do your clients want more detail on the invoices that you send them for reimbursable job expenses
well then you need to know how to record billing for expense items
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and i'll do my best to help you and of course if you feel the video helped you i hope you will
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expense items are items that vendors provide for us and when we purchase them they get placed on a
check or a bill from a vendor the item is attached to an expense type of account the same way
that the income items are attached to an income type of account
and placed on an invoice for service that we give to the clients you see here's our items list and
it's very extensive at this point in the course but we remember when we set up the items list
the items were connected to an income type of account in the chart of accounts
so that when we placed it on an invoice the income account that was connected to the item
goes up now we have expense items on the items list and we will connect the expense items to
an expense type of account the same way that we connected the income item to the income uh type
of account so that this way when we place it on a transaction the account automatically increases
so expense items are the same idea as the income items except they're attached to expense items and
placed on vendor related transactions but the big question is why do we need them well up until now
billable expenses only have the expense account listed in the transaction there was no detail
about the items purchased or what you're actually billing the client at the moment you put it on
an invoice there is no detail that shows on the invoice like what item it was and what quantity
and so on so you see if we use an item instead of just using the expense account that we're
billing for then we'll have more detail and the detail shows on the invoice so the client can see
what expense they are being billed for and more specifically what item of that expense for example
supplies expense if you just bill the client for supplies they don't know what's going on but
supplies expense could mean envelopes stamps paper the specific thing that you used in the quantity
that you use them the supplies expense is the account in the chart of accounts but these three
things on the right would be items that would go on the items list that would be connected to
the supplies expense account so that you could bill for that level of detail and have the same
numbers affect your chart of accounts while giving the clients the details that they need
let's add two items to the items list just to see how this works let's add envelopes and stamps
and we'll connect them to the supplies expense account so from the main menu
we click list items list and in the bottom left we click item new
now this will be a service and the name of the service will be envelopes
and you can pause the video to type it in but it's connected to the supplies expense account
now let's click next and notice it leaves the supplies expense account here and let's put stamps
and click ok now we have the two items on the list that are connected to the expense account
now let's imagine on january 25th we purchased seven envelope boxes for three dollars each
and five stamp packages at four dollars each from staples and let's imagine they're both billable
to the lillian court job under brown company well what would happen in the trial balance if
we purchase these items by using the items on the items list well the total is forty one dollars so
supplies expense would increase by the forty one dollars and become two hundred ninety one dollars
and the cash in bank that we're paying the money for would decrease by the forty one dollars
and become eight thousand fifty nine dollars from this transaction seven at three
and five at four so let's go ahead and record the transaction we click banking write a check
and the date would be january 25th of 2028 of 2018 in our little story
now we purchase the supplies from staples and we're going to write a check even though we have
unpaid bills but you must be careful down here you must remove any expense account that shows
down here because now we're not using expense accounts we are instead using items and notice
the items are on the items list so it's envelopes and what's the quantity and purchase cost seven
envelopes at three dollars each billable to lillian court seven envelopes three dollars each
and click no because we reserve the right to change the cost and the price at each transaction
and it's lillian court and it's billable but we're not done we also have to put on stamps
and stamps the quantity in this transaction is five at four dollars each five stamps five units
of stamps or books of stamps at four dollars each let's not memorize the cost and the price
but let's make it billable to the lillian court job and this is what your check should look like
if you're using items remember the expense tab should be clear and it should only be in items
do not type in a money amount up top the items will calculate the money amount total
and put it up top now we hit enter to save it and when we open the trial balance the results
are exactly as what we expected supplies expense is 291 dollars just like we predicted
and cash in chase bank is eight thousand fifty nine dollars just like we expected
are we finished checking results well the numbers look good in the trial balance but you must always
check the profit and loss by client to see that the expense items were tracked to the right place
so if we click profit and loss uh by job which is profit and loss by client look under lillian court
the column of lillian court under brown company and you can see supplies expense increased by 41
250 was for mockingbird lane but this 41 was specifically for lillian court
and they add up to the total supplies expense that was in the trial balance now the interesting part
now will actually bill betty for the supplies so let's imagine on january 29th we billed betty for
the january 25th supply purchase so what happens when we use expense items and then we bill for
them well these are what we call one-sided items which means they're only connected to one account
which means when you bill for them you have no choice supplies expense that originally went
up when you purchased now goes back down when you bill because when you bill the client
the client is now responsible for paying that forty one dollars
so your company no longer has forty one dollars in supplies expense that's why it went back down and
if the client is responsible for it it means they owe more it means accounts receivable increases
by the forty one dollars that you bill to the client for these reimbursable job expenses
very very simple invoice and make sure the date is proper at january 29th
and then we'll choose lillian court and you can see we will not we will not match this
invoice against the estimate because it's for reimbursable expenses just click cancel
but we will watch carefully add billable time and cost to the invoice now when you click ok
notice before we click the expense tab when we were doing billable expenses but now all the only
things available are the billable items because we put them in as items they would be in this tab
we choose both of them now we will agree with the price each because we will not mark them up
you're not able to properly mark them up without a problem by using this type of item if you need to
bill them for more than what you paid for you have to watch the video that follows this one
for two sided items so that you can mark them up without causing a problem but we'll get to that
in a moment right now you're billing the client for 41 so we hit enter and at the moment we open
the trial balance you can see that the results are exactly as what we expected supplies expense went
back down look i'm going to double click it went up by 41 when we paid for it it went down by 41
when we build the client and the client is now responsible for that
one dollars added to account receivable lastly let's check the profit and loss by client
if we open the report profit and loss by job and we look in the lillian court column we
see that supplies expense specifically for lillian court has disappeared we no longer have
that supplies expense because the client now owes us for that expense you can learn everything you
need in quickbooks regarding contractor features by watching the full playlist that this video
is a part of you can just click the link in the comment field or under the first paragraph in
the description field and there's also links in the top right of the video as it plays
you