debits & credits for entering a Salse Order ??

[Will]

I am not an accountant but need to learn how to manually enter a "Sales
Order" or "Purchase Order from a Customer" into the books.

I know when we Invoice a customer we...
Credit Inventory & Debit Accounts Receivable

When the customer pays we...
Credit A/R and Debit Cash (or Checking)

BUT... when we book an order... what two accounts do we use??

And, if we have a 'Sales Account' what account is associated with it?

thanks for any help - Will

[___cliff rayman___]

Post by Will
I am not an accountant but need to learn how to manually enter a "Sales
Order" or "Purchase Order from a Customer" into the books.
I know when we Invoice a customer we...
Credit Inventory & Debit Accounts Receivable

Not complete. Think about it. Debits and credits have to equal. This
will only be equal if you sell everything for exactly the same as you
have booked it into inventory. Probably not a good long term viable
business solution. Try this:

Accounts Receivable - Debit for Total Sale to Customer
Sales - Credit for Total Sale to Customer
Cost of Goods Sold - Debit for Cost of Inventory as on Books
Inventory - Credit for Cost of Inventory as on Books

Post by Will
When the customer pays we...
Credit A/R and Debit Cash (or Checking)

Yes.

Post by Will
BUT... when we book an order... what two accounts do we use??

None usually. Just booking an order does not create any change on the
financials in the current time or past. If you receive a deposit
however, then you would post as follows:
Cash - Debit for Amount of Deposit.
Customer Deposits - Credit for amount of deposit. (I usually make this
a contra account to the Accounts Receivable account)

Then when I actually book the sale (ship the merchandise or deliver the
service):
Accounts Receivable - Debit for Total Sale to Customer minus the deposit
Customer Deposits - Debit for the Amount of Deposit when the order was
booked
Sales - Credit for Total Sale to Customer
Cost of Goods Sold - Debit for Cost of Inventory as on Books
Inventory - Credit for Cost of Inventory as on Books

[Will]

Cliff,

Thanks for the info.

Regarding 'booking an order'

If you don't 'book orders' how do you look at backlog by month?

Say you have a customer who orders 1,000 widgets and want's them delivered
100 per month for 10 months.

And if you have lot's of business like this... or say your in the
advertising business and customers routinely sign contracts for many months
of advertising...

And management ask... "how much business do we have booked for next month"
or "let me see our backlog month by month for the rest of the year"

The old original Quick Books would let you do this... but now you must buy
one of the expensive advanced versions...

I was trying to set it up manually in QB using journal entries... but didn't
know how to do the accounting.

thanks for any additional comments - Will

Post by ___cliff rayman___

Post by Will
I am not an accountant but need to learn how to manually enter a "Sales
Order" or "Purchase Order from a Customer" into the books.
I know when we Invoice a customer we...
Credit Inventory & Debit Accounts Receivable

Not complete. Think about it. Debits and credits have to equal. This
will only be equal if you sell everything for exactly the same as you
have booked it into inventory. Probably not a good long term viable
Accounts Receivable - Debit for Total Sale to Customer
Sales - Credit for Total Sale to Customer
Cost of Goods Sold - Debit for Cost of Inventory as on Books
Inventory - Credit for Cost of Inventory as on Books

Post by Will
When the customer pays we...
Credit A/R and Debit Cash (or Checking)

Yes.

Post by Will
BUT... when we book an order... what two accounts do we use??

None usually. Just booking an order does not create any change on the
financials in the current time or past. If you receive a deposit
Cash - Debit for Amount of Deposit.
Customer Deposits - Credit for amount of deposit. (I usually make this
a contra account to the Accounts Receivable account)
Then when I actually book the sale (ship the merchandise or deliver the
Accounts Receivable - Debit for Total Sale to Customer minus the deposit
Customer Deposits - Debit for the Amount of Deposit when the order was
booked
Sales - Credit for Total Sale to Customer
Cost of Goods Sold - Debit for Cost of Inventory as on Books
Inventory - Credit for Cost of Inventory as on Books
--
_____cliff_rayman_____________________________________
Business Consulting and Turnaround Management
[web] http://www.rayman.com/
[web] http://all-clear-turnaround-management.com/
[eml] cliff _at_ rayman.com
[phn] 888-736-3802 x701
[fax] 818-743-7404
______________________________________________________

[___cliff rayman___]

Post by Will
If you don't 'book orders' how do you look at backlog by month?
Say you have a customer who orders 1,000 widgets and want's them delivered
100 per month for 10 months.

Personally, I don't like using the GL for these types of management
reports. I would probably use a spreadsheet or more likely software
that I had written for that exact purpose. That said, you can always
make accounts to book things to and then contra them out. i.e.
Bookings
Bookings Contra

so, when you book a sale you would
Debit Bookings
Credit Bookings Contra

when you record a sale you would have to:

Accounts Receivable - Debit for Total Sale to Customer
Sales - Credit for Total Sale to Customer
Bookings Contra - Debit for Total Sale to Customer
Bookings - Credit for Total Sale to Customer
Cost of Goods Sold - Debit for Cost of Inventory as on Books
Inventory - Credit for Cost of Inventory as on Books


on the balance sheet, the net result of the two Bookings accounts would
be zero, but the balance of the Bookings account contains the current
booked amount.