Journal Entries

ACCOUNTS PAYABLES
Material Receipt:

1. On entry of PO:
No accounting impact.

2. Material receipt

Receiving accrual Dr
AP accrual Cr.

3. On completion of inspection

Inventory Dr.
Receiving accrual Cr.

4. On entering invoice in AP and matching it to receipt

AP Accrual Dr.
Accounts payable Cr.

5. On payment

Accounts payable Dr.
Cash clearing Cr. (if clearing is enabled)
Cash Cr. (if clearing is not enabled)

6. On clearing
Cash Clearing Dr.
Cash Cr.

Debit and Credit Memo :

Debit Memo/ Credit Memo:

Accounts Payable A/c …Dr.
To Expense A/c

Standard Invoice:

AP Accrual A/c …Dr
To Accounts Payable A/c

Payment against Invoices and DM/CM:

Accounts Payable A/c …Dr
To Cash Clearing A/c

Reconciliation Entry in Cash Management:

Cash Clearing A/c Dr
To Cash A/c

Prepayment to Supplier/Employees :

Prepayment Invoice:
Prepaid Expense A/c ...Dr
To Accounts Payable A/c

Payment against Invoice
Accounts Payable A/c …Dr
To Cash Clearing Ac

Reconciliation in Cash Management:
Cash Clearing A/c Dr
To Cash A/c

Standard Invoice:
AP Accrual A/c Dr
To Accounts Payable A/c

Apply payment against Invoices:
Accounts Payable A/c …Dr
To Prepaid Expenses

Petty Cashier Transactions:

Prepayment Invoices:
Prepayment Expenses A/c …Dr
To Petty Cashier Liability A/c

Payment against the invoice:

Petty cashier Liability A/c …Dr
To Cash A/c

Expense Report:

Expense A/c …Dr
To Petty Cashier Liability A/c

Apply payment Against Invoices :
Petty Cashier Liability A/c …Dr
To Prepayment Expenses A/c

*** FIXED ASSETS ****

Normal Addition of assets :
Purchasing:

1. When Asset Item is received:-

Receiving Inventory Account Dr
To Inventory A/P Accrual Account Cr

2. When Item is Delivered to Asset:-

Asset Clearing Account Dr
To Receiving Inventory Account Cr

Payables

1. When Invoice for Asset Item is created :

Inventory A/P Accrual Account Dr
To Account Payable Liability Account Cr

2. When Invoice is paid in Accounts Payable:-

Account Payable Liability Account Dr
To Bank Account Cr

Entry in Assets:

Assets A/c ...Dr.
To Asset Clearing A/c. Cr.

Depreciation Expense:

Depreciation A/c Dr.
Depreciation Adjustment A/c …Dr
To Accumulative Depreciation

Merge Two Assets:

Assets ( A+ B) ….Dr
To Asset Clearing A/c (Cost of Asset A)
To Asset Clearing A/c (Cost of Asset B)

CIP Assets:

Payables:
CIP Clearing A/c Dr
To Accounts payable A/c

When we add an asset as CIP assets, then we will have the entry as:

Assets:
CIP Cost A/c …DR
To CIP Clearing A/c

For these types of assets, we will not charge depreciation until and unless we capitalize the assets.

Capitalization will be in two types:
1. Capitalize the asset in the same period in which the asset is added to the system
2. Capitalize the asset other than the same period, in which the asset is added to the system.

Capitalized in the same period:
In payable:
CIP Clearing A/c …Dr
To Liability account

Asset A/c …Dr
To CIP Clearing

Capitalized after closing the period:

Asset A/c …Dr.
To CIP Clearing

When we adjusted the regular asset to the CIP Asset:
CIP Cost A/c …Dr.
To Asset Clearing A/c

Retirement of Asset:

Receivables:
Receivable A/c ...Dr
To Proceeds of sales A/c

Payables:
Asset Clearing [Cost of Removable] A/c
To payable A/c

Asset:

Accumulated Depreciation …Dr.
Proceeds of sales Clearing A/c …Dr.
Cost of Removable Gain A/c …Dr.
Revaluation Reserve A./c …Dr
Net Book Value Retired Gain …Dr.

To Asset Cost A/c
To Proceeds of Sale Gain A/c
To Cost of Removable Gain A/c
To Revaluation Reserve Retired Gain A/c

Normal sale once completed the life of asset
Sale:

Receivables A/c …Dr.
To Proceeds for Sale A/c (Revenue)

Cost of removable:

Asset Clearing A/c (Cost of Removable) …Dr.
To Liability A/c

Asset:

We sold the asset with profit and the incurred the cost of removable expenses:

Accumulated Depreciation A/c …Dr
Cost of Removable (Expense) …Dr
Sales Proceedings (Sale) …Dr.
To Asset Cost A/c
To Gain on sale of asset
To Asset Clearing A/c (Cost of removable)

We sold the asset with loss :

Accumulated Depreciation …Dr
Sale Proceedings …Dr
Loss on sale of Assets …Dr
To Asset Cost A/c

Scrap Sale:

Accumulated Depreciation A/c …Dr
Cost of Removable (Expense) …Dr
Sales Proceedings (Sale) …Dr.
To Asset Cost A/c
To Gain on sale of asset
To Asset Clearing A/c (Cost of removable)

We sold the asset (Scrap) with loss
Accumulated Depreciation …Dr
Sale Proceedings …Dr
Loss on sale of Assets …Dr
To Asset Cost A/c

Added additional features when asset value is Zero:

Asset Clearing account …Dr.
To Liability A/c

Asset Cost A/c …Dr.
To Asset Clearing Account

Depreciation A/c Dr.
Depreciation Adjustment A/c …Dr
To Accumulative Depreciation

*** ACCOUNTS RECEIVABLES ****

For Invoices and Debit Memos

Receivable A/c …Dr.
To Revenue A/c

For Invoice adjustment which increases the invoice amount

Receivables A/c …Dr
To Adjustment A/c

For Invoice adjustment which decreases the invoice amount

Adjustment A/c …Dr
To Receivable A/c

For Deposit:

When you enter an Invoice :

Receivables (Deposit) A/c …Dr.
To Unearned Revenue (Liability Account)

When you enter an Invoice against the Deposit
Receivables (Invoice) A/c …Dr.
To Revenue A/c

Unearned Revenue A/c …Dr.
To Receivables (Invoice) A/c

When cash is received against the Deposit
Cash A/c …Dr
To Receivables (Deposit) A/c


Goods are issued with a Guarantee:

When you enter a Guarantee:
Unbilled Receivable A/c …Dr.
To Unearned Revenue A/c

When you enter an invoice as against the Deposit:

Receivables (Invoice) A/c ..Dr.
To Revenue

Unearned Revenue A/c …Dr
To Unbilled Receivable (Invoice) A/c

Bills in Advance :

Receivable A/c ..Dr
To unearned Revenue

Unearned revenue A/c …Dr.
To Revenue A/c

Bills in arrears:
Unbilled receivable A/c …Dr
To Revenue A/c

Receivables A/c …Dr
To Unbilled Receivables A/c
Apply Receipt to Invoice :
Cash A/c …Dr
To Receivable A/c (Invoice)

Standard Reversal :
Receivable (Invoice) A/c …Dr
To Cash A/c

Debit Memo Reversal :
Reversal (Debit Memo) A/c …Dr
To Cash A/c

Standard Receipt :

Cash A/c …Dr
To Receivables/ Un applied/ on-Account/ Unidentified

Receipt with discount based on payment Terms:

Cash A/c …Dr.
To Receivable A/c

Earned/Unearned Discounts A/c …Dr.
To Receivables A/c

Receipts and Adjustments :

Cash A/c …Dr.
To Receivable A/c

Write-Off A/c …Dr.
To Receivables A/c


Receipt that requires Remittance:

Enter Receipt:
Confirmation …Dr
To Receivable A/c

Remit Receipt :
Remittance …Dr
To Confirmation

Clear Receipt
Cash A/c …Dr
To Remittance


Apply Receipt to Invoice :
Cash A/c …Dr
To Receivable A/c (Invoice)

Standard Reversal :
Receivable (Invoice) A/c …Dr
To Cash A/c

Debit Memo Reversal :
Reversal (Debit Memo) A/c …Dr
To Cash A/c

Standard Receipt :

Cash A/c …Dr
To Receivables/ Un applied/ on-Account/ Unidentified

Receipt with discount based on payment Terms:

Cash A/c …Dr.
To Receivable A/c

Earned/Unearned Discounts A/c …Dr.
To Receivables A/c

Receipts and Adjustments :

Cash A/c …Dr.
To Receivable A/c

Write-Off A/c …Dr.
To Receivables A/c


Receipt that requires Remittance:

Enter Receipt:
Confirmation …Dr
To Receivable A/c

Remit Receipt :
Remittance …Dr
To Confirmation

Clear Receipt
Cash A/c …Dr
To Remittance