Accounting entries for purchase orders with destinations type expense, item type expense and with accrue on receipt option is true.
Sequence of actions and accounting entries
Action
Create, Approve, Reserve PO
Accounting entries
Budget a/c DR @ PO price (base + Non Recoverable Tax calculated for the (received quantity * PO line unit price))
Action
Invoice Validation after matching
Accounting entries
Recoverable Tax calculated for the (received quantity * PO line unit price) and Non Recoverable Tax calculated for the (received quantity * PO line unit price) DR @ tax amount
Action
Create Accounting for invoice
Accounting entries
AP Expense accrual a/c DR @ PO price excluding tax and tax DR @ tax rate separately
AP Liability a/c CR @ invoice price
REC Tax and Non Recoverable Tax calculated for the (received quantity * PO line unit price) CR @ tax amount
Action
Receive the PO
Accounting entries
Receiving Inspection a/c DR @ PO price (base + Non Recoverable Tax calculated for the (received quantity * PO line unit price))
AP Expense accrual a/c CR @ PO price (base+ Non Recoverable Tax calculated for the (received quantity * PO line unit price))
Action
Deliver the PO
Accounting entries
Expense Charge a/c DR @ PO price (base + Non Recoverable Tax calculated for the (received quantity * PO line unit price))
Receiving Inspection a/c CR @ PO price (base + Non Recoverable Tax calculated for the (received quantity * PO line unit price))
Budget a/c CR @ PO price (base + Non Recoverable Tax calculated for the (received quantity * PO line unit price))
Reference
Accounting Flow against Purchase Orders, Receipts and Matched Invoices.
Authors: Manighandan Venkatraman & Asha Ravada
