Excess Credit GL Accounting Example

The following example shows the additional GL details that are created when a service agreement's balance changes and the starting or ending balance is a credit. For this example, a single VAT rate of 10% is used simply to illustrate the principle.

The service agreement has a zero starting balance. Note the following:

• When the first payment is received, the overpayment results in a credit balance and additional GL entries are created to recognize the unbilled energy revenue and unbilled VAT liability.
• When the second bill segment is created, the credit balance is reduced and additional GL entries are created to back out the unbilled GL entries, up to the amount of the credit balance.
• When the bill segment is canceled, the service agreement again has a credit balance and additional GL entries are created to recognize the unbilled energy revenue and unbilled VAT liability.