Journal Entries Generated by Accounts Payable

Sage 300 ERP

Journal Entries Generated by Accounts Payable

This topic describes the effects of posted transactions on the general ledger.

Invoices

Assigned to source code AP-IN on the G/L Transactions report, except interest invoices, which are assigned the source code AP-IT.

Posted invoice transactions debit the general ledger inventory account or expense account you specify with each invoice detail (either directly or using a distribution code) and credit the vendor's Payables Control account.

G/L Accounts	DR	CR
Inventory (or Expense)	X
Retainage Control		X
Payables Control		X

The entry for a retainage invoice is:

G/L Accounts	DR	CR
Retainage Control	X
Payables Control		X

Credit Notes

Assigned to source code AP-CR on the G/L Transactions report.

Credit note transactions credit the general ledger account (the inventory account in this example) and debit (decrease) the vendor's Payables Control account.

G/L Accounts	DR	CR
Payables Control	X
Retainage Control	X
Inventory		X

Debit Notes

Assigned to source code AP-DB on the G/L Transactions report.

Debit note transactions debit the general ledger account represented by the distribution code (inventory in this example) and credit (increase) the vendor's Payables Control account.

G/L Accounts	DR	CR
Inventory	X
Retainage Control		X
Payables Control		X

Payments

Assigned to source code AP-PY on the G/L Transactions report.

Payments debit the vendor's Payables Control account, credit the Bank account specified for the payment batch, and credit the Payment Discounts account (if a discount is taken). Discounts are assigned the source code AP-ED (for earned discount).

G/L Accounts	DR	CR
Payables Control	X
Bank		X
Payment Ciscounts		X

Prepayments

Assigned to source code AP-PI on the G/L Transactions report.

Prepayments debit the Prepayment account and credit the Bank account for the payment batch. When you apply the prepayment later, Accounts Payable will credit the prepayment account and debit the expense or asset account that you specify.

G/L Accounts	DR	CR
Prepayments	X
Bank		X

Miscellaneous Payments

Assigned to source code AP-PY on the G/L Transactions report.

Miscellaneous cash payments debit the general ledger account you specify on the Payment Detail tab of the Payment Entry form and credit the Bank account for the payment batch.

G/L Accounts	DR	CR
Misc. Expense	X
Bank		X

Adjustments

Assigned source code AP-AD on the G/L Transactions report.

An adjustment entered as a positive number credits the vendor account (increases the payables balance) and debits the general ledger account you specify when you enter the adjustment.

For example, the following adjustment was entered as a positive adjustment to the inventory account.

G/L Accounts	DR	CR
Inventory	X
Payables Control		X

An adjustment entered as a negative amount debits the vendor account and credits the general ledger account you specify when you enter the adjustment.

Multicurrency Transactions

Exchange Gains or Losses During Revaluation

Assigned source code AP-GL (for "gain/loss") on the G/L Transactions report.

Accounts Payable creates entries for General Ledger when you revalue an invoice in a source (non-functional) currency at an exchange rate that is different from the rate currently used by the invoice.

The following transaction registers a loss, because changes in the exchange rate have increased the value of the vendor invoice:

G/L Accounts	DR	CR
Exchange (or Realized) loss	X
Payables Control		X

If you use the Realized and Unrealized Gain/Loss accounting method for your company, exchange gains and losses are considered unrealized until the document is paid. Revaluation sends unrealized gain and loss transactions to General Ledger as reversing transactions (meaning they are automatically reversed at the beginning of the next fiscal period).

The following entry shows how the unrealized loss is reversed:

G/L Accounts	DR	CR
Payables Control	X
Exchange (or Realized) loss		X

When you print the Vendor Transactions report for the period in which you post the reversing revaluation transaction, both transactions appear for the vendor. Their net effect on the account balance is zero.

If you use the Recognized Gain/Loss accounting method, revaluation exchange gains and losses are not reversed.

Exchange Gains or Losses Arising on Settlement

Assigned source code AP-GL (for "gain/loss") on the G/L Transactions report.

This type of exchange gain or loss arises when you settle an invoice using an exchange rate that is different from the rate currently used by the invoice.

If posting changes the value of an invoice (for example, through partial payment, full payment, or credit note), Accounts Payable calculates the gain or loss for the portion of the invoice that was changed by the posting, and creates gain or loss transactions for the general ledger accounts.

The following transaction registers a gain, because the exchange rate on settling reduced the value of the vendor invoice:

G/L Accounts	DR	CR
Payables Control	X
Exchange (or Realized) gain		X

Note that credit notes and debit notes do not affect gains or losses if they are issued at the exchange rate of the original invoice. However, they will generate gains or losses if they are issued at a different rate.

Transaction Types

A full list of the transaction types listed on the G/L Transactions report follows:

AP-AD Adjustment
AP-CF Applied Credit (from)
AP-CR Credit Note
AP-CT Applied Credit (to)
AP-DB Debit Note
AP-DF Applied Debit (from)
AP-DT Applied Debit (to)
AP-ED Earned Discount Taken
AP-GL Gain or Loss (multicurrency ledgers)
AP-IN Invoice
AP-IT Interest Charge
AP-PI Prepayment
AP-PY Payment