fairly complex estimate that’s being taken place.
So if you have a very customizable thing that’s going to be completely different, such as construction jobs for different individuals, then the estimate is becoming more and more important. But even more in a simplified term.
If you have a bookkeeping firm, or a law firm or something like that, and someone calls you in with an estimate, then you might have a fairly more basic kind of estimate. But the same kind of process, you’re going to want to say,
Okay, I don’t want to create an invoice to try to calculate how much this thing may potentially cost. Let’s open up an estimate.
And we’ll run an estimate and give an idea of how much something might potentially cost. You might also use it if you have like a rental kind of situation if you’re going to rent equipment out.
And so someone calls in and says I would like to request a rental of this kind of thing. We might run the estimate but at that point in time, we haven’t really rented them anything and they haven’t they haven’t really paid us at that point in time possibly.
So then when they come in to actually do to actually pick up the stuff, we might use the estimate, then to create the invoice the estimate, then allowing us to track that information in the system without actually recording the financial transaction.
So we got it, we could create a new customer as we go, or we might be using an existing customer. Just like with an invoice, we got the class tracking, if it was turned on,
that’s a specialized area, the template, you could change the estimate template, it’s an important thing to think about the look and feel of the estimate,
because like the invoice, it’s a form that you might be giving externally to the clients. And then we’ve got the date of it, the number generated automatically, the address and so on is going to be generated from the customer fields when we set up the customer.
And then much like the invoice, we’ve got the items that are going to be selected on the left hand side, which will help us to then populate the amount that might be charged for, for these services for
what we’re going to do with those services provided and the goods provided. But we have not yet provided them. So this isn’t an estimate of what could happen if we went forward in the future.
And so it looks a lot like an invoice. And then of course we sum it up a lot like an invoice, we could have a we’ve got a markup,
which that could be something that you can kind of set up in the estimate meaning if you have a job cost type of system, you might say, how are you going to calculate your your your income on the invoice,
you might want to populate data on the invoice meaning I’m going to put my line items of how much the things cost. And then I’m going to put my markup, whatever the markup is that I’m going to charge over and above that’s
going to be my profit over and above what I think the cost is going to be in terms of the estimate so that you can be seen as clear and transparent in the estimate. That’s one way, you could set up an estimate.
And then you’ve got the sales tax that would be applied so that we want that in the estimate as well. And then the total,
this whole thing looks like the type of form that would be impacting the financial statements. But remember, it’s not going to impact the financial statements, because we’re just estimating what would happen,
we’re estimating what in essence, the invoice might look like, after the job was done, and we actually invoice the client. And then we can use this estimate to pull over to an invoice.
So if I close this out, and we see this, we can see the next step in the estimate would generally be an invoice so we can imagine an estimate happening.
And then we actually do the work for a customer. And then possibly we use the estimate to help us populate the invoice.
And so in a job cost system, there could be changes from the estimate to the invoice and so on, we’re not going to get into all the detail on that here, we I think we have a course on a job cost system specifically, if you want to dive into that in more detail. It’s a specialty area.
And so you want to keep that in mind that it is a specialty area, when you’re thinking about where you’re going to be like working, what’s your particular business? What kind of bookkeeping services you want to provide for what kind of industries.
So then you might have questions, of course about the estimates. And usually those questions would be tracked in the Customer Center. So which we can go to here, or we can go to the customers up top and then the customer center.
So we we then on the left hand side tab, we’ve got the the customers, and on the right hand side, we could search by transaction. So I believe that customer that we were looking at what was that estimate for that customer something with an N?
It was this one was it, I’ve got all transactions here, I don’t know if this one’s got an estimate in it.
So here’s an estimate, for example. So if someone came in, if this customer came in and said, Hey, I started an estimate or whatnot, then we might go into this particular estimate and find it. That’s how it could happen in practice, double click on the estimate.
And then if we’re going to follow through with it at that point in time, if we had done the work, then we can create the invoice using the estimate.
So we can go up here and create an invoice from the estimate and move forward there depending on whatever our flow system and is, depending on what kind of industry we’re in.
I’m going to close this back out for now. And then we could go through a similar thing up here to the transactions. And for example, search your estimates on the Transactions tab. And then you might look at all the estimates.
Or you might look at the open estimates and then try to sort your estimates in this way remembering the estimates have no impact on the financial statements. They’re not flowing through the balance sheet, or the income statement. They’re tracked internally. And usually when you’re looking at where they’re going to be tracked.
You’re looking at the Customer Center by customer and then possibly using those estimates, say, say active estimate. To make an invoice I’m going to click on this one, the cook estimate I’m gonna double click on it.
And so then, let’s first go through the options up top with the tabs. We’re in the main tab that looks similar to an invoice for example, we can go back, we can go forward,
we’ve got the new item, we can save the estimate, save as a PDF, we’ve got the Delete option, create a copy of it, which could be useful if it’s like a complicated estimate that we want to copy over, we can memorize it, we can mark as inactive, which marks the estimate as inactive.
QuickBooks keeps a record of inactive estimates, but doesn’t use the estimate numbers and reports. Now remember, the estimate itself is not going to be used to create the balance sheet.
But we might want to be tracking, in essence, the estimates themselves. So it’s quite possible that we’re making estimates. And some of which are going to be converted into invoices, and some of which possibly no action is ever taken on them.
Maybe we don’t want to delete them to delete the process, but make them in essence, inactive. So we can then print we’ve got the preview estimate, in envelope and so on,
we’ve got the emailing options, which could be useful. Of course, with estimates these days, email later, we can attach to it if we need to,
we will create shortly an invoice from the estimate. And you’ve got the start of a project. So we’re going to go to the formatting tab, we’ve got the preview,
if you go to the preview, it looks like this, you can go into some customizations for the estimate. But this would be the general look and feel of it. You can manage your templates,
if you have different templates, download the templates, spelling, you can insert the lines, which could be useful if you’re trying to maneuver around these lines.
And you want to put something in between here. So when you have a complex set of data down below that can be useful copy align,
as well send shift you’ve got your options for the email, prepare or letter and so on, and then your reports up top, back to the main tab. If we were then to use this to create an invoice, then we could go to the Create Invoice up top, we have some options create an invoice for the entire estimate.
That’s the general idea we were probably going to be started with Create Invoice for a percentage of the entire estimates or Create Invoice for selected items or for different percentages of each item.
So I’m going to create one from the entire estimates where it’s going to say okay, and then it creates an invoice that looks a whole lot like the estimate
the invoice now is what’s going to record the actual transaction right, so we got this customer has since been generated, the date now of the invoice, the invoice number, the ship to the terms and so on when we expect to receive the money,
we’ve got the items down below that are being sold, and then the taxes that are being applied when we create the invoice, that’s when we expect the transaction to do what invoices do with an invoice it’s going to increase accounts receivable.
For example, for the full amount, the other side is going to go to some kind of sales account, but not including the sales tax. And then we’re gonna have to include the sales tax in sales tax payable.
Also, we’re gonna have a decrease if inventory is involved to inventory,
not for any amount on the invoice but for the cost the system knowing what the cost is by by having the items in place, and then cost of goods sold will be impacted. So I’m going to close this back out and say, recording, I’m not going to record it.
And I’m going to go back to the carrot up top and the homepage. So if you have a full accrual process on your accounting system, then you’re in a business where you do the work first. You could could start at the invoice if you do the work.
First, your billing in essence invoicing, the clients increase in accounts receivable, and then receiving payment and then deposit or you might have an added step where the client is typically going to be requesting some kind of estimate of how much it’s going to be costing first.
And that case, whatever system you have, you might first be doing an estimate which will not be affecting the financial statements but which you’re going to track and possible use that estimate in the future to generate the invoice then the process continues on as we’ve seen in the past.