Allocation Rules: To Create an Allocation Rule That Uses a Fixed Ratio (Percentage)

In this activity, you will learn how to create an allocation rule in which a percentage is used to distribute amounts among accounts and subaccounts.

Story

Suppose that the RETAIL and SWEETEQUIP branches of the SweetLife Fruits & Jams company do not have finance departments. Accountants of the HEADOFFICE branch are responsible for preparing the financial statements, paying bills, billing customers, and performing similar tasks. At the end of each month, the salaries of the HEADOFFICE finance department should be distributed between the HEADOFFICE, RETAIL, and SWEETEQUIP branches with the following percentages: 50%, 15%, and 35%.

Acting as an administrator, you need to define an allocation rule that will distribute the posted amount for the Finance department between these three branches.

Configuration Overview

For the purposes of this activity, the Subaccounts feature has been enabled on the Enable/Disable Features (CS100000) form. On the Segmented Keys (CS202000) form, the SUBACCOUNT segmented key has been defined according to the company's business needs. For details, see Subaccounts: Implementation Activity.

Process Overview

On the Allocations (GL204500) form (the Allocation tab), you will specify the general settings for an allocation rule. Then, on the Source Accounts and Destination Accounts tabs of this form, you will specify the accounts and subaccounts for the rule.

System Preparation

Before you start configuring the allocation rule, you need to sign in to a tenant with the U100 dataset preloaded. Sign in as an administrator by using the following credentials:

  • Username: gibbs
  • Password: 123

Step 1: Specifying General Settings for an Allocation Rule That Uses Percentages

To begin creating an allocation rule that distributes amounts by percentages, do the following:

  1. Open the Allocations (GL204500) form.
  2. On the form toolbar, click Add New Record.
  3. In the Description box of the Summary area, type Salaries for the Finance department.
  4. In the Branch box, select HEADOFFICE.
  5. On the Allocation tab, in the Start Period box, select 01-2023.
  6. Leave the End Period box empty.
  7. Make sure that the Recurring check box is cleared.
  8. In the Allocation Method box, make sure the By Account PTD option is selected.

    The period-to-date amount will be distributed during the allocation process.

  9. In the Distribution Method box, select By Percent.

    With this option selected, you have to specify the percent that is distributed to each account–subaccount pair.

  10. In the Allocation Ledger box, select ACTUAL.
  11. In the Source Ledger box, select ACTUAL.
  12. In the Last Revision Date box, leave the current date, which the system has inserted by default.

You have specified the general settings for the allocation rule; you will now proceed to specifying source and destination accounts and subaccounts for the rule.

Step 2: Specifying Accounts and Subaccounts for the Allocation Rule

To specify the accounts for the rule, while remaining on the Allocations (GL204500) form, do the following:

  1. To specify the source account from which the allocated amount will be deducted (which in this case is the salaries and wages account of the head office), on the Source Accounts tab, click Add Row, and specify the following settings in the added row:
    • Branch: HEADOFFICE
    • Account: 69500
    • Subaccount: 000-FIN
    • Percentage Limit: 100.00

      This indicates that the full amount will be distributed during the allocation process.

  2. To specify the first destination account–subaccount pair to which the amount will be allocated (for the head office branch), on the Destination Accounts tab, click Add Row, and specify the following settings in the added row:
    • Branch: HEADOFFICE
    • Account: 69500
    • Subaccount: 000-FIN
    • Weight/Percent: 50
  3. To specify the second destination account–subaccount pair to which the amount will be allocated (for the retail store branch), click Add Row, and specify the following settings in the added row:
    • Branch: RETAIL
    • Account: 69500
    • Subaccount: 000-FIN
    • Weight/Percent: 15
  4. To specify the third destination account–subaccount pair to which the amount will be allocated (for the equipment sales center branch), click Add Row, and specify the following settings in the added row:
    • Branch: SWEETEQUIP
    • Account: 69500
    • Subaccount: 000-FIN
    • Weight/Percent: 35
  5. Click Save on the form toolbar.

You have defined a rule that will distribute the amount posted to the salaries and wages account of the head office branch for the Finance department among the three branches in the system.