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.
Event
Normal GL Accounting
Additional GL Accounting
SA Balance
Bill segment for £110 created
A/R 110
Revenue <100>
VAT <10>
110
Payment of £330 is received
Cash 330
A/R <330>
A/R 220
Unbilled Energy <200>
Unbilled VAT <20>
<220>
Bill segment for £275 created
A/R 275
Revenue <250>
VAT <25>
A/R <220>
Unbilled Energy 200
Unbilled VAT 20
55
Payment of £55 is received
Cash 55
A/R <55>
0
Bill segment for £275 is canceled
A/R <275>
Revenue 250
VAT 25
A/R 275
Unbilled Energy <250>
Unbilled VAT <25>
<275>