and now we're going to learn how to make invoices for earned income from attorney
services what happens at the end of each month well income from legal fees goes up by the amount
of retainer that was prepaid and earned during the month but if income from legal fees goes up
by that same amount unearned retainer fee should go down because now you have less money unearned
because you actually earned it during the month what happens to the clients balance well in this
case the clients balance will go down because if you actually earned some of the money that the
client prepaid for then you owe the client less money in future services for example January 31
let's create invoice number 1 for our client Allen RB for the fees Ross earned during January we know
that that's a thousand dollars a month because in the previous video he preap he prepaid six
thousand dollars in retainer fees for six future months now one of those months has gone by which
means Ross has earned $1,000 so this is how you record the invoice you click invoice from the
icon bar choose Ross ask you to choose Allen R be the client the date is the end of the first month
which in this case is January 31 of 2017 now the only item that you have to put on this invoice is
the fees earned item that you actually setup in the first video and you have to put a thousand
dollars because you can see this invoices for the end of January which means during January Ross
earned $1,000 now when we click Save and close and click don't worry about this message just
click yes and a cake cancel we'll talk about that pop up in the next video but right now let's take
a look at the trial balance you can see unearned fees has decreased by a thousand and income from
legal fees has shown up in the trial balance for the first time as a thousand dollars you may also
notice that in the client balance detail Allen was owed six thousand dollars in future service
on January 1 but then on January 31 Ross declared that he actually earned the income of a thousand
dollars which was one sixth of the payment and that means as of January 31 Ross owes to Allen
only five thousand because a thousand was earned during January now what about our other retainer
client Betty Boop January 31 we also declare that we earned Betty's January retainer the same
way and we remember from the previous video that Betty paid us seventy two hundred dollars for six
months in advance which means during January Ross earned one thousand two hundred from Betty and he
will acknowledge that by making an invoice again we click invoice from the icon bar this time the
client is Betty and the date is already set for January 31 of 2017 again the only item you have
to put on the invoice as fees earned but in this case it's twelve hundred dollars that Ross earned
from Betty during the month I also should mention at the bottom of the window that you cannot see
there's another memo field where you can describe every last detail of this invoice and how it
relates to everything else when we click Save and close we can take a look at the trial balance and
now you can see actual earned income from legal fees has increased to two thousand two hundred and
unearned retainer fees has decreased to thirteen thousand four hundred if you ever wonder why the
balance is the number that it's showing any time you see a total amount in a report you
can always double click and get the detail so here we can double click the total of income from legal
fees earned and see it's because of these two invoices that were recorded on January 31 you
can also double click the thirteen thousand four hundred dollars of unearned retainer fees to see
why that is the result when you double click you get a detail of every single transaction that has
led you up to the balance of thirteen thousand four hundred notice the first three payments that
went into unearned retainer fees increase the balance and then notice the two invoices that
we recorded when we actually returned it when we actually earned it decrease the balance and this
is the explanation and of course just like in the previous example when you open the client balance
detail you can see that we now Oh Betty only six thousand dollars in future service because we
earned twelve hundred dollars during the month so this customer balance detail which is also called
the client balance detail shows you every event that changes the balance and it shows you the
running balance which means the balance of what's owed to the client at any given moment in time
you may remember from the previous video that our arrangement with candy is a little bit different
On February 2 Ross performed one of two prepaid services for candy Charles worth $1,200 make
invoice number three and send her a paid invoice well that's basically the exact same thing Ross
earned some of what was prepaid but in this case the invoice date will instead be February two and
of course QuickBooks automatically enumerates the invoice and you could always highlight this
and change it to whatever invoice number you would like it to be the customer in this case
the client is candy Charles and the only item you ever have to put on an invoice if you do
not track your income for separate services and the amount we earned in this case is 1200 now
at the moment we click Save and close of course the trial balance shows and increase and earned
income and a decrease and unearned income and of course the client balance detail shows that
we now owe candy less money as a result of the service that we performed on February 2nd