Journal Entries Generated for Posted Transactions

This topic describes the journal entries that are created for your general ledger when you post invoice and receipt batches created in Accounts Receivable by Order Entry and when you process billings in Project and Job Costing.

It also describes the journal entries created for shipments posted in Order Entry.

You view and print the Accounts Receivable G/L Transactions report for all entries except shipments. Shipment transactions appear on the Order Entry G/L Transactions report.

This page contains the following sections:

Shipments

Invoices

Number of detail lines on A/R invoices

Prepayments

Credit notes

Items returned to inventory

Damaged items

Price adjustment

Shipping and invoicing kitting items

Job-related transaction entries

Shipping and invoicing in Order Entry

Project invoicing in Project and Job Costing

Shipments

Shipments are assigned source code OE-SH on the Order Entry G/L Transactions report.

Item quantities are removed from Inventory Control for posted shipments (either during day end processing or when you use the Create G/L Batch icon), as follows:

G/L Account	Debit	Credit
Shipment Clearing	X
Inventory Control		X

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Invoices

Invoices are assigned source code OE-IN on the Accounts Receivable G/L Transactions report.

When you post an invoice, the program generates the following entries:

G/L Account	Debit	Credit
Receivables Control	X
Cost of Goods Sold (Item)	X
Shipment Clearing		X
Tax Liability		X
Sales		X

If an item's costing method is the standard method or the most recent cost method, then the item's cost variance account is debited or credited with the difference between the standard or most recent cost, and the weighted average cost of the items shipped.

If you decrease the quantity shipped on an invoice, Order Entry creates an entry to adjust Inventory Control (either when you run Day End Processing or when you use the Create G/L Entries icon), as follows:

G/L Account	Debit	Credit
Inventory Control	X
Shipment Clearing		X

The source code that appears on the G/L Transactions report for this entry is OE-IN.

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Number of detail lines on A/R invoices

The way that Order Entry creates detail lines in A/R invoices depends on whether or not you use detail optional fields or Sage ERP Accpac Project and Job Costing.

Without optional fields or Project and Job Costing

If you do not use optional fields in Order Entry invoice details and in Accounts Receivable invoice details, and you are not posting job-related transactions, the Order Entry program creates A/R invoices with separate detail lines for sales, cost of goods sold, and shipment clearing entries (as in earlier versions of Order Entry).

All A/R invoice details are consolidated by G/L account, so if you use only one sales account, one cost of goods sold account, and one clearing account, you will see only three lines on an invoice.

Sales	Acct 4111	750.00
Cost of Goods Sold	Acct 5200	-500.00
Shipment Clearing	Acct 5900	500.00

With optional fields or Project and Job Costing

If you use optional fields in Order Entry invoice details and in Accounts Receivable invoice details, or if you are posting job-related transactions, the Order Entry program now creates a single A/R invoice detail line for each Order Entry invoice detail line.

Each A/R invoice detail includes the entries for the revenue, inventory (shipment clearing), and cost of goods sold accounts, and there will be as many invoice detail lines as there were on the original O/E invoice. A/R invoice details are not consolidated.

Sales item 1	Acct 4111	250.00
Sales item 2	Acct 4111	250.00
Sales item 3	Acct 4111	250.00

Each of the unconsolidated A/R invoice lines will produce a G/L entry with sales account, cost of goods sold account, and clearing account details when posted in Accounts Receivable.

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Prepayments

Prepayments are assigned source code AR-PI on the G/L Transactions report.

Prepayments are added directly to Accounts Receivable receipt batches when you post an order, shipment, or invoice that has a prepayment. Prepayments debit the general ledger prepayment liability account and credit the customer's receivables control account.

Credit Notes

Credit notes are assigned source code OE-CN on the Accounts Receivable G/L Transactions report.

Credit note transactions debit and credit general ledger accounts as shown in the following tables.

If an item's costing method is the standard method or the most recent cost method, then the item's cost variance account is debited or credited with the difference between the standard or most recent cost and the weighted average cost of the items shipped.

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Items returned to inventory

The following example records a credit note transaction for items returned to inventory. The first transaction is posted directly to G/L from Order Entry; the second one goes through Accounts Receivable.

G/L Account	Debit	Credit
Inventory Control	X
Credit/Debit Note Clearing		X

G/L Account	Debit	Credit
Sales Returns	X
Credit/Debit Note Clearing	X
Tax Liability	X
Receivables Control		X
Cost of Goods Sold		X

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Damaged items

The Damaged Goods account is debited rather than the Sales Returns account.

G/L Account	Debit	Credit
Damaged Goods	X
Credit/Debit Note Clearing	X*
Tax Liability	X
Receivables Control		X
Cost of Goods Sold		X*

* The Cr/Dr Note Clearing and the COGS entries will always be zero for damaged goods.

This transaction will appear differently in the A/R Invoice form depending on whether or not the transaction is job-related or uses optional fields.

• If the transaction is job-related or uses optional fields, the invoice will list a single detail line for the damaged goods account.

• If the transaction is not job-related and does not use optional fields, the invoice will list three lines—one for damaged goods, one for cost of goods sold, and one for Credit/Debit Note clearing—but only the damaged goods line will have an amount.

Price adjustment

G/L Account	Debit	Credit
Sales	X
Tax Liability	X
Receivables Control		X

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Shipping and invoicing kitting items

As of Order Entry 5.5, A/R invoices created if you have Project and Job Costing or if you added optional fields to invoice details will show only one detail line for each kitting item listed on an invoice, instead of showing one line for each component of each kitting item. Order Entry handles the accounting for kitting items with the following G/L entries.

When you ship kitting items, Order Entry creates G/L entries for each of the components in the kitting item:

G/L Account	Debit	Credit
Shipment Clearing, component 1	X
Inventory Control		X
Shipment Clearing, component 2	X
Inventory Control		X

When you invoice a kitting item, Order Entry creates the following G/L entries to back out the components for the master item from the shipment clearing account:

G/L Account	Debit	Credit
Shipment Clearing, master item	X
Shipment Clearing, component 1		X
Shipment Clearing, component 2		X

The source code that appears on the G/L Transactions report for the shipment entry is OE-SH. The source code that appears on the G/L Transactions report for the invoice entry is OE-IN.

Note:If you do not use optional fields in Order Entry invoice details and in Accounts Receivable invoice details, and if you do not use Project and Job Costing, the Order Entry program creates shipment clearing lines for each component to the A/R invoice and will not create the G/L account entries shown above during invoicing.

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Job-related transaction entries

Job-related transactions can take two separate paths. You can invoice orders through Project and Job Costing (by choosing the Project Invoicing option) or you can create invoices in Order Entry.

Shipping and invoicing in Order Entry

The following example shows the shipping and invoicing transactions for an order with one item and one miscellaneous charge. The miscellaneous charge is considered internal, because it's a handling charge and one of your employees is packaging the shipment. You can enter both the revenue and cost for the miscellaneous charge or only the revenue. Usually, you would enter the cost because you wanted to associate both the cost and revenue to the job and have labor and overhead calculated on the cost.

Type	Item No./ Misc. Charge	Qty.	Unit Cost	Billing Cost Type	Ext. Billing Amt.
Item	A1-103/0	1	50.00	Billable	100.00
Misc.	HC		15.00		30.00

Shipment posting entry:

G/L Account	Debit	Credit
Shipment Clearing	50.00
Misc. Charges Clearing	15.00
Inventory Control		50.00
Shipping Expense		15.00

Invoice posting entry:

G/L Account	Debit	Credit
Receivables Control	146.90
Cost of Goods Sold	71.50
Revenue		130.00
Overhead Allocated		3.25
Labor Burden		3.25
GST (Fed sales tax)		9.10
PST (Prov/State sales tax)		7.80
Shipment Clearing		50.00
Misc. Charges Clearing		15.00

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Project invoicing in Project and Job Costing

The following example shows an item being shipped from Order Entry and invoiced through Project and Job Costing. It also show the entries for an additional shipping cost (FedEx) coming through Accounts Payable instead of through O/E.

The shipping cost is recorded in Accounts Payable, picked up by PJC when you run the Billing Worksheet, and, finally, included on the invoice created in Accounts Receivable.

Type	Item No.	Qty.	Unit Cost	Billing Cost Type	Ext. Billing Amt.
Item	A1-103/0	1	50.00	Billable	100.00

Shipment posting entry:

G/L Account	Debit	Credit
Work In Progress	55.00
Inventory Control		50.00
Overhead Burden		2.50
Labor Burden		2.50

Accounts Payable invoice entry for FedEx charge:

G/L Account	Debit	Credit
Work In Progress	16.50
Work In Progress (Prov/State s. tax)	.90
GST (Canadian Fed sales tax)	1.05
A/P Invoice Posting		16.95
Overhead Allocated		.75
Labor Burden		.75

A/R invoice created from the billing worksheet:

G/L Account	Debit	Credit
Receivables Control	146.90
Billings		130.00
GST (Canadian Fed sales tax)		9.10
PST (Prov/State sales tax)		7.80

Revenue recognition:

G/L Account	Debit	Credit
Billings	130.00
Cost of Sales	72.40
Revenue (Sales)		130.00
Work In Progress		72.40

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See also

Using Order Entry with Project and Job Costing

Setting Up Miscellaneous Charges

Entering Item Details

Entering Miscellaneous Charge Details

G/L Accounts Used by Order Entry

Invoice Entry form — overview

Order Entry form — overview

Shipment Entry form — overview

Using Order Entry templates