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Former Member

OBBU Regrouping payables and receivables

Hi

Can anyone explain me what are adjustment accounts and target accounts

what exactly happens when we regroup payables or receivables and

how is reconciliation account affected in this process.

Points promised

Thanks

Prashanth

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  • author's profile photo Former Member
    Former Member
    Posted on Aug 29, 2007 at 06:45 AM

    Hello Prasanth

    What we r doing here is sorting the receivables and payables by the remaining periods.We r sorting the open items of receivables / payabels as this is necessary to disclose as per the legal requirements (eg - customer more than 6 months and less than 6 months)

    Even this configuration regroups accounts receivables nad payables balances which are maturing beyond 6 months

    We do it separately for customers and vendors

    we are regrouping the reconciliation accounts by creating a group in the initial screen

    Target accounts are those accounts to which the amount is to be postedand by whichthe balance of the specified accountis to be adjusted

    The adjustment account is displyaedin the BS/PL statement together with the accounts to be adjusted

    For example - for receivable 0 month ( receivables within 6 months) check vendor posting

    <b>1st line</b>

    Customer reconciliation account ( ASSETS)

    Adjutment account for regrouping for AR ( ASSETS)

    target account as - credit balance in AR ( liability)

    <b>2nd line</b>

    vendor reconciliation account ( liability)

    Adjuctment account - accounts payable adjuctment account regrouping ( liability)

    target account - Debit balance in AP( Assets)

    For receivable - more than 6 months ( check both customer and vendor posting)

    <b>1st line</b>

    Customer reconciliation account ( ASSETS)

    Adjutment account for regrouping for AR ( ASSETS)

    target account - AR maturity more than 6 moths ( assets)

    <b>2nd line</b>

    vendor reconciliation account ( liability)

    Adjuctment account - accounts payable adjuctment account regrouping ( liability)

    target accounts - AP maturity more than 6 months ( liability)

    thse are the GL accounts you need to create

    Similarly for vendor also u need to do it

    Hope it would help u in understanding the process

    Assign points if u find the answer useful

    Regards

    Anup

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    • Former Member

      Hi Anup

      Thanks for the reply

      Could you elaborate on target account

      what i understand is target account is an offsetting entry for the adjustment account

      However in your example you are using it for credit balances of AR and debit balances of AP

      Could you explain with an example with some amounts in A/R with maturities within 6 months and more than 6 months and how these amounts will be posted to adjustment and target accounts

      Thanks

      Prashanth

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