Here is the scenario I ran into:
I was asked why there was no Journal entry when entering a vendor prepayment in Bills and Adjustments rather than Checks and Payments.
The Solution
Think of entering a vendor prepayment in Bills and Adjustments rather than Checks and Payments as entering a vendor prepayment request. Just like an AP bill, you can specify line details (non-stock items or services). A prepayment request may have one summary line or any number of detail lines.
Once entered the vendor prepayment request is entered, the transaction will flow like an AP bill. It is taken off hold, go for approval if approval is required, then released.
However, unlike an AP bill, when vendor prepayment request is released there is no General Ledger entry. The JE will post once you pay the prepayment request.
You pay the prepayment by creating an accounts payable check, as you would to pay any other AP bill, by using the Checks and Payments form or include it on a check run. Make sure that you select Prepayment as the document type so you can select the prepayment request that you released earlier.
When you release the accounts payable check, the system changes the status of this check to Closed and makes the original prepayment available on the Checks and Payments form, so that you can apply this prepayment to bills and credit adjustments.
If you need to correct errors in a prepayment request that you created, you have the following options:
1. If the prepayment has not been paid, you can void it at any time by clicking Void on the form toolbar of the Bills and Adjustments form for the selected prepayment request.
2. If there were errors detected for a PAID prepayment request, you should create an adjustment instead of voiding the prepayment.
3. If the prepayment has been paid, and you need to reverse the payment, you void the associated accounts payable check.
This is great, but you may be asking why would I go through all the above steps rather than just creating a prepayment on the Checks and Payments?
Here are the advantages prepayment requests:
• Go through the same workflow as an AP bill, making it easier on AP
• Allows for use of approval workflow before issuing a check
• Can be included on check runs along with AP Bills rather than have to be entered individually
For those that want more, below you will find a video of me going through the scenario and the solution.
Any questions? Contact us.
Shah.