Purchases - Batch Entry
PURCHASES BATCH ENTRY OPTION IS TO RECORD PURCHASE INVOICES RECEIVED FROM TRADE SUPPLIERS FOR PURCHASES MADE BY THE BUSINESS.
THESE PURCHASE ENTRIES RECORD THE PURCHASE / EXPENSE INCURRED BY THE BUSINESS. SIMPLY CREATE THE PURCHASE TRANSACTION ENTRY FROM THE ACTUAL INVOICE RECEIVED FROM THE SUPPLIER.
THE TRANSACTION WILL RECORD:
- Supplier to whom the business now owes
- Type of Expense Incurred
- Amount Owing to the Supplier (Trade Creditors Account)
PLEASE NOTE: THERE IS NO ASSUMPTION OF PAYMENT OF THE INVOICE.
PURCHASES > BATCH ENTRY
This is the internal reference that will cross reference the physical invoice to the transaction entered on screen.
Date of issue of the invoice as displayed on the invoice, this should not be doctored.
Select a Supplier name from the list of Suppliers (F2) who issued the invoice to you.
Set up New Supplier during transaction entry
If the purchase invoice is from a new Supplier who does not already exist within the Supplier listing then simply type the Supplier name into the "Supplier" field.
The program will recognise that the Supplier does not already exist within the Supplier listing and give you the option to set up the Supplier.
This is the suppliers invoice number as displayed on the invoice to facilitate future cross reference for any queries on the account and to reconcile the closing period balance to the statement.
The narrative is an optional field and can be completed if required. The narrative will give further information in relation to the invoice / goods purchased.
Select the appropriate Purchase / Expense nominal account to which the purchase invoice relates, e.g. the Telephone Bill will be posted to the "Telephone and Fax" expense account.
If the Purchases are direct cost of sales / Purchases for Resale then choose the appropriate Purchases account as customised for the purpose of the business.
Purchases account at relevant VAT rate should be selected, these accounts should only be used to record Purchase for Resale, e.g. Purchases at Standard Rate.
Enter the GROSS amount (bottom line figure inclusive of VAT).
Attach the appropriate VAT rate as indicated on the purchase invoice.
The entry posted for Goods/Purchases for Resale with an applicable VAT rate of 23% :
Dr Purchases at Standard Rate 100.00 Net Amount P&L account, Expense
Dr VAT account 23.00 VAT element reclaimable from revenue Balance Sheet, Reclaimable from Revenue
Cr Trade Creditors A/c (123.00) Gross Amount Balance Sheet, Payable to Supplier
The profit and loss account (P&L) records the actual expense incurred by the company, therefore the P&L can only ever reflect a particular invoice once as the expense linked to this invoice is only incurred once.
The Balance Sheet (B/S) records amounts payable/receivable and amounts paid/received. In posting a purchase invoice the amount of the invoice is recorded as a payable so is therefore automatically posted to the “Trade Creditors” account which represents amounts payable to Suppliers.
In the above transaction the invoice relates to a purchase for resale (i.e. a direct cost of the end product sold) so this will be debited to the “Purchases at Standard Rate” account in the P&L, however as the business is VAT registered the business can reclaim the VAT element of the invoice from the Revenue therefore they are not actually incurring the full cost (Gross amount) of the invoice only the amount excluding VAT (Net Amount). The Net amount (excl VAT) is posted as the actual P&L expense and the VAT element is posted to the VAT account (B/S) as a debit meaning it is receivable from the Revenue.
The total Gross amount (incl VAT) is payable to the Supplier so this amount is posted to the Trade Creditors account as a credit as the full amount is payable to the Supplier.
The VAT report will capture the VAT element for inclusion in the appropriate VAT return.
N.B. Accounting works on a double entry basis and must always balance
P&L Expense Debit +
B/S Payable/Paid Credit -
P&L Income Credit -
B/S Receivable/Received Debit +