Invoice Prepayments: Generated Transactions
When you release a prepayment, the system generates a GL transaction to update the involved asset accounts with the prepayment transactions. The prepayment includes all the information the system needs to generate the transaction.
The following two accounts are usually involved:
- The AR account specified in the Prepayment Account box on the GL Accounts tab of the Customers (AR303000) form for the customer. This account is filled in automatically in the AR Account box on the Financial tab of the Payments and Applications (AR302000) form for the prepayment.
- The cash account specified in the Cash Account box in the Summary area of the Payments and Applications form.
You may record customer prepayments to a designated AR account or to the same AR account to which payments are recorded. In the latter case, the system will generate a GL batch with transactions that are similar to payment transactions. For details, see Invoice Payments: Release of Payments.
If you record customer payments and prepayments to separate AR accounts—that is, for the customer, the AR Account and Prepayment Account boxes contain different accounts on the GL Accounts tab of the Customers form—the following prepayment transactions will be recorded to the general ledger when the prepayment is released.
| Account | Debit | Credit |
|---|---|---|
| Cash account | Prepayment amount | 0.00 |
| Accounts Receivable account for prepayments | 0.00 | Prepayment amount |
You can view the batch details by clicking the link in the Batch Nbr. box on the Financial tab of the Payments and Applications form.
If you have recorded bank charges for the payment, the system generates the respective transactions and includes them in the batch with the payment transactions. For details on bank charge transactions, see Finance Charge Transactions.
In addition to prepayment transactions that update the asset accounts, the batch may contain transactions generated by application records that were released along with the prepayment. For details, see Invoice Payments: Release of Application Records.
Batch Generated for a Partially Applied Prepayment
When you release a partially applied prepayment, the GL batch may contain, in addition to prepayment transactions, transactions generated by its application records.
If you record prepayments to a designated AR account, which is usually different from the AR account where outstanding documents are recorded, the following prepayment transactions will be recorded to the general ledger when the prepayment is released.
| Account | Debit | Credit |
|---|---|---|
| Cash account | Prepayment amount | 0.00 |
| Accounts Receivable account for prepayments | 0.00 | Prepayment amount – paid amount |
| Accounts Receivable account for invoices | 0.00 | Paid amount |
For details on the other application transactions, see Invoice Payments: Release of Application Records.
Batch Generated for a Fully Applied Prepayment
If you record prepayments to a designated AR account that is different from the AR account where outstanding documents are recorded, and you release a fully applied prepayment and its application records, the system records the prepayment amount to the AR account specified for the applied outstanding documents. The following transactions are recorded to the general ledger when the fully applied prepayment and its application records are released.
| Account | Debit | Credit |
|---|---|---|
| Cash account | Prepayment amount | 0.00 |
| Accounts Receivable account for invoices | 0.00 | Prepayment amount |
When you release a fully applied prepayment, the GL batch may contain transactions generated by the prepayment's application records, in addition to prepayment transactions. For details on application transactions, see Invoice Payments: Release of Application Records.
Batch Generated for a Reversed Application to an Invoice
When you release a reversing entry created by the system when you reverse application of a prepayment to an invoice, the system generates the following GL transaction.
| Account | Debit | Credit |
|---|---|---|
| Customer deposit | 0.00 | Prepayment amount |
| Accounts Receivable | Prepayment amount | 0.00 |