Purchase Order to Invoice Paid (GL Entries)

Fishyfreak

Hi,

I'm mapping out the GL flow of debits and credits for a purchase to pay process. Can anyone tell me what the typical Dr/Cr entries would be for the following steps (and at which point does the commitment become an actual)

1. PO Raised
2. Good Received
3. Customer Invoice Received
4. Invoice Paid

In particular i'm interested to see how 1. & 2. hit the balance sheet for people? I have it mapped out myself but not 100% sure i have it right?

christy c

Fishyfreak wrote: »

Hi,

I'm mapping out the GL flow of debits and credits for a purchase to pay process. Can anyone tell me what the typical Dr/Cr entries would be for the following steps (and at which point does the commitment become an actual)

1. PO Raised
2. Good Received
3. Customer Invoice Received
4. Invoice Paid

In particular i'm interested to see how 1. & 2. hit the balance sheet for people? I have it mapped out myself but not 100% sure i have it right?

If it's a goods PO, no entries for step 1.
2. DR P&L, CR accrual account
3. CR creditor account, DR accrual account (reversing second part of step 2)
4. CR bank, DR creditor account

Fishyfreak

Great, that's perfect.

I was working under the assumption the raising the PO did create some sort of entry in the Balance Sheet (Dr & Cr) but actually what you've posted is logical and makes more sense.

While raising the PO may raise a "commitment" this does not hit GL but can be viewed in a seperate management report. Now agreeing this logic to the system i'm working on is the next battle, not entirely sure that this is what happens there!!

ASOT2012

2. Good received - DR Inventory CR GRNI (goods received not invoiced)

Raising a PO may not generate a commitment. It depends on when the risks and rewards of the goods have transferred to you