In this post, i am going to describe how debit and credit entries are recorded on Subledger journals of Purchase Orders.
I am using COM data set here.
Go to Accounts Payable > Common > Purchase Orders > All Purchase Orders
Click New > Purchase Order button on action pane
Set Vendor Account = PVND000001
Click Yes on AX message box
Click OK button
Click Add line button
Set Procurement Category = APPAREL AND LUGGAGE AND PERSONAL CARE PRODUCTS
Set Quantity = 1
Set Unit = Ea
Set Unit price = 10
Click Financials > Distribute amounts button
Set Ledger Account = 999-61100-120-101 [Set ledger dimension for which Budget Register Entries are already created. I will discuss Budget Register Entries in my next posts. This is the ledger dimension of Expense Account Structure as we are doing expense transaction (Purchase Order)]
Click Purchase tab on the top
Click Subledger journal button under Accounting section
Subledger journal entries:
36360 entry is picked up from Posting defintions form.
36360 is the debit entry because we are doing Accounts Payable transaction and All Accounts Payable transactions are expense transactions and debit entry is recorded against expense transactions.
37130 is the balancing entry.
Go to Accounts Payable > Common > Vendors > All Vendors
Select Vendor PVND000001
Expand Financial dimensions fast tab
999 is set on Fund financial dimension that’s why it is appearing on first attribute of ledger dimensions of two Subledger journal entries above.
Go to General Ledger > Setup > Posting > Posting definitions
There is no matching account number specified for Matching criteria on Posting defintions form that’s why for every expense account, debit entry should be generated. We set one generated entry as “Same” and the other generated entry as “Balancing” on Generated debit/credit drop down.
“Same” means that if there is any transaction is credit against the account i.e. specified on the Matching criteria then generated entry will be credit and if the transaction is debit against the account i.e. specified on the Matching criteria then generated entry will be debit. In this case, 36360 is generated entry as a result of expense account transaction (Purchase Order transaction) define on Purchase Order line distribute amounts form. 36360 is debit because we set “Same” in Generated debit/credit drop down and as already discussed above all expense transactions are debit transactions.
“Balancing” means that if the other entry is debit then the balancing entry will be credit. So in this case, 37130 is the balancing entry of 36360 that’s why 37130 is recorded as credit entry on Subledger journals.
Go to General Ledger > Setup > Posting > Transaction posting definitions
Posting defintion PREnc was set on Transaction posting definitions form that’s why “PREnc” posting definition was active and Subledger entries are generated according to this posting definition.