Procure to Pay Cycle Accounting Entries

After completing this document, you should be able to understand the accounting entries generated by the system during procure to pay cycle.

· When Inventory / Material is in Transit

· When Inventory is delivered to the Inventory Sub Stores

· When Invoice is booked / recorded

· When Payment is made

· When Reconciliation is made

ENTRY 01:

When Goods / Material Are In-Transit Or When We Receive Inventory, The Following Accounting Entry Will Be Generated.

Description	Dr.	Cr.
Receiving Inventory Account	xxxxx
Inventory AP Accrual Account		xxxxx

There are two inventory Organizations:

· Receiving Organization

· Inventory Organization

When the inventory is received at Receiving Organization then the above entry will be generated. Receiving of Inventory can be made through Purchasing Responsibility as well as Inventory Responsibility.

Receiving Inventory Account

This account is defined in the Receiving Options of purchasing Responsibility.

Navigation: PURCHASING > SETUPS > ORGANIZATIONS > RECEIVING OPTIONS

Inventory AP Accrual Account

This account is defined in the Inventory Organization Parameters window; click on Others (B) and then select Inventory Information and then chose the Other Accounting tab.

Navigation: PURCHASING > SETUPS > ORGANIZATIONS > ORGANIZATIONS

ENTRY 02:

When Inventory Is Delivered To Sub Inventory Stores Then The Following Accounting Entry Will Be Generated.

Description	Dr.	Cr.
Material Account	xxxxx
Receiving Inventory Account		xxxxx

When the Inventory is delivered in the Stores this account will be hit in the Inventory Organization click on the others button and then select the Inventory Information and then choose the Costing Information tab and this account will be defined in the Valuation Account region named as Material.

Receiving Inventory Account

This account is defined in the Receiving Options of purchasing Responsibility.

Material / Inventory Account

This account is defined in the Inventory Organization Parameters window; click on Others (B) and then select Inventory Information and then chose the Costing Information tab.

Navigation: PURCHASING > SETUPS > ORGANIZATIONS > ORGANIZATIONS

ENTRY 03:

When We Book Liability At Invoice Level, The Following Accounting Entry Will Be Generated.

Description	Dr.	Cr.
Inventory AP Accrual Account	xxxxx
Liability Account		xxxxx

At the Invoice Level when we book the liability the supplier liability account will be credited.

Inventory AP Accrual Account

This account is defined in the Inventory Organization Parameters window; click on Others (B) and then select Inventory Information and then chose the Other Accounting tab.

Supplier Liability Account

To define the Liability account in the Payables Responsibility click on Setups, choose Options, click on Financials, and then select the Accounting tab.

Navigation: PAYABLES > SETUPS > OPTIONS > FINANCIALS

ENTRY 04:

When Payment Is Made To Supplier, The Following Accounting Entry Will Be Generated.

Description	Dr.	Cr.
Liability Account	xxxxx
Cash Clearing Account		xxxxx

Cash Clearing Account is defined in the Payables Responsibility while defining the banks.

Supplier Liability Account

To define the Liability account in the Payables Responsibility click on Setups, choose Options, click on Financials, and then select the Accounting tab.

Cash Clearing Account

To define Cash Clearing Account click on Setups, choose Payments and then click on Banks. After entering the required information in the main bank window click on the Bank Accounts button. In the Bank Accounts region choose the Account Use Type Internal to show the GL Accounts. Here we find the Cash Clearing Account.

Navigation: PAYABLES > SETUPS > PAYMENT > BANKS

ENTRY 05:

When Reconciliation Is Made In Cash Management, The Following Accounting Entry Will Be Generated.

Description	Dr.	Cr.
Cash Clearing Account	xxxxx
Bank / Cash Account		xxxxx

Switch to the Cash Management Responsibility for Reconciliation purpose. When we made the Reconciliation then the above Accounting entry will be generated.

Cash Clearing Account

To define Cash Clearing Account click on Setups, choose Payments and then click on Banks. After entering the required information in the main bank window click on the Bank Accounts button. In the Bank Accounts region choose the Account Use Type Internal to show the GL Accounts. Here we find the Cash Clearing Account.

Bank / Cash Account

To define Cash Account click on Setups, choose Payments and then click on Banks. After entering the required information in the main bank window click on the Bank Accounts button. In the Bank Accounts region choose the Account Use Type Internal to show the GL Accounts.