Versions

AM10 for SQL and Express (and higher versions)

Module

AP

Question

We have a new vendor from overseas that we need to pay in advance before they ship our orders. We want to debit our Inventory In-transit account while the shipment is in transit. How do I do this?

Answer

Perform the steps below:

1. Configure the following settings and values in Vendor Maintenance for the new vendor:

  • The vendor is not set up for AP/PO Matching and Accrue Received Goods in the Settings tab.
  • The Prepayment account ID is the In-transit Inventory account while the account ID in Reference Accounts is the Inventory account in the GL Accounts (1) tab.

2. Create a prepayment invoice for the vendor using the Prepayment Transactions function. Then, print a check for the prepayment invoice to pay the vendor in advance. The Print Computer Check function will create the following journal entry:

  • DR: In-transit Inventory
  • CR: Cash-in-Bank

3. When the goods arrive, receive the goods through the Received Goods function. No journal entry is created since the vendor is not set to accrue received goods.

4. Post the AP invoice for the received goods using the AP Invoice Transactions function and apply the prepayment. This will create the following journal entry:

  • DR: Inventory
  • CR: In-transit Inventory