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  • Accounting Entries For Order To Pay W - Debit Memo

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    rhrashel
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    The document discusses the accounting entries for a normal order to pay process and one involving a debit memo. For a normal process, entries are made to record inventory, accounts payable accrual, and payment. When an invoice is overstated and a debit memo is issued, the invoice and debit memo are matched and posted together, with the debit memo credited to offset the overstated invoice amount rather than the accounts payable accrual. The payment entry remains the same, clearing the accounts payable liability account.

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    Accounting Entries for Order to Pay W - Debit Memo

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    Accounting Entries for Order to Pay W - Debit Memo

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    The document discusses the accounting entries for a normal order to pay process and one involving a debit memo. For a normal process, entries are made to record inventory, accounts payable accrual, and payment. When an invoice is overstated and a debit memo is issued, the invoice and debit memo are matched and posted together, with the debit memo credited to offset the overstated invoice amount rather than the accounts payable accrual. The payment entry remains the same, clearing the accounts payable liability account.

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    © All Rights Reserved
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    3 views2 pages

    Accounting Entries For Order To Pay W - Debit Memo

    Uploaded by

    rhrashel
    The document discusses the accounting entries for a normal order to pay process and one involving a debit memo. For a normal process, entries are made to record inventory, accounts payable accrual, and payment. When an invoice is overstated and a debit memo is issued, the invoice and debit memo are matched and posted together, with the debit memo credited to offset the overstated invoice amount rather than the accounts payable accrual. The payment entry remains the same, clearing the accounts payable liability account.

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    Accounting Entries for Order to Pay w/ Debit Memo


    Printed from: ERPstuff offers Oracle ERP Forums, Training, Support & Implementation.
    Topic URL: http://www.erpstuff.com/forums/topic.asp?TOPIC_ID=3736
    Printed on: Jun 26 2010

    Topic:

    Topic author: ssray23


    Subject: Accounting Entries for Order to Pay w/ Debit Memo
    Posted on: Apr 22 2008 07:14:40 AM
    Message:

    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

    ERPstuff offers Oracle ERP Forums, Training, Support & Implementation. : http://www.erpstuff.com/forums/

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