when we need to buy more inventory from our vendors we usually create a purchase order
and send it to them a purchase order is a document that formally requests the merchandise a document
that asks the vendor to ship the merchandise for us so we can purchase it from them and sell it
to the customer as you can see a purchase order is like any other document in QuickBooks and we
make a purchase order the same way we complete any other document that we previously learned
about it is an event that must be recorded in our financial records however even though
we must have records of the purchase order the purchase order is not a transaction all
you are doing when you make a purchase order is asking the vendor to send the merchandise maybe
they will maybe they will not but the event of asking for the merchandise is not a full
transaction therefore the purchase order will not show in the journal the purchase order will
not have an effect on the trial balance or any of the balances of the accounts in the chart
of accounts purchase orders have their own separate reports for you to manage what was
ordered what was received and what you are waiting for to manage your purchase orders you must know
what open purchase order means an open purchase order is a purchase order that we have not yet
received even though we mailed out the document to the vendor the best report to see this is on
the open purchase order detail report from the main menu click reports purchases open purchase
order detail open purchase order detail this report shows everything you need after you start
recording purchase orders and start receiving them you will see this will help you manage your
purchase orders to best illustrate this point we will record three purchase orders June fifth
ordered sixty five apples from a DS orchard from the main menu vendors create purchase
order June fifth purchase order number one a DS orchard the item is apples and the quantity is
sixty five save and new will bring you to the next purchase order the next purchase order is
June sixth ordered eighty five bananas from Sam's farm so June 6th Sam's farm bananas 85
save and new to go to the next purchase order June 7 order 95 bananas from a DS orchard June 7
at ease orchard bananas 85 save and close and now you can see that the open purchase order detail
separates the purchase orders by item and of course gives you all the details of the quantity
on the order Harmonie were received how many back ordered and the amount now let's see what happens
when we receive some of these items June 8th receives the 65 apples from a DS orchard from
purchase order number one we received it with bill number four for 55 from a d of course we
go to vendors receive items and enter bill at the moment we choose a DS orchard we get this message
this message is a normal part of QuickBooks it is not an error message and you did not make a
mistake you are supposed to read this message and understand that the vendor whom you're receiving
merchandise from has open purchase orders and QuickBooks is asking you if the merchandise you
receive today today June 8th is merchandise from one of those orders when we click yes we have a
choice of which of the orders from a DS Orchard we are receiving the merchandise from in this
case it's number 1 so we click on order number 1 and we when we click OK all of the information
from order number 1 comes here on the screen of course it's June I believe it's June 8th is the
day we were physically receive this merchandise and the bill number is bill number 4 4 5 5 now
it says over here in this corner this is from purchase order number 1 so after we save this
bill as evidence of receiving the items save and close now we look on the open purchase
order report and we see purchase order number 1 is no longer on this report at all because
purchase order number 1 is no longer a purchase and an open purchase order it is not an open
purchase order if it has been received now let's take a look at the more interesting one June 9th
received only 40 of the 85 banana's order from Sam's farm on purchase order number 2 and we
received it with the bill so we received from Sam's farm one of the orders but only some of
them we click vendor receive items and enter bill the date is June 9th the bill number is 6 6 7 7
look what happens at the moment we choose Sam's farm ah we get this normal message reminding us
that we have open purchase orders and that this bill is from one of those orders we should click
yes to get the open purchase order list just for Sam's farm as you can see there's only one
purchase order open for Sam's farm let's choose it and click OK now QuickBooks assumes that all
of the information from purchase order number two should be copied directly to the bill you are the
bookkeeper you know that the proper quantity we received is only 40 so we push tab and that
adjusts the amount of the bill to the amount that we really owe for what we physically received so
we ordered 85 but we only received 40 and the money amount adjusts down for this specific
bill and this specific item receipt click Save and close and now we look at the open purchase
order detail you can see for purchase order number two you can see that the quantity was
85 we received 40 therefore what's backordered is 45 the total amount of the order is $1,700 and the
open balance meaning the amount that we did not receive is 45 times the cost of the bananas which
is $900 students will sometimes ask is there a specific report for closed purchase orders
there is no specific report for closed purchase orders but there are two ways that you can see
all purchase orders regardless of whether they're open or closed you can use the advanced fine to
see all purchase orders and export that into a report or you could use the transaction list by
vendors to see all of the open purchase or all of the purchase orders regardless of whether they're
open or closed but they're organized by vendor so we can click edit find and then in the simple
transaction tab choose purchase order and click find are all of the purchase orders regardless
we can export them into a report and then this way you can double click and you can see this
one is still open you can double click and see this one is received in full you can also open
the transaction list by vendor reports vendors and payables transaction list by vendor push
pay for all and you can see a DS orchard had to purchase orders here number 3 is still open and
number 1 is received in full and though that would be two ways to see all purchase orders
and then you can sort through them one by one to see which ones are open and which ones are closed