Example Setup
This chapter provides an example setup and discusses examples of not-to-exceed (NTE) calculations on a time and material billing line for:
Revenue generation for one workfile transaction.
Invoicing with revenue recognition for one workfile transaction.
Revenue generation for two workfile transactions.
Invoicing with revenue recognition for two workfile transactions.
Example Setup
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).
Revenue Generation for One Workfile Transaction
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).
Example 1 - NTE Rule of 2 (Subject to Invoice and Revenue)
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.
Revenue Recognition
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
Invoice processing runs after revenue recognition is complete and it creates no entries.
Example 2 - NTE Rule of 3 (Subject to Revenue)
In this example, NTE is calculated on the entire amount of the workfile transaction.
Revenue Recognition
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 |
Invoice Processing
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 |
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.
Revenue Recognition
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 |
Invoice Processing
The Journal Edit Register program (R48300), when called by the Invoice Journal Generation program (R48131), creates no entries.
Invoicing with Revenue Recognition for One Workfile Transaction
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).
Example 4 - NTE Rule of 2 (Subject to Invoice and Revenue)
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.
Invoice Processing with G/L Journal Generation
The Invoice Journal Generation program (R48131) creates no accounts receivable or general ledger entries.
Example 5 - NTE Rule of 3 (Subject to Revenue)
In this example, NTE is calculated on the entire amount of the workfile transaction.
Revenue Recognition
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 |
Invoice Processing
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 |
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.
Invoice Processing with G/L Journal Generation
The Invoice Journal Generation program (R48131) creates no accounts receivable or general ledger entries.
Revenue Generation for Two Workfile Transactions
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).
Example 7 - NTE Rule of 2 (Subject to Invoice and Revenue)
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).
Revenue Recognition
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 |
Invoice Processing
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 |
Example 8 - NTE Rule of 3 (Subject to Revenue)
In this example, NTE is calculated on the entire amount of the workfile transaction.
Revenue Recognition
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 |
Invoice Processing
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 |
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).
Revenue Recognition
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 |
Invoice Processing
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 |
Invoicing with Revenue Recognition for Two Workfile Transactions
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).
Example 10 - NTE Rule of 2 (Subject to Invoice and Revenue)
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).
Invoice Processing with G/L Journal Generation
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 |
Invoice Processing
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 |
Example 11 - NTE Rule of 3 (Subject to Revenue)
In this example, NTE is calculated on the entire amount of the workfile transaction.
Revenue Recognition
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 |
Invoice Processing
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 |
Example 12 - NTE Rule of 4 (Subject to Invoicing)
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).
Revenue Recognition
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 |
Invoice Processing
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 |