Monday, May 20, 2019

Correct the Number of Periods and Amounts of an Amortization Schedule for a Bill Posted in a Closed Period


Step 1: Create the Amortization template

1. Navigate to Lists > Accounting > Amortization Templates > New
2. Name = Straight-line
3. Type = Standard
4. Method = Straight-line, by even periods
5. Term Source = Transaction Date
6
. Amortization Period = 12
7. Add a Deferral Account
8
. Add a Target Account
9
. Click Save 

*Amortization template = Straight-line is created

Step 2: Create a Vendor Bill

1. Go to Transactions > Purchases/Vendors > Enter Bills
2. Add a GL Account amounting to $12,000 > Select the Amortization Template= Straight Line created in Step 1
3. Date = 08/01/2013
4. Period = Aug 2013
5. Add Amortization Start Date = 10/15/2013
6. Add Amortization End Date = 10/14/2014

7. Click Save

*Bill #123 is created
-Amortization Schedule #1 is created
-The Amortization schedule has 13 periods dividing the Total Bill amount into 13 equal amounts which is $923.08 starting from Oct 2013
and ending in Oct 2014.

Step 3: Close the Accounting Period Aug 2013

1. Navigate to Setup > Accounting > Manage Accounting Periods
2. Click on the Checklist icon for Aug 2013
3. Perform all Period Close tasks to close the period

Step 4 : Post the Amortization  Journal Entries

1. Navigate to Transactions > Financials > Create Amortization Journal Entries
2. Select Posting Period Oct 2013
3. Select Transaction Type Bill
4. Mark the Select box for Bill #123
5. Click Create Journal Entries button
Note: Journal Entry #567 is created with posting period Oct 2013 and amounts to $923.08

Solution:

Step 1: Delete the Amortization Journal Entry that recognized the first Amortization since the amount is incorrect.
1. On Amortization Schedule #1 > Click on the Journal Entry #567
2. Click Edit and Go to More Actions > Click Delete

Step 2. Navigate to Setup > Accounting > Accounting Preference > General tab > Amortization section :  check the box "Allow Users to Modify Amortization Schedule" > Click Save
  
Step 3. Edit the Amortization Schedule to correct the # of recurrence and the Amortization amounts
1. Open the Amortization schedule #1 from the Bill or by going to Lists > Accounting > Amortization Schedules > Click Edit on Schedule #1
2. Go to Line #13 for Period Oct 2014 and Click on Remove button
3. Adjust the Amounts on each periods starting from Oct 2013 up to Sep 2014 to show $1000.00
4. Click Save

Step 4. Post the first Amortization Journal Entry
1. Navigate to Transactions > Financial > Create Amortization Journal Entries
2. Select Posting Period Oct 2013
3. Select Transaction Type Bill
4. Mark the Select box for Bill #123
5. Click Create Journal Entries button
*The JE posted to Oct 2013 now amounts to $1000.00

Notes:
1. The Amortization Start Date and Amortization End Date on the transaction determines the actual number of periods on the Amortization Schedule. Even if we set the Amortization period to 12 but entered an Amortization start and Amortization end date that will consist of 13 periods, the latter will prevail.

2. User can no longer edit the amount of the posted Amortization Journal Entry, we can delete it or just adjust the amounts of the succeeding periods on the Amortization Schedule to complete the amortization.

3. User can no longer edit the Amortization Start and Amortization End Date on the vendor bill regardless if is posted in a closed period or an open one.

 

 

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