attorneys need to know how to allocate costs after the fact attorneys have unique challenges
regarding allocating costs sometimes you don't know which client the check or the bill is for
until long after you pay for example March 25th we wrote a check to Staples and Staples gave us a box
of supplies with a specific packing slip number on the top of the box on March 25th we don't know
which client will use the supplies for but we know that during the month of April we will be
using them for a particular client and we have to allocate the cost to that client same thing with
the March 28th check to the US Post Office for $200 for postage the stamps came in an envelope
with a specific receipt number on March 28th but we will use these stamps for a particular client
during April but we don't yet know who it is so what do we do well if you don't know what client
they will be used for yet then on March 25th and on March 28th write the checks normally write the
checks normally and then on the day you use it you do a specific procedure so just to prepare
for that procedure let's record these two checks they should be very easy and should only take a
second check number three it's March 25th of 2017 don't forget and this first check was to Staples I
believe it was for $300 worth of supplies now it was for $300 worth of supplies but in this case
the packing slip number on the top of the box is 6 1 6 1 and if you have to allocate costs after the
fact it is very important that you use the memo field and you put some kind of identification on
the physical item that you will use in the future the rest is easy obviously the account is supplies
expense and when we click Save and close for this check the general supplies expense and the
trial balance will increase even though it has not yet been allocated to a specific client ok
that's also true for the March 28th March 28th check to the post office for $200 same thing
we opened the check window and we record March 28th QuickBooks knows this is checked number 4
we know the check is to the US Post Office it's for $200 and we know it's for postage expense
however in this case because we don't know yet which clients the check is for we have to put in
the memo field ok receipt number 1 7 1 7 ok to be used in the future so it's very important if
you're allocating costs after the fact that you put some identification about the physical item
some physical identification that's physically on or near the item in the memo field click Save and
close and of course postage expense increased in the trial balance it showed up for the first time
in the trial balance but we don't know yet which client will use the postage or the supplies now
let's imagine on April 5th we used $50 of the supplies purchased on March 25th that had the
packing slip 6:161 for the Betty Boop client case and let's also imagine on April 7th we
use $25 of the stamps purchased on March 28th with receipt number 171 7 in the envelope and that was
used specifically for the candy Charles client case all you have to do is reopen the original
transaction in this case we're both checks and reallocate the cost so let's do that for the
April 5th $50 for Betty Boop it's very easy to find the previous transactions and if you watch
the supplemental videos with the tools on how to find things it will be very easy the easiest way
to find every bank account transaction and every check is to open the trial balance and look here
where it says chase bank account this is only one of several ways to find the cheques double-click
the balance and you get every check every payment every deposit that you recorded against the bank
account or to the bank account now if we make the memo field a little wider you can see clearly this
is the one from Staples with the supplies that you used double click now we have to allocate this so
we're going to make this $50 less and we're going to put the other $50 on the next line
the next 50 dollars of course it still supplies expense but the other $50 is specifically for
the Betty boob job we're not yet showing you how to bill so let's remove the checkmark that comes
automatically yes that was for the Betty Boop job okay now of course we have another memo field here
and you can put who used the supplies and you can put how the supplies were used etc but you
know for sure that these supplies were used for the Betty Boop job and of course you can put the
date that it was used do not change the date of the check the date of the check is the day that
you paid your only going to put in the memo field on the line of the particular job the information
and specifically when it was used when we click Save and close and click yes you'll notice that
nothing in the trial balance changed but when we look at the profit and loss client you can see
that Betty Boop now has 50 dollars of supplies expense and we can double click and we can see
the check by double clicking again and you can come down here and see April 7th it was used for
Betty Boop now let's record the April 7th usage of the $25 of stamps that was purchased on March 28th
with receipt number 1 7 1 7 still in the envelope of stamps and remember this $25 of stamps was used
for candy Charles client case you do the exact same thing you use one of several methods to
find that particular check now again if you make the memo field a little bit wider you can see that
this was the check to the post office for stamps with receipt number one 7 1 7 if you open it up
you have to decrease not up here decrease down here by $25 then QuickBooks will automatically
put the $25 on the next row you know for sure its postage expense but in this case you know for sure
that this is for the candy Charles client job and again only the video that follows this one will
talk about billable so we remove the billable check mark now we click into the memo field and
we type in used on April 7th receipt number 1 7 1 7 so that we know for sure which we know for
sure that the stamps that were used on April 7th were from the March 28th purchase and they get
allocated specifically to the candy Charles job click Save and close and click yes and now notice
the trial balance doesn't change at all because you still have the same overall amount of postage
that you paid but when you look at the profit and loss by client under the candy Charles job
there's now postage expense of $25 decreasing your profit from the candy Charles client case