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Details: Invoice Number = 02
Invoice Date = 1/1/XX
Invoice Amount = $100
Duration = 5 months
Invoicing Rule = Bill In Advance
Accounting Rule = Fixed Amount as follows:
Period 1 = $20
Period 2 = $20
Period 3 = $10
Period 4 = $30
Period 5 = $20
Accounting Entries:
GL Date and Period Status:
1/1/XX | DR | Accounts Receivable | $100 | |||
Open | CR | Unearned Revenue | $100 | |||
DR | Unearned Revenue | $20 | ||||
CR | Revenue | $20 | ||||
2/1/XX | DR | Unearned Revenue | $20 | |||
Not Opened | CR | Revenue | $20 | |||
3/1/XX | DR | Unearned Revenue | $10 | |||
Not Opened | CR | Revenue | $10 | |||
4/1/XX | DR | Unearned Revenue | $30 | |||
Not Opened | CR | Revenue | $30 | |||
5/1/XX | DR | Unearned Revenue | $20 | |||
Not Opened | CR | Revenue | $20 |
Details: Credit memo date = 2/15/XX
Credit memo amount = $100
Accounting Entries:
GL Date and Period Status:
1/1/XX | No Entries |
2/15/XX | DR | Unearned Revenue | $100 | ||||
Open | CR | Accounts Receivable | $100 |
DR | Revenue | $20 | |||||
CR | Unearned Revenue | $20 |
DR | Revenue | $20 | |||||
CR | Unearned Revenue | $20 |
3/1/XX | DR | Revenue | $10 | ||||
Not Opened | CR | Unearned Revenue | $10 |
4/1/XX | DR | Revenue | $30 | ||||
Not Opened | CR | Unearned Revenue | $30 |
5/1/XX | DR | Revenue | $20 | ||||
Not Opened | CR | Unearned Revenue | $20 |
Details: Credit Memo Date = 2/15/XX
Credit Memo Amount = $65
Accounting Entries:
GL Date and Period Status:
1/1/XX | No Entries |
2/15/XX | DR | Unearned Revenue (65/100*$100) | $65 | ||||
Open | CR | Accounts Receivable | $65 |
DR | Revenue (65/100*$20) | $13 | |||||
CR | Unearned Revenue | $13 |
DR | Revenue (65/100*$20) | $13 | |||||
CR | Unearned Revenue | $13 |
3/1/XX | DR | Revenue (65/100*$10) | $6.50 | ||||
Open | CR | Unearned Revenue | $6.50 |
4/1/XX | DR | Revenue (65/100*$30) | $19.50 | ||||
Not Opened | CR | Unearned Revenue | $19.50 |
5/1/XX | DR | Revenue (65/100*$20) | $13 | ||||
Not Opened | CR | Unearned Revenue | $13 |
Details: Credit Memo Date = 2/15/XX
Credit Memo Amount = $65
Accounting Entries:
GL Date and Period Status:
1/1/XX | No Entries |
(credit memo amount is fully applied by Period 2)
2/15/XX | DR | Revenue | $5 | ||
Open | CR | Unearned Revenue | $5 |
* The amount is computed as follows:
*A *B *C *D |
DR | Unearned Revenue | $65 | |||||
CR | Accounts Receivable | $65 |
*
A = Credit Memo Amount
B = Period 5 Revenue Amount
C = Period 4 Revenue Amount
D = Period 3 Revenue Amount
3/1/XX | DR | Revenue | $10 | |||
Open | CR | Unearned Revenue | $10 |
4/1/XX | DR | Revenue | $30 | |||
Not Opened | CR | Unearned Revenue | $30 |
5/1/XX | DR | Revenue | $20 | |||
Not Opened | CR | Unearned Revenue | $20 |
Details: Credit Memo Date = 6/1/XX
Credit Memo Amount = $65
Accounting Entries:
GL Date:
Formula = Net Unit Price = Invoice Amount in this period - any previous credit memos in this period / Original invoice quantity Amount to Credit in this period = Net Unit Price for period * Units to Credit
Formula = Net Unit Price per period = |
Period 5 = $20-$0/10units = $2 |
Period 4 = $30-$0/10units = $3 |
Period 3 = $10-$0/10units = $1 |
Period 2 = $20-$0/10units = $2 |
Period 1 = $20-$0/10units = $2 |
Formula = Amount to Credit this period =
Period 5 = $2 * 8units = $16 $65-$16 = $49
Period 4 = $3 * 8units = $24 $49-$24 = $25
Period 3 = $1 * 8units = $8 $25-$8 = $17
Period 2 = $2 * 8units = $16 $17-$16 = $1
Period 1 = $2 * 8units = $16 $1-$16 = - $15
--- ---
Total $80 $65
1/1/XX | DR | Unearned Revenue | $65 | |||
Open | CR | Accounts Receivable | $65 |
DR | Revenue | $1 | ||||
CR | Unearned Revenue | $1 | ||||
2/1/XX | DR | Revenue | $16 | |||
Open | CR | Unearned Revenue | $16 |
3/1/XX | DR | Revenue | $8 | |||
Open | CR | Unearned Revenue | $8 |
4/1/XX | DR | Revenue | $24 | |||
Open | CR | Unearned Receivable | $24 |
5/1/XX | DR | Revenue | $16 | |||
Open | CR | Unearned Receivable | $16 |
Details: Invoice Number = 103
Invoice Date = 5/1/XX
Invoice Amount = $100
Duration = 5 months
Invoicing Rule = Bill In Arrears
Accounting Rule = Fixed Amount as follows:
Period 1 = $20
Period 2 = $20
Period 3 = $10
Period 4 = $30
Period 5 = $20
Accounting Entries:
GL Date:
1/1/XX | DR | Unbilled Receivable | $20 | ||
Open | CR | Revenue | $20 | ||
2/1/XX | DR | Unbilled Receivable | $20 | ||
Not Opened | CR | Revenue | $20 | ||
3/1/XX | DR | Unbilled Receivable | $10 | ||
Not Opened | CR | Revenue | $10 | ||
4/1/XX | DR | Unbilled Receivable | $30 | ||
Not Opened | CR | Revenue | $30 | ||
5/1/XX | DR | Accounts Receivable | $100 | ||
Not Opened | CR | Unbilled Receivable | $100 | ||
DR | Unbilled Receivable | $20 | |||
CR | Revenue | $20 |
Credit Memo Amount = $100
Accounting Entries:
GL Date:
1/1/XX Closed | No Entries | ||
2/1/XX Closed | No Entries | ||
3/1/XX Closed | No Entries |
4/1/XX | DR | Revenue | $20 | |||
Open | CR | Unbilled Receivable | $20 |
DR | Revenue | $20 | ||||
CR | Unbilled Receivable | $20 |
DR | Revenue | $10 | ||||
CR | Unbilled Receivable | $10 |
DR | Revenue | $30 | ||||
CR | Unbilled Receivable | $30 |
5/1/XX | DR | Revenue | $20 | |||
Open | CR | Unbilled Receivable | $20 |
6/1/XX | DR | Unbilled Receivable | $100 | |||
Open | CR | Accounts Receivable | $100 |
4/1/XX | DR | Revenue | $20 | |||
Open | CR | Unbilled Receivable | $20 |
DR | Revenue | $20 | ||||
CR | Unbilled Receivable | $20 |
DR | Revenue | $10 | ||||
CR | Unbilled Receivable | $10 |
DR | Revenue | $30 | ||||
CR | Unbilled Receivable | $30 |
5/1/XX | DR | Revenue | $20 | |||
Open | CR | Unbilled Receivable | $20 |
6/1/XX | DR | Unbilled Receivable | $100 | |||
Open | CR | Accounts Receivable | $100 |
Details: Credit Memo Date = 6/1/XX
Credit Memo Amount = $65
Accounting Entries:
GL Date:
1/1/XX | No Entries |
Closed |
2/1/XX | No Entries |
Closed |
3/1/XX | No Entries |
Closed |
4/1/XX | DR | Revenue | (65/100*$20) | $13 | ||
Open | CR | Unbilled Receivable | $13 |
DR | Revenue | (65/100*$20) | $13 | |||
CR | Unbilled Receivable | $13 |
DR | Revenue | (65/100*$10) | $6.50 | |||
CR | Unbilled Receivable | $6.50 |
DR | Revenue | (65/100*$30) | $19.50 | |||
CR | Unbilled Receivable | $19.50 |
5/1/XX | DR | Revenue | (65/100*$20) | $13 | ||
Open | CR | Unbilled Receivable | $13 |
6/1/XX | DR | Unbilled Receivable | $65 | |||
Open | CR | Accounts Receivable | $65 |
Details: Credit Memo Date = 6/1/XX Credit Memo Amount = $65
Accounting Entries:
GL Date:
1/1/XX | No Entries |
Closed |
2/1/XX | No Entries |
Closed | |
3/1/XX | No Entries |
Closed |
4/1/XX | DR | Revenue | $5 | |||
Open | CR | Unbilled Receivable | $5 |
* The amount is computed as follows:
*A *B *C *D |
Formula = | $5 = $65 - $20 - $30 - $10 |
DR | Revenue | $10 | ||||
CR | Unbilled Receivable | $10 |
DR | Revenue | $30 | ||||
CR | Unbilled Receivable | $30 |
5/1/XX | DR | Revenue | $20 | |||
Open | CR | Unbilled Receivable | $20 |
6/1/XX | DR | Unbilled Receivable | $65 | |||
Open | CR | Accounts Receivable | $65 |
* A = Credit Memo Amount
B = Period 5 Revenue Amount
C = Period 4 Revenue Amount
D = Period 3 Revenue Amount
Details: Credit Memo Date = 6/1/XX
Credit Memo Amount = $65
Accounting Entries:
GL Date:
Formula = Net Unit Price = Invoice Amount in this period - any previous credit memos in this period / Original invoice quantity
Amount to Credit in this period = Net Unit Price for period * Units to Credit
Formula = Net Unit Price per period = |
Period 5 = $20-$0/10units = $2 |
Period 4 = $30-$0/10units = $3 |
Period 3 = $10-$0/10units = $1 |
Period 2 = $20-$0/10units = $2 |
Period 1 = $20-$0/10units = $2 |
Formula = Amount to Credit this period = |
Period 5 = $2 * 8units = $16 |
Period 4 = $3 * 8units = $24 |
---- |
Total $40 |
1/1/XX | No Entries |
Closed | |
2/1/XX | No Entries |
Closed | |
3/1/XX | No Entries |
Closed |
4/1/XX | DR | Revenue | $24 | |||
Open | CR | Unbilled Receivable | $24 |
5/1/XX | DR | Revenue | $16 | |||
Open | CR | Unbilled Receivable | $16 | |||
6/1/XX | DR | Unbilled Receivable | $40 | |||
Open | CR | Accounts Receivable | $40 |
Details: Invoice Number = 104
Invoice Date = 1/1/XX
Invoice Amount = $100
Payment Terms = 3 Installments as follows:
Due Date Amount
2/1/XX $50
3/1/XX $25
4/1/XX $25
The payment schedules for these installments will be as follows:
Due Date | Original Amt. Due | Remaining Amt. Due | Amount # Credited | ||||
2/1/XX | $ 50 | $ 50 | $0 | ||||
3/1/XX | $ 25 | $ 25 | $0 | ||||
4/1/XX | $ 25 | $ 25 | $0 | ||||
____ | ____ | ____ | |||||
Total | $100 | $100 | $0 |
On 1/1/XX a credit memo is entered against invoice #104. The credit method for split terms is set to Prorate for this example.
Details: Credit Memo Date = 1/1/XX
Credit Memo Amount = $45
To calculate the amount credited per payment schedule, Receivables uses the following formula:
Amount Credited = (Credit Memo Amount/Total Remaining Amount Due) * Amount Due Remaining on this installment
e.g. 45/100 * 50 = 22.50
This credit memo has the following affect on the payment schedules of invoice #104:
Due Date | Original Amt. Due | Remaining Amt. Due | Amount Credited | |
2/1/XX | $ 50 | $27.50 | $22.50 | |
3/1/XX | $ 25 | $13.75 | $11.25 | |
4/1/XX | $ 25 | $13.75 | $11.25 | |
______ | ______ | ______ | ||
Total | $100 | $55.00 | $45.00 |
Step 2.
On 1/15/XX a payment is received for $20 which has the following affect on the payment schedules of invoice #104:
Due Date | Original Amt. Due | Remaining Amt. Due | Amount Credited | Payment Applied |
2/1/XX | $ 50 | $ 7.50 | $22.50 | $20 |
3/1/XX | $ 25 | $13.75 | $11.25 | $ 0 |
4/1/XX | $ 25 | $13.75 | $11.25 | $ 0 |
______ | ______ | ______ | ______ | |
Total | $100 | $35.00 | $45.00 | $20 |
Step 3.
On 1/16/XX another credit memo is entered against invoice #104:
Details Credit Memo Date = 1/16/XX
Credit Memo Amount = $20
This credit memo has the following affect on the payment schedules of invoice #104:
Due Date | Original Amt. Due | Remaining Amt. Due | Amount Credited | Payment Applied | |
2/1/XX | $ 50 | $ 3.22 | $26.78** | $20 | |
3/1/XX | $ 25 | $ 5.89 | $19.11 | $ 0 | |
4/1/XX | $ 25 | $ 5.89 | $19.11 | $ 0 | |
______ | ______ | ______ | ______ | ||
Total | $100 | $15.00 | $65.00 | $20 |
** 22.50+(20/35*7.50) = 26.78 (rounded to two decimal places)
On 1/1/XX a credit memo is entered against invoice #104. The credit method for split terms is set to LIFO for this example.
Details: Credit Memo Date = 1/1/XX
Credit Memo Amount = $45
This credit memo has the following affect on the payment schedules of invoice #104.
Due Date | Original Amt. Due | Remaining Amt. Due | Amount Credited |
2/1/XX | $50 | $50 | $0 |
3/1/XX | $25 | $5 | $20 |
4/1/XX | $25 | $0 | $25 |
______ | ______ | ______ | |
Total | $100 | $55.00 | $45.00 |
Step 2.
On 1/15/XX a payment is received for $20 which has the following affect on the payment schedules of invoice #104:
Due Date | Original Amt. Due | Remaining Amt. Due | Amount Credited | Payment Applied |
2/1/XX | $50 | $30 | $0 | $20 |
3/1/XX | $25 | $5 | $20 | $ 0 |
4/1/XX | $25 | $0 | $25 | $ 0 |
______ | ______ | ______ | ______ | |
Total | $100 | $35 | $45 | $20 |
Step 3.
On 1/16/XX another credit memo is entered against invoice #104.
Details Credit Memo Date = 1/16/XX
Credit Memo Amount = $20
This credit memo has the following affect on the payment schedules of invoice #104:
Due Date | Original Amt. Due | Remaining Amt. Due | Amount Credited | Payment Applied |
2/1/XX | $50 | $15 | $15 | $20 |
3/1/XX | $25 | $0 | $25 | $ 0 |
4/1/XX | $25 | $0 | $25 | $ 0 |
______ | ______ | ______ | ______ | |
Total | $100 | $15 | $65 | $20 |
On 1/1/XX a credit memo is entered against invoice #104. The credit method for split terms is set to FIFO for this example.
Details: Credit Memo Date = 1/1/XX
Credit Memo Amount = $45
This credit memo has the following affect on the payment schedules of invoice #104.
Due Date | Original Amt. Due | Remaining Amt. Due | Amount Credited |
2/1/XX | $50 | $5 | $45 |
3/1/XX | $25 | $25 | $0 |
4/1/XX | $25 | $25 | $0 |
______ | ______ | ______ | |
Total | $100 | $55.00 | $45.00 |
Step 2.
On 1/15/XX a payment is received for $20 which has the following affect on the payment schedules of invoice #104:
Due Date | Original Amt. Due | Remaining Amt. Due | Amount Credited | Payment Applied |
2/1/XX | $50 | $0 | $45 | $5 |
3/1/XX | $25 | $10 | $0 | $15 |
4/1/XX | $25 | $25 | $0 | $ 0 |
______ | ______ | ______ | ______ |
Total | $100 | $35 | $45 | $20 |
Step 3.
On 1/16/XX another credit memo is entered against invoice #104.
Details Credit Memo Date = 1/16/XX
Credit Memo Amount = $20
This credit memo has the following affect on the payment schedules of invoice #104:
Due Date | Original Amt. Due | Remaining Amt. Due | Amount Credited | Payment Applied |
2/1/XX | $50 | $0 | $45 | $5 |
3/1/XX | $25 | $0 | $10 | $15 |
4/1/XX | $25 | $15 | $10 | $ 0 |
______ | ______ | ______ | ______ | |
Total | $100 | $15 | $65 | $20 |
DR Accounts Receivable (Deposit) $1000
CR Revenue $1000
2. An invoice for $400 is entered against this deposit. The accounting entries are:
DR Accounts Receivable (Invoice) $400
CR Revenue $400
Receivables automatically creates a receivables adjustment for the invoiced amount. This adjustment is created against the invoice resulting in an amount due in Accounts Receivable of $0. (Note: In our example, the $400 below does not include tax and freight). Therefore, there is no balance due for the $400 invoice, as it has drawn against their $1000 deposit in lieu of payment of the invoice.
DR Revenue $400
CR Accounts Receivable (Invoice) $400
3. A credit memo for $400 is applied to the $400 invoice. The accounting entries are:
DR Accounts Receivable (Invoice) $400
CR Revenue $400
(This accounting entry reverses the adjustment entered in the previous step.)
DR Revenue $400
CR Accounts Receivable (Invoice) $400
(This accounting entry reverses the invoice entered in the previous step, leaving a deposit balance of $600.)
DR Unbilled Receivables $1000
CR Unearned Revenue $1000
2. An invoice for $400 is entered against this guarantee. The accounting entries are:
DR Accounts Receivable $400
CR Revenue $400
Receivables automatically creates a receivables adjustment for the invoiced amount. This adjustment is created against the guarantee. Therefore, an outstanding amount of $400 exists for this invoice and the guarantee has an outstanding balance of $600.
DR Unearned Revenue $400
CR Unbilled Receivable $400
3. A credit memo for $400 is applied to the $400 invoice. The accounting entries are:
DR Unbilled Receivables $400
CR Unearned Revenue $400
(This accounting entry reverses the adjustment entered in the previous step.)
DR Revenue $400
CR Accounts Receivable $400
(This accounting entry reverses the invoice entered in the previous step.)
1. A deposit is entered for $100. The accounting entry is:
DR Accounts Receivable (Deposit) $100
CR Revenue $100
2. An invoice for $220 is entered against this deposit. The accounting entries are:
DR Accounts Receivable (Invoice) $220
CR Revenue $220
DR Revenue $100
CR Accounts Receivable (Invoice) $100
(The current outstanding balance for the invoice is $120)
3. A credit memo for $150 is applied to the invoice. The accounting entries are:
Receivables automatically creates a receivables adjustment for $30 against the invoice to increase the outstanding balance to $150.
DR Accounts Receivable (Invoice) $30
CR Revenue $30
DR Revenue $150
CR Accounts Receivable (Invoice) $150
(This accounting entry is for the $150 credit memo leaving a deposit balance of $30.)
1. A guarantee is entered for $100. The accounting entry is:
DR Unbilled Receivable $100
CR Unearned Revenue $100
2. An invoice for $220 is entered against this guarantee. The accounting entries are:
DR Accounts Receivable $220
CR Revenue $220
DR Unearned Revenue $100
CR Unbilled Receivable $100
(The current outstanding balance for the invoice remains at $220)
3. A credit memo for $150 is applied to the invoice. The accounting entries are:
DR Revenue $150
CR Accounts Receivable (Invoice) $150
(The current outstanding balance for the invoice is $70)
Receivables automatically creates a receivables adjustment for $30 against the guarantee to increase the outstanding balance to $30.
DR Unearned Revenue $30
CR Unbilled Receivable $30
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