Example 5 - Invoicing Only

A company creates an invoice for 1,200.00. The original cost per unit is 10.00 for 100 units. The cost of each unit is recorded in the Work in Process account. After the units are invoiced, the cost is moved from the Work in Process account to the Cost of Goods Sold account. Each unit is sold for 12.00.

The journal entries are:

G/L Date	Account	Debit	Credit
June 30, 2005	Work in Process	1,000.00
June 30, 2005	Accounts Payable		(1,000.00)
July 31, 2005	Accounts Receivable	1,200.00
July 31, 2005	Sales Revenue		(1,200.00)
July 31, 2005	Cost of Goods Sold	1,000.00
July 31, 2005	Work in Process		(1,000.00)

Billing AAI table number 4811 first directs the 1,200.00 invoice amount to the Sales Revenue account. The system uses the AAIs to create the Accounts Receivable portion of the journal entry. Then, billing AAI table number 4841 reduces the Work in Process account by the cost amount and billing AAI table number 4842 increases the Cost of Goods Sold account by the cost amount.

The Work in Process account postings and balances for June in the general ledger are:

Date	Debit	Credit	Balance
June 30, 2005	1,000.00		1,000.00

The Accounts payable account postings and balances for June in the general ledger are:

Date	Debit	Credit	Balance
June 30, 2005		1,000.00	(1,000.00)

The Accounts Receivable account postings and balances for July in the general ledger are:

Date	Debit	Credit	Balance
July 31, 2005	1,200.00		1,200.00

The Sales Revenue account postings and balances for July in the general ledger are:

Date	Debit	Credit	Balance
July 31, 2005		1,200.00	(1,200.00)

The Work in Process account postings and balances for July in the general ledger are:

Date	Debit	Credit	Balance
June 30, 2005	1,000.00		1,000.00
July 31, 2005		1,000.00	0

The Cost of Goods Sold account postings and balances for July in the general ledger are:

Date	Debit	Credit	Balance
July 31, 2005	1,000.00		1,000.00

Note: In the example, the Journal Generation system constant is set to 1 because the company is creating invoices only without revenue recognition. Billing AAI table number 4811 is the only table that you need to create the revenue. Reallocation journal entries are made from billing AAI table numbers 4841 and 4842.