RECEIVABLES Module Basics Slideshow - Transactions, Reports, Journals, and Ledgers

1. RECEIVABLES Module - Basics Slideshow 2A

2. Contents • RECEIVABLES Module Overview • Transactions recorded in the RECEIVABLES Module • Displaying Inventory Summary • Printing Reports • Customer Aged Reports • The RECEIVABLES Journals • The Sales Journals Customizing the Sales Journal Window • Sales Invoice Styles • Entering Transactions in the RECEIVABLES Module • Recording a Sales Quote • Revising the Sales Quote Form • Converting a Sales Quote into a Sales Order • Producing a Sales Invoice from a Sales Order • Journalizing Sales Returns • The Receipts Journal • Journalizing a Receipt with Cash Discount • Journalizing a Partial Receipt with No Discount • Correcting a Journal Entry • Canceling an Invoice After Posting • The Customer Ledger • Adding a New Customer Record • Printing Reports

3. Transactions that Affect Accounts Receivable You would enter transactions concerning CUSTOMERS in the RECEIVABLES Module. Study the transactions that are recorded in the RECEIVABLES Module at the right. Click. Click to continue. Transactions that are Recorded in the RECEIVABLES Module • Cash Sales (cash, cheque or credit card) • Sales on account (credit). • Receipt for sales on account. • Deposit received for a future sale. • NSF payment received from a customer. • Customer account write-off.

4. Transactions that Affect the Accounts Receivable Account Major components of the Income Statement & Balance Sheet are updated when you enter transactions in the RECEIVABLES module. For example, Click. Sales transactions update REVENUE in the Income Statement and ACCOUNTS RECEIVABLE or BANK ACCOUNT(s) in the Balance Sheet. Click. SALES RETURNS & ALLOWANCES in the Income Statement affects INVENTORY in the Balance Sheet. INVENTORY will be discussed later in the text. Click. The Net Earnings in the Balance Sheet is updated according to the Net Income in the Income Statement. Click to continue. Income Statement Jan 01, 2022 to February 28, 2022 Balance Sheet as at February 28, 2022

5. The RECEIVABLES Module Window

6. Creating a Customer Ledger You may create a Customer Ledger for a customer that you expect to make more purchases in future. As you process transactions for the customer, the corresponding Customer Ledger is updated. To create a customer’s ledger, select ADD CUSTOMER in the Customers option on the RECEIVABLES start screen (see below). Click. Study what goes on the Address Page of the Receivables Ledger, then click the other tabs in consecutive order. Revenue Account – is the Sales account the goods or services are charged. Standard Discount – Discount that applies to each item the customer buys, not discount for early payment. Price List - Sage 50 supports 100 different price lists. Forms for the Customer – Choices are email or print. Early Payment Terms – Most companies allow 2% discount for payments within 10 days and net amount in 30 days (2/10 net 30). Produce Statements for the Customer – Check the box if you wish to produce statements for the particular customer. Synchronize with Microsoft Outlook – Option that will place the customer’s e-mail address in MS Outlook mailing address list. The text does not have an exercise for this feature.

7. Creating a Customer Ledger You may create a Customer Ledger for a customer that you expect to make more purchases in future. As you process transactions for the customer, the corresponding Customer Ledger is updated. To create a customer’s ledger, select ADD CUSTOMER in the Customers option on the RECEIVABLES start screen (see below). Click. Study what goes on the Address Page of the Receivables Ledger, then click the other tabs in consecutive order. This field would be used if the customer was exempt from the HST. An identification number would be given to the customer by the provincial and/or federal government. This is the tax code used with this client. Answer Yes or No.

8. Creating a Customer Ledger You may create a Customer Ledger for a customer that you expect to make more purchases in future. As you process transactions for the customer, the corresponding Customer Ledger is updated. To create a customer’s ledger, select ADD CUSTOMER in the Customers option on the RECEIVABLES start screen (see below). Click. Study what goes on the Address Page of the Receivables Ledger, then click the other tabs in consecutive order. Additional Information The fields in this window allow you to record additional information. If desired, you may display the information on any or all of the fields on a pop-up screen when the customer is selected in a transaction. Memo Import/Export You would check this box if you wish to allow the customer to import your quotes and invoice information through Sage 50. You may enter notes about the customer here. If your company uses the Perpetual Inventory System, you and your customer can coordinate the use of item numbers.. Most companies give each customer a credit limit. When the customer's balance is larger than its preset limit, a warning message box will appear when you try to post a new sale to the customer's account. Although a customer may have exceeded its limit, the company may opt to extend the credit without changing the credit limit on this page and sales to that customer can still be processed. Most companies give each customer a credit limit. When the customer's balance is larger than its preset limit, a warning message box will appear when you try to post a new sale to the customer's account. Although a customer may have exceeded its limit, the company may opt to extend the credit without changing the credit limit on this page and sales to that customer can still be processed. A check mark will display the notes in the Daily Business Manager.

9. How the RECEIVABLES Module Works There are two basic journals in the RECEIVABLES Module: SALES and RECEIPTS journals. The Sales Journal Sales invoices are created in the Sales Journal (see right). When you select a customer, Sage 50 Accounting finds the corresponding customer Receivables Ledger and uses the relevant information. Study how Sage 50 Accounting uses the customer Receivables Ledger when creating an invoice. Click to continue.

10. How the RECEIVABLES Module Works The Sales Journal (continued) In the Journal Entry for the invoice, ACCOUNTS RECEIVABLE is automatically debited if the Payment Method is Pay Later. Click. The ACCOUNT column defaults to the Revenue Account specified in the corresponding customer Receivables Ledger; however, you may change it if necessary. Click. To display information about taxes, click the Tax Summary icon. Click. Study the invoice and the resulting journal entry for this sale on credit. Click to continue.

11. Entering Sales Transactions in the RECEIVABLES Module Invoice Styles There are 3 invoice styles available in Sage 50 Accounting. The differences among the templates are in the detail portion of the invoice. Click Standard for Invoice Style now. STANDARD has the most number of detail columns. This template is best suitable for sales quotes, sales orders, and sales on credit. Click. RETAIL does not have some of the columns in Standard. This template is more appropriate for cash sales. Click. PROFESSIONAL includes only Description, Amount, Tax and Account columns, which makes the template more appropriate for professional service invoices. Click. Professional STANDARD RETAIL

12. Entering Sales Transactions in the RECEIVABLES Module (continued) Customizing the Sales Journal You can further customize your Sales Journal by clicking the Change Form Option for Invoice Icon (see arrow pointing at the right). Click. You would select the sales journal style, then select Customize Form. Click. If you click COLUMNS, Click. You can either use the default tabbing order (suggested) or you can customize the tabbing order (No.). You can then select the columns that you want included in the form and its title (in English or French); Title and Data Alignment. You can also select options for Border, Text style, Background, etc. See other options (see right). Click to continue.

13. Entering Sales Transactions in the RECEIVABLES Module (continued) • Payment Method Options • You need to specify the customer’s manner of payment in the Payment Method field on the invoice so Sage 50 Accounting would know which G/L asset account to debit. • Pay Later – used for credit sales. • Cash – used when cash is received at the time of sale. • Cheque - used when a cheque is received at the time of sale. • Pre-Authorized Debit (PAD) – used when a client signs an agreement to authorize an automatic transfer of funds to a business. This needs to be pre-arranged before you can use it. • Bank Debit Cd – used when a debit card is used by the customer to pay at the time of sale. • Credit Card – the credit card previously set up as credit card acceptable to company. There could be more than one credit card set up. • Click. Sage 50 Accounting automatically debits ACCOUNTS RECEIVABLE when Pay Later is selected, and debits BANK ACCOUNT when any of the other five is used. You will learn more about payments later. Click to continue.

14. Entering Sales Transactions in the RECEIVABLES Module (continued) • One-time vs. Regular Customers • There are basically two types of customers in Sage 50 Accounting: • Regular customer – one who buys more than once a year from your company. They are also referred to as a customer on file. This means that a customer subledger has been created with all the customer details as shown in the next slideshow (Slideshow 2B). • One-time customer – refers to a customer who is not likely to purchase from your company more than once. You may or may not create a customer subledger for this type of client. If you do, the client becomes a customer on file. • It is important to understand this concept at this point, because Sage 50 Accounting allows more Payment Method options to regular customers than one-time customers. Study the two illustrations at the right. • Click to continue. Regular Customer (on file) One-time customer

15. Entering Sales Transactions in the RECEIVABLES Module (continued) Recording a Sales Quote/Order A Sales Quote is issued to a customer upon receipt of an inquiry regarding availability and prices of merchandise or service. When the customer decides to purchase merchandise or service, a Sales Order is issued. An Invoice is sent with the delivery of merchandise or upon completion of service ordered. In Sage 50 Accounting, however, you can produce a sales invoice without a sales quote or a sales order, as in the case of a cash on delivery sale (COD). It is, however, important to keep on record sales orders so you can easily track undelivered merchandise. It is very important to remember: a sale has not occurred at the time you issue a sales quote or a sales order. You do not post a sales quote or a sales order; instead, you record it. Therefore, no journal entries are generated. Click the RECORD button at lower right corner. Study the resulting Sales Journal entry for either sales quote or sales order. Click to continue.

16. Entering Sales Transactions in the RECEIVABLES Module (continued) Creating a Sales Quote for Inventory Items Inventory Items refer to merchandise for sale (Service items are discussed in Chapters 2A and Chapter 8). Companies that sell merchandise usually keep track of the value of their merchandise (Inventory) using the Perpetual Inventory method. The other method, Periodic Inventory, is discussed in Appendix F and G which you can download from www.nelson.com/student. Click. Start from the RECEIVABLES Home Page and click Sales Quotes. Click Sales Quotes now. You would select the customer from the drop-down list. Notice the next Quote No. is automatically entered. Click. When the customer name is entered, the Tax Code, (revenue) Account and Early Payment Terms entered in the Customer Subledger appear. Click to continue.

17. Creating a Sales Quote for Inventory Items (continued) To enter the Inventory item number, double-click on the box under Item Number (see red arrow). Click at the red arrow now. The Select Inventory/Service window will appear showing the company’s Inventory items on file. You would double-click to select an item. Click. When the inventory item appears on the Sales Quote, observe the relevant information is filled in. Click. Once you enter the quantity ordered (see Order column), Sage 50 Accounting fills in the relevant information. Click. You may then continue entering the other Inventory items ordered, then click RECORD. Click. Study the pending sales orders reports that you can display/print at any time. Click to continue.

18. Entering Sales Transactions in the RECEIVABLES Module (continued) Converting a Sales Quote/ Sales Order to an Invoice When you receive the sales order on your sales quote, you may convert it into a sales order, by clicking the Convert box (see red arrow). Click. Notice that the Order No. is the same as the Quote No. The dates may be different. Click. Upon delivery, you can convert the sales order into an invoice. Click. Notice that the next available Invoice No. is applied. The Order/Quote No. is automatically entered. The date of the invoice should be the date of delivery. Also notice that the Invoice is posted (not recorded). Click to continue.

19. Converting a Sales Quote/ Sales Order to an Invoice (continued) Study the Sales Journal Entry and relate it to the Invoice details: Accounts Receivable = invoice TOTAL. Cost of Goods Sold and Inventory = (see INVENTORY SUMMARY for cost of each item) 5 Lap-BP @ $35 = $175.00 8 Suit-w/w L @ $31 = 248.00 9 Suit-w/w R @ $28 = 252.00 Cost of Inventory Sold = $675.00 HST Charged on Sales = HST total Sales = invoice SUBTOTAL Click to continue. Invoice Details

20. Journalizing Sales Returns • Customers return goods because they may have received: • the wrong style(s) or size(s), • damaged goods, or • goods in excess of their P.O. • The seller would normally send the customer a credit memo advising a decrease in the corresponding sales invoice amount.(GAAP: Objective Evidence) • In Sage 50 Accounting, sales returns are entered in the Sales Journal as a negative sale (see negative quantity). The invoice number of the original sales invoice is used with a prefix or a suffix to indicate that it is a sales return. • Study the negative sales invoice at the right. Note that taxes are negative and they apply only to the returned goods. • Click and study the Sales Journal Entry. • Click to continue.

21. How the RECEIVABLES Module Works (continued) The RECEIPTS Journal Study a cheque received from a customer for payment of an invoice. Click. Payments are recorded in the RECEIPTS Journal. The Receipts Journal consists of a cheque portion and an advice portion detailing the payment, just like the paper cheque from the customer. Click. When you select the customer’s name using the down-arrow button on the Receipts Journal, the customer’s unpaid invoices appear at the bottom of the journal. Click. You could then select the invoice(s) to which the payment is applied by clicking on the invoice(s). You may pay more than one invoice with one Receipts Journal entry. Click to continue.

22. The RECEIPTS Journal (continued) If a discount applies, depending on the terms of sale, it will appear in the Discount Available column. Click. You would TAB to the Discount Taken column, and Sage 50 Accounting will enter the discount amount automatically. Click. Sage 50 Accounting automatically calculates the Amount Received and Total receipts as you TAB to the corresponding column and enters the amount in the cheque portion. Click. Before posting, make sure to check your entry first by displaying the Receipts Journal Entry. Click tocontinue.

23. The RECEIPTS JOURNAL (continued) Journalizing a Partial Receipt with No Discount Although the payment may be within the discount period, a partial payment is normally not allowed a discount. So, if the payment shown in the previous screen is only a partial payment of Invoice 2256, you would simply enter the payment under Amount Received and no amount should be shown under Discount Taken. Click and study the Receipts Journal Entry. Click to continue.

24. The Daily Business Manager (DBM) The Daily Business Manager (DBM) window is very helpful for managing customer receivables. You can display it by clicking DBM at the top right corner (see red arrow below). Click DBM now and click each TAB to display the function of each tool, starting from RECURRING. The current MEMO tab displays items on or before the shaded date in the calendar. Click RECURRING, etc. Click to continue.

25. The Daily Business Manager (DBM) From Purchase Orders.Click to continue.

26. Correcting an Invoice or Receipt After Posting In the last slideshow, you learned how to ADJUST and REVERSE G/L journal entries. The same procedures may be used in Receivables invoices and receipts. Looking Up an Invoice/Receipt First, you need to find the invoice or receipt that you want to adjust or cancel. On a blank Sales/Receipt Journal, click the LOOK UP icon. The example at the right is looking up a receipt. You can use the same procedure to look up an invoice. Click the Look Up icon now. A search window will appear. You can search by entering a start and a finish date. Click. When the search result window appears, you would double-click the desired receipt. Click to continue. Looking Up an A/R Receipt Look Up a Receipt (CTRL+L)

27. Correcting Errors After Posting (continued) Canceling an Invoice/Receipt We will now reverse (cancel) an invoice, keeping in mind that the same procedure can be used to cancel a receipt. When the desired invoice is displayed, click the REVERSE INVOICE icon . Click the Reverse Invoice icon now. A Confirmation prompt will appear. Click YES. A Transaction Confirmation prompt will appear, indicating that the invoice was reversed successfully. Click OK. Study the resulting entries (original and reversal) in the All Journal Entries Report. To be able to view both original and corrected entries, you need to modify the report to include CORRECTIONS. Click to continue. Reversing (canceling) an A/R Invoice All Journal Entries Report Mar 31, 2022 Original entry Mar 31, 2022 Reversal

28. Correcting Errors After Posting (continued) Adjusting a Receipt/Invoice The adjustment feature allows you to correct transactions after they have been processed without having to record two entries in your company ledger. Sage 50 Accounting automatically reverses the original transaction and enters the corrected transaction in one step. In this example, you will learn how to adjust a receipt. The same procedure can be used for adjusting an invoice. Use the LOOK UP function to find the receipt (or invoice) you wish to adjust as shown in the previous slide. When the desired receipt displays, click the Adjust Receipt icon. The receipt (or invoice) gets into edit mode and you can change almost anything on the document, but not the customer name. Click to continue.

29. Printing RECEIVABLES Reports As in the COMPANY Module, the quickest way to produce reports in the RECEIVABLES Module is through the REPORT CENTRE. When you need to find the status of a particular customer’s account, you can display and/or print the Customer Aged Detail report. Click. The report shown at the right is a sample detail report. Study its contents.. Click to continue.

30. More… Go back to your text and proceed from where you have left off. Review this slideshow when you finish the chapter to better prepare yourself for the next chapter. Press ESC now, then click the EXIT button to close the slideshow. EXIT