Accounting Entries for Order to Pay w/ Debit Memo
Posted: Tue Apr 22, 2008 11:14 am
<font size="2"></font id="size2"><font face="Arial">Hi,
In our setup, matched invoices originate in Oracle Retail Invoice Matching System. Once these
matched invoices are posted to Oracle Finance AP, the physical payment occurs from AP.
This is what my understanding is for a normal scenario where PO matches receipts and receipts
match invoice.
PO Creation in Oracle Retail
-------------------------------------------------
No entries
PO amount = 100
PO Receipt in Oracle Retail
-------------------------------------------------
Dr. Inventory 100
Cr. AP Inventory Accrual 100
Invoice matched and Posting
--------------------------------------------------
Dr. AP Inventory Accrual 100
Cr. AP Supplier Liability A/c 100
Payment in AP
--------------------------------------------------
Dr. AP Supplier Liability A/c 100
Cr. Cash/Bank 100
All is clear till this point.
But let's say that the supplier over-invoices retailer by 10. i.e. invoice comes for 110 instead of 100.
In response to that, retailer creates a debit memo for -10 and posts it with the std invoice of 110.
My question is how are the accounting entries different in this case?
Will it be something like .......
PO Creation in Oracle Retail
-------------------------------------------------
No entries
PO amount = 100
PO Receipt in Oracle Retail
-------------------------------------------------
Dr. Inventory 100
Cr. AP Inventory Accrual 100
Invoice for 110 , Matched with DM(-10) and Posting
-----------------------------------------------------------------------------
Dr. AP Inventory Accrual 100
Cr. AP Supplier Liability A/c 110
Cr. Debit Memo -10
Payment in AP
--------------------------------------------------
Dr. AP Supplier Liability A/c 100
Cr. Cash/Bank 100
Please correct if my accounting entries for the debit Memo case is wrong.
Thanks in advance,
Suddha Satta Ray</font id="Arial">
In our setup, matched invoices originate in Oracle Retail Invoice Matching System. Once these
matched invoices are posted to Oracle Finance AP, the physical payment occurs from AP.
This is what my understanding is for a normal scenario where PO matches receipts and receipts
match invoice.
PO Creation in Oracle Retail
-------------------------------------------------
No entries
PO amount = 100
PO Receipt in Oracle Retail
-------------------------------------------------
Dr. Inventory 100
Cr. AP Inventory Accrual 100
Invoice matched and Posting
--------------------------------------------------
Dr. AP Inventory Accrual 100
Cr. AP Supplier Liability A/c 100
Payment in AP
--------------------------------------------------
Dr. AP Supplier Liability A/c 100
Cr. Cash/Bank 100
All is clear till this point.
But let's say that the supplier over-invoices retailer by 10. i.e. invoice comes for 110 instead of 100.
In response to that, retailer creates a debit memo for -10 and posts it with the std invoice of 110.
My question is how are the accounting entries different in this case?
Will it be something like .......
PO Creation in Oracle Retail
-------------------------------------------------
No entries
PO amount = 100
PO Receipt in Oracle Retail
-------------------------------------------------
Dr. Inventory 100
Cr. AP Inventory Accrual 100
Invoice for 110 , Matched with DM(-10) and Posting
-----------------------------------------------------------------------------
Dr. AP Inventory Accrual 100
Cr. AP Supplier Liability A/c 110
Cr. Debit Memo -10
Payment in AP
--------------------------------------------------
Dr. AP Supplier Liability A/c 100
Cr. Cash/Bank 100
Please correct if my accounting entries for the debit Memo case is wrong.
Thanks in advance,
Suddha Satta Ray</font id="Arial">