Journal Entries Generated for Posted Order Entry Transactions

Sage 300 generates journal entries for your general ledger when you:

Except for shipment transactions, these journal entries appear on the Accounts Receivable G/L Transactions report. Shipment transactions appear on the Order Entry G/L Transactions report.

The following sections include information about the journal entries associated with Order Entry transactions:

Shipments

On the Order Entry G/L Transactions report, shipments are assigned source code OE-SH.

Item quantities are removed from Inventory Control for posted shipments (either during Day End Processing or when you use the Create G/L Batch screen) as follows:

Journal Entries for Shipments
G/L Account Debit Credit
Shipment Clearing X  
     Inventory Control   X

Invoices

On the Accounts Receivable G/L Transactions report, invoices are assigned source code OE-IN.

When you post an invoice, Sage 300 generates the following entries:

Journal Entries for Invoices
G/L Account Debit Credit
Receivables Control X  
Cost of Goods Sold (Item) X  
     Shipment Clearing   X
     Tax Liability   X
     Sales   X

Costing methods. If an item's costing method is the standard method or the most recent cost method, the item's cost variance account is debited or credited with the difference between the standard or most recent cost and the weighted average cost of the items shipped.

Decreasing quantities shipped. If you decrease the quantity shipped on an invoice, Order Entry creates an entry to adjust Inventory Control (either when you run Day End Processing or when you use the Create G/L Entries screen) as follows:

Journal Entries for Invoices
G/L Account Debit Credit
Inventory Control X  
     Shipment Clearing   X

The source code that appears on the G/L Transactions report for this entry is OE-IN.

Detail Lines in Accounts Receivable Invoices

The detail lines that Order Entry creates in Accounts Receivable invoices vary depending on whether you use optional fields for detail lines or you use Sage 300 Project and Job Costing.

Without optional fields or Project and Job Costing. If you do not use optional fields in Order Entry invoice details and in Accounts Receivable invoice details, and you are not posting job-related transactions, Order Entry creates Accounts Receivable invoices with separate detail lines for sales, cost of goods sold, and shipment clearing entries.

All Accounts Receivable invoice details are consolidated by general ledger account, so if you use only one sales account, one cost of goods sold account, and one clearing account, you will see only three lines on an invoice.

Accounts Receivable Invoice Details (No Optional Fields; Not Job Related)
Sales Acct 4111 750.00
Cost of Goods Sold Acct 5200 -500.00
Shipment Clearing Acct 5900 500.00

With optional fields or Project and Job Costing. If you use optional fields in Order Entry invoice details and in Accounts Receivable invoice details, or if you are posting job-related transactions, Order Entry creates a single Accounts Receivable invoice detail line for each Order Entry invoice detail line.

Each Accounts Receivable invoice detail includes the entries for the revenue, inventory (shipment clearing), and cost of goods sold accounts. There will be as many invoice detail lines as there were on the original Order Entry invoice. Accounts Receivable invoice details are not consolidated.

Accounts Receivable Invoice Details (Job Related or Optional Fields)
Sales item 1 Acct 4111 250.00
Sales item 2 Acct 4111 250.00
Sales item 3 Acct 4111 250.00

Each of the unconsolidated Accounts Receivable invoice lines will produce a journal entry with sales account, cost of goods sold account, and clearing account details when posted in Accounts Receivable.

Prepayments

On the G/L Transactions report, prepayments are assigned source code AR-PI.

Prepayments are added directly to Accounts Receivable receipt batches when you post an order, shipment, or invoice that has a prepayment. Prepayments debit the general ledger prepayment liability account and credit the customer's receivables control account.

Credit Notes

Credit notes are assigned source code OE-CN on the Accounts Receivable G/L Transactions report.

Credit note transactions debit and credit general ledger accounts as shown in the following tables.

If an item's costing method is the standard method or the most recent cost method, then the item's cost variance account is debited or credited with the difference between the standard or most recent cost and the weighted average cost of the items shipped.

Items Returned to Inventory

The following example records a credit note transaction for items returned to inventory. The first transaction is posted directly to General Ledger from Order Entry; the second one goes through Accounts Receivable.

Journal Entries for Transactions Posted Directly to G/L from Order Entry
G/L Account Debit Credit
Inventory Control X  
     Credit/Debit Note Clearing   X
Journal Entries for Transactions Posted Through Accounts Receivable
G/L Account Debit Credit
Sales Returns X  
Credit/Debit Note Clearing X  
Tax Liability X  
     Receivables Control   X
     Cost of Goods Sold   X

Damaged items

The Damaged Goods account is debited rather than the Sales Returns account.

Journal Entries for Damaged Goods
G/L Account Debit Credit
Damaged Goods X  
Credit/Debit Note Clearing X*  
Tax Liability X  
     Receivables Control   X
     Cost of Goods Sold   X

*The Credit/Debit Note Clearing and the COGS entries will always be zero for damaged goods.

This transaction will appear differently in the Accounts Receivable invoice depending on whether or not the transaction is job-related or uses optional fields.

Price adjustments

Journal Entries for Price Adjustment
G/L Account Debit Credit
Sales X  
Tax Liability X  
     Receivables Control   X

Shipping and Invoicing Kitting Items

If you have Project and Job Costing or if you use optional fields with invoice details, Accounts Receivable invoices show only one detail line for each kitting item listed on an invoice, instead of showing one line for each component of each kitting item. Order Entry handles the accounting for kitting items with the following general ledger entries.

When you ship kitting items, Order Entry creates general ledger entries for each of the components in the kitting item:

Journal Entries for Components in the Kitting Item
G/L Account Debit Credit
Shipment Clearing, component 1 X  
     Inventory Control   X
Shipment Clearing, component 2 X  
     Inventory Control   X

When you invoice a kitting item, Order Entry creates the following general ledger entries to back out the components for the master item from the shipment clearing account:

Journal Entries to Back Out Components for Master Item from Shipment Clearing Account
G/L Account Debit Credit
Shipment Clearing, master item X  
     Shipment Clearing, component 1   X
     Shipment Clearing, component 2   X

The source code that appears on the G/L Transactions report for the shipment entry is OE-SH. The source code that appears on the G/L Transactions report for the invoice entry is OE-IN.

Note: If you do not use optional fields in Order Entry invoice details and in Accounts Receivable invoice details, and if you do not use Project and Job Costing, Order Entry creates shipment clearing lines on the Accounts Receivable invoice for each component, and does not create the general ledger entries shown above during invoicing.

Shipping and Invoicing Job-Related Transactions

When entering job-related transactions, you can create invoices in Order Entry, or you can select the Project Invoicing option if you want to create invoices in Project and Job Costing.

Creating Invoices in Order Entry

The following example shows the shipping and invoicing transactions for an order with one item and one miscellaneous charge. The miscellaneous charge is considered internal, because it's a handling charge and one of your employees is packaging the shipment. You can enter both the revenue and cost for the miscellaneous charge or only the revenue. Usually, you enter the cost because you want to associate both the cost and revenue with the job, and have labor and overhead calculated on the cost.

Journal Entry for Shipping and Invoicing in Order Entry
Type Item No./Misc. Charge Qty. Unit Cost Billing Cost Type Ext. Billing Amt.
Item A1-103/0 1 50.00 Billable 100.00
Misc. HC   15.00   30.00
Journal Entry for Shipment Posting
G/L Account Debit Credit
Shipment Clearing 50.00  
Misc. Charges Clearing 15.00  
     Inventory Control   50.00
     Shipping Expense   15.00
Journal Entry for Invoice Posting
G/L Account Debit Credit
Receivables Control 146.90  
Cost of Goods Sold 71.50  
     Revenue   130.00
     Overhead Allocated   3.25
     Labor Burden   3.25
     GST (Fed sales tax)   9.10
     PST (Prov/State sales tax)   7.80
     Shipment Clearing   50.00
     Misc. Charges Clearing   15.00

Creating Invoices in Project and Job Costing

The following example shows an item being shipped from Order Entry and invoiced through Project and Job Costing. It also shows the entries for an additional shipping cost (FedEx) coming through Accounts Payable instead of through Order Entry.

The shipping cost is recorded in Accounts Payable, picked up by PJC when you run the Billing Worksheet, and, finally, included on the invoice created in Accounts Receivable.

Journal Entry for Item Shipped from Order Entry
Type Item No. Qty. Unit Cost Billing Cost Type Ext. Billing Amt.
Item A1-103/0 1 50.0 Billable 100.00
Shipment Posting Journal Entry
G/L Account Debit Credit
Work In Progress 55.00  
     Inventory Control   50.00
     Overhead Burden   2.50
     Labor Burden   2.50
Accounts Payable Invoice Entry for FedEx Charge
G/L Account Debit Credit
Work In Progress 16.50  
Work In Progress (Prov/State sales tax) .90  
GST (Canadian Fed sales tax) 1.05  
     A/P Invoice Posting   16.95
     Overhead Allocated   .75
     Labor Burden   .75
Accounts Receivable Invoice Created From Billing Worksheet
G/L Account Debit Credit
Receivables Control 146.90  
     Billings   130.00
     GST (Canadian Fed sales tax)   9.10
     PST (Prov/State sales tax)   7.80
Revenue Recognition Journal Entry
G/L Account Debit Credit
Billings 130.00  
Cost of Sales 72.40  
     Revenue (Sales)   130.00
     Work In Progress   72.40