Slideshow 4B Accounts Payable Transaction Processing Part 2

List of Topics Slide No. A/P Analytical Reports3 Processing Payments 4 Define Payment Selection Codes 5 Using Control Payment 6 System Check Run 8 Pre-Check Register 9 Create Payment Batch 10 Review Payment Batch Listing 11 Print and Post Cheques 13 Payment Entry Method for Single Payments 14 Manual/Typewritten Cheques 14 Miscellaneous Payments - COD 15 Miscellaneous Payments – Adjusting/Posting an Invoice 16 Miscellaneous Payments – Tax/Payroll Remittance 17 Prepayments18 Vendor Activity19 A/P Period-End Processing 20 Print Month-End Reports 21 Clear A/P History 25 Post A/P Subledger Batches in G/L 26

A/P Analytical Reports Three types of A/P reports are commonly used for analyzing Accounts Payable. Click and study each type. Your text will give you step-by- step instructions on how to produce each of these reports. Click to continue. A/P Analytical Reports Vendor Transactions Report - lists transactions for vendors for specified transaction types during a specified period or range of dates. This report will be printed at the end of this chapter. Aged Payables - lists outstanding payables by vendor. Documents are aged by comparing document date or due date against the aged as of date selected at the time of printing. This report will be printed at the end of this chapter. Aged Cash Requirements - lists cash amounts that will be required to meet obligations as they become due. The report lists documents aged by payment due date.

Processing Payments Most companies make payments to vendors by cheque. Cheques can be printed by ACCPAC or manually handwritten/typewritten. If your company uses both system-printed cheques through ACCPAC and manual cheques, it is best to use separate chequebooks for each type of cheques. If you use one of the system cheques to produce a manual cheque, the cheque numbering system in ACCPAC will be out of sync. If you decide to use one set of cheques, you must tell ACCPAC the number of the first cheque form in the print cheques window. ACCPAC provides two ways to enter payments to vendors. Click and study the two ways of entering vendor payments. Click to continue. Ways to enter payments to vendors: Create Payment Batch - produces payment cheques for a specific group of vendors with specified due and discount dates. This method is useful for companies that have a large number of vendors and a policy of paying vendor amounts due on a regular basis (e.g., every one or two weeks). This is one of the most valuable features of ACCPAC Accounts Payable. This process is often referred to as a system check run. Payment Entry – to record entry of single payments of previously written manual cheques, or produce single printed cheques. This method is useful for COD charges, cash advances, prepayments to vendors and invoices not set up in the A/P application, or cheques required in between system check runs.

Processing Payments (continued) Define Payment Selection Codes If you wish to produce cheques through ACCPAC, you need to define the criteria for selecting the vendor invoices to be paid. The criteria can be modified at any time when the Payment Batch is created. Click and study the SELECT page for the weekly cheque run. Notice that the Selection Code is WEEKLY. When you are scheduled to make payments to invoices due, you can then create a payment batch using a Selection Code to specify which vendors should be paid, and ACCPAC will automatically generate what is referred to as system cheques. Click the other two tabs starting from Criteria. Click to continue. This field instructs ACCPAC how to select the vendor invoices to be paid. The other options are Due Date, Discount Date or Due Date or Discount Date. If there are no exceptions to the criteria, this page is left blank. If you wish to exclude any vendor from the payment list, you would enter the Vendor No. and ACCPAC will not generate any cheque for the vendor until the vendor is taken out of this list.

Using Control Payment The Control Payment feature allows you to not pay a particular invoice; entering a vendor in the Vendor Exclusion List prevents ACCPAC from paying a particular vendor. You must remember that distinction. Specifically, the Control Payment feature allows you to place an invoice: On Hold – to prevent the system to pay an invoice due. Forced – to include a particular invoice in the check run even though it may not be due for payment.Click. The Control Payment feature allows you to instruct special handling of one invoice (Single Document) Click. …or a range of invoices from a particular vendor or a range of vendors (Range of Documents). Click to continue. If you wish to put payment on a particular invoice on hold, you would enter the particulars on this screen. Using the same screen, you can also force payment for a particular invoice. Similarly, you can put particular invoice payments on hold or force payment using the screen where you can specify the vendor group(s), vendor number(s), or a range of documents. Furthermore, you can specify certain document type(s)

Using Control Payment (continued) Study the memo at the right about a check run. Click and study the A/P Control Payments window to put Invoice 102 ON HOLD. The invoice will remain on hold until another Control Payment window is produced to change the Status to Normal ( according to the Selection Criteria) or Forced (for payment although not yet due). Click and study the A/P Control Payments window to pay Invoice 79 although it is not yet due. You must check if the Disc Amount is correct. You may correct it at this point, if necessary. Click to continue.

Steps in a System Check Run 1.Post all A/P batches to ensure that the vendor payables are up to date. 2.Print the Aged Payables report or the Aged Cash Requirements report to review the vendor balances and cash required for a cheque run. 3.Use Control Payments to place vendor invoices on hold or force payment if necessary. 4.Specify vendor and invoice selection criteria in the Create Payment Batch window. 5.Print the Pre-Check Register to review the listing of cheques that satisfy the criteria. 6.Change the selection criteria or use Control Payments if necessary. 7.If satisfied with the Pre-Check Register, generate the Payment Batch. 8.Review the Payment Batch Listing to verify accuracy. 9.Print and post the cheques. 10.Print the Payment Posting Journal and/or the Check Register. System Check Run Note that because ACCPAC is also sold in the U.S., check, the American spelling, is used instead of cheque (the Canadian spelling) on the ACCPAC screens. In the text and in these slideshows, cheque is used to refer to the document; check is used to refer to the wording on the screen; e.g., Pre-Check Register, etc. Click and study the steps in a System Check Run. Click to continue.

System Check Run (continued) Pre-Check Register The Pre-Check Register gives a list of cheques that will be generated by ACCPAC based on the information entered in the Create Payment Batch window. This serves as a trial run of the check run in order to verify its accuracy. You may revise the payment selection and criteria and print the Pre-Check Register as many times as necessary. It is important to set your print destination to Printer so you will have a hard copy to review the Pre-Check Register. Click and study the SELECT page of the A/P Create Payment batch window. Click the CRITERIA tab. The EXCLUSION page is blank. When you click the REGISTER button, the Print Check Register will be printed. Click to continue.

System Check Run (continued) Create Payment Batch You cannot print a new Pre-Check Register until after the payment batch is either posted or deleted (see arrow for the notation at the right). When you are satisfied with the accuracy of the Pre-Check Register, you can generate the Payment Batch. Click the GENERATE button. You will see a confirmation message indicating the batch number that has been generated. You can then open the Payment Batch to review and post if you are satisfied. Click to continue.

System Check Run (continued) Review Payment Batch Listing You can view the resulting system-generated batch from the Payment Batch List window. Click SYSTEM GENERATED CHECK BATCH. The warning message indicates that the batch cannot be revised, as you did not select Allow Edit of System Generated Batches when setting up the A/P Options earlier. This is to prevent unauthorized manipulation of payments. Click to continue.

System Check Run (continued) Print and Post Cheques In your text is a sample custom- printed cheque that can be produced for your company and which is compatible with pre- stored format in ACCPAC, APCHK03.RPT. More sample cheques are on your Student Support CD which you can use for practice printing. There may be times when cheques are damaged or are misprinted. Your text gives you step-by-step instructions on how to print cheques.Click. When printing is completed, you will see a confirmation message. As soon as you click Yes, the cheques will be posted automatically. Click to continue.

To pay a single vendor invoice. To enter a manual/typewritten cheque into the A/P system. To pay a deposit to a vendor. To apply an existing prepayment or credit note against an invoice. To pay for C.O.D. purchases. To make payment for a vendor without a vendor record and/or without an outstanding invoice. Payment Entry Method for Single Payments There are times when you need to pay a recorded vendor invoice outside of the System Check Run. Study the options for Transaction Type in the Payment Entry window.Click. If there is only one payment entry in the batch, you can print the cheque by clicking Print Check (see arrow). The cheque will be posted automatically when you confirm that it is printed correctly. If there are other entries, you may either click Print Check on each entry window or print all cheques together. Click to continue. To pay a single vendor invoice. To enter a manual/typewritten cheque into the A/P system. To pay a deposit to a vendor. To apply an existing prepayment or credit note against an invoice. To pay for C.O.D. purchases. To make payment for a vendor without a vendor record and/or without an outstanding invoice.

Payment Entry Method for Single Payments (continued) Processing Manual/Typewritten Cheques Manual cheques are issued when, for any reason, a computer cheque cannot be printed. The cheque is best issued from a separate cheque book following a numerical sequence different from the system cheques. At a later time, the manual cheque, together with its cheque number, is entered in the A/P module without printing a system cheque. This method maintains the numerical sequence of the system cheques and at the same time keeps the bank reconciliation balance. Click and study the memo at the right and the corresponding A/P Payment entry. You may enter this type of entry in a batch together with payments for which you need to print cheques. Just be sure that the Print Check box is not checked. Click to continue.

Payment Entry Method for Single Payments (continued) Miscellaneous Payments – C.O.D. Study the the purposes for which the Miscellaneous Payments option is used. Click and study the C.O.D. invoice at the right and the corresponding A/P Payment entry. Click to continue. The Miscellaneous Payment option is used for the following purposes: Payments for C.O.D. charges. Payments to one time vendors. Cash advances to employees. To adjust and pay an invoice at the same time. Payments to vendors that are paid regularly, but for which an invoice is not entered in to the A/P system; e.g., rent, equipment leases, service contracts, etc. Government remittances for payroll deductions, GST and PST.

Payment Entry Method for Single Payments (continued) Miscellaneous Payments – Adjusting and Paying an Invoice Study the memo at the right and the corresponding A/P Payment Entry. The original amount of Invoice is $ Notice that $90.00 is deducted from this amount in the cheque payment as per the memo. Adjustment is made by clicking the ADJUST button.Click. Study the Miscellaneous Adjustment Entry window which appears when you click Adjust. When the adjustment entry is posted, the journal entry will be: Dr Accounts Payable Cr. Purchases – Product Cr. GST on Purchases 4.29 Click to continue.

Payment Entry Method for Single Payments (continued) Miscellaneous Payments – Tax/Payroll Remittances Study the remittances that are made to various government agencies. Click and study the memo and the corresponding A/P Payment Entry at the right. You can find the amounts to pay on either the Tax Tracking Report in Tax Services or the Trial Balance Report in the General Ledger. In our example, the GST amounts are: Cr. GST Charged on Sales Less: Dr. GST Paid on Purchases Remittance A cheque for $ will be printed. Click to continue. Receiver General (Canada) for GST/HST. Receiver General (Canada) for payroll deductions – income tax withheld, CPP (Canada Pension Plan) and EI (Employment Insurance). Provincial Treasurer for PST. Other remittances may be for Workers’ Compensation, Employer Health Tax, Canada Savings Bonds, garnishees, etc. Remittances to various government agencies:

Payment Entry Method for Single Payments (continued)Prepayments Deposits are made to vendors as a commitment to an usually large order or a special order. When prepayment is recorded, a prepayment document number is assigned to it. When the order is filled and an invoice is received, the prepayment is applied to the invoice. Click and study the memo at the right and the corresponding A/P Payment entry. Click to continue.

Vendor Activity There may be times when you need to view individual vendor activity (e.g., when reviewing your company purchases or purchase patterns, checking outstanding invoices from a particular vendor, etc.). It is easier to look up information in the A/P Vendor Activity window rather than printing and looking at a report. Study the ACTIVITY page for Computer Support Group. Click the other tabs from left to right starting from AGING. Click to continue. This page shows the vendor’s summary payable and transaction information. Aging for current invoices is shown on this page. This page includes ALL invoices – paid and unpaid because the Include Fully Paid Transactions box has been checked. To view any of the invoices, highlight it and click the OPEN button. All cheques paid to the vendor are listed on this page. You can find details about each entry by highlighting it and clicking either the OPEN or DOCUMENT button.

A/P Period-End Processing Review the GAAPs related to period-end processing. Click and study the procedures to be completed in A/P at the end of a fiscal period. Click to continue. Time Period Principle The economic life of a business can be divided into time periods. Objectivity Principle The Objectivity Principle requires that all information reflected in the accounting records and financial statements is gathered, analyzed, recorded and communicated using only independent and verifiable data separate from any influences of the gatherer and recorder. Consistent Reporting Principle In the preparation of financial statements, the same accounting concepts are applied in the same way in each accounting period. Procedures to complete in A/P at period-end: Print the fiscal period-end reports for the A/P application. Print a G/L transactions report that summarizes the G/L account activity entered into the A/P application during the period. Delete any A/P history no longer required. Delete any inactive vendor records.

A/P Period-End Processing (continued) Print Month-End Reports Batch Status Report The Batch Status Report is very important and should be printed first, as it gives a summary of all the batches processed during the period. It indicates the status of the batches. Click and study the various types and possible status of A/P batches. Batches not posted should be investigated and either posted or deleted before printing other reports and moving to the next period. The Batch Status Report must be printed before any posted or deleted batches are purged. Click to continue.

A/P Period-End Processing (continued) Print Month-End Reports Aged Payables Report The Aged Payables Report is a summary of outstanding invoices payable to each vendor aged according to a report date compared to document date. This report should support the G/L ACCOUNTS PAYABLE account. The owner and management of the company would be most interested in this report.Click. Study the completed window to print the A/P Aged Payables Report. Click to continue.

A/P Period-End Processing (continued) Print Month-End Reports Vendor Transactions Report The Vendor Transactions Report is a breakdown of all vendor transactions processed during the period. You can select one or more document types (invoice, debit/credit note, interest, payment or prepayment). It is very useful for providing an audit trail of transactions for a vendor. It is used most often for inquiry purposes. Click and study the A/P Vendor Transactions Report window to print the Vendor Transactions Report. Vendors that had outstanding balances before the current month but did not have applied payments or adjustments during the current month would not appear on the report. If so, the total of this report would be less than the total of the Aged Payables Report. Click to continue.

A/P Period-End Processing (continued) Print Month-End Reports G/L Transactions Report This report is not essential to A/P Period-End Processing, but provides record of the A/P subledger data before they are posted in G/L. Click and study the A/P G/LTransactions Report window. It is best to select all batch types and specify the posting sequence. A summary report would be sufficient for this purpose. Click to continue.

Clear A/P History At this point, obsolete data can be cleared from the vendor records so that only relevant information is stored. Click and study the vendors and A/P transactions records that may be cleared. Click to continue. Vendors and A/P transactions that may be cleared at period-end Fully paid documents. Vendor comments (notes attached to the vendor by the user). Vendor period statistics (total amount of invoices, payments, discounts, credit and debit notes and adjustments for a vendor in a period). Printed posting journals. Posted and deleted batches. Inactive vendors.

A/P G/L Integration Post A/P Subledger Batches in G/L Review the A/P Options that are relevant to G/L. Because you selected During Posting for Create G/L Transactions, ACCPAC automatically created A/P subledger batches in the G/L when batches are posted in A/P. The last step in period-end processing related to A/P is posting the A/P subledger batches in G/L. Backing Up A/P Data At period-end, an archival backup of A/P data should be made and kept for at least one full year. This is in addition to the regular daily and weekly backups prior to posting. Click to continue. Selecting this option instructs ACCPAC to automatically create A/P subledger batches in the G/L when batches are posted in A/P. Do Not Consolidate instructs ACCPAC to post transaction details to G/L instead of a consolidated summary. This instructs ACCPAC to create a new batch in the G/L whenever a new A/P batch is posted.

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