If you are regularly reconciling your Accrued Inventory Payable, this feature is very handy. This is not a mandatory procedure but was created to help you in reconciling the Accrued Inventory Payable Account.
When you receive Inventory and Post to Accrued the Accounting side of this entry is to Debit Inventory and Credit Accrued Inventory Payable. The Credit to Accrued is keeping track of the liability until you enter the actual Invoice that may arrive 3-5 days later. When the Invoice arrives the Invoice should be entered and the PO can be selected using the F5- PO List or F6- PPO List Function Keys in Enter & Edit A/P Invoices. If you follow this procedure using these Function Keys you it should be easier to reconcile the Accrued Inventory Account.
The Accrued Inventory Account should be reconciled on a regular basis to be sure the value in the account is correct. For your Company this may be monthly, quarterly or yearly. The value in the Accrued Account at any time should be the value of Inventory that has been received where the Invoice has not been entered yet.
There are Accrued Reports available in the Accounts Payable Reports selection to help you reconcile this account. The Accrued reports will provide you with a listing of all of the values received into your Accrued Inventory Payable Account and not removed using the F5-PO List or F6-PPO List Function Keys. If any other entries are made to your Accrued Inventory Account they will not be reflected on these reports. These reports are not directly tied to the Accounting System and therefore do not go back in time.
You can print these reports by date, so if you were not using the F5 and F6 feature in Accounts Payable Invoices until 05-01-00 you would run the report starting with Purchase Orders received on or after 05-01-00. Since this report is not directly tied to the Accounting system you can start or stop using this feature at any time.
If you are using this feature you may find occasionally there is a situation where an Accounts Payable Invoice as entered that applies to an Inventory Receipt and it leaves a leftover value in your Accrued Inventory Account. This value that is left then shows up on the Accrued Accounts Payable Reports. Following is a procedure to remove and write off the left over balance.
You will enter an Invoice for the Vendor through the regular Enter & Edit A/P Invoices. This invoice must have a unique Invoice Number e.g. a Date, a reference to the original Invoice or P.O. The Invoice Amount will be Zero.
Press the PO List Function Key and select the Purchase Order you would like to clear.
The system will show you the Open Accrued Amount and will also default that amount as the Amount to Apply to Invoice. Assuming we want to write off the entire amount left in Accrued press enter to go to the next prompt.
You should now be at the Amount to Apply to Over/Under prompt. Enter the same amount as a negative. If the Amount to Apply to Invoice was 12.00 then the Amount to Apply to Over/Under would be -12.00.
The next line Over/Under Account will be defaulted to the Over/Under Account that was set up in your Control Accounts. If you would like to change this, simply type in the Account you would like.
The last line on the screen will show the Remaining Open Accrued. This should be Zero if we were writing off the entire balance that was left.