You can match a prepayment to a purchase order or receipt. The accounting entries for Item distributions on a matched prepayment typically debit a prepayment account that Payables provides. However, during prepayment entry you can override any account that Payables defaults or builds.
Payables does not create an encumbrance entry for the prepaid amount when a prepayment is matched to a purchase order.
The match is treated like a reservation of the quantity billed. Payables does not calculate the invoice price variance or exchange rate variance at this point. Furthermore, you cannot change the unit price during the prepayment match to purchase order. A final match to the purchase order is not allowed either. When the matched prepayment is applied to an invoice, Payables reverses the matched quantity on the prepayment to reflect the balance of the total quantity matched.
The following example illustrates a prepayment application to a purchase order: You contract to attend a $5,000 trade show and the show requires a prepaid deposit of $1,000. Enter a purchase order for: quantity 5,000, unit price one, unit of measure each, currency USD. Match a prepayment deposit of $1,000 to the purchase order. You get an invoice for $5,000 and enter the invoice amount as $5,000. Match the invoice to the purchase order, and then apply the prepayment.
After you have completed invoice entry and the prepayment application, in the Invoices window you will see that the invoice amount is $5,000 and the prepaid amount is $1,000.
Applying the invoice to the prepayment reverses the prepayment from the purchase order, resulting in a net match of $5,000. The prepayment application ensures that you don't overpay the trade show fee.
Payables does not create an encumbrance entry for the prepaid amount when a prepayment is matched to a purchase order.
The match is treated like a reservation of the quantity billed. Payables does not calculate the invoice price variance or exchange rate variance at this point. Furthermore, you cannot change the unit price during the prepayment match to purchase order. A final match to the purchase order is not allowed either. When the matched prepayment is applied to an invoice, Payables reverses the matched quantity on the prepayment to reflect the balance of the total quantity matched.
The following example illustrates a prepayment application to a purchase order: You contract to attend a $5,000 trade show and the show requires a prepaid deposit of $1,000. Enter a purchase order for: quantity 5,000, unit price one, unit of measure each, currency USD. Match a prepayment deposit of $1,000 to the purchase order. You get an invoice for $5,000 and enter the invoice amount as $5,000. Match the invoice to the purchase order, and then apply the prepayment.
After you have completed invoice entry and the prepayment application, in the Invoices window you will see that the invoice amount is $5,000 and the prepaid amount is $1,000.
Applying the invoice to the prepayment reverses the prepayment from the purchase order, resulting in a net match of $5,000. The prepayment application ensures that you don't overpay the trade show fee.
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