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 Overview

If you must make a payment against an invoice that is not received or entered in the Open Invoice file and a prepayment is posted using Manual Check and Payment Entry, you can apply the prepayment amount against the invoice balance when the invoice is entered using Accounts Payable Invoice Data Entry.

Prepaid invoices are applied to standard invoices using A/P Invoice Data Entry. When a prepaid invoice is encountered, the invoice number assigned to that specific prepayment in Manual Check and Payment Entry is entered in the Prepaid Invoice field. If a valid invoice number is entered, the prepayment amount is applied to the invoice balance automatically and you can proceed to distribute the net balance of the invoice to the general ledger accounts.

For example, if a $100.00 prepayment is made against a $500.00 invoice, and that prepayment is posted to the appropriate general ledger expense or asset accounts, only the remaining $400.00 should be distributed when the invoice is received and entered into the Open Invoice file. If the Prepaid Invoice field is not used, both the $100.00 prepayment and the $500.00 invoice amount are distributed, causing an overstatement of $100.00

 Before You Begin

To use an expense distribution table, the Enable Expense Distribution Tables check box must be selected in Accounts Payable Options and a table must be set up in Expense Distribution Table Maintenance.

 

To apply prepaid invoices

1. Select Accounts Payable Main menu > Invoice Data Entry.

2. Enter the vendor number, invoice number, and invoice date. To use an expense distribution table, enter a table code in the Exp Distribution Table field. For more information, see A/P Invoice Data Entry - Fields.

3. In the Prepaid Invoice field, enter the identifier assigned to the invoice when the prepayment was made.

4. In the Prepayment Information window, the Net Distribution Amount field displays the amount that must be distributed to the appropriate general ledger accounts. For more information, see Prepayment Information - Fields.

If the invoice identifier exists, the prepayment amount and associated information appear. The information displayed cannot be maintained for existing prepayment invoices.

If the prepayment invoice does not already exist, enter the new prepayment information in the Prepayment Amount, Prepayment Date, and Check Number fields. Click OK.

5. If the prepayment was a deposit for an asset purchase, perform the following:

1. In the Invoice Amount field, enter the total invoice amount, and then click the Lines tab.

2. In the G/L Account field, enter the deposit account used to apply the prepayment, and then enter the prepayment amount as a negative amount.

Note If an account is set up for posting invoices to the vendor in Vendor Maintenance, the first line defaults to the vendor's account number and the remaining balance. Delete this line.

3. In the next line, in the G/L Account field, enter the asset account, and then enter the total invoice amount.

4. In the Asset Template field, select the asset template to use to create assets in Sage Fixed Assets.

Note Sage Fixed Assets refers to the fixed assets product used with Sage 100.

6. In Invoice Data Entry, click Accept.

The prepayment amount is applied to the invoice.

Note For asset purchases, the Fixed Assets Import Status Report is printed when you update the Invoice Register. Use this report to verify assets were created correctly.

 

 Example - Distributing Invoice Balance

The net distribution amount for the invoice is adjusted to the invoice balance instead of the invoice amount. You must distribute the invoice balance depending on whether the original prepayment was posted against the prepaid expense account or directly to appropriate expense accounts.

 Example - If a Prepaid Expense Account was Used

If the original prepayment was posted against the prepaid expense account, you must first enter the negative amount of the original payment against the same prepaid expense account. You can then distribute the invoice amount to the appropriate direct expense accounts.

For example, if the prepayment amount is $1,000, and the invoice amount is $1,200,
$-1,000 is posted against the Prepaid Expense account and the $1,200 is posted against direct expense accounts.

The following is a recap of the general ledger postings for this example.

G/L Account	Debit	Credit
Expense Account(s)	1,200.00
Accounts Payable		200.00
Prepaid Expense	_______	1,000.00
	1,200.00	1,200.00

 

 Example - If a Direct Expense Account was Used

If the original prepayment was posted to a direct expense account, post any difference between the new invoice amount and the prepayment amount to the direct expense accounts. If the invoice amount and the prepayment amount are identical, no additional expense postings are required.

For example, if the prepayment amount is $1,000 and the invoice amount is $1,200, only the difference of $200 must be posted to direct expense accounts.

The following is a recap of the general ledger postings for this example.

G/L Account	Debit	Credit
Expense Account	200.00
Accounts Payable	______	200.00
	200.00	200.00

 

An invoice with an applied prepayment appears in the Aged Invoice Report and Trial Balance Report; it appears as a regular invoice with a payment applied. The invoice payment history provides the prepayment transaction in detail.

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