Accounting transactions are created when the following events have occurred:


  • User authorized purchase order or sale quote with deposit/prepayment. Nothing will be created if deposit or prepayment is not attached to the purchase order or sale quote.
  • User authorized purchase or sale invoice/credit note
  • User authorized sale shipment
  • User authorized manual journal transaction
  • User authorized/completed stocktake
  • User authorized/completed stock adjustment
  • User authorized/completed finished goods task
  • User authorized/completed issue to production task
  • User authorized/completed disassembly task
  •  User undo/voided any of items above


Purchase


You have created a purchase order and attached a $25 deposit.


Dr

Cr

Amount

Transaction Date

Prepayment

Bank

$25

Prepayment date


When processing a purchase the following accounts are involved:

  • Inventory control Account
  • Account Payable
  • Tax Account
  • Optional Expense Account

In the image below is an example of a Purchase Invoice:

  • Tax rate is 10%
  • Purchase amount is $110 (including Tax)
  • $22 delivery fee (that is not capitalized however it is allocated to an expense account).

Dr
Cr
Amount

Transaction Date
Inventory control
Account Payable

$100
Invoice date
Tax
Account Payable
$10

Invoice date
Expense
Account Payable

$20
Invoice date
Tax
Account Payable
$2

Invoice date


Account Payable will then be reduced by the amount of Prepayment made previously ($25).


Account Payable


Prepayment


$25


Invoice date



If Purchase Order is a Drop ship purchase the transactions are going to be the same as the above example plus the transaction below.


Dr


Cr


Amount


Transaction Date


COGS


Inventory control


$100


Invoice date



If the delivery fee is capitalized transactions will look like the image below:


Dr

Cr

Amount

Transaction Date

Inventory control

Account Payable

$100

Invoice date

Tax

Account Payable
$10

Invoice date

Inventory control

Account Payable

$20

Invoice date

Tax

Account Payable

$2

Invoice date


You decided to distribute $8 in the Warehouse Overheads and allocate them to the inventory items on this invoice:


Dr

Cr

Amount

Transaction Date

Inventory control

Warehouse overheads

$8

Manual Journal Date


In a month you find a defect in the item and request a credit note (total amount is $11)


Dr

Cr

Amount

Transaction Date

Inventory control

Account Payable

$-10

Credit Note Date

Tax

Account Payable

$-1

Credit Note Date


Invoice Payment will cause the following:


Dr

Cr

Amount

Transaction Date

Account Payable

Bank

$110

Payment Date


Sale


You have created a Sale Quote, authorized it and received a client payment of $25.

Dr

Cr

Amount

Transaction Date

Bank

Prepayment

$25

Prepayment Date


A Sale Invoice includes the following accounts:

  • Accounts Receivable
  • Tax Account
  • Optional Expense Account

In the image below is an example of a Sale Invoice:

  • 10% Tax
  • Sale is $110 (including Tax)
  • $22 delivery fee (which is allocated to a different Sale Account)

Accounts Receivable will be reduced by the amount of Prepayment made before.


Dr

Cr

Amount

Transaction Date

Accounts Receivable

Sale

$100

Invoice Date

Accounts Receivable

Tax

$10

Invoice Date

Accounts Receivable

Sale 2

$20

Invoice Date

Accounts Receivable

Tax

$2

Invoice Date

Prepayment

Accounts Receivable

$25

Invoice Date

 

When you authorize the Shipment tab in the Sales Module the following accounts are involved:

  • Inventory Control Account
  • Cost of Goods Sold (COGS) Account

The amount of the transaction will depend on the value collected from the inventory cards that were picked according to the costing method (e.g. FIFO, FEFO etc.)


Dr

Cr

Amount

Transaction Date

COGS

Inventory control

$50

Max of Shipment Dates if multiple


You decided to distribute $8 in the Warehouse Overheads and allocate them to the COGS Account to change the profit of this sale:

Dr

Cr

Amount

Transaction Date

COGS

Warehouse overheads

$8

Manual Journal Date


The Invoice Payment will cause the following:


Dr

Cr

Amount

Transaction Date

Bank

Accounts Receivable

$110

Payment Date


In a month the customer finds a defect in the item and requests a credit note (total amount is $11).


Dr

Cr

Amount

Transaction Date

Accounts Receivable

Sale

$-10

Credit Note Date

Accounts Receivable
Tax

$-1

Credit Note Date

COGS

Inventory control

$-5

Credit Note Date



Stock Adjustments and Stocktake


When changing the quantity of stock on hand you have an option to allocate the difference in cost, to a Selected Expense Account.

Below is a result of a $10 increase in stock value due to a stock adjustment:


Dr

Cr

Amount

Transaction Date

Inventory Control

Selected Expense Account

$10

Effective Date


Below is a result of a $10 decrease in stock value due to a stock adjustment:


Dr

Cr

Amount

Transaction Date

Inventory Control

Selected Expense Account

$-10

Effective Date


Finished Goods

There are two stages of manufacturing new finished goods:

  1. Component allocation
  2. Placing finished goods to the Inventory Account


User can select dedicated work-in-progress account and move the components inventory to this account. The transaction below will be created when user clicks the Allocate button.


Dr

Cr

Amount

Transaction Date

Selected ‘work in progress’ account

Inventory Control


$10


Date when user completed finished goods task


Once finished goods are ready user can finalize work order by pressing ‘Complete’ button. This will close the Work In Progress account and place finished goods to the Inventory account.


Dr

Cr

Amount

Transaction Date

Inventory Control
Selected ‘work in progress’ account

$10

Date when user completed finished goods task


If you need to add extra expenses for example labor and overheads:


Dr

Cr

Amount

Transaction Date

Inventory Control

Labour account or Overheads account

$150

Date when user completed finished goods task



Issue to Production

 

Issue to production is required when you need to write off stock from the inventory as a result of damage, expiration or to use it to perform some work (this is an element of Job Costing). Along with raw materials you can specify labor and overheads to be allocated on the expense accounts.


Dr

Cr

Amount

Transaction Date

Selected Expense Account
Inventory Control
$20
Date when user completed issue to production task
Selected Expense Account
Labour account or Overheads account
$100
Date when user completed issue to production task



Disassembly

 

Disassembly works in a similar way as Finished Goods. Initially a product that needs disassembly will be put into the Work-In-Progress Account and the disassembled components will be placed to the Inventory Account. Along with raw materials you can specify labor and overheads to be allocated on the expense accounts.


Dr

Cr

Amount

Transaction Date

Selected ‘work in progress’ account
Inventory Control
$200
Date when user completed disassembly task
Inventory Control
Selected ‘work in progress’ account

$200
Date when user completed disassembly task
Inventory Control

Labour account or Overheads account

$100
Date when user completed disassembly task