Tigerpaw Accounting Configuration:
Each client will use different General Ledger accounts, so this document addresses these accounts in generic terms. If you not plan to use one of these functions, you do not need to fill it in.
GL Distribution Codes â€“ Sales Code are Mandatory â€“ Cost Codes are Optional.
The Sales code debits Accounts Receivable, and credits a Revenue account. If you want to split the revenues in your General Ledger by type of product sold (Telephone, Computer, Service), then each product type of should carry a different sales code. Otherwise Tigerpaw reports can be used to determine Sales by Category of item.
The Cost code normally debits your Cost of Sales account, and credits your Inventory account.
It is recommended that you create a GL Account called Inventory Adjustments In/Out. This account is to be used for both Inventory Losses (Shrinkage) and Gains, so that they offset each other.
If you want to track the amount of Discounts given to your customers, then create a code for Discounts that debits Accounts Receivable and credits a revenue account called Discounts (or similar). The amounts are all negatives, so this is the same as a reverse sale. If you donâ€™t want to track Discounts, use the normal Sales account. You cannot track Discounts by type of sale.
Deposits and Trade-Ins are viewed as forms of payments, and not reductions in the sale amount (that would be a discount). Codes for deposits and trade-ins should credit liability accounts for un-applied payments.
After the invoice has been imported, you should apply the payment to the invoice directly in your accounting system, debiting the account instead of cash.
One alternative is to just not use GL Codes for these entries in Tigerpaw and handle them solely within the accounting system. You still enter the amount on the Tigerpaw order to have them print on the invoice but without any GL Codes defined, nothing will go over and you can control it all on the other side. For example, your customer gives you a $25 deposit on a $100 sale. The invoice will indicate the $100 sale, and the $25 deposit, with $75 due. However, the full $100 is transferred to Accounts Receivable, to be offset by the $25 already received.
Another method used is to issue a Credit Memo to the Customer when the deposit is received. This causes his AR to go negative, awaiting the invoice. This is OK if the time span doesnâ€™t go beyond your taxation period. Some people use this method, and move cash around at tax time to show the liability instead of the asset.
Purchase Order Receipts GL Code: This code comes into play when the items on a Purchase Order are received from the vendor. Since we do not have the vendorâ€™s invoice at the time of receipt, we cannot apply the cost amount to Accounts Payable.
So we have two basic options to handle the PO costs of the items received:
- Move the cost received into a holding account and wait for the vendors invoice to clear the holding account. In this option we use a GL Receipts code in Tigerpaw to debit the Inventory account (asset), and credit an Other Liability account (such as AP Clearing or Un-invoiced Receipts) when the PO item is received. When the vendorâ€™s invoice is received, it is entered to credit the Other Liability account, and debit Accounts Payable. This GL Receipts Code is entered on the Accounting Interface screen, where it is transferred to new Price Book Items (changeable at the item level). It is also transferred to the PO item detail screen (changeable for this PO only).
- Donâ€™t move any cost at the time of the receipt, and handle the cost in QuickBooks alone. In this option, the GL Receipts code is left blank on the Accounting Interface screen, and the Price Book item level. Since there is no code entered, the PO item detail has no GL Receipts code. When the PO item receipt is made, the quantity goes into Tigerpaw inventory just as above, but NO COSTS are transferred. When the vendorâ€™s invoice is received, the Inventory account (asset) is debited and Accounts Payable is credited.
Using option two removes one balance account so that it does not have to be maintained and reconciled. The â€˜realâ€™ inventory amount would be understated by goods received, but where you have not entered the vendorâ€™s invoice. Current experiences with speed of invoice deliveries keeps this number to such a low amount, that it is not significant.
Disclaimer: This document expresses the findings and recommendations of Williams Technology Solutions and it is not a statement from Tigerpaw Software nor Intuit.