Problem: How to pass Following transaction in the system:
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DR Owner's Current account
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/ CR Current trade payable account
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(Branch Company)
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Solution: This entry can be done by Mutual Settlement, Register Correction and General Ledger Transaction documents
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because there is no direct way to resolve and beside GL entries some registers need to be fixed but since it is not always easy to understand which registers to fix therefore we create a Mutual settlement document to create one part of entry and understand the linked register.
1. Create a new Mutual Settlement document with transaction type Supplier Debt Assignment. In both Supplier and Supplier Recipient fields, select Branch Company:
In Accounts Payable Tab select the contract and put the amount, Advance option will be populated automatically once the document field is empty, default GL account here is Prepayments to Suppliers (BS Trade and Other Receivables) or you can select another available account from the list:
In Payee Attributes select the contract and put the amount, the amount should be equal to the amount in Accounts Payable tab:
Once you post the document you can check the created transaction by pressing the DR-CR sign:
It's creating DR Prepayments to Supplier Transaction that should be Reversed and CR Current Trade Payable and adding Payable document in Company's Statement:
The Above highlighted Advance Expense Record in the Accounts Payable Register will be reversed by Register Correction Document.
2. In Administration section, open Register Correction and Create a new document:
In Register Content Settings and Accumulation Register, select Accounts Payable:
The Content should be the same that you've checked in Mutual Settlement Records, but Instead of Expense it will be reversal Receipt Type:
Period - Reversal Period, it should correspond with Mutual Settlement Date
Activity - select Yes
Register records type - for the Reversal entry it should be Receipt
Entity - Copy from the screenshot above (from Mutual Settlement)
Accounts Type - Advance
Company - Copy from Mutual Settlement
Contract - Company contract (Copy from Mutual Settlement)
Document - Mutual Settlement
Is Loan - No
GL Account - Prepayment to Suppliers (Copy from Mutual Settlement)
Amount - Amount should be equal to the amount entered in Mutual Settlement
3. In order to create the GL entry open Transactions (General Ledger) in Accounting section and create a new one:
In Dr column select Owner's Current account (BS Capital Issued) and in Cr column select Prepayments to Suppliers (BS Trade and Other Receivables) or other GL account that was select in Accounts Payable Tab of Mutual Settlement document:
4. In the Statement of Mutual Settlements you'll have the Payable amount on this Company's account:
And the following transactions will be in Trial Balance as a result:
In summary, the entry needed was DR Owner's Current account
CR Current trade payable account Credit (Branch Company)
a) Mutual settlement has created the entry,
DR Prepayment to supplier
CR Current trade payables
b) Transaction general ledger- DR Owner account
CR Prepayments to Supplier
since there is no direct way, and directly recording it using general ledger transaction will not have an effect in the registers and reports, therefore, workaround is to be done, by Mutual settlement, we record the CR part i.e. the Current trade payables and transaction general ledger created the CR part. Prepayment to the supplier account are reversed by adding it as DR and CR in the respective documents.
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