Entering Invoices

When an invoice is entered, it may have associated with it a Customer Discount, a Freight charge, and/ or Sales Tax. (Note that the Customer Discount is above and beyond any discount the customer may take due to the terms of the invoice.) There are three ways that you can represent this on an invoice; each method is described below.

Example 1:

The Customer Discount, Freight, and Sales Tax are lump sums that should be posted to the standard accounts for those items (i.e., the Customer Discount and Freight Out accounts in the Parameters file, and the Sales Tax liability account in the Sales Tax District file for the appropriate sales tax code).

The invoice itself has the following items on it:

Invoice Subtotal: $1000.00 Customer Discount: $ 100.00 Freight Out: $ 50.00 Sales Tax: $ 7.85 Invoice Total: $ 957.85

This is accompanied by a single line item for the sale of $1000.00 of merchandise.

This transaction posts to General Ledger as follows:

Example 2:

The Customer Discount, Freight Out, and Sales Tax are lump sums that should be posted to their customary accounts, but the customer prefers to see them itemized as line items on the invoice.

The invoice itself has the following items on it:

Invoice Subtotal: $1000.00 Customer Discount: $ 100.00 Freight Out: $ 50.00 Sales Tax: $ 7.85 Invoice Total: $ 957.85

This is accompanied by the following line items:

Merchandise: $1000.00 Customer Discount: $ 100.00- Freight Out: $ 50.00 Sales Tax: $ 7.85

This invoice posts exactly like the invoice in Example 1. Since the discount, freight, and sales tax were entered on the invoice itself, the system ignores the discount, freight, and tax line items. They are called “memo” line items, and exist only to be printed on the invoice. Notice that the discount line item is a negative amount; invoice line items are normally credit amounts, so the sign of the amount on an invoice line item must be reversed if the line item is a debit.

Example 3:

You have an invoice where the Customer Discount, Freight Out, and Sales Tax should be posted to accounts that are not their standard account numbers.

The invoice itself has the following items on it:

Invoice Subtotal: $ 957.85 Invoice Total: $ 957.85

This is accompanied by the following line items:

Merchandise: $1000.00 Supplies Discount: $ 75.00- Customer Discount $ 25.00- Special Freight: $ 50.00 Special Sales Tax: $ 7.85

This transaction posts to General Ledger as follows:

Notice that the system will take the account numbers for the discount, freight, and tax from the line items using this method. This is because no discount, freight, or sales tax was entered on the invoice itself.

NOTE: You can “mix and match” using the invoice itself or a line item to express Customer Discount, Freight, and Sales Tax. In other words, you can enter the Customer discount and Sales Tax on the invoice itself, and enter a Freight line item; or, you can enter Sales Tax on the invoice itself, and enter a Freight line item; or, you can enter Sales Tax on the invoice and Customer Discount and Freight line items, and so forth. Any combination may be used. If an amount is entered on the invoice itself for any of these three items, the amount is posted to the customary account for that item and any corresponding line item is ignored. Conversely, if there is no amount on the invoice itself for one of these three items, any corresponding line item is posted to the account specified on the line item.