Previous  Next          Contents  Index  Navigation  Glossary  Library

Oracle Receivables Reconciliation Examples

The following examples illustrate the accounting entries generated when you enter a receipt in Oracle Receivables, then reconcile it through Cash Management.

The first example represents a domestic situation where your functional currency, bank account, and receipt currency are the same. The second example represents international and foreign situations where your bank account currency may differ from your receipt currency. In the foreign case, you remit funds into a bank account denominated in a foreign currency. In the international case, you remit into a multi-currency bank account denominated in your functional currency.

Example 1 - Reconciling a Functional Currency Receipt

You install Oracle General Ledger and Oracle Receivables, and define US Dollars as the functional currency for your set of books. You enter Accrual Basis as your accounting method. You enter an invoice for 100 US Dollars (USD) and receive a payment from your customer for 100 USD. You create a receipt for that amount, with a Receipt Class that has the following options:

Creation Method: Manual
Require Confirmation: No
Require Remittance: No
Require Bank Clearance: By Matching

When you post the invoice and receipt, Oracle Receivables transfers the accounting entries to your general ledger, where the Journal Import function creates a journal entry in your functional currency.

Activity Accounting Entries
Enter invoice for 100 USD DR Accounts Receivable 100 USD
CR Revenue 100 USD
Enter receipt for 100 USD
(see note) 		DR Remittance account 100 USD
CR Accounts Receivable 100 USD
Reconcile receipt with bank
statement, including bank
charges of 2 USD. 		DR Cash 98 USD
DR Bank Charges 2 USD
CR Remittance account 100 USD

Note: If the Require Remittance option had been set to Yes, this entry would have been a debit to the confirmation account and a credit to accounts receivable. When the receipt was remitted to the bank, there would be another entry to debit the remittance account and credit the confirmation account.

Example 2 - Reconciling a Foreign Currency Receipt

You install Oracle General Ledger and Oracle Receivables and define US Dollars (USD) as the functional currency for your set of books. You enter Accrual Basis as your accounting method. You enter an invoice for 120 French Francs (FF), with a corporate exchange rate. The exchange rate on the date you enter the invoice is 4:1. When you post the invoice, Oracle Receivables transfers journal information in both your foreign currency (120 FF) and your functional currency (30 USD) and Journal Import creates a journal entry in your functional currency.

You receive a payment from your customer for 120 FF. You create a receipt for that amount, with a Receipt Class that has the following options:

Creation Method: Manual
Require Confirmation: No
Require Remittance: No
Require Bank Clearance: By Matching

On the receipt date, the exchange rate has increased to 5:1, representing a loss in your functional currency of 6 USD. You transfer your receipt information to your general ledger and Journal Import creates a journal entry to record the receipt along with the realized loss.

When you reconcile the receipt, the exchange rate has again increased, to 6:1, representing a loss in your functional currency of 4 USD. When you transfer your reconciliation information to your general ledger, the Journal Import function creates a journal entry to record the reconciled receipt along with the realized loss.

Note: This example assumes that you post from Receivables to General Ledger after each activity.

Activity Accounting Entries
Enter invoice for 120 FF
(exchange rate: 4 FF = 1 USD) 		DR Accounts Receivable 120 FF (30 USD)
CR Revenue 120 FF (30 USD)
Enter receipt for 120 FF
(exchange rate: 5 FF = 1 USD) 		DR Remittance account 120 FF (24 USD)
DR Exchange Loss 0 FF (6 USD)
CR Accounts Receivable 120 FF
(30 USD)
Reconcile receipt with bank
statement, including bank
charges of 6 FF
(exchange rate: 6 FF = 1 USD) 		DR Cash 114 FF (19 USD)
DR Bank Charges 6 FF (1 USD)
DR Exchange Loss 0 FF (4 USD)
CR Remittance account 120 FF (24 USD)

         Previous  Next          Contents  Index  Navigation  Glossary  Library