Adjusting Accounts When a Customer is also a Vendor

Adjusting Accounts When a Customer is also a Vendor INTRODUCTION The following example illustrates how to adjust accounts if you have a balance with a vendor, and the vendor wants to apply your balance to his account with you. For an example, assume that you owe the vendor $462.58 and the vendor owes you $750. The vendor wants to apply the $462.58 so that you have a balance of $0 and the amount he owes you is reduced. You must enter transactions in both Accounts Payable and Accounts Receivable. SETUP You will need to set up the following in order to record the exchange adjustments: An AR Adjust code An AP Adjust code Both codes will reference a clearing account in the SuccessWare21 chart of accounts. Doing so will create a wash entry to the clearing account when you have finished processing. Before you add the appropriate codes into the Reference Library you should review the Chart of Account Setup to find the clearing account. To find the clearing account: 1. Select Setup, then General Ledger from the MAIN MENU. 2. Select tab 1 Account Setup. 3. Locate the Account Class Current Liabilities using the drop down menu. 4. Locate account 2090 - Clearing. (If your company uses a different account for clearing, confirm that account number exists.) 5. If you cannot locate the account, you must add it. To add the account: a. While displaying the Current Liabilities, select the New Account button. b. Use the drop down menu in the right panel of your screen to select the account category Other Current Liabilities. c. Double-click account 2090, enter the description Clearing, and select Save. NOTE: Confirm that your CPA does not want you to use a different account for clearing. SuccessWare, Inc. 1

AR Adjust Code You will use an AR Adjust Code when posting credit or debit adjustments in BILLING ACCOUNT HISTORY. The AR Adjust Code will determine what account should be debited or credited to offset the posting to Accounts Receivable. The system will post to Accounts Receivable by default. To add an AR Adjust Code: 1. Select Setup, then Reference Library, from the MAIN MENU. 2. Select Accounting from the list of Volumes. 3. Click on AR Adjust Codes and select the Open button to open the table. 4. Press Ctrl+Enter or right-click and select Modify mode to open the table for editing. 5. Press Ins to insert a new line. 6. Enter the Code and Description that you wish to use. Be sure to select or enter the Clearing account as the GL_Account. 7. Press Enter to save the line, then Esc to exit modify mode. 8. Press Esc again to return to the REFERENCE LIBRARY. Remain in the Accounting Volume to add the next code. AP Adjust Code You will use an AP Adjust Code when posting credit or debit adjustments in VENDOR ACCOUNT HISTORY. The AP Adjust Code will determine what account should be debited or credited to offset the posting to Accounts Payable. The system will post to Accounts Payable by default. To add an AP Adjust Code: 1. Click on AP Adjust Codes and select the Open button to open the table. 2. Press Ctrl+Enter or right-click and select Modify mode to open the table for editing. 3. Press Ins to insert a new line. SuccessWare, Inc. 2

4. Enter the Code and Description that you wish to use. Be sure to select or enter the Clearing account as the GL_Account. 5. Press Enter to save the line, then Esc to exit modify mode. 6. Press Esc again to return to the REFERENCE LIBRARY. 7. Select Close to return to the MAIN MENU. PROCESSING There are two steps necessary to record exchange adjustments: Update the customer s BILLING ACCOUNT HISTORY Update the VENDOR ACCOUNT HISTORY As an example, assume that Jim Overton is your customer. He also owns Advanced Automotive, the company that performs your fleet s maintenance and repair To adjust the Billing Account History: We re going to start by applying a credit to the amount that Jim Overton owes us, reducing his remaining balance. 1. Open the RECEIVABLES MANAGER and locate the Vendor s billing account. 2. Highlight the account and press Enter, right-click and select Open account, or press F4 to open the BILLING ACCOUNT HISTORY form. 3. Highlight the open invoice and select Adjust. 4. The Adjustment form will open. SuccessWare, Inc. 3

a. Select Credit memo. b. The Date will default to the current date. Accept the date or enter the date you wish the adjustment to post. c. Use the drop-down menu to select the AR Adjust Code that was set up for the exchange credits. d. Enter the amount of the credit the vendor has issued to your account. e. The Acct will default the clearing account as set up on the code. f. Enter or select the Department that you wish to affect with the memo. Since this will be a wash transaction you can post against 00, the Admin Department. You will use this same department on the AP side. g. The Reference field is optional but it is recommended that you enter a reference number. The reference will appear as the reference on general ledger transactions. You may wish to use the invoice number as the reference. h. Enter a Comment if you wish. i. The system will select Manual Allocation by default. Select Post. j. The system will open the MANUAL ALLOCATION form where all open items will be displayed. SuccessWare, Inc. 4

k. Highlight the invoice to which you are applying the credit and press Enter to apply the memo to that transaction. l. Confirm that the Unapplied Balance is $.00 and the transaction is Fully allocated. Then select Post to complete the transaction. The accounting result of this memo will be a credit to Accounts Receivable (1101) and a debit to the Clearing account (2090). The combined posting of this transaction and the adjustment to the vendor will create a wash entry to 2090 and the net result will be a credit to Accounts Receivable and a debit to Accounts Payable. 5. Exit from Receivables and open the PAYABLES MANAGER. To adjust Vendor Account History: Now we are going to apply a credit to the vendor billing account and apply it against an outstanding invoice. 1. Locate the Vendor from the PAYABLES MANAGER. 2. Highlight the account and right-click to select Open account, or press F4 to open the VENDOR ACCOUNT HISTORY form. SuccessWare, Inc. 5

3. Highlight the open invoice and select Adjust. 4. The Adjustment form will open. a. Select Credit memo. b. The Date will default to the current date. Accept the date or enter the date you wish the adjustment to post. c. Use the drop-down menu to select the AP Adjust Code that was set up for the exchange credits. d. The amount will default to the open balance of the invoice. Accept the amount, or enter the amount if it is different. e. The Acct will default the clearing account as set up on the code. f. Enter or select the Department that you wish to affect with the memo. Since this will be a wash transaction you can post against 00, the Admin Department. Be sure to use the same department you used on the AR side of the transaction. g. The Reference field is optional but it is recommended that you enter a reference number. The reference will appear as the reference on general ledger transactions. You may wish to use the original AR invoice number as the reference. h. Enter a Comment if you wish. i. If the Adjust Amount matches the invoice balance, the system will default to Auto allocate adjustment. Select Post. You will return to the VENDOR ACCOUNT HISTORY form. If the Adjust Amount does not match the invoice balance, the system will select Manual Allocation by default. Select Post. 1. The system will open the MANUAL ALLOCATION form where all open items will be displayed. SuccessWare, Inc. 6

2. Highlight the invoice to which you are applying the credit and press Enter to apply the memo to that transaction. 3. Confirm that the Unapplied Balance is $.00 and the transaction is Fully allocated. Then select Post to complete the transaction. The accounting result of this memo will be a debit to Accounts Payable (2001) and a credit to the Clearing account (2090). The combined posting of this transaction and the adjustment to the vendor will create a wash entry to 2090 and the net result will be a credit to Accounts Receivable and a debit to Accounts Payable. SuccessWare, Inc. 7