QuickBooks Online 2022 journal entry, get ready because it’s go time with QuickBooks online 2022 Online in our browser searching for QuickBooks Online test drive going into the test drive and looking at the United States version, verifying that we’re not a robot sample company Craig’s design and landscaping services holding CTRL down scrolling up a bit to get to that one to 5%, we’re also going to have the free 30 day trial version open just to look at the Business View as opposed to the accounting view, if you don’t have access to it, that’s okay,
00:34
we’re going to use it more in the second half of the course, back to the Craig’s design and landscaping services hitting the plus button up top, we’re now looking at the journal entry. Now the journal entry is something that’s going to be used if you don’t have some other type of data input form to enter a particular transaction. Remembering that the design of QuickBooks is to have some form, that’s going to be set up a form that will typically be in a particular cycle, the customer cycle vendor cycle or employ a cycle to record transactions.
01:06
So you don’t want to just record a journal entry. If there’s a form related to it for multiple different reasons. One, you want the the journal entry to be entered with the forms because that’ll make it easier for the data input to be kind of universal, to pass on the data input to other people, and to have multiple people be able to do the data input.
01:27
And to because the forms are designed to have functionality that can be beneficial beyond just the construction of the financial statements by tying the forms together, such as the invoice being linked to the receive payment, the estimate being linked to the invoice, the bill being linked to the Pay Bill, and so on, and so forth.
01:46
Those things are quite useful for the accounting system. If you’ve learned accounting in terms of debits and credits, you might have a tendency to want to do everything with journal entries. And you might have a tendency to be leaning towards what happens to the creation of the financial statements, and not thinking so much about some of these these important links that are happening within the bookkeeping system, like linking the invoice to the receive payment, the credit memo, and the and the credit memos out in the estimates to the invoice and so on.
02:18
So you want to make sure that you’re doing that, because that’s going to be a beneficial thing, typically. And if you don’t have a data input form, that’s when you default to the journal entry. So the typical way I would think about it is what’s the financial transaction I want to do? Is it a normal day to day financial transaction, if it is, there will most likely be a form that I can use to do that data input if there is not,
02:40
if it’s not a normal day to day transaction, like the purchase of equipment, for example, then I’m going to ask is cash affected if cash is affected that I could probably still use a check or a expense form or deposit form. And then if cash is not affected, and there’s no form for it, that’s when you would enter the journal entry.
03:00
One of the most common were ways you would be using a journal entry is the period end adjustments, like the adjustments at the end of the month, or the end of the year, adjusting journal entries, we’ll get into those in more detail in that section in a future presentation. So let’s go I’m going to go out of this item, I’m going to create them our trial balances open a trial balances time by going to the tab up top right clicking on it, I’m going to duplicate that tab and take a look at a trial balance.
03:28
And so we’re going to scroll down and say let’s take a look at the reports. And then let’s open the trusty trial balance by typing in trial balance. This is the balance sheet on top of the income statement. In essence in one report, I’m going to keep the date range at Oh 101 to two to let’s say 1231 to two.
03:47
So there we have it, let’s run that report. Now let’s first think about a transaction in terms of what not to do. So if I go back onto the right hand side, and if I was to say let’s record a transaction regarding a sale type of transaction, but instead of entering, say an invoice, I’m just going to be entering then the journal entry. I’m gonna say I know the journal entry. So I’m just going to enter a journal entry and just put the debits and credits related to it in place.
04:13
We just want to see why this is kind of a problem. In general, oftentimes, I’m going to put this in there as of January 1, and we’ll say okay, I know accounts receivable goes up. So I’m gonna say accounts receivable is going to be debited, let’s say by 1000. And then we’re going to say that accounts receivable is gonna affect a particular customer, let’s say this is customer one. And notice it won’t let me record it if I don’t put a customer in.
04:39
So So QuickBooks is going to try to force us to still add the customer that so that the sub ledger will be correctly input. And then I’m going to say I’m not going to do a sales tax right now. So I’m just going to basically take the sales tax out of it. The other side, I’m going to say is going to sales. So we’ll say it’s going to go to sales, let’s say sale of products of 1000.
05:00
And then we also note, let’s, let’s assume there was an inventory items. So I know that cost of goods sold is going to be impacted. And let’s just say that was 800. And then the other side is going to be inventory inventory. And that’s going to be 800.
05:17
Now, one of the things that you can see right off the bat, that’s gonna be a problem is this inventory line item, they didn’t force us to hit the sub ledger, like we did with the customer up here. So that’s gonna throw off our sub ledger for the inventory. That’s one thing that’s going to happen. It’s also not as easy to tie this out. If it’s not an invoice as I track the invoice, I can’t really give this to the client the same way I could, if it was an invoice, right? It’s just a journal entry, although it could be impacting the financial statements in the correct way.
05:47
This is why people that have a financial background and accounting background are thinking of the financial statement and might not be thinking so much about what’s going to be the invoice What am I going to be given to the client in terms of the invoice, how can I tie out the invoice to the receive payment, and so on. So I could say let’s say Save and Close.
06:06
And then if I go to the trial balance and take a look at this, I’m going to say let’s run this report closing up the hamburger. And then if I go into the accounts receivable, we got accounts receivable that’s going up, that looks correct. But it’s with a journal entry, I would expect normally to kind of see an invoice here. If I go back to my prior tab, and I’m going to go down and say Okay, the other side went into sales. So sales went up, again, the correct input on the financial statements there.
06:35
But it’s done with a journal entry, as opposed to what we would normally see in here, which would be a sales receipt or an invoice, that’s what we expect to see in here. And then the other side is going to go to the inventory. So if I go into the inventory, then we’ve got a journal entry for the inventory. So the financials could be correct in that case, but it’s not going to affect the sub ledger.
06:54
And if I go to the other side, it’s in cost of goods sold. There’s the 800 and cost of goods sold. I’m going to go back on over. Now I’m going to make the other report which is going to be a sub report for inventory. I’m going to go up top and right click on this tab, and I’m going to duplicate this tab. And now let’s let’s look at the inventory valuation Summary Report reports on the left hand side, I’m going to type in inventory valuation Summary Report. And so we have that here and the bottom line of it the 596 24.
07:30
And if I go back on over here to the inventory, it doesn’t tie out to the inventory here, because we entered the transaction which isn’t being picked up in the sub ledger, because we didn’t record the sub ledger into for tracking inventory, that would cause a problem. That’s one problem that you know, you can have if you try to enter journal entries, instead of using the forums, that will be in place because QuickBooks will, if you set up the items correctly, have the sub ledgers be populated properly.
07:59
Also, if I go back to the first tab, and I go down to the sales area, and we look at our customer information, close in the hamburger and we’re going to go to our customer area. And we set up customer number one, if I go into customer number one, notice I have a zero kind of balance here in customer number one, and I’ve got this item. But it’s basically just a journal entry.
08:24
And again, I would expect to see it in the form of an invoice. So it’s difficult for me to set the journal entry, I can’t really send it to the client and say, Hey, you got this journal entry form that you need to pay us on, I also don’t have the receive payment link, that I can basically receive the payment on the journal entry, which is this next step, normally that I would enter, and again, you could enter the journal entry related to the receive payment, which would be increasing undeposited funds or the checking account and the other side decreasing the decrease in the the accounts receivable.
08:57
But then these two won’t link together properly, and so on. So again, you kind of there’s there’s issues with entering the journal entry. And this is maybe a fairly common example. But just note that you typically want to use the forms because the forms are designed to create the sub ledgers properly. And so you don’t want to enter the journal entry unless you’re doing something that doesn’t have a form related to it.
09:22
So for example, you might have a transaction where you’re purchasing where you’re purchasing equipment and you’re financing the entire thing. In that case, there’s no real form for it. So you might say, Okay, I’m just going to go to the journal entry at that point.
09:36
Also just realize, however, that you could enter the journal entry directly into the register. And if people aren’t as familiar with debits and credits, this might be the place you could go if you like debits and credits, obviously the journal entry would be the place to go. If you’re not liking debits and credits, then you could go to the register when you’re entering entering journal entries and you think about it like this.
09:57
You go into the accounting area down below You’re going to see the chart of accounts. And normally we think of a register as something that we have just for cash. We’ll talk more about registers later. But notice there’s a register for everything that’s a balance sheet accounts down to like the equity section, at least.
10:14
So all these balance sheet accounts, if you look at the balance sheet side of the transaction, there’s a register to it. So you might be able to enter some transactions directly into the register. This works well, if you have transactions that only have two accounts involved in them, because one account is going to go up or down, that’ll be the one you’re going to use the register on.
10:32
And the other account will do whatever it’s going to do debit or credit the other side. So for example, if I went into this one and said, Okay, I’m gonna, there’s a purchase of the truck, here, we got another truck, or something like that, and we finance the whole thing, I could look at the register, and say, I’m gonna open up the register here, and say, there’s only two accounts affected. So notice the transaction types I have, all I have is a transfer or journal entry, I can’t enter a check into this register,
11:00
I can’t enter a deposit into this register, because it’s, it’s a register for the property, plant and equipment type of account. And if I make this as of January, let’s say, January 1, I could say the payee, I won’t enter the payee now that will say purchase, or finance, new car or something like that. And we’re gonna say this is going to increase over here. So we’re going to say this is going to be an increase of, let’s say, 10,000.
11:26
And then the other side is going to be some kind of loan loan payable account, that’s going to be going up. And that would be the that would be the transaction because there’s only two accounts affected. And it’ll enter the journal entry. If I save it, then it’s going to, it’s going to enter that journal entry. And then if I, if I look at that journal entry, and go and go in edit it, that will take me into the actual journal entry, where I can see the debits and credits.
11:53
And then usually I copy over the description over here. So it’s on both sides. And so that would be a use where we would need to enter the journal entry because there’s no actual form to enter that to enter that transaction. So if I go back to the first tab, or the trial balance, and I go into this data, I’m gonna say, Okay, now I entered a journal entry, we had the truck, the truck account here is impacted, there’s the journal entry, if I go into it, then I’m going to see the debits and credits related to it.
12:22
Notice, it doesn’t take me to a form because there is no form. The last form that we’ll go to if there’s no other form involved will be the journal entry. That’s how you want to kind of think about it. And then the other side is going to go into that Accounts Payable liability, I’m sorry, like loan payable type of account.
12:39
So there is that. Now if you did a transaction that had multiple accounts that are going to be impacted, then the journal entry is also typically something that you might end up using, because it’s a more complex transaction. But you can’t really use the register as easily, you’re going to, you’re going to most likely need to know the debits and credits in that instance. And that’s when you you’d basically hit the drop down, and you’d want to go just directly into the journal entry.
13:03
And then of course, in the journal entry, you’ve got your your journal form, you’ve got your date, it’ll journalize, giving you the journal number. And then you’ve got your accounts, you’ve got your debits or your credits, your descriptions, and then your names over here, remembering that if you do anything to an account, that’s like an accounts receivable or payable account type that has a required sub ledger that’s going to break out by customer or vendor, then QuickBooks will try to force you to put the names in here because they’re trying to say, hey, look,
13:32
I’m going to make you put the data input in such a way that one you’re going to be imbalanced you can enter anything that’s not in balance and to the sub ledgers can still be reported for those main accounts that are supporting the accounts receivable and accounts payable, for example. So we’ll get into the journal entry with some more complex journal entries. When we talk about the adjusting entries.
13:52
At a later point. Notice if you’re talking about the day to day normal data input for the adjusting entries, hopefully the form will take care of those. And that’s because if you hit some of these forms, like the invoice form, and the sales receipt forms with inventory tracking and sales tax are actually quite complicated as his payroll forms that we’ll talk about later, in terms of the numbers of accounts that are affected.
14:14
But what we’re trying to do is of course, because those are normal transactions, make it so the data input is as easy as possible. And again, if the adjusting entries at the end of the period, it would be nice if basically those were one of the only things that we used the journal entries for because the journal entry should indicate to us that we’re doing something outside the norm that’s not a normal data input type of process. So we’ll talk more about journal entries when we get to the adjusting entries