Answer Posted / dj
Accounting for P2p can be classified into 3 types, accounting for Inventory items, accounting for Expenses, Accounting for Assets, below are the accounting entries.
1) For Inventory items
When you create a receipt
Receiving inventory account Debit
To Accrual account credit
When you run the receiving transaction processor job
Inventory Valuation account Debit
To Receiving inventory account
When invoice is matched to PO
Accrual/Ap accrual account Debit
To Liability account credit
When Payment is issued
Liability account Debit
Cash/Bank Clearing credit
When payment is cleared (reconcilation)
Cash/Bank clearing account Debit
To Bank/Cash account
When items are transferred from inventory to the department requesting the items
Expense account Debit
To Inventory valuation account
Here after all the account getting knocked off, what remains is
Expense account Debit
To Cash/Bank Account Credit
2) Accounting for Expenses
When creating a receipt
Receiving inventory account Debit
To Accrual/Ap accrual account credit
When the receiving transaction processor job is run
Expense Account Debit
To Receiving inventory account
When Invoice is matched to PO
Accrual/Ap accrual account debit
To Liability account credit
When Payment is issued (clearing)
Liability account Debit
Cash/Bank Account clearing credit
When Cleared from Bank (reconcilation)
Cash/Bank account clearing
Cash/Bank account
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