Journal Entry Examples

The following provides detailed examples of the journal entries that are generated for various transactions in the Accounts Receivable and Accounts Payable modules.  The account types are defined in Reference File category 302 for Accounts Receivable and Reference File category 202 for Accounts Payable.

For the following examples, the draft amount is 120.  For the unpaid/claimed back example, an arbitrary amount of 10 was used as the expense amount.

Accounts Receivable

1.   At payment entry time, drafts and non-draft payment types with a remittance procedure are applied to selected open items.  Remittance records are created and the open amounts of the selected open items are reduced accordingly.

2.   When the payments are remitted, remittance records are sent to the bank via paper or via magnetic tape.  Based on the remittance procedure defined on Reference File category F48, one of three different sets of accounting transactions are possible:

a.   All non-draft payments and draft payments where Due Date Generation is 'N' and Risk is 'N'.

For this transaction, the accounting date is the remittance date.

b.   Draft payments where the Due Date Generation is 'Y', Risk is 'N'.  The following two transactions occur for drafts payments under these conditions.

For this transaction, the accounting date is the remittance date.

For this transaction, the accounting date is the due date of the payment

c.   Draft payment types, Due Date Generation is 'N', Risk is 'Y'.  For risk accounting transactions, you want to have the payment put into your cash account on the remittance date; however, at the same time, you want to note that the draft has not reached its due date and there is a potential that this amount may not be paid.  The following three transactions occur for draft payments under these conditions.

For these transactions, the accounting date is the remittance date.

For this transaction, the accounting date is the due date of the payment.

3.   The Draft Management module provides additional capabilities for processing drafts which were rejected by the bank or claimed back by the vendor after remittance.  In the Unpaid/claimed Back Draft conversation, a new document is created to recover the amount of the unpaid/claimed back draft.  The accounting transactions for this are based on the value of the Bank Entry flag on Reference File category F31.  The accounting date for the following transactions is entered at unpaid/claimed back draft entry time.

If Bank Entry flag is set to 'Y', the following transactions occur.

If Bank Entry flag is 'N', the following transaction occurs.

Accounts Payable

For draft payment types, the following transaction occurs on the payment creation date.

If the Due Date Generation flag is 'Y' on Reference File category 240, the following transaction will also occur on the due date of the payment.