{"id":5318,"date":"2015-04-24T06:13:14","date_gmt":"2015-04-24T04:13:14","guid":{"rendered":"http:\/\/www.officetodo.com\/public\/?p=5318"},"modified":"2015-04-19T06:14:02","modified_gmt":"2015-04-19T04:14:02","slug":"recognizing-supplier-payables-when-theres-no-invoice-just-yet","status":"publish","type":"post","link":"http:\/\/www.officetodo.com\/public\/recognizing-supplier-payables-when-theres-no-invoice-just-yet\/","title":{"rendered":"Recognizing supplier payables when there’s no invoice just yet"},"content":{"rendered":"

As it happens, not always there\u2019s an invoice for inventory purchase, but since you received the materials, you\u2019re more than likely to require using them already. So how you\u2019d proceed?\u00a0<\/p>\n

It\u2019s in fact not just using those materials, but also recognizing an asset and a liability within your accounts as you\u2019re liable for the risks arising from owning physically the goods mentioned. With accruals basis accounting there\u2019s a term we often use for such situations. What you\u2019d do in such a case is \u2018accrue\u2019 for the liability and for the asset within your accounts based on your best estimate as to what\u2019s the price of the goods received. Normally you\u2019d have an agreed price list or publicly available prices or something similar based on which you could estimate the payable amount.<\/p>\n

Note that this accrued amount should always be adjusted with the actual invoice once it\u2019s obtained.<\/p>\n

To continue with our previous example, say that you received 100 units of bread with a unit price of 1.5 CU as per your agreement with the supplier. Your accounting entry would then look something like this:<\/p>\n\n\n\n\n\n\n\n\n\n\n
<\/td>\n<\/tr>\n<\/tbody>\n
#<\/strong><\/td>\n<\/td>\nDebit-Credit<\/strong><\/td>\n<\/td>\nAccount name<\/strong><\/td>\n<\/td>\nAmount\u00a0<\/strong><\/td>\n<\/td>\n<\/tr>\n
<\/td>\n<\/tr>\n
1<\/em><\/td>\n<\/td>\nDebit<\/em><\/td>\n<\/td>\nInventory<\/em><\/td>\n<\/td>\n150<\/em><\/td>\n<\/td>\n<\/tr>\n
<\/td>\n<\/tr>\n
\u00a0<\/em><\/td>\n<\/td>\nCredit<\/em><\/td>\n<\/td>\nAccrued liabilities<\/em><\/td>\n<\/td>\n150<\/em><\/td>\n<\/td>\n<\/tr>\n
<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

 <\/p>\n

However, say that it later turned out your supplier had issued a new price list and one unit is now 1.6 CU. For the sake of our example let\u2019s presume that you accepted this increase and as such you make a corrective entry alongside with recognizing that you now have an invoice and not an estimate any longer.<\/p>\n

 <\/p>\n\n\n\n\n\n\n\n\n\n\n\n
<\/td>\n<\/tr>\n<\/tbody>\n
#<\/strong><\/td>\n<\/td>\nDebit-Credit<\/strong><\/td>\n<\/td>\nAccount name<\/strong><\/td>\n<\/td>\nAmount\u00a0<\/strong><\/td>\n<\/td>\n<\/tr>\n
<\/td>\n<\/tr>\n
1<\/em><\/td>\n<\/td>\nDebit<\/em><\/td>\n<\/td>\nInventory<\/em><\/td>\n<\/td>\n10<\/em><\/td>\n<\/td>\n<\/tr>\n
<\/td>\n<\/tr>\n
\u00a0<\/em><\/td>\n<\/td>\nDebit<\/em><\/td>\n<\/td>\nAccrued liabilities<\/em><\/td>\n<\/td>\n150<\/em><\/td>\n<\/td>\n<\/tr>\n
<\/td>\n<\/tr>\n
\u00a0<\/em><\/td>\n<\/td>\nCredit\u00a0<\/em><\/td>\n<\/td>\nPayable to suppliers<\/em><\/td>\n<\/td>\n160<\/em><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n","protected":false},"excerpt":{"rendered":"

As it happens, not always there\u2019s an invoice for inventory purchase, but since you received the materials, you\u2019re more than likely to require using them already. So how you\u2019d proceed?\u00a0<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[80],"tags":[],"class_list":["post-5318","post","type-post","status-publish","format-standard","hentry","category-2-10-purchases-and-payables"],"aioseo_notices":[],"_links":{"self":[{"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/posts\/5318","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/comments?post=5318"}],"version-history":[{"count":1,"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/posts\/5318\/revisions"}],"predecessor-version":[{"id":5319,"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/posts\/5318\/revisions\/5319"}],"wp:attachment":[{"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/media?parent=5318"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/categories?post=5318"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/tags?post=5318"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}