This chapter contains the following topics:
Section 8.2, "Revenue Generation for One Workfile Transaction"
Section 8.3, "Invoicing with Revenue Recognition for One Workfile Transaction"
Section 8.4, "Revenue Generation for Two Workfile Transactions"
Section 8.5, "Invoicing with Revenue Recognition for Two Workfile Transactions"
All of the examples are based on the setup described in this section.
The NTE amount is 10,000.00 in the Contract Master Revisions program (P5201).
These automatic accounting instructions (AAIs) are set up in the Billing AAIs program (P48S95):
| AAI Table | Key Type and Description | Table Key and Description | Begin Date | End Date | Resulting Account |
|---|---|---|---|---|---|
| 4851 (Not-to- Exceed - Credit) | 8 (Company) | 00050 (Project Management Company) | January 1, 2005 | December 31, 2005 | Revenue Contra Account |
| 4852 (Not-to- Exceed - Debit) | 8 (Company) | 00050 (Project Management Company) | January 1, 2005 | December 31, 2005 | Accrued Receivable Contra Account |
You have selected the Not To Exceed Control check box in the Billing Constants program (P48091).
These three examples illustrate the results of the NTE calculation when revenue is generated first and then invoicing is processed. These examples are based on a single workfile transaction in the amount of 15,000.00 with no markup and no taxes.
This section discusses:
Example 1 - NTE rule of 2 (subject to invoice and revenue).
Example 2 - NTE rule of 3 (subject to revenue).
Example 3 - NTE rule of 4 (subject to invoicing).
In this example, NTE is calculated on the entire amount of the workfile transaction. Because the workfile amount (15,000.00) exceeds the NTE maximum for the contract (10,000.00), no entries are created for invoicing.
The Journal Edit Register program (R48300), when called by the G/L Journal Generation program (R48132), first produces these results:
| Account | Debit | Credit |
|---|---|---|
| Accrued Accounts Receivable | 10,000.00 | |
| Revenue Account | 10,000.00 | |
| Revenue Contra Account | 5,000.00 | |
| Accrued Receivable Contra Account | 5,000.00 |
Invoice processing runs after revenue recognition is complete and it creates no entries.
In this example, NTE is calculated on the entire amount of the workfile transaction.
The Journal Edit Register program (R48300), when called by the G/L Journal Generation program (R48132), produces these results:
| Account | Debit | Credit |
|---|---|---|
| Accrued Accounts Receivable | 10,000.00 | |
| Revenue Account | 10,000.00 | |
| Revenue Contra Account | 5,000.00 | |
| Accrued Receivable Contra Account | 5,000.00 |
The Journal Edit Register program (R48300), when called by the Invoice Journal Generation program (R48131), produces these results:
| Account | Debit | Credit |
|---|---|---|
| Accounts Receivable | 15,000.00 | |
| Accrued Accounts Receivable | 15,000.00 |
In this example, NTE is calculated on the entire amount of the workfile transaction. Because the workfile amount (15,000.00) exceeds the NTE maximum for the contract (10,000.00), no entries are created for invoicing.
The Journal Edit Register program (R48300), when called by the G/L Journal Generation program (R48132), produces these results:
| Account | Debit | Credit |
|---|---|---|
| Accrued Accounts Receivable | 15,000.00 | |
| Revenue Account | 15,000.00 |
The Journal Edit Register program (R48300), when called by the Invoice Journal Generation program (R48131), creates no entries.
These three examples illustrate the results of the NTE calculation when invoicing is processed with revenue. These examples are based on a single workfile transaction in the amount of 15,000.00 with no markup and no taxes.
This section discusses:
Example 4 - NTE rule of 2 (subject to invoice and revenue).
Example 5 - NTE rule of 3 (subject to revenue).
Example 6 - NTE rule of 4 (subject to invoicing).
In this example, NTE is calculated on the entire amount of the workfile transaction. Because the workfile amount (15,000.00) exceeds the NTE maximum for the contract (10,000.00), no entries are created for invoicing or revenue.
The Invoice Journal Generation program (R48131) creates no accounts receivable or general ledger entries.
In this example, NTE is calculated on the entire amount of the workfile transaction.
The Journal Edit Register program (R48300), when called by the G/L Journal Generation (R48132), creates these general ledger entries:
| Account | Debit | Credit |
|---|---|---|
| Accrued Accounts Receivable | 10,000.00 | |
| Revenue Account | 10,000.00 | |
| Revenue Contra Account | 5,000.00 | |
| Accrued Receivable Contra Account | 5,000.00 |
The Journal Edit Register program (R48300), when called by the Invoice Journal Generation program (R48131), creates these accounts receivable entries:
| Account | Debit | Credit |
|---|---|---|
| Accounts Receivable | 15,000.00 | |
| Accrued Accounts Receivable | 15,000.00 |
In this example, NTE is calculated on the entire amount of the workfile transaction. Because the workfile amount (15,000.00) exceeds the NTE maximum for the contract (10,000.00), no entries are created for invoicing or revenue.
The Invoice Journal Generation program (R48131) creates no accounts receivable or general ledger entries.
These three examples illustrate the results of the NTE calculation when revenue is generated first and then invoicing is processed. These examples are based on two workfile transactions, one in the amount of 8,000.00 and the other in the amount of 15,000.00. Both transactions have no markup and no taxes.
This section discusses:
Example 7 - NTE rule of 2 (subject to invoice and revenue).
Example 8 - NTE rule of 3 (subject to revenue).
Example 9 - NTE rule of 4 (subject to invoicing).
In this example, NTE is calculated on the entire amount of the workfile transaction. Invoice entries are created for the 8,000.00 transaction, but not for the 15,000.00 transaction because it exceeds the NTE maximum (10,000.00).
The Journal Edit Register program (R48300), when called by the G/L Journal Generation program (R48132), produces these results:
| Account | Debit | Credit |
|---|---|---|
| Accrued Accounts Receivable | 10,000.00 | |
| Revenue Account | 10,000.00 | |
| Revenue Contra Account | 13,000.00 | |
| Accrued Receivable Contra Account | 13,000.00 |
The Journal Edit Register program (R48300), when called by the Invoice Journal Generation program (R48131), produces these results:
| Account | Debit | Credit |
|---|---|---|
| Accounts Receivable | 8,000.00 | |
| Accrued Accounts Receivable | 8,000.00 |
In this example, NTE is calculated on the entire amount of the workfile transaction.
The Journal Edit Register program (R48300), when called by the G/L Journal Generation program (R48132), produces these results:
| Account | Debit | Credit |
|---|---|---|
| Accrued Accounts Receivable | 10,000.00 | |
| Revenue Account | 10,000.00 | |
| Revenue Contra Account | 13,000.00 | |
| Accrued Receivable Contra Account | 13,000.00 |
The Journal Edit Register program (R48300), when called by the Invoice Journal Generation program (R48131), produces these results:
| Account | Debit | Credit |
|---|---|---|
| Accounts Receivable | 23,000.00 | |
| Accrued Accounts Receivable | 23,000.00 |
In this example, NTE is calculated on the entire amount of the workfile transaction. Invoice entries are created for the 8,000.00 transaction, but not for the 15,000.00 transaction because it exceeds the NTE maximum (10,000.00).
The Journal Edit Register program (R48300), when called by the G/L Journal Generation program (R48132), produces these results:
| Account | Debit | Credit |
|---|---|---|
| Accrued Accounts Receivable | 23,000.00 | |
| Revenue Account | 23,000.00 |
The Journal Edit Register program (R48300), when called by the Invoice Journal Generation program (R48131), produces these results:
| Account | Debit | Credit |
|---|---|---|
| Accounts Receivable | 8,000.00 | |
| Accrued Accounts Receivable | 8,000.00 |
These three examples illustrate the results of the NTE calculation when invoicing is processed with revenue. These examples are based on two workfile transactions, one in the amount of 8,000.00, and the other in the amount of 15,000.00. Both transactions have no markup and no taxes.
This section discusses:
Example 10 - NTE rule of 2 (subject to invoice and revenue).
Example 11 - NTE rule of 3 (subject to revenue).
Example 12 - NTE rule of 4 (subject to invoicing).
In this example, NTE is calculated on the entire amount of the workfile transaction. Invoice and revenue entries are created for the 8,000.00 transaction, but not for the 15,000.00 transaction because it exceeds the NTE maximum (10,000.00).
The Journal Edit Register program (R48300), when called by the Journal Generation program (R48132), produces these entries:
| Account | Debit | Credit |
|---|---|---|
| Accrued Accounts Receivable | 8,000.00 | |
| Revenue Account | 8,000.00 |
The Journal Edit Register program (R48300), when called by the Invoice Journal Generation program (R48131), produces these results:
| Account | Debit | Credit |
|---|---|---|
| Accounts Receivable | 8,000.00 | |
| Accrued Accounts Receivable | 8,000.00 |
In this example, NTE is calculated on the entire amount of the workfile transaction.
The Journal Edit Register program (R48300), when called by the G/L Journal Generation program (R48132), produces these results:
| Account | Debit | Credit |
|---|---|---|
| Accrued Accounts Receivable | 10,000.00 | |
| Revenue Account | 10,000.00 | |
| Revenue Contra Account | 13,000.00 | |
| Accrued Receivable Contra Account | 13,000.00 |
The Journal Edit Register program (R48300), when called by the Invoice Journal Generation program (R48131), produces these results:
| Account | Debit | Credit |
|---|---|---|
| Accounts Receivable | 23,000.00 | |
| Accrued Accounts Receivable | 23,000.00 |
In this example, NTE is calculated on the entire amount of the workfile transaction. Revenue and invoice entries are created for the 8,000.00 transaction, but not for the 15,000.00 transaction because it exceeds the NTE maximum (10,000.00).
The Journal Edit Register program (R48300), when called by the G/L Journal Generation program (R48132), produces these results:
| Account | Debit | Credit |
|---|---|---|
| Accrued Accounts Receivable | 8,000.00 | |
| Revenue Account | 8,000.00 |
The Journal Edit Register program (R48300), when called by the Invoice Journal Generation program (R48131), produces these results:
| Account | Debit | Credit |
|---|---|---|
| Accounts Receivable | 8,000.00 | |
| Accrued Accounts Receivable | 8,000.00 |