You are using Bill of Exchange (BoE) as payment method for supplier invoices. Now the question arises how to clear the involved bank - and payables accounts.
The Supplier Account Monitor view shows a debit balance for the Supplier Account Payables g/l account XYZ-1 and a credit balance for the Suppliers bill of exchange account XYZ-2.
Reproducing the Issue
- Access the Payables work center.
- Select supplier ABC in the Supplier Accounts view.
- Enter the Supplier Account Monitor by clicking View.
- In the Supplier Balances pane the respective balances for payables General Ledger Accounts are shown for Supplier Account Payables XYZ-1 and Suppliers bill of exchange account XYZ-2.
The BoE is issued and still status In Transfer. In line with the nature of this document the BoE continues to be accounted as payable until the eventual cashing of the BoE has been effected.
This is usually done by the processing of a bank statement confirming the effective outgoing payment.
Supplier invoice DEF over 1000 EUR is cleared by BoE payment GHI on 01.01.2015. Invoice DEF shows as Paid. Payment GHI is issued and therefore set into In Transfer.
The resulting clearing journal entry shows as:
|Debit:||Supplier Account Payables XYZ-1:||1000 EUR|
|Credit:||Suppliers bill of exchange XYZ-2:||1000 EUR|
The current holder of the BoE presents the document to their house-bank for cashing on 01.04.2015. This clearing is reflected in a processed bank statement.
The journal entry resulting from the payment allocation shows as:
|Debit:||Suppliers bill of exchange XYZ-2:||1000 EUR|
|Credit:||BoE Bank Account:||1000 EUR|
The BoE status is set to Confirmed.
Only then will the supplier account balance reflect the effective clearing of the involved account payables.
KBA , SRD-FIN-ACP , Payables , How To