yoyoyo wheeze back and who are you man I am CPA strength I am the strongest
licensed CPA in the state of Florida what do you do buddy I teach the
world-over accounting basic building blocks by building blocks by building
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really the best accounting playlist you'll find it's all my accounting
playlist currently now what is this this is number 77 this is my classic series
this is my AFB accounting for beginners classic series this is number 77
independent contractor we're going to do an independent contractor expense a
subcontractor the cost of goods sold I don't really want to confuse everybody
with because sometimes like a cost of goods sold is really just an expense
it's broken up different but it's really on the cost of goods sold is on the
income statement under the expenses so I just wanted to leave independent
contractor as an expense but yes is a cost of goods sold for the purpose of
this video we're not gonna do we're not gonna rock with that even bigger than
this being number 77 of my classic series it is v it is number 5 of widget
incorporated where we started our own little business and I hopefully now that
we're getting going you can you can see exactly I hope why after this juror
after they ever do this journal entry you can see why the balance sheet and
the income statement are the way they are and we've just done you know one
journal entry a month but anyways let's get on let's see let's see if
the first one you've seen hey what's up consider watching my other ones if
you're back again hey what up we're learning a lot early and of course how
can I forget my DC either this is really why everybody would watch me damn its
current asset raw expense liability equity reference is like a mapping
system that so you won't forget everything now what are we doing in
number 77 here subset widget Inc number 5 let's go Road to 100 widget
incorporated pays independent contractors 3000 dollars to help with
widget repairs basically what's happy is we only had like 4 that we had like
$4,000 in our bank account I believe yes we had loot $4,000 in our checking
account we have a whole bunch of repairs to do but the only we don't have any
tools or any equipment any anything so we so we we don't have any employees
yeah we have a job to do but we don't have like any employees and employees
you know with like payroll and queueing a foreign employee I don't know do we
like this guy you know cuz that once you start it it's once you have an employee
it's the whole thing you have to have unemployment taxes and all this then
fire and blah blah blah so a lot of people do an independent contractor or a
subcontractor I wrote it out bless my heart right now as an independent
contractor because I think that's more I think you're like where he's an
independent contractor well it's a contractor that's independent he does
his own thing and dependently and view his own thing so you give them the money
without taxes and you'll get a 1099 but anyways it's just another expense
because for us it's a cost of goods sold but it gets the gross profit but it's an
expense because we don't have employees right now even if we did have employees
we might need a special we might need an independent contractor to come work
because he can do things that our employees can't
this is the case right here he has a lot of knowledge right here so he's
basically showing up with his little tool bag and he's gonna fix it he's
gonna fix some witches just because he knows the stuff does he went I don't
know he went to like wood just school for like seven or eight years or
something he's pretty smart guy already a contractor
anyways what do we have well you paid somebody $3,000 do we have cash or
checking account yes we do it's leaving the account yes what is that it's an
asset so if some foreign assets leaving the account the positives or our debit
if it's leaving the account into credit so boom so we have a credit for three
thousand in our checking account because because we have three thousand dollars
leaving our checking account what's our debit gonna be over here well
an independent contractor well your notice three thousand what why are you
having three thousand dollars leave your checking account it is because I'm
paying that independent contractor three thousand dollars that's in the ordinary
course of business and it's a new hope that you would get the money back so
that's an expense so we pay independent contractor three thousand dollars for
which repair she's really smart guy and we need him
we don't have salaried employees yet debit independent contractors three
thousand dollars credit checking account three thousand dollars okay this one
looks this board looks great everything wants to be in shape oh I need an eraser
because I won't feel right and I'm going to rock with the the purple because the
purpose feel real nice in my hand because I use the black one alot of the
purples feel good alright now what happened in that let me
look what happened that journal entry we're an independent contractor and
checking account for three thousand dollars each let's go to our chart of
accounts we already had our checking account because we I think movies are
checking out on all of our transactions so far up through this is May 31st sorry
I forgot to include that in the first board that it's May 31st sorry
it's the fifth transaction May 31st but we have we used there's our chart of
accounts we use checking account in that one - current asset and we used
independent contractor which is an expense now this is a new one so we
would have made an account for this one yeah we just make a new one because we
didn't have any other expenses that were even close to that or like a sub sub
grouping or anything the only other expense we had was rent
and pay to independent contractors not rent so we made up a new expense it is
an expense but it's not right expense so we made a new one and we also from
previous journal entries we have in our chart of accounts we have truck we have
loan from shareholders we have widget service asset liabilities revenue
expenses all various things so that was in our chart of accounts
now the to chart the two accounts that we use for that journal entry was it was
our checking account and our independent contractor let's go in the subdivision
of the account what's going on in the ledger the general ledger for our time
period of when the company started - May 31st 2017 or 2015 sorry May 31st 2015
there's only one thing that happened in the independent contractor general
ledger at 5:30 115 has an expense for $3,000 all right has 390 spends but it
has $3,000 in it he paid somebody $3,000 at the time now what's going on in our
checking account well yeah right we've had productivity in one one fifteen to
twenty eight fifteen 3:31 fifteen four thirty fifteen and five 31:15 so every
single journal entry every month every journal entry we've used the checking
account that's why I always say hey if you can figure out where the cash is
going you're gonna get about half the journal entry right and yeah and that's
what made my life a lot easier I started follow the cash and I started getting
more and more rights than of D's and F's I started it in season B's and then well
I never got better than that really
so I'm 531 15 checking account we had negative $3,000 if you hadn't subtract
every every journal entry that leaves us with $1000 at the end of our currently
right now in our checking account we have $1000 and our independent
contractor account we have $3,000 so that's our chart of accounts in general
ledger now let's bump over to our balance sheet
and income statement all right guys who's back through back
once again we're gonna do the balance sheet the income statement
now balance sheet goes on top that's at 5:30 1:15 set its current certain date
but let's go to the income statement first that runs from 1 1:15 to now which
is 5:30 1:15 what happened on our what happened in our income statement in our
expenses we had independent contractor for $3,000 we added that into our income
statement so that has our expenses at $7,000
we have revenue of $2000 with 2000 - seven thousand is negative $5,000
negative $5,000 is our net income for the year so far
revenues minus expenses net income negative $5,000 so the net income from
the income statement transferring four numbers it's two eights two times on the
end it's once on the income statement and then it goes over the balance sheet
under equity now balance sheet is assets equal liabilities plus equity our assets
our checking account is we've just a journal entry that's 1,000 now plus
starts truck at 4,000 is $5,000 for our assets on our balance sheet assets equal
liabilities plus equity our liabilities didn't change until $10,000 our equity
did change because our net income changed
it's now negative $5,000 so we have five thousand so we have ten
thousand dollars - five thousand dollars for liabilities and equity so that is
five thousand dollars the liabilities plus equity is five thousand dollars so
five thousand dollars liability plus equity equals five thousand dollars
balance sheet let's look at a couple things here common things that you might
hear I might hear from a client you might hear from a client or someone
dad's like so we have a profit of negative a loss of five thousand dollars
of negative five thousand dollars net income but we have a thousand dollars in
our bank account so someone might say ah buddy I have a thousand dollars here to
spend in my bank account but I've lost five thousand I don't make no sense if I
had if I would have negative five thousand in my bank account but I have a
thousand of a great counsel you're stupid
well you got you started with ten thousand dollars I was alone that's his
own thing so I want you to think about that or what I want you to do is look at
look at the a balance sheet the income statement the general ledger the chart
of accounts from the last video possibly I'm just giving the idea from last video
kind of look at it make the journal make a journal entry that we make look at and
then and then do the balance sheet and income statement chart of accounts and
such and see how the number the journal entries and the problem we did change to
the problem before anyways I got a super busy day I love doing this I'm staying
positive but someone this is going to be out in
September so gotta stay positive September is my positivity month nothing
about positivity and my each the YouTube channels just growing subscribers views
it's having record record days like every day now and
all this hard work is paying off anyways till next time have a great one
deuces
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