General Ledger Journal Entries Generated from Invoices

Invoices are assigned source code PO-IN on the G/L Transactions report. The journal entries for invoices are created when the Purchase Orders batch is posted in Accounts Payable.

If a receipt is invoiced without changes to quantities and costs, a journal entry is created to debit the item's payables clearing account and credit the vendor's payables control account (with the total of the extended item cost, allocated taxes, and any prorated additional costs and their allocated taxes).

If quantities or costs were changed on the invoice, Purchase Orders creates general ledger journal entries that:

• Debit or credit the item's inventory control (or inventory/ expense) account for the difference between the receipt amount and the invoice amount.

• Debit or credit the item's payables clearing account for the difference between the receipt amount and the invoice amount.

• Debit the Payables Clearing account for the original amount of the receipt, net of any adjustments as listed above.

For example, if the item cost increases on an invoice, the difference between the invoice cost and the receipt cost is debited to the item's inventory control or inventory/expense account.

New prorated additional cost added on an invoice. When a new additional cost is added on an invoice, general ledger journal entries are created by Day End Processing to debit the Inventory Control account with the amount of the cost and credit the payables clearing account.

Non-inventory items. When invoices are posted for non-inventory items, the general ledger journal entries created in Accounts Payable debit the expense account specified for the non-inventory item and credit the vendor's payables control account.

If you choose the P/O option to create G/L entries for non-inventory expenses from receipts/returns (on the Integration Options tab of Purchase Orders' G/L Integration form), Purchase Orders will create debit entries to expense accounts and credit entries to the non-inventory payables clearing account when you post receipts. (Posting the invoices later in A/P will credit the payables control account and debit the non-inventory payables clearing account.)

Expensed additional costs. If additional costs are expensed (rather than prorated to the items on a receipt), Day End Processing creates an Accounts Payable invoice that will debit the additional cost expense account and credit the vendor's payables control account when it is posted in Accounts Payable.

If you choose the P/O option to create G/L entries for expensed additional costs, Purchase Orders will create debit entries to expense accounts and credit entries to the Expensed Additional Cost Clearing Account when you post additional costs. (Posting the invoices later in A/P will credit the payables control account and debit the Expensed Additional Cost Clearing Account.)

Note: If the additional costs are job-related, Purchase Orders will always create G/L entries for expensed additional costs during posting — whether you select this option or not.

Job-related items. Purchase Orders sends transactions to Project and Job Costing if an invoice includes an adjustment to the receipt — such as a change to the cost, quantity, or billing rate. These transactions do not affect the G/L or A/P.

For example:

• If you change the billing rate, Purchase Orders generates a new transaction for the difference between the old billing rate and the new billing rate.

• If you also change quantities, Purchase Orders will also create a billing adjustment transaction for the quantity difference.

• If the receipt originated from a purchase order and you change the quantity outstanding, Purchase Orders will update the committed quantities and costs in Project and Job Costing.

Do not change invoices in Accounts Payable. Job-related invoices transferred to A/P from P/O will not update Project and Job Costing when posted in Accounts Payable. Purchase Orders directly updates Project and Job Costing with invoice amounts.