Divisionalized accounting impact on entry functions
If you are implementing a fully divisionalized accounting system, transactions update GL at the divisional level, rather than the company level. These entry functions are impacted:
- Vendor Invoice Center Entry
With the exception of purchase order costing, AP transactions are posted against the division number that is specified on the transaction screen. The Division # field initially defaults with the division from Vendor Setup, but can be overridden. Debit memos, credit memos, and reversals are posted to the division on the original invoice to which they are applied.
When you cost multiple purchase orders on one invoice, the division number of all purchase orders must be identical. Allocating an invoice to more than one division is not permitted. The division number of the first purchase order costed is used for all purchase orders subsequently entered against an invoice. The division number is defaulted from the Product Warehouse Description Setup record.
However, the division on the purchase order header may be different from the divisions to which the purchase order is costed. For example, a purchase order has been billed to the central warehouse, which is in division 1, and the merchandise was shipped to the branch warehouse, which is in division 2. The following journal entries are made when the merchandise is received:
DR DR Inventory Div 2 1200.00 Uninvoiced Inventory Div 2 1200.00 The invoice is received by division 1 and the following entries are made:
DR DR Uninvoiced Inventory Div 2 1200.00 Accounts Payable Div 2 1200.00 Interdivisional Div 1 1200.00 Interdivisional Div 2 1200.00 The AP control account in division 1 is updated for the payable amount. The offset is the amount that was credited to the Uninvoiced Inventory account when the merchandise was received in division 2.
The Interdivisional accounts are updated automatically for any transactions that cross divisions to keep the divisions in balance.
This same process applies to third-party addons and batch updating processed in Vendor Entry Batch Update Report.
- Vendor Apply Miscellaneous Credit Entry
This function allows you to apply a miscellaneous credit, which belongs to one division, to another division or divisions. For example, a miscellaneous credit of $100.00 belongs to division 1. It can be applied to invoices belonging to division 2 and division 3. The journal posting follows:
DR DR Accounts Payable Div 2 40.00 Accounts Payable Div 3 60.00 Interdivisional Div 1 100.00 Accounts Payable Div 1 100.00 Interdivisional Div 2 40.00 Interdivisional Div 3 60.00 - Vendor Entry Pay Invoices Due Report
When Vendor Entry Pay Invoices Due Report is run for a fully divisionalized accounting system, each AP transaction or invoice is checked to determine which division’s AP control account and cash account are updated, rather than the account codes set up on the Vendor Setup record. During Vendor Invoice Center Entry, the division number is specified on the transaction screen or from the purchase order header, if an invoice is costed. The bank number comes from Vendor Setup and is stored on the AP transaction.
The Pay Through Bank option in Vendor Entry Pay Invoices Due Report allows you to enter a specific bank number to pay these vendors. If this field is blank, the Vendor Setup bank numbers for individual vendors is updated. Use this option when multiple divisions share the same vendor, vendors and divisions are assigned with different banks, and you want to pay out of one bank. When this option is used, the Vendor Setup record's bank is not updated. Instead, the CR Bank Setup record for the indicated bank number is updated. In this example, three invoices are paid from three different divisions and a $50.00 credit is applied:
DR DR Accounts Payable Div 1 100.00 Interdivisional Div 1 100.00 Accounts Payable Div 2 60.00 Interdivisional Div 2 60.00 Accounts Payable Div 3 40.00 Interdivisional Div 1 40.00 Interdivisional Div 1 50.00 Accounts Payable Div 1 50.00 Interdivisional Div 1 150.00 Cash Account Div 1 150.00 You can apply miscellaneous credits automatically during Vendor Entry Pay Invoices Due Report. If you select Yes or Whole for the Take Misc Credits (Y)es, (N)o, (W)hole option, the division that each miscellaneous credit is attached to is credited.
When you run Vendor Entry Pay Invoices Due Report for multiple divisions, you cannot control which miscellaneous credits apply to a particular division. The vendor’s remittance is simply reduced by the amount of the miscellaneous credit. If you do not want miscellaneous credits to be posted across divisions, run Vendor Entry Pay Invoices Due Report for each division at a time.
If part of a miscellaneous credit is used to fully pay an invoice, a new miscellaneous credit is created during Vendor Entry Pay Invoices Due Report. This new credit retains the same division number as the original miscellaneous credit.
- Customer Transaction Entry
When you enter AR transaction types, a warehouse is not involved, so you can specify division numbers for each transaction posted. This includes all transactions except credit memos, debit memos, and reversals. In those cases, the division number from the original transaction is used. The division number is defaulted from the Customer Setup record, but can be overridden.
You must specify account codes with valid division numbers on the General Ledger Distribution window when a journal is opened. During update, divisional totals are calculated and offset postings are made to Interdivisional accounts for any differences between divisions. This example illustrates a journal entry for a transaction entered in Customer Transaction Entry:
DR DR Accounts Receivable Div 1 1200.00 Sales Div 1 750.00 Sales Div 2 450.00 Interdivisional Div 2 450.00 Interdivisional Div 1 450.00 - Customer Cash Receipt Entry
In a non-divisionalized accounting system, cash is posted to General Ledger based on the account code set up on the Customer Setup record. With fully divisionalized accounting, cash is debited against the division number of the bank that is accepting the cash. This bank number is set up on the CR Bank Setup record. The bank number on the Customer Cash Receipt Entry header defaults from the Customer Setup record, but can be overridden.
- Customer Entry Roll Balances Report
Before you calculate service charges, the Service Charge By options are verified in SA Administrator Options-Customers-Service Charges. If this option is set to By Division of By Ship To (Job), service charges are calculated on the balance per division and a service charge is assessed for any past due balance per division.
If this option is By All, a service charge is calculated on the customer’s balance, then on the totals of transactions sorted by job/ship to and on the totals of transactions sorted by division number. This may result in many service charge records being created.
- Product Warehouse Transfer Entry
Any inventory transferred across divisions in Product Warehouse Transfer Entry uses the interdivisional inventory transfer accounts based on the division number set up on the Product Warehouse Description Setup record.
- Product Entry Count Update Report
General Ledger postings are made to the division number specified on the Product Warehouse Description Setup record, which is specified on the report Options view.
- Product Adjustment Entry
The warehouse specified in the Update section for each product is used to determine which division number to assign to the entries.
- Sales Order Entry
The Division # Default From option in SA Administrator Options-Documents-Sales Orders-Entry Settings determines which division number to attach to an order. If you default the division number from the Customer Setup record, the division number of the customer entered on the sales order banner is stored on the order header. If you default the division number from the Product Warehouse Description Setup record, the division number of the warehouse entered on the sales order banner is stored. If you define divisions for each branch location, you would most likely set the Division # Default From option to Warehouse.
When you accept a payment from your customer, you must open a journal to record the transaction. The journal entry debits the cash account for the bank set up on the Product Warehouse Description Setup record and credits the OE Uninvoiced Cash Sales or OE Down payment account set up on the operator’s SA Operator-G/L Defaults record. The division credited depends on how the Division # Default From option is set.
For example, a customer makes a $100.00 purchase from your counter with these details:
Order type: Counter Sale (CS)
SA Administrator Option selection: Division # Default From = Customer
Warehouse = Main (Division 2)
Bank = 20040 (Division 1)
Since the bank is set up in Division 2, the Cash account in Division 2 is updated for the payment amount. The credit is posted to the division specified on the customer’s account, which is Division 1. The interdivisional accounts are used to balance the General Ledger per division. The General Ledger is updated in this manner:
DR DR Cash Div 1 100.00 OE Uninvoiced Cash Sales Div 1 100.00 Interdivisional Div 1 100.00 Interdivisional Div 2 100.00 If the Division # Default From option is set to Warehouse, the OE Uninvoiced Cash Sales account for Division 2 is credited. Since the Cash account is also in Division 2, postings to the interdivisional accounts would not have been created.
- Sales Entry Invoice Processing Report
The division number for each order is taken from the sales order header. As AR transactions are created, the General Ledger control account for the correct division is stored in the internal ARET transaction record.
As ARET records are created during Sales Entry Invoice Processing Report, some customers may have credit balances. A credit memo or miscellaneous credit is created. When the division number of the original invoice does not match the division number of the sales order, a miscellaneous credit is created for the division number from the order header.
- Purchase Transaction Entry
The division number of the ship to warehouse is stored on the purchase order header record when a purchase order is entered in Purchase Transaction Entry. When the purchase order is received, the division is updated.
- Purchase Receipt of Inventory Entry
When you perform Final Update in Purchase Receipt of Inventory Entry, the Product GL Distribution Setup balance sheet accounts are updated with the division on the purchase order header. The same division number is used for uninvoiced inventory, cost adjustments, etc.
- Transfer Entry
GL journals are not created during Transfer Entry, therefore, divisionalized accounts are not affected. However, the division number of the receiving warehouse is stored on the transfer header.
- Transfer Shipping Entry
When you ship products from one warehouse to another, General Ledger is updated by the value of the inventory transferred from the shipping warehouse. The receiving warehouse’s accounts and balances are not updated until the product is received. For example:
Transfer value: $200.00
Shipping warehouse: Midwestern (Div 1)
Receiving warehouse: Southeastern (Div 2)
Since the shipping and receiving warehouses are located in different divisions, General Ledger is updated in this manner:
DR DR WT Inventory In Transit Div 1 200.00 Inventory Control Div 1 200.00 - Transfer Receipt of Inventory Entry
When the transfer is received, General Ledger and Inventory Control accounts are updated for all divisions involved. To balance journal postings by division, the Product Warehouse Description Setup Interdivisional Inventory Transfer account is used.
General Ledger updating occurs in the same manner as non-divisionalized accounting. However, rather than the intercompany transfer account, the Interdivisional Inventory Transfer account for the proper divisions is used.
The General Ledger is updated in this manner:
DR DR Inventory Control Div 2 200.00 WT Inventory In Transit Div 1 200.00 Interdivisional Inventory Transfer Div 1 200.00 Interdivisional Inventory Transfer Div 2 200.00 If the transfer contains addons, the capitalized portion of the addon is posted to the Product Warehouse Description Setup Interdivisional account. The expensed portion of the addon is posted to the SA Company Setup Interdivisional account.