and now we will learn how to record rent that we actually earned this means creating invoices
if you have any questions about this topic you can leave them in the comment section below and
I'll do my best to help you and of course if you feel the video helped you I hope you will click
like and don't forget to subscribe to get updates on new videos that come out all the time we make
an invoice after we earn the rent this is how earned income is recorded into QuickBooks and
that's because in a normal business the invoice would be a request for payment after the product
or service has been delivered when we create an invoice in QuickBooks it actually serves
two functions first it records and acknowledges that we have actually earned the income and the
section second function of the invoice would be to make a request for payment and actually
have a document that we can print and hand to the tenant so first we will record that
we have earned only at the moment we have earned it which is actually at the end of the month and
we'll discuss that in a moment but then we will give a document to the tenant for a request for
payment for a future month now regarding giving a document to the tenant we'll talk about that
in the video that follows this one the rest of this video is just making invoices to record that
we acknowledge that we earned the rent in fact in many cases we don't even make an invoice we
just record that we earn the rent and it's very rare we have to print one and give it to a tenant
we did not earn the rent until the end of the month the invoice date therefore must always be
the last day of the month that the tenant stayed since most tenants pay before staying anyway you
can give them a paid invoice and again we will learn in a later video how to get QuickBooks to
mark the invoice as acknowledged and stamped as paid so what will actually happen at the end of
the month at the moment we record this invoice well at the end of the month we can acknowledge
and record that we earned rental income so that number will go from 0 up and it will increase
but the unearned amount that actually the amount we earn during the month will make honored rental
income decrease by the amount we actually earned that's because if a month went by then some of
what we some of what the tenant paid for we actually earned so that's what will happen
rental income will show up for the first time an unearned rental income will go down when we
make our first invoice for example on January 30th or really supposed to be January 31st we need to
make an invoice for Allen to acknowledge the rent that we have earned during January remember he is
the only one that pays 2,000 per month so what will happen in the trial balance when we record
an invoice for Allen for the very first month that he actually stayed well we know that here are the
numbers after the previous video after receiving the rent from only two tenants Allen being one of
them now we know that unearned rental income is going to decrease by the amount that he paid and
become $16,000 because 2,000 of the previous 18,000 we just earned during January but the
rental income actually earned is an account in the chart of accounts that will show up for the
first time in the trial balance as $2,000 and to top it off in Allen's specific records his
balance then becomes 10,000 let's take a look so to create an invoice you click the plus sign
the way you would for most any transaction then go all the way to the column on the left that
deals with tenant related transactions and click invoice and the invoice window opens up and it's
very simple to complete the invoice window first click the customer pull down menu scroll down
to the customer we want and click and we have a land RB in a1 now click here and go back to the
date that were actually making the first invoice January 31st is the end of the first month whose
rent that we actually earned and of course we click directly under the word product or service
just to bring the pull down arrow now when we click the arrow we notice all of the items that
we learned about in the prior video are listed here in the pull down menu and we click rent due
and in the case of Allen we put 2,000 because his rent is 2,000 per month now when we click
Save to acknowledge that we recorded our first invoice for Allen and again you don't have to show
this message click OK oh let's don't show this message again click OK now when we come here to
the reports the results are exactly as we expect it reports custom trial balance notice unearned
rental income has decreased because there's less unearned and rental income earned has shown up
for the first time in the trial balance as $2,000 we can also click reports tenant balance detail
and we can see that only Allen's balance has decreased by 2000 and it is now down to $10,000
now in QuickBooks Online the better report it turns out is really the transaction list
by customer it does what the balance detail is supposed to do and we're going to change the
transaction list by customer to read transaction list by tenant quickbooks online for some reason
is very different than the QuickBooks desktop version and this report is only slightly helpful
the better report is where you click reports standard and then scroll down to where it says
sales and customers and click this last one transaction list by customer if we change
the date pull down to read all you can and then run the report click run the report you can see
that it's actually giving you each individual transaction and then it gives you the balance
at the bottom now that's not as good as having the running balance the way the desktop version
allows you to see the balance at any given moment in time but the video that will follow this one is
a supplemental video that shows how to export this to excel and type in a formula to get the running
balance and that would be the balance at any particular moment but let's just save this with
the name transaction list by tenant so we click the pencil tool just like we learned last time
and change the word customer to the word tenant oops well we don't want to do the opposite of
capitals so we change it to tenant and of course click away from the field and that would save it
and now when we click Save customization we also change the name on the report oh it actually knows
that we want it to be called transaction list by tenant because we changed it in the title so
when we click Save we can check that if we click reports custom reports we can get transaction list
by tenant and we can see every payment and every invoice and we can see what the current balance
is for each tenant now let's do a second example let's imagine again on January 31 we made another
invoice this time for candy to acknowledge the rent that we have earned during January
for candy now remember she only pays $1,000 a month so can we predict what will happen well
this is the way the trial balance looks before we record this next transaction can you predict
what the numbers will be if we have less unearned because another month went by that means unearned
goes down by the amount of rent for that month so unearned rental income will become 15,000 and
the rental income earned will increase this time and become 3000 so we have 1,000 less of unearned
and 1,000 more of rental income earned after we record Candy's first invoice and of course in a
separate area of Records Candy's balance becomes $5,000 let's take a look so again we click the
plus sign for every possible type of transaction go all the way to the left for tenant related
transactions and again click invoice this invoice again is dated January 31 because it acknowledges
that we earn the rent at the end of the month from this specific tenant scroll down scroll up
here she is candy Charles good now we click under the word product and service to bring
the arrow click on the arrow and click rent due and for candy it's only a thousand push
tab now we click Save and then of course when we close it we can check the results we click
report well right here in the transaction list by tenon you can see that this thousand dollar
invoice been added to candy section and that adjusts her balance accordingly the balance
obviously is not correct because that's indicating everything as positive so that's why you also need
the tenant balance detail as well but if you click reports and then you click trial balance
you can see that the numbers and the trial balance are exactly as what we predicted after
this transaction and then if you click reports and then you click tenant balance detail you can
see that Candy's actual balance is down to 5,000 and Alan's actual balance is down to 10,000 and
of course I want to stress again what I had stressed before in the previous video you can
fix any transaction that you recorded by simply opening the report double-clicking the transaction
and changing it to what you want just to remind you if we click reports and we went back to the
trial balance the trial balance is a summary and that means if we double click any summary number
we get the details of each transaction that lead up that led up to that total number or we would if
it allowed us to scroll I don't know why but if we wanted to change one for example if this invoice
was wrong for a thousand if I double click and I say I don't want this to be a thousand I want
it to be a billion or whatever that is ok a big huge ridiculous number the most QuickBooks can
handle we click Save click yes if I change this right now and I go back to reports trial balance
you can see the trial balance has crazy numbers I could also click reports and see that on the
transaction list by tenant I can see I have this crazy number but if I double click from any report
if I open the transaction any report I go back to the original window that I entered it change it to
what it's supposed to be then click save click yes soon as I said save the change the results
and the reports immediately fix themselves and the numbers go back to the way they're supposed to be