Understanding the Profit Recognition Journal Entries
When you run the Create Journal Entries program (R51444), the system uses the JD Edwards EnterpriseOne Job Cost AAIs to determine the accounts to use for the debit and credit entries. Because the journal entries must balance, the system uses a pair of AAIs for each type of journal entry that it generates. This table lists each pair of AAIs that the system uses for each balancing journal entry that the system generates.
See Setting Up AAIs for Job Cost.
AAI Pair |
Function of AAI and Journal Entry |
Recognition Method |
Debits and Credits |
|---|---|---|---|
JCST01 and JCST02, JCST03 and JCST04, and so on. |
Identify the range of cost accounts that the system uses. You can set up 49 separate ranges to identify the cost accounts that you want to use. |
Not applicable |
Not applicable |
JCCA01 and JCCA02, JCCA03 and JCCA04, and so on. |
Identify the range of revenue accounts that the system uses. You can set up 49 separate ranges to identify the revenue accounts that you want to use. |
Not applicable |
Not applicable |
BS and IS |
Transfer the amounts for the work in progress (WIP) cost and revenue from the balance sheet (item BS) to the cost of sales and revenue accounts on the income statement (item IS). |
Not applicable |
Dr. IS cost of sales Cr. BS WIP cost Dr. BS WIP revenue Cr. IS revenue |
JCCOUA and JCBE |
Record the overbilling amount, which the system calculates by subtracting the earned revenue from the actual revenue. If the actual revenue is greater than the earned revenue, the system records the difference in an overbilled revenue account and records the offset in an unearned revenue liability account. The system generates a reversing journal entry. |
1 – Cost |
Dr. JCCOUA Cr. JCBE |
JCBOUA and JCBE |
Record the overbilling amount, which the system calculates by subtracting the earned revenue from the actual revenue. If the actual revenue is greater than the earned revenue, the system records the difference in an overbilled revenue account and records the offset in an unearned revenue liability account. The system generates a reversing journal entry. |
2 – Revenue |
Dr. JCBOUA Cr. JCBE |
JCCE and JCCOUA |
Record the underbilling amount, which the system calculates by subtracting the earned revenue from the actual revenue. If the actual revenue is less than the earned revenue, the system records the difference in an underbilled revenue account and records the offset in an accrued revenue asset account. The system generates a reversing journal entry. |
1 – Cost |
Dr. JCCE Cr. JCCOUA |
JCCE and JCBOUA |
Record the underbilling amount, which the system calculates by subtracting the earned revenue from the actual revenue. If the actual revenue is less than the earned revenue, the system records the difference in an underbilled revenue account and records the offset in an accrued revenue asset account. The system generates a reversing journal entry. |
2 – Revenue |
Dr. JCCE Cr. JCBOUA |
JCAPC and JCAPO IS and BS |
Record the adjustment to the cost that was entered in the Accrual/Deferral field on the job adjustments form. If the amount entered in the field is positive, the adjustment is an accrual. Note: Because the accrual and deferral accounts are typically balance sheet accounts, the system generates an additional journal entry to move the amount from the balance sheet to the income statement. The system generates a reversing journal entry. |
Not applicable |
Dr. JCAPC Cr. JCAPO Dr. IS Cr. BS |
JCSMI and JCSMJ IS and BS |
Record the adjustment to the cost that was entered in the Accrual/Deferral field on the job adjustments form. If the amount entered in the field is negative, the adjustment is a deferral. Note: Because the accrual and deferral accounts are typically balance sheet accounts, the system generates an additional journal entry to move the amount from the balance sheet to the income statement. The system generates a reversing journal entry. |
Not applicable |
Dr. JCSMI Cr. JCSMJ Dr. BS Cr. IS |
JCLOSS and BSLOSS or JCBE |
If the projected final amount results in a loss of profit, the system records it in the provision for loss account (JCLOSS) and records the offset in BSLOSS or JCBE if BSLOSS is not set up. The system generates a reversing journal entry. |
Not applicable |
Dr. JCLOSS Cr. BSLOSS or JCBE. |
If you force projected final costs, revenue, or profit values using one of the job adjustment programs, the system also generates one-sided journal entries to the FA ledger if the Projected Final Change Entries processing option is set to 1. The system uses these AAIs to locate the accounts to use for the journal entries:
Force projected final costs – JCPFC.
Force projected final revenue – JCPFR.
Force projected final profit – JCPFP.
The system generates these journal entries for audit trail purposes only. The system automatically updates the F0902 table for the FA ledger with the amounts that you force regardless of whether you select to generate the journal entries.