Creating a journal entry

Hello,

How do I enter a journal entry for an accounts payable?

For example, if I owed $1000 to ABC company, how would I record that? I don’t see any accounts for Accounts payable to choose.

Thanks

Go to Settings and under Chart of Accounts you can create the account under liabilities.

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Thanks tony! I guess I have to create all the types of accounts myself? I don’t see any accounts like accounts recievable, cash, salaries expense etc…

System accounts will appear in the Chart of Accounts for Accounts Receivable, Accounts Payable, Wages & Salaries, etc if you enable the applicable modules. If you prefer to use journal entries to account for accounts payable and accounts receivable then you will need to create your own accounts. If you use payroll, go to Settings to create Payslip Items.

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I’m just planning on using this software to do double entry journal entries of all my income and expenses. Is the easiest way to do this in the “Journal Entries”?

Also would you know how to make an entry for the following scenario?

If 123 company was to start the manufacturing process, they would need a deposit of 40% from abc company.

I was thinking along the lines: debit Inventory and credit accounts payable? That seems wrong though to me since I haven’t recieved the goods yet since it hasn’t been manufactured yet

Thanks for all the help in advance. I’m still new to accounting and currently taking an accounting course, which is why I have all these questions

You can review the guides to decide if you should use specific modules instead of journal entries - Choosing which modules to enable

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Thanks that helps a lot!

Would you happen to know the answer to my previous question?
Do you know how to make an entry for the following scenario?

If 123 company was to start the manufacturing process, they would need a deposit of 40% from abc company.

I was thinking along the lines: debit Inventory and credit accounts
payable? That seems wrong though to me since I haven’t recieved the
goods yet since it hasn’t been manufactured yet

If you have a bank account you need to set it up under Cash Accounts, record the money received and allocate it to a liability account.

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Who is making these accounting entries, company 123 (the seller) or company abc (the buyer). Your posting was not clear.

Also, if you are going to make or receive payments, you will need to enable Cash Accounts and create one or more accounts. You cannot spend or receive money in Journal Entries in Manager.

The buyer (company abc) is the one making the accounting entries.

How would company abc write a double entry journal for the following scenario:

  • Company 123 (seller/supplier) needs a 40% deposit/advance payment from company ABC (buyer) to start the manufacturing process of granite counter tops.
  • For this example, lets say the 40% = $4000.
  • Company ABC says ok and wire transfers the $4000 so that company 123 can start the manufacturing process of granite counter top.

How would I record this in a double entry journal?
Which accounts would be debited, and which accounts would be credited?

Hope that clarifies my question a bit better.


From my understanding this entry would be a bit different than a regular purchase of inventory since company ABC (buyer) has not yet reccieved the goods, but has already paid 40% up front.

Thanks to some recent changes in Manager (see [16.7.73] Categorization against customer and supplier accounts more intuitive), this is easier than it used to be, no longer requiring an Advanced deposits account.

Just Spend Money from a cash account and allocate the transaction to Accounts payable. When the subsidiary account box appears, select the supplier. Do not enter an invoice, because you do not officially have one yet. Enter the deposit amount.

This will create or add to the Supplier credits asset account, and Manager will know which supplier the credit is with. When the supplier invoices you, enter the purchase invoice and Manager will automatically apply the deposit to the invoice, zeroing out Supplier credits (unless there were additional deposits) and show the balance due.

Notice that nothing is entered into any inventory account until the purchase invoice arrives. Manager does not yet have the ability to track inventory items on order versus in production versus in stock. When the warehousing module rolls out, it will.

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This is good. I’ve just had this exact scenario and was tossing around which way to do it :slight_smile:

The ONLY problem I see with it though, is by not being able to allocate it to something in particular, if you purchase something else from them in the mean time and enter a purchase invoice for that, then the credit will be applied to that invoice first but it belongs to the first order. (I am purchasing several different items and they each have different delivery time frames.

The other way I was thinking of dealing with it was to create a Purchase Invoice from their quote and allocate payment directly to it. Then once the final invoice comes in I could amend the quote/invoice number (if they don’t already coincide).

In my situation I got three quotes from them, am acting on two, each need 50% deposit. They will be delivered several weeks apart.

It would be bad accounting practice to enter a purchase invoice against a quote unless the quote is a binding offer which you have accepted in full. Your payment of the deposit then completes the necessary elements of a contract: offer, acceptance, and consideration. In such a situation, it is the contract, not any supplier’s sales invoice, that creates the obligation. Therefore, you want to be sure you have not just ordered some elements from a list of potential items, and you probably need corroborating written correspondence, such as a binding purchase order from you. Then, what you describe would be appropriate, as your deposit would be in partial payment of the obligation.

In such a case, go one step further than I described in my last post and select the purchase invoice number when spending money instead of just the supplier.

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To track your separate deposits you could use

(A) You could create each purchase using modified Supplier name - XYZ (1) and XYZ (2) - This way the different Invoices & Payments would be kept separate

(B) use the new feature

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