Specialised Accounting Services
Clean up open purchase orders and backorders
In Sage MAS 90 and Sage MAS 200, accomplished Purchase Orders that have been completed longer than the quantified number of days, assigned in the Purchase Order Options (Number of Days to Retain Completed PO setting), are eliminated mechanically during Period End Processing.
For the Purchase Order position to change to Finished, the ordered quantity should equal the Received Quantity. And if the Purchase Order Option flag "Post A/P Invoices" is turned on, then the ordered quantity must equal the Received Quantity and the Invoiced Quantity.
The Day-to-day Receipt Registers/Update procedure associates the lines for all POs and completes the purchase order when the quantity ordered = quantity received = quantity invoiced.
It is significant to examine and understand the details why a Purchase Order is in a Backordered status so the proper technique for clearing the Backordered status is used. Before proceeding regulate why the ordered quantity does not match the received and invoiced quantities.
To confirm the quantities for the three amounts, run one of the Purchases Clearing reports from the P.O. Period End menu. Run the report option for Purchases Clearing in Open PO format. A more summarized Report Master or Crystal report can also be created, selecting on a calculated field (Quantity Ordered minus Quantity Invoiced) if the calculated value is zero. (This report would also list all purchase orders not invoiced yet).
Example: Ordered = 10 Received = 10 Invoiced = 0
In this situation the invoice was typically entered directly in Accounts Payable. Since a G/L posting of Debit to Inventory and Credit to Purchases Clearing was made when the Receipt of Goods was updated there is a Credit amount in the Purchases Clearing Account.
1. Turn off the "Post A/P Invoices" setting in Purchase Order Options. This will cause the system to disregard the invoiced quantity field. In Purchase Order Entry, change the ordered quantity up to 11 and click OK to accept the line. Re-select the line, and change the ordered quantity back down to 10, click OK, and accept the order. This process will change the PO status from Backordered to Completed. Be sure to turn the Purchase Order Options "Post A/P Invoices" setting back on before entering or updating any new receipts.
A general ledger correcting entry will be essential to balance the purchases clearing account. The correcting G/L entry must be:
Debit: Purchases Clearing
Credit: The A/P expense account the A/P invoice debited
2. Procedure a Receipt of Invoice for the quantity 10. Since Sage MAS 90 won’t let you to use the same A/P invoice number, add an "-A" on the end of the original invoice for tracking purposes. Then in A/P Invoice Data Entry, regulate the newly created invoice to 0.00 using the A/P expense account the original invoice debited. This will have the net consequence of debiting Inventory and crediting A/P
- Entry of a Purchase Order does not create a G/L entry. The Purchases Clearing account only comes into play when a receipt of goods is treated without an invoice.
- A finished Purchase Order will endure in Purchase Order Entry until the Purchase Order Option "Number of Days to Retain Completed PO" setting is surpassed, AND a Period End Processing is achieved.
- There is a setting to "Automatically Close Partially Received POs" which lets a percentage modification between the quantity ordered and received/invoiced quantities. If the modification is set at 10% for instance, and 10 were ordered when 9 are received and invoiced then the PO will complete.
This purpose will purge all Purchase Orders irrespective of status. A G/L journal entry to regulate the Purchases Clearing account for those POs where the established quantity does not match the invoiced quantity should be made.
Disclaimer: The software content used in this page is only for customers to know about the software and not for any commercial intentions.
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