Our books are a mess but through this forum, I have been able to start straightening out our solutions partner’s incorrect setup!! Cudos to this forum!!! My next task is General Posting Setup. I noticed on my general ledger in the liabilites section that our A/P account has the same DR and CR in the account FOR THE SAME TRANSACTION. We setup a separate A/P account for product received by the warehouse but not recorded as a liability (no invoice from vendor yet). When the invoice is received by the A/P clerk, she pulls the PO# in and posts the invoice adding additional freight if included on the vendor’s invoice. A/P is credit in full for the total invoice amount (original po and freight), freight expense is debited and supposedly the temporary A/P account is debited for the original amount (clearing the temporary A/P account!). Instead, our A/P account used to pay invoices is DR for the receipt by the warehouse and CR when the clerk pays the invoice. This is not the correct setup. I looked in General Ledger> General Posting Setup> General Posting Group and read that the “Purchase Account” is the same account number as the A/P account number used for paying our bills. And in General Ledger> General Posting Groups> Product Posting Groups the “Purchase Account” is the same as the A/P account number used for paying our bills. This seems to tell me that the number that should be used for both of these should be the temporary A/P account that the warehouse would post to. Is this correct? Should I change these two posting groups to be the temporary A/P account? Thanks for any help…
After taking another look at the G/L and Setup, A/P for payments is setup in the Purchasing Account and COGS is set-up as the Purch Credit Memo Account. I think this is the issue now after looking at the trial balance and seeing the related entries in these accounts. COGS has credit entries throughout that relate to the purchases recorded in the A/P Payments account (not A/P Temporary where these debits should be listed). The document number is the same. The credits do not belong in the COGS account nor do the debits belong in the A/P Payments account. Is it correct to change in the General Ledger> Setup> General Posting Groups > General Posting Setup: Purch. Account to the A/P Temporary Account and Purch. Credit Memo Account to the A/P Temporary Account? If this is correct and if my question in the No G/L Posting Entries forum is correct then all my problems are gone!! (With the exception of the procedure on “How to Consolidate Companies.” Thanks for any help…
Hi Skolnick, Your doubt is not very clear to me but this could help you. When you post a purchase invoice the following entries will be generated from the following setup Dr. Inventory (Inventory Posting Group) Cr. Direct Cost Applied Account (General Posting Setup) Dr. Purchase Account (General Posting Setup) Cr. Vendor Account- AP (Vendor Posting Group) As you see above, the AP entry is posted from the Vendor Posting Group and not from the General Posting Setup. Now if you are getting both the Debit and the credit in the same account that means the Purchase Account in the General Posting Setup and the Vendor Account in the Vendor Posting Group is the same. Please change the same to that account which you want to debit, as you have rightly mentioned.
Thanks for the reply Ronkam. Understood some of the info but not all. Let me ask my question a little differently: (By the way, we are a distributor, not a manufacturer.) 1. The Purchases and Payables module issues a PO. No entries are recorded on the G/L by Navision. 2. Our Warehouse Management module receives the inventory. Navision should record the inventory (which it does correctly) in the inventory account as a DR. The corresponding CR should be recorded in our A/P-Inventory Received account. In which posting group do I change this account? 3. The Purchases and Payables module records the payable upon the company receiving the invoice from the vendor. This invoice may include freight, etc. The DR to Freight is recorded correctly. The CR to A/P - Payments for the total amount of the invoice is reorded correctly. The DR for the amount in the account: A/P-Inventory Received needs to be DR to zero out this temporary account. In which posting group for the A/P-Inventory Received account do I change? Summary: When the invoice is received from our vendor, the Purchases and Payables module brings in the transaction from the A/P-Inventory Received account (our temporary A/P account) by our A/P clerk setting up the payment by entering the PO #. The system should automatically DR the temporary account. Instead, the DR is recorded in the wrong A/P account (A/P - Payments). The reason for recording the transaction this way allows our company to receive merchandise for sale immediately, although we do not know the total dollar amount we will be charged by the vendor (usually freight). If this correction can be made, I feel I am home free and may have just some minor questions. Please help. Thanks!
Ronkam, I changed the Posting groups to read as follows: Dr. Inventory (Inventory Posting Group)= Inventory Account Cr. Direct Cost Applied Account (General Posting Setup)=A/P Temporary Account Dr. Purchase Account (General Posting Setup)=A/P Temporary Account Cr. Vendor Account- AP (Vendor Posting Group)=A/P - Payments The way I understand your reply is: When the Warehouse Management module records the receipt of product the first entry by Navision is: Dr. Inventory (Inventory Posting Group) Cr. Direct Cost Applied Account (General Posting Setup) (A/P-Temp) When Purchases and Payables records the actual invoice to pay, Navision records the entry as: Dr. Purchase Account (General Posting Setup) (A/P-Temp) Cr. Vendor Account- AP (Vendor Posting Group) If this logic is correct, our financials should be working fine.
Yes your logic is correct, but the Direct Cost Applied Account and the Purchase account may not post the same values… in the following cases 1. When there are Indirect Cost to the Inventory Purchased i.e. when you have indirect costs specified or item charges posted the same will not be equal 2. When you make a Credit Memo for the purchase and do not apply it to the origianl invoice the system posts the current average cost (assuming your costing method is average) to the DCA but the Purchase account is posted with the payable amount. In the above cases, you will have to remember that the Temporary account you have set up may not be balanced out. Cheers,
Hi Skolnic, and Rohith, Small Correction, is that when the user in the Warehouse posts the Receipt there will not be any Entries unless The system has the Expected cost Posting is Ticked in the Inventory Setup Entries will Be: Upon Posting of Receipt of goods (GRN) Dr. Inventory (interim) acc. (Inventory Setup) – PO Cost Cr. Inventory Accrual Interim acc. (General Posting Setup) – PO Cost Upon Posting Purchase Invoice Reversal of Interim Posting: Dr. Inventory Accrual Interim acc. (general posting setup) – PO Cost Cr. Inventory Interim Acc (Inventory Posting Setup) – PO Cost Actual Cost Posting: Dr. Inventory Acc Cr. Direct Cost Applied Acc. Dr. Purchase Acc Cr. Account Payables.
It works! At least the first entry and sample credit we put through… I talked with the clerk about posting extraneous charges (freight, etc) to different accounts than the A/P Temp account and she was aware of this already! (Pretty sharp on her part!) I did not check the Expected Cost Posting in the Inventory Setup. At first I did check this box, but I could not post PO’s in the Warehouse Management module. When the check was removed, PO’s could be received and the appropriate accounts are recorded properly. The Automatic Cost Posting box is checked. Thanks for all your help. I will monitor the activity for a day or two and get back if there are any problems. (Of course there will always be a question or two…)