Examples of Journals Generated by the Service Manager Day End Process
Contents
This section contains the following examples of journal entries generated by the Service Manager Day End process.
•Example 1 - Standard Invoice Transaction
•Example 2 - Work in Progress Transaction
•Example 3 - Job Covered by an Agreement
•Example 4 - Sale of an Agreement
Example 1 - Standard Invoice Transaction
Document (No Agreement Cover)
Description |
|
Amount |
Extended Price |
|
100.00 |
Extended Cost |
|
50.00 |
Discount |
10% |
10.00 |
Net total before Tax |
|
90.00 |
Tax 1 |
6.25% |
5.63 |
Tax 2 |
2.00% |
1.80 |
Net Total |
|
97.43 |
A/R Batch
Account |
Debit |
Credit |
A/R Control |
97.43 |
|
Tax 1 |
|
5.63 |
Tax 2 |
|
1.80 |
Item Revenue |
|
100.00 |
Discount |
10.00 |
|
Total |
107.43 |
107.43 |
G/L Batch
Account |
Debit |
Credit |
Cost of Goods Sold |
50.00 |
|
Inventory Control |
|
50.00 |
Total |
50.00 |
50.00 |
Note: Services operate similarly to Inventory except if the Service has blank Cost Accounts, where no costs will be posted to the General Ledger.
Example 2 – Work in Progress Transaction
Document (Includes Agreement Cover)
Description |
|
Amount |
Extended Price |
|
100.00 |
Extended Cost |
|
50.00 |
Discount |
10% |
10.00 |
Net total before Tax |
|
90.00 |
Tax 1 |
6.25% |
5.63 |
Tax 2 |
2.00% |
1.80 |
Subtotal |
|
97.43 |
Less Cover |
50% |
45.00 |
Net Total |
|
52.43 |
A/R Batch
Account |
Debit |
Credit |
A/R Control |
52.43 |
|
Billings (Cover) |
45.00 |
|
Tax 1 |
|
5.63 |
Tax 2 |
|
1.80 |
Billings (Item Revenue) |
|
50.00 |
Billings (Agreement Revenue) |
|
50.00 |
Discount |
10.00 |
|
Total |
107.43 |
107.43 |
G/L Batch
Account |
Debit |
Credit |
Work in Progress |
50.00 |
|
Inventory Control |
|
50.00 |
Total |
50.00 |
50.00 |
Note: Service cost will post to the Service Cost Clearing Account.
Recognizing revenue and expense
G/L Batch
Account |
Debit |
Credit |
Billings |
45.00 |
|
Agreement Cover |
45.00 |
|
Item Revenue |
|
50.00 |
Agreement Revenue |
|
50.00 |
Discount |
10.00 |
|
Cost of Goods Sold |
50.00 |
|
Work in Progress |
|
50.00 |
Total |
150.00 |
150.00 |
Overhead and Burden
If Overhead and/or Burden Accounts are specified in the Service Manager Options, these values will be calculated for Work in Progress Jobs only, and Day End Processing will post journals to the General Ledger directly, according to the calculation methods specified.
G/L Batch (Expense Flat 10% of Total Cost) – Post WIP
Account |
Debit |
Credit |
WIP (Overhead Applied) |
5.00 |
|
Overhead Recovered |
|
5.00 |
WIP (Burden Applied) |
5.00 |
|
Burden Recovered |
|
5.00 |
Total |
10.00 |
10.00 |
G/L Batch – Recognize WIP Day End Process
Account |
Debit |
Credit |
Overhead Applied |
5.00 |
|
WIP |
|
5.00 |
Burden Applied |
5.00 |
|
WIP |
|
5.00 |
Total |
10.00 |
10.00 |
Assume Month End actual overhead = $150.00, you may raise an adjustment general journal as follows:
G/L Batch (General Expense Journal)
Account |
Debit |
Credit |
Over/Under Appl. Overhead |
140.00 |
|
Overhead Recovered |
|
140.00 |
Note: You may choose to revise Standard Overhead Recovery Rates at any time if Overhead budgeted is incorrect.
Recovered Overhead should offset your Actual Overhead in your income Statement and will be cleared to Retained Earnings as part of the normal Year End function.
Example 3 – Job Covered by an Agreement
Document (Customer Pays Tax)
Description |
|
Amount |
Extended Price |
|
100.00 |
Extended Cost |
|
50.00 |
Discount |
10% |
10.00 |
Net total before Tax |
|
90.00 |
Tax 1 |
6.25% |
5.63 |
Tax 2 |
2.00% |
1.80 |
Subtotal |
|
97.43 |
Less Cover |
50% |
45.00 |
Net Total |
|
52.43 |
A/R Batch
Account |
Debit |
Credit |
A/R Control |
52.43 |
|
Agreement Cover |
45.00 |
|
Tax 1 |
|
5.63 |
Tax 2 |
|
1.80 |
Item Revenue |
|
50.00 |
Agreement Revenue |
|
50.00 |
Discount |
10.00 |
|
Total |
107.43 |
107.43 |
G/L Batch
Account |
Debit |
Credit |
Cost of Goods Sold |
50.00 |
|
Inventory Control |
|
50.00 |
Total |
50.00 |
50.00 |
Note: Services operate similarly to Inventory except if the Service has blank Cost Accounts, where no costs will be posted to the General Ledger. These accounts are: Cost of Service Sold and Service Cost Clearing.
Document (Tax paid on Invoice value)
Description |
|
Amount |
Extended Price |
|
100.00 |
Extended Cost |
|
50.00 |
Discount |
10% |
10.00 |
Net total before Tax |
|
90.00 |
Tax 1 |
6.25% |
0.00 |
Tax 2 |
2.00% |
0.00 |
Less Cover |
100% |
90.00 |
Net Total |
|
0.00 |
A/R Batch
Account |
Debit |
Credit |
A/R Control |
0.00 |
|
Agreement Cover |
90.00 |
|
Tax 1 |
|
0.00 |
Tax 2 |
|
0.00 |
Item Revenue |
|
0.00 |
Agreement Revenue |
|
100.00 |
Discount |
10.00 |
|
Total |
100.00 |
100.00 |
G/L Batch
Account |
Debit |
Credit |
Cost of Goods Sold |
50.00 |
|
Inventory Control |
|
50.00 |
Total |
50.00 |
50.00 |
Note:
Services operate similarly to Inventory except if the Service has blank Cost Accounts, where no costs will be posted to the General Ledger. These accounts are: Cost of Service Sold and Service Cost Clearing.
Document (Service Company pays Tax)
Description |
|
Amount |
Extended Price |
|
100.00 |
Extended Cost |
|
50.00 |
Discount |
10% |
10.00 |
Net total before Tax |
|
90.00 |
Tax 1 |
6.25% |
5.63 |
Tax 2 |
2.00% |
1.80 |
Less Cover |
50% |
52.43 |
Net Total |
|
45.00 |
A/R Batch
Account |
Debit |
Credit |
A/R Control |
45.00 |
|
Agreement Cover |
52.43 |
|
Tax 1 |
|
5.63 |
Tax 2 |
|
1.80 |
Item Revenue |
|
50.00 |
Agreement Revenue |
|
50.00 |
Discount |
10.00 |
|
Total |
107.43 |
107.43 |
G/L Batch
Account |
Debit |
Credit |
Cost of Goods Sold |
50.00 |
|
Inventory Control |
|
50.00 |
Total |
50.00 |
50.00 |
Example 4 – Sale of an Agreement
Document (With Amortization)
Description |
|
Amount |
Extended Price |
|
1200.00 |
Extended Cost |
|
50.00 |
Discount |
10% |
120.00 |
Net total before Tax |
|
1080.00 |
Tax 1 |
6.25% |
67.50 |
Tax 2 |
2.00% |
21.60 |
Net Total |
|
1169.10 |
A/R Batch
Account |
Debit |
Credit |
A/R Control |
1169.10 |
|
Tax 1 |
|
67.50 |
Tax 2 |
|
21.60 |
Unearned Income |
|
1200.00 |
Discount |
120.00 |
|
Total |
1289.10 |
1289.10 |
G/L Batch
Account |
Debit |
Credit |
Unearned Income |
90.00 |
|
Agreement Revenue |
|
100.00 |
Discount |
10.00 |
|
Total |
100.00 |
100.00 |
Note: Day End Processing processes Amortization Journals to the General Ledger according to the Amortization Schedule specified for the Sale of Agreement Service line in the Agreement Document.
Example 5 – Warranty Claim
The example below is based on the Customer Paying the Tax, but is equally valid where Tax is calculated on Invoice value or where the Service Company Pays the Tax. Refer Tax Calculation Methods for Agreements.
It is important to note that if Warranty is claimed on a Work in Progress Job, WIP will be taken up before Warranty journals. On recognition of WIP, the Warranty Control account will be debited. On reversal of Warranty during the Day End Processing function, the Warranty Control account will be credited and the COGS account will be debited. These transactions can take place during the same Day End Process.
Document (Company pays Tax)
Description |
|
Amount |
Extended Price |
|
100.00 |
Extended Cost |
|
50.00 |
Discount |
10% |
10.00 |
Net total before Tax |
|
90.00 |
Tax 1 |
6.25% |
5.63 |
Tax 2 |
2.00% |
1.80 |
Subtotal |
|
97.43 |
Less Cover |
50% |
45.00 |
Net Total |
|
52.43 |
A/R Batch
Account |
Debit |
Credit |
A/R Control |
52.43 |
|
Agreement Cover |
45.00 |
|
Tax 1 |
|
5.63 |
Tax 2 |
|
1.80 |
Item Revenue |
|
50.00 |
Warranty Revenue |
|
50.00 |
Discount |
10.00 |
|
Total |
107.43 |
107.43 |
G/L Batch
Account |
Debit |
Credit |
Warranty Claims Control |
50.00 |
|
Cost of Service Clearing |
|
50.00 |
Total |
50.00 |
50.00 |
Document (Claim Warranty from Manufacturer)
Description |
|
Amount |
Extended Price |
|
65.00 |
Extended Cost |
|
50.00 |
Discount |
10% |
6.50 |
Net total before Tax |
|
58.50 |
Tax 1 |
6.25% |
3.66 |
Tax 2 |
2.00% |
1.17 |
Net Total |
|
63.33 |
A/R Batch
Account |
Debit |
Credit |
A/R Control |
63.33 |
|
Tax 1 |
|
3.66 |
Tax 2 |
|
1.17 |
Warranty Revenue |
|
65.00 |
Discount |
6.50 |
|
Total |
69.83 |
69.83 |
G/L Batch
Account |
Debit |
Credit |
Cost of Services Sold |
50.00 |
|
Warranty Claims Control |
|
50.00 |
Total |
50.00 |
50.00 |