Speaker 1: In this presentation, we're going to record a pledge into our not-for-profit organization. Get ready, because here we go with Xero. Here we are in our not-for-profit organization dashboard. We're going to go on over to Excel to see what our objective will be. So we're on tab 3 within Excel. Now it's important to remember that a pledge is not going to be a donation really at that point in time because we have not yet received cash. And it's also not going to be the same as a business transaction where we would typically record an invoice because there hasn't been any exchange that has happened. But there's going to be a similar kind of transaction as if we were to invoice a client for a for-profit type of organization. So just for the comparison, if we did bookkeeping or landscaping or something like that, or if we sold something like a good or service, then typically we would have done the work. And you can imagine billing or invoicing the customer for it. And then they would owe us money at that point. And they would pay us in the future. Now, when you're talking about a business type of transaction, there's going to be a requirement to pay us in the future because we did work. We did work and therefore we have some kind of recourse if they do not pay us because there's been basically a transaction has taken place in that case. However, in a pledge type of situation, we're a not-for-profit organization. Therefore, no work has really happened here other than us, you know, it's work to try to get a pledge for sure. But notice that we haven't actually provided anything to the customer. So that's... That means that it's just a promise at this point in time. And that's going to be a little bit different. So we want to make sure that we don't indicate it as basically, you know, the same thing as a receivable in that the collectability of it and whatnot. So that might affect basically the collectability and definitely could affect the recourse that we might have if we have problems collecting on pledges. So a pledge promised to pay, but we're going to record it in a similar way as an invoice would be, which would be a service type of invoice, which means we're going to increase the recourse. We're going to increase a receivable account, which we could call contributions receivable here. The other side is going to go to some kind of income account. Now here, we're going to record it as a restricted income for a time restriction. And this will just... This will basically reflect the fact that this isn't really income right now. It's basically restricted until we get it. So we're going to put this into a type of restricted income. First time we've done that so far. So the accounts that would be affected if we were to post this would be a receivable goes up. We want to be... We want to be able to track those receivables by who owes us money, what would be called customers, or in this case, donors or pledgers. And then down below, we have the revenue account, but we're going to put it into a different revenue account, still contributions, but with donor restrictions. In other words, we're going to say it's restricted due to a time restriction because we don't yet have the cash yet. So that's going to be our item that's going to be increasing here. And then the income statement, in essence, is going to go up in total. However, we want to be able to break this information. Out when we consider the income statement or the statement of activities by restricted items versus not restricted items without restrictions and with restrictions. Now we have a breakout between the two that we want to be breaking out. All right, so let's do that. Let's how can we do that over in zero? What we're going to do is we're going to use our tracking feature to do that. So we're going to go back on over to zero. We're going to hit the plus button up top. We're going to be making... an invoice. So it's going to be an invoice. It's still called an invoice within the zero system, but we kind of customized it to make it like a pledge type of form. We could find that in the branding. So if I go to the branding drop down over here, then I'm going to go to the pledge type of form. So I'm going to go to the pledge type of form. Then we're going to say this is going to be going to a pledger. I'm just going to call Pledger one. That's going to be the pledger. The people that's the person that's going to be giving us money. That's going to be the pledger. And then I'm going to say the date is January first or January. Not first. We want. Whoa, whoa, whoa, whoa. It went way crazy there. Let me go off of that. Go back on here. We want January 3rd. Let's go January 3rd. And then the due date, I'll just make February. So when do we expect it to be to be given to us by? I'm going to say February, let's say 3rd. And then. The invoice number. I'll keep that branding is going to be we want the pledge form. All right. So then we're going to go back down to the item down below. Now I'm going to add another item, which which as you recall last time or in a prior presentation, we had an item that we created for the sales receipt when it was a donation. People giving us money. Now it's a pledge. I'm going to make another item here for a pledge. I'm going to say pledge. And the reason is that it can't be the same the same item because the donation. Went to a different income account. Hold on a second. I have to hit the dropdown and then say new. So we have the donation there. We need a new item. And this is going to be a pledge. You'll recall that these items are basically kind of like income. They would be in inventory or service items. Hold on. I'll try to spell this right. I can't spell and think like other stuff at the same time or I can't spell with anyway. OK, so this would be similar to service items or inventory items. We're going to set up, but we're going to set them up as pledges here. They're acting in a similar way for a for profit organization. We're not going to have any unit price. You could have a different tiers of pledges if you so choose. If you have a standard set of pledges, you could put, you know, different different items for those standard sets. And then you can have a price that would then populate automatically. Then I'm going to select the dropdown. We need a contributions note. We have a. Contributions here. We need another account. We want contributions that are restricted this time. So I'm going to put contributions restricted. I'm going to select the dropdown then and say now we want the contributions. This is going to be a revenue type account, which we called sales. I'm going to make it a sales type of account and it's going to be four zero one zero. Let's make it because the other one was 4000, I think. So four zero one zero. The short name we're going to say contributions. And this time it's restricted. So these are restricted contributions. And then I'm going to say that looks like good. So I'm going to say save here. We'll say save. And then so there we have it going to that account pledge. So we don't need any purchase item. We don't need any track item down here. We're not actually selling it. But this is, again, equivalent to what we'd be doing for like an invoice that we sold goods or services. This would be like the service that we would have. So we're going to say save then save. There's our pledge. There it is. Unit price. So the unit price. How much was it for here? Let's go back to our journal entry because that's where the numbers are at. And we have the 108. The 108. Now, remember, you could think of this as multiple pledges happening that would add up to the 108. We're just going to put one like large pledge, but all of them would be doing the same thing. So there's the pledge. We don't have a discount contributions restricted. That looks good. And then. We're going to say this is on the restricted side in terms of our categories. So let's put this in the category of restricted. Select the dropdown. And we're going to say it's a time restriction. So I'm going to say time restriction tab. OK, so what's this going to do? There's a little bit complex as an invoice, but it's an invoice that's going to be in the format of a pledge document. That means that accounts receivable, a receivable account is going to go up. Balance sheet account showing that people owe us money. Other side on the income statement is going to be revenue. But now it's going to go to a new revenue driven by the pledge item, which is going to be the contributions restricted revenue account. Also, it's going to go into the restricted column. If we were to break this out by category restricted column in more detail, restricted by time. All right, let's do it. Let's check it out. We're going to say approve. And then we're going to go to our reports and see if that is indeed what happens. Let's first make sure it records. OK, OK. Green thing up here. That's green is usually meaning we're good. I'm not even going to read it. Says it's good. Says invoice approved. So I read it, but that's still good. We're going to go into the accounting. We're going to go down to the balance sheet. Let's open up the old balance sheet here. And then let's change the date. Going to hit the date drop down. Bring this on out to January 31st, January 31, 2020. Update. I'm going to hold down control. Let's see if I could scroll in a little bit. Make it a little bit larger. I'm at the 125, 125 on the zoom feature. And there's our checking accounts. So there's the checking account. Now there's the new thing. There's the receivable. That's the new thing that's happening. Other side is going to be in the equity because it's in the income section. So the accounts receivable, if we were to select the accounts receivable, then go into that AR, that accounts receivable account. We will see the detail. There's our accounts transactions. And then we could go into, of course, our invoice. So the transaction is an invoice because that's what we made. But it's really a plus. It's a pledge form. Someone promising to pay us money. So there it is. And then if I was to open it up, I could print this as a PDF. Let's go ahead and print it as a PDF and see what it looks like. So would you like to mark this invoice as sent? I'll say, yeah, we sent it. And then open it up. And so you can see here, we could send this out. And we're still basically saying, hey, it's an invoice. Give us money. But it's a pledge. We renamed it as a pledge. That's what we did when we customized the form. So it's a pledge form. Would you give us money down here? We have a little payment stub thingy. And of course, it looks a lot like an invoice to give us to give us the money. OK, so then I'm going to close this back up. I'm going to go back to our forms. I'm going to go back and then back to the balance sheet. Then I'm going to go up top, going to duplicate this tab. So let's right click on this tab. Let's duplicate this tab. So I'm going to duplicate the tab. Then we're going to go back to the tab to the left. We're going to open up the income statement now by going to the accounting drop down. And scrolling on down to that income statement. So let's open up the old income statement. And then if I scroll down, note I have it broken out in this format. We have the contributions restricted and unrestricted. So it's broken out by two separate accounts. But you'll also note that we would like to have it broken out by the two categories which we can do. So we did it a little bit in a redundant type of way. Let's go over to Excel. I'm in Excel now. And I'm going to go down to our statement of activities. So we want it broken out this way as well. Notice here I don't have two accounts on this statement of activities. I just called it contributions and broke it out by column. So by adding another account, in other words, we're being a little bit redundant. But I like that because it's kind of a double check for us. So if I was to go back over then. We can sort this report using our report settings up top. And we have our categories of unrestricted and restricted. Now I'm going to get into this in a little bit more detail in a future presentation. Because I want to spend a little bit more time on it than we have here at this point. But we will take a look at that in a second in a future presentation. So we could break these out not just by a one column report. But start to think of how we can format this report with added columns. Now the other report I want to take a look at. If I go back up top. Let's duplicate this tab. Right click on the income statement tab. Duplicate it. Then if we go back to the balance sheet. Note that we have this accounts receivable of the 108 now. So if we go back. To the first tab. First tab. And we go to the accounting drop down. Take a look at our reports. We'd also want to be tracking who owes us the money. So for that we could take a look at the age receivable detail. Let's say let's go into the aged receivable detail report. Open that one up. And that will help us track who owes us the money. So there's the 108,000. And the name is just Pledger 1. Because we called it Pledger 1. And that of course should tie out. The total of this report will tie out to what's on the balance sheet. In the accounts receivable. Also note that we could rename the receivables if we so choose. We had over here that it was. What did we call it? Pledger receivable or contributions receivable. And over here of course it's called accounts receivable. So we could change accounts receivable. We could simply go to the chart of accounts and change it. The key point here being that it's still an accounts receivable type of account. So I won't do that now. But we could just go and adjust the account name. As we've seen in the past. So I'm going to go back to the first tab again. We can also track the contacts. Now notice these are we could think of them as customers. If it was a for-profit. They're pledgers for us here really. So we're going to say contacts. We can look at all the contacts. So if I go to contacts on the left. And then all contacts. Now contacts generally include the customers. People that are going to give us money. Like the donors and the pledgers. And then the vendors. People that we pay. So then if we go into our customer tab within our contacts. There's our pleasure once again of the $108,000. So that's going to be it for now. Let's get out of here.