Example: Allocating Expenses Using Fixed Amounts and Remainders

This example shows how fixed amounts and remainders can be used to distribute an expense to different accounts.

Chart of Accounts

You could set up an allocation account 99870 where unit code 1 is accessible and holds the department numbers for your company.

Chart of Account Allocations

You can then use the Chart of Account Allocations form to allocate the expense of the electric bill by department, based on amounts that you define. You would set up the Chart of Account Allocations form to contain these sequences and values for account 99870, unit code 1:

Allocation Account 99870

Sequence	Basis Type	Basis Rate	Distribution Account	Unit Code 1
1	Amount	100.00	51551	100
2	Amount	200.00	51551	300
3	Remainder	0	51551	500

In this rule, sequence 1 distributes the first $100 of the expense to department 100, using the distribution account 51551. Sequence 2 distributes the next $200 to department 300, and sequence 3 distributes whatever remains of the expense to department 500. I

Journal Entries

This is the original journal entry for the expense:

Account	Debit	Credit	Comment
99870	600.00		Initial entry to allocation account
2000		600.00

This is the allocation entry that is generated during ledger posting:

Account	Unit Code 1	Debit	Credit	Comment
99870			600.00	Offset to initial entry
51551	100	100.00
51551	300	200.00
51551	500	300.00

If the original journal entry was for $500, the first two distributions would be the same, but Department 500 would be allocated the remainder of $200.

If the original journal entry was for $50, Department 100 would be allocated all of the $50 expense.