ACCOUNTS PAYABLE AUTOMATIC DISTRIBUTION ACCOUNTS WITH PURCHASE ORDER MATCHING AND EXCHANGE RATES EXPLAINED

Automatic G/L Distribution for PO Transfer Amount Matching for products with exchange cost as part of the products total cost.

Screen 1 (Purchase Order)

Screen 2. (Product Cost).

Screen 3. (Invoice showing matching screen)

Screen 4. (Invoice showing automatic distribution).

1^st line posting to ap_exch.1.1  (Accounts Payable Exchange Account Posting).  This is the posting of the invoice exchange amount. Since the invoice is not in home currency and exchange rate is not equal to 1 this posting is generated.  Exchange account is defined in the Currency file Maintenance for the currency of the invoice. 

Calculation : Take the Total Invoice Amount on main AP1100 screen multiply it by the exchange rate.  In our example invoice amount is US $1,130.00 and exchange rate is 1.3.  Applying the formula the resulting amount will be 1130 * .3 = $339.00

Screen 5. (Currency)

2^nd Line posting to trans_var.1.1 (Transfer Variance Posting).  This posting is for the amount  difference between standard transfer cost of the products and the total invoiced amount for the products.  Transfer variance account is defined in the reason code maintenance.

Calculation: (Invoice Extension (from the Variance/Matching screen of AP1100) – Standard Cost Transfer Cost @ receipt) * ((Standard Cost Exchange Cost @ receipt / Standard Cost Transfer Cost @ receipt) + 1) and result is rounded to 2 decimal places.   In our example invoice extension is US $1,000.00, standard cost transfer cost is $2.00 (see screen 2 – total amount is (quantity of 10 * transfer cost of 2) $20) and standard cost exchange cost is $4.00 (exchange cost is 40 * quantity matched is 10).  Applying the formula the resulting amount will be (1000 – 20) * ((4 / 20) + 1) = $1,176.00.

Screen 6.

Screen 7.

3rd Line posting to exchange_var.1.1 (Exchange Variance Posting).  This posting is for the exchange amount difference between standard cost exchange amount of the product and the current exchange amount (applied to the standard cost).  Any total receipt and total exchange and total g/l distribution amount difference to total invoice extension at local currency amount will also be added to the exchange variance posting.   Account is defined in the reason code maintenance.

First step Calculation: Standard Cost Transfer Cost @ receipt * (Current Exchange Rate – ((Standard Cost Exchange Cost @ receipt / Standard Cost Transfer Cost @ receipt) + 1)) result rounded to 2 decimal places.  In our example standard cost transfer cost is $2.00 (see screen 7 or screen 2 – total amount is (quantity of 10 * transfer cost of $2.00) $20), standard cost exchange cost is $4.00 (exchange cost is 40 * quantity matched is 10) and current exchange rate is 1.3.  Applying the formula the resulting amount will be  (20  - (1.3 – ((4 / 20) + 1)) = 2.

Second step calculation:

(Total Invoice Extension (from matching/variance screen) * invoice exchange rate) –

(Total Standard Transfer Amount (quantity invoiced * standard transfer cost @ receipt) + Total Standard Exchange Amount (quantity invoiced * standard exchange cost @ receipt) + Total g/l distribution amount posted to transfer variance account and exchange variance account. In our example total invoice extension is $1,000.00(quantity invoiced 10 * invoice cost $100.00/each), invoice exchange rate is 1.3, total standard transfer amount is $20.00 (transfer cost $2.00 * quantity invoiced 10), total standard exchange amount is $4.00 (exchange cost .4 * quantity invoiced 10) and total distribution amount for transfer variance and exchange variance is $1,176.00).  Applying the formula the resulting amount will be (1000 *1.3) – (20 + 4 + 1176) = $100.00

Screen 8. (Reason Code)

4th Line posting to accliab.1.1 (Accrued Liability Posting).  This posting is for the reversal of the accrued liability posting that was done when the product was received and receipt was posted to general ledger (PO5300).  Accrued liability account is defined in the currency file maintenance.

Calculation: Product Standard Cost * quantity invoiced/matched and result is rounded to 2 decimal places.  In our example product cost is $2.40 and quantity invoiced/matched is 10.  Applying the formula the resulting amount will be 2.40 * 10 = $24.00