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Topic Notes 4: Accounts Payable

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Topic Notes 4: Accounts Payable FNSACCT407B Set up and operate a computerized accounting system Topic notes 4: Accounts Payable Topic notes 4: Accounts Payable (I) Purchases Purchasing goods or services on credit (i.e. transactions relating to Accounts Payable) are recorded through the ‘Purchases’ module in MYOB. Purchases Credit Purchases Business receives Invoice Supplier The business returns goods previously bought on credit or there is an overcharge in a previous invoice from the supplier Business receives Credit note/adjustment note Supplier Invoice When the business has purchased goods or services ob credit, it receives an Invoice from the supplier (Accounts Payable), the Invoice is recorded as a Bill in MYOB. Credit note/adjustment note When the business returns goods to a supplier or when there is an overcharge in a previous invoice (bill), the business receives a credit note/adjustment note from the supplier. It is also recorded as a Bill but with –ve (negative) figures. Quotes and orders Bills are recorded in the journals and ledger accounts. Quotes and orders will not be recorded in the journals and ledger accounts until they are changed to bills. In other words, quotes and orders are kept on the side until the actual invoices have been received and recorded as bills. Examples of transactions - Purchasing goods/stock/inventory on credit - Returning goods/stock/inventory previously purchased on credit - Acquiring services on credit - Purchasing fixed assets and items used in the business such as stationery on credit. - Payments to Accounts Payable (Cash payments are usually recorded through the Banking module, but payments to Accounts Payable are recorded through the ‘Pay Bills’ in the Purchases module.) _____________________________________________________________________________________________________ SakaiSharePoint/CertIVonline/FNSACCT407B/version1/9.5.09 Page 1 of 5 FNSACCT407B Set up and operate a computerized accounting system Topic notes 4: Accounts Payable (II) Subsidiary Ledger In Accounting 1, you have learnt the Subsidiary Ledger and the importance of reconciling it with the Control account in the General Ledger. Example The business purchased furniture on credit $450 plus GST $45 from Supplier A. The accounting for this transaction in the General Ledger is: debit Furniture $450; GST paid $45 and credit Accounts Payable $495 The subsidiary ledger has to be updated accordingly with $990. If you are recording this manually, you have to record the figures in the General Ledger and Subsidiary Ledger: General Ledger Subsidiary Ledger Accounts Payable Control Supplier A 495 495 Furniture 450 GST paid 45 When you record the same transaction in MYOB through the ‘Purchases’ module, you have to select the supplier’s card and the transaction is recorded as shown: General Ledger Subsidiary Ledger (Supplier’s card) Accounts Payable (Trade Creditors) Supplier A 495* 495 Furniture 450 GST paid 45 The $495 recorded in Supplier A’s account in the Subsidiary Ledger will update the Accounts Payable (Trade Creditors) account in the General Ledger automatically (495*). Any transactions involving Accounts Payable are recorded through the Subsidiary Ledger using the suppliers’ cards. Unlike in the manual system, there is no need to record the figure in the Accounts Payable (Trade Creditors) account in the General Ledger as MYOB will update it for you – with ONE EXCEPTION: The only time when you have to record the figure in both the supplier account and the General Ledger account is when it is a Historical Purchase. _____________________________________________________________________________________________________ SakaiSharePoint/CertIVonline/FNSACCT407B/version1/9.5.09 Page 2 of 5 FNSACCT407B Set up and operate a computerized accounting system Topic notes 4: Accounts Payable If the business is changing over from a manual accounting system to a computerized accounting system, it may have existing balances in the General Ledger and Subsidiary Ledger for Accounts Payable. These are known as Historical Purchases in MYOB. You have to record the figures in both ledgers as the General Ledger is not updated with figures from the Subsidiary Ledger in this instance. Example A Star has changed over from a manual accounting system to a computerized accounting system on 1 March 2009. On that date, the balance in the Accounts Payable Control account is $5,000 which consists of two individual accounts payable: Alfa $2,200 Beta $2,800 General Ledger You have to record the $5,000 in the Trade Creditors account in the General Ledger through Setup balances account opening balances Subsidiary Ledger Then you have to record the individual balances through EITHER Setup balances supplier balances add purchases OR Setup Easy Setup Assistant Purchases Historical Purchases Add Purchases General Ledger Subsidiary Ledger Accounts Payable (Trade Creditors) Alfa $5000 $2200 Beta $2800 Now you are ready to work through Chapter 4 of the book. The points in the next section can be useful as you are working through the chapter. _____________________________________________________________________________________________________ SakaiSharePoint/CertIVonline/FNSACCT407B/version1/9.5.09 Page 3 of 5 FNSACCT407B Set up and operate a computerized accounting system Topic notes 4: Accounts Payable Useful points Terminology Alternative terminology used: In MYOB, different terms are used in different areas for Accounts Payable Area Terminology for Accounts Payable Accounts List Trade Creditors Setting up cards Suppliers Reports Payables Page 104 1. MYOB uses electronic cards Tulloch Pty Ltd Discount days: 10% 7 should be 10% 7 days net 30 days This means the business can receive a 10% on the invoice amount if it is paid within 7 days of the invoice date and any unpaid amount is due within 30 days of the invoice Page 107 When you change the Quote to Order, there should be NO tick in the Tax Inclusive box. Page 108 There is an error in the screen shot: Terms Net 30th after EOM INCORRECT On your screen, you should see Terms: 10% 7 net 30 (if you have set up the terms correctly in the supplier card) Take a moment to look at how the figures are calculated. As the Tax Inclusive box is not ticked, the $95.70 and the tax code GST would be interpreted by MYOB as $95.70 is the GST exclusive amount and 10% of that amount $9.57 will be added on. Hence, the total amount is $105.27. Page 124 &125 To get the report for ‘All Journals’ on Page 124 and 125 of your book, find the ‘Source Journal’ on the same Report Customization screen you were using. Select ‘All’ instead of Purchases, then click ‘Display’. Page 128 & 129 [Exercise 4.2] Prices are omitted from the orders: Order # Description 581 2 units x $500.00 plus GST 582 3 units x $300.00 plus GST 583 5 units x $800.00 plus GST 584 3 units x $200.00 plus GST Order # Description 585 5 units x $500.00 plus GST 586 4 units x $300.00 plus GST 587 2 units x $800.00 plus GST 588 4 units x $200.00 plus GST Page 130 & 131 [Exercise 4.4] _____________________________________________________________________________________________________ SakaiSharePoint/CertIVonline/FNSACCT407B/version1/9.5.09 Page 4 of 5 FNSACCT407B Set up and operate a computerized accounting system Topic notes 4: Accounts Payable - Prices are omitted from the orders. You should be able to find the prices as in Exercise 4.2. - Purchases of food supplies from Arkaroola Supplies P/L is GST FREE - Use the 5-2000 Purchases account for both purchases of food and laundry services _____________________________________________________________________________________________________ SakaiSharePoint/CertIVonline/FNSACCT407B/version1/9.5.09 Page 5 of 5 .
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