Chapter 5

Setting up Accounts Payable (Suppliers)

Lesson Outcomes
At the end of this Chapter, you should be able to.
LO 1 Explain Interactions between accounts payable and other sections in Sage 50.
LO 2 Describe how to set suppliers' defaults.
LO 3 Explain how to create a vendor's ledger; and
LO 4 Explain how to record vendor beginning balances.
5.1 Introduction (LO 1)

Accounts Payable monitors the products received from vendors (suppliers) and the money paid
to them. You can set up payment terms, age guidelines, and more for each vendor. When
transactions are posted in Accounts Payable, the relevant journals are updated. The journals, in
turn, update General Ledger. The interaction between Accounts Payable and other sections in
Sage 50 is illustrated in Figure 5.1.

Figure 5.1: Interaction between Accounts Payable and Other Sections in Sage 50

Accounts
Payable

Job Cost
Inventory Accounts
Receivable
Journals

General
Ledger

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5.2 Entering Suppliers Defaults (LO 2)

Before transactions are posted to the accounts payable module in Sage, entering default
information relating to vendors is recommended. The default information is standard information
for a particular section, such as vendors, customers, etc. To access default information relating to
vendors, the following steps can be followed:

Steps:
Click Maintain in the menu bar - Select Default Information - Click Vendors
Or

Click Vendors and Purchases Navigation Bar – Select Vendor Navigation Center –
Click Set Up Vendor Defaults

5.2.1 Vendor Defaults Window

Once you follow the above steps relating to the default information of vendors, you will
see the Vendor Defaults Window. Figure 5.2 shows How to access to Vendor Defaults
Window. The Vendor Defaults window enters basic information that applies to most of
your vendors and purchase transactions. This window consists of 4 tabs: Payment Terms,
Account Aging, Customer Fields, and the 1099 setting.

Figure 5.2: How to access Vendor Defaults Window

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 a) Payment Terms Tab

You can set up standard payment terms that apply to the majority of the invoices that you
receive from your vendors. You also assign the General Ledger purchases (Inventory) and
discount account number, any discount allowances, and a standard credit limit for all
vendors. When you change the payment terms on this tab, the default terms for vendors
that use standard terms change automatically. Figure 5.3 payment terms tab

Figure 5.3 Payment Terms Tab

b) Account Aging Tab

Account aging traces how old your outstanding invoices are. Select the Account Aging
tab in the Vendor Defaults Window (Figure 5.4) to enter account aging information. You
select whether your purchase invoices/vendor bills should be aged by invoice date or due
date, and you can specify the frequency that your payables age. This information is
reflected on the Aged Payables Report (can be accessed via Reports & Forms in the
menu bar – Accounts Payables – Age Payables) and in the Payment Manager (can be
accessed via Analysis in the menu bar – Payment Manager).

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 Figure 5.4 Account Aging Tab

c) Custom Fields Tab

Sage 50 allows you to customize up to five additional fields for maintaining information
about your vendors. (Figure 5.5)

Figure 5.5 Custom Fields Tab

d) Payment Method Tab

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 Sage 50 allows adding up to 20 methods of payments (figure 5.6) that your business uses.
This list is available from the purchases/receive inventory and payments screen.

Figure 5.6 Payment Method Tab

e) 1099 Setting Tab

The settings on the 1099 Settings tab allow you to define how Sage 50 tracks and reports
payments made to 1099 vendors. For instance, the payments you make to an independent
contractor for services rendered should be reported as 1099 earnings. If you pay the same
contractor to reimburse materials, the payment should not be reported as 1099 earnings.
Please note that this tab is not relevant to the Sri Lankan context.

Class Activity 5.1 (LO 1, 2)

The management of BCOM 2022 (Pvt) Ltd. decided to set the following default information
of its vendors.
Stranded Terms (Due in number of days) 3%, 30, Net 60 Days
Credit Limit Rs 500,000
GL Inventory Account 1050-CL
GL Discount Account 4200-CL (Create a new account as Discount
Received.)
Account Aging Categories (Based on 0 to 60 days; 61 to 90 days; 91 to 120 days;
Invoice Date) Over 120 days.
Additional Fields Sales Manager, Special Note
Payment Methods Cash and Cheques
5.3 Creating Vendors Ledger (LO 3)

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After entering the vendor default information, the next step is to create each vendor in the
system. As you add vendors, you can use the default information entered or change the
information for specific vendors. To create a vendor requires accessing the Maintain Vendors
window. The Maintain Vendors window is shown in Figure 5.7. This window consists of four
tabs: General, Addresses, History, and Purchase Info.

Steps to access the Maintain Vendors window:

Click Maintain in the menu bar – Select Vendors

Or

Click Vendors and Purchases Navigation Bar – Click Vendors Navigation Center – Select
New Vendor

Figure 5.7: Maintain Vendors Window

a) General Tab

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Once you open the Maintain Vendors Window (Figure 5.7), you will be directed to the General
Tab. The General Tab is used to add, edit and view information about your vendor.

Class Activity 5.2 (LO 3)

Create the following vendor of BCOM 2022 (Pvt) Ltd. in the system.

Vendor ID - QA001
Vendor Name - QA Fabric (Pvt) Ltd.
Contact Person - Mr Roshan
Mailing Address – No. 400, Kirulapone, Colombo 5, Sri Lanka
Vendor Type - Credit
Select GL Account - 1050-CL
Telephone No. - 011-2659874
Fax No. - 011-2659810
E-mail - qafabric@slt.lk
Web - www.qafabric.lk
Sales Manager - Mr Lalith

b) Address Tab

Use the Addresses tab to keep track of remits to addresses for this vendor. You can also select
the addresses tab as defaults for Payments, Purchase Orders, and Shipments. You can have up to
20 remits to addresses. The Addresses tab is shown in Figure 5.8.

Figure 5.8: Address Tab

Class Activity 5.3 (LO 3)

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BCOM 2022 (Pvt) Ltd. decided the following.

i. To copy the Mailing address of QA Fabric (Pvt) Ltd. to its Remit to 1 address.

ii. Create the following address in the Remit to 2 address field and set it as the purchased
order address of QA Fabric (Pvt) Ltd.
‘No. 120, Nugegoda, Sri Lanka’

c) History Tab

The History tab helps us to view purchases, payments, and last payment information. You can
also add beginning balances here. Figure 5.9 shows the History Tab.

Figure 5.9: History Tab

As mentioned earlier, you can enter the beginning balances of vendors. To do that, click the
Vendor Beginning Balance Button in the History Tab. Then you will see the Vendor Beginning
Balances window. Figure 5.10 shows the Vendor Beginning Balances window. It is
recommended to enter the beginning balances of vendors once all vendors are created in the
system. Therefore, the instructions to enter beginning balances will be given in the latter part of
this Chapter.

Figure 5.10: Vendor Beginning Balances Window

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d) Purchase Info Tab

Purchasing information such as the Purchase Rep, Tax ID Numbers, and Shipping Terms is
entered on the Purchase Info tab. Further, you can customize default terms and credit limits in
this tab. Figure 5.11 shows the Purchase Info Tab.

Figure 5.11: Purchase Info Tab

Class Activity 5.4 (LO 3)

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BCOM 2022 (Pvt) Ltd. selected Customer Pickup as the Shipping Method of QA Fabric
(Pvt) Ltd.

Class Activity 5.5 (LO 3)

Create the following vendor records for BCOM 2022 (Pvt) Ltd.
1 2 3 4 5 6
Vendor ID COS001 NT001 Nes001 BR001 SK001 BE001
Name COS Nation Nest Brilliant Sky (Pvt) Big
Clothing Treads (Pvt) Trading PLC Ltd Entertainme
Ltd nt
Contact Mr Sandun Ms Dilini Mr Kapila Ms Nayana Mr Udara Mr Bindu
Person
Mailing No. 25/4 No. 25/4 No. 310 No. 50 No. 442 No. 116
Address Maharagama Panadura Negambo Colombo 7 Homagama Colombo 10

Vendor Credit Credit Cash Credit Credit Credit

Type
GL 1050-CL 1050-CL 1050-CL 1050-CL 1050-CL 6040-TR
Account
Telephone 0112643445 0382234544 0314565555 0112234345 0115566123 0113535100

Fax 0112643446 0382234545 0314565555 0112234346 - -

E-mail cos@gmail.c mail@nt.co nesttrading infor@brilli sky@gmail. bigent@hot

om m @yahoo.co ant.lk com mail.com
m
Web - www.nation - www.brillia - www.bigent
tread.lk nt.com .com
Remit to 2 - No.510, - No.22, - -
addresses Rathmalana Nugegoda

Purchase Purchase
orders are orders are
carried out carried out
using this using this
address. address.

Shipping Customer Courier Customer Customer Customer Courier

Method pickup pickup pickup pickup

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 Terms & Default Default CO D 2%, 20, Net Default 1%, 10, Net
Credits No credit 60 Days 30 Days
Limit Credit Limit Credit Limit
Rs 300,000 Rs 200,000

5.4 Vendor Begging Balances (LO 4)

Beginning balance invoices are vendor invoices that are outstanding as of the date you started to
use Sage 50. Since these bills were recorded to the appropriate accounts in your previous
accounting system, they should not affect General Ledger in Sage 50. The balance of the
Accounts Payable Account in General Ledger should equal the total amount of the vendor
beginning balances as long as no other payable transactions have been made.

How to enter the beginning balances to vendors?

Once all vendors are created in the system, you can record their beginning balances. To enter the
beginning balances of vendors, you need to open Maintain Vendors window (as depicted in
Figure 5.10).

The steps are;

i. Click Vendor and Purchased Navigation Bar – Select Vendor Navigation Center –
Click New Vendor
Or
i. Select Maintain in the menu bar – Select Vendors.

In the Maintain Vendors Window;

ii. Go to History Tab – Click Vendor Begging Balance Button (Then you will see the
Vendor Beginning Balances Window as depicted in Figure 5.10).

In the Vendor Beginning Balances Window;

iii. Go to the Vendor Balances Tab - Select the Vendor.

iv. Enter Vendor Invoice Number – Select Invoice Date – Enter Purchased Order
Number (If any) – Enter Invoice Amount – Select Accounts Payable Account Number

Repeat Steps iii and iv until you enter the balances of all vendors.

Class Activity 5.6 (LO. 4)

Enter the following balances to the BCOM 2022 (Pvt) Ltd vendors.

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Vendor ID Invoice No. Date PO No. Amount (Rs) A/P Code
COS001 125 10/01/2022 PO128 130,000 2000-CL
138 17/02/2022 PO132 40,000 2000-CL
145 25/03/2022 PO140 110,000 2000-CL
NT001 114 02/01/2022 PO125 120,000 2000-CL
140 20/03/2022 PO138 135,000 2000-CL
BR001 150 28/12/2021 PO118 85,000 2000-CL
SK001 110 15/02/2022 PO130 70,000 2000-CL
120 19/03/2022 PO137 30,000 2000-CL

Backup Your Company

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