Royalty Account from Sales Zeroes out

[Former Member]

Hello Gurus,

I don't know if this should go to Finance or here. The objective is to have 7.5 percent of sales of some materials (4 of them) go to a special GL account.

I created to conditions as percentage and statistical so that it doesn't charge the customer.

I created to pricing procedure. I created the account key and assign it to the pricing procedure and condition. I made this Accruals.

Finance team created a G/L account for this royalty. I assign this G/L account to the account key I created earlier.

Well, everything seems to be workin fine. When those material are used in the sales order, delivery and shipment are done. When the invoice is created for this order, the amount of 7.5% is transfered to the G/L account.

The strange thing is the the amount goes to the G/L account as credit and debit. For example if 7.5% of sales of this materia is 50 dollars, it goes to the G/L account as 50 and -50 so it zeros itself out. This is not suppose to happen. The amount in the G/L account should just be 50 dollars.

I think I did something wrong in the configuration. Can anyone please help me on this issue. I don't want to amount to go into the G/L account as debit and credit thereby zeroing itself out. The G/L account should be credited always when this materials are sold.

Thanks.

See attached screenshot.

[Former Member]

Thanks everyone. I fixed it.

The accruals check box was the issue. I unchecked it and it works fine now. It goes in the G/L account as negative now.

[suman_sardar2]

Hi Basil,

Can you paste the screen dump of the Accounting entry.

As you have told that it will not Debit the Customer.

I created to conditions as percentage and statistical so that it doesn't charge the customer.

Plz waiting for the screen shot.

Thanks,

Suman

[suman_sardar2]

Hi Basil,

Basil Balogun wrote:
I created to conditions as percentage and statistical so that it doesn't charge the customer. 
The strange thing is the the amount goes to the G/L account as credit and debit. For example if 7.5% of sales of this materia is 50 dollars, it goes to the G/L account as 50 and -50 so it zeros itself out. This is not suppose to happen. The amount in the G/L account should just be 50 dollars.

In your post you have said that It does not charge the Customer now you tell me is there any system in this world which can only post the single entry of Debit or Credit.

I am telling you no.... You have to make both entry.

Now come to your point you do not want to charge to customer still want to make a Credit entry in the RV doc. Now you tell me which will be Debited on behalf of that amount.

I think your requirement is nothing but the Rebate.So I would suggest you to configure the Rebate configuration for this business needs.

Thanks,

Suman

[Former Member]

Thanks Suman for your response.

Let me try and explain a little better. When i said we are not chargin the customer means, the customer is not being charged for the Royalty. For example, we sell a material for 50 dollars, when a customer order this item, they are charged 50 dollars. Then 7.5% of that 50 dollars is (3.75 dollars) is transferred to this Royalty G/L account we created.

What we are trying to do i this. We are selling for materials that is a third party and when we sell this material, we want to keep a 7.5% Royalty into an account for this third party. So we can remit it to them quarterly.

I created a condition table for this so that anytime that material is sold, a condition is generated and 7.5% is calculated. I created a condition type (as seen in the attachment). I maintained the condition type in the pricing procedure. I created an account key for it. I created a G/L account for the Royalty and assigned the account key to it.

Everything works fine. When 1 of the materials is used in a sales order, it generated the condition and deduct the 7.5%. When the order is completed and invoice generated. i checked the G/L account and the 7.5% amount is reflected but it goes in the GL account as Debit and Credit thereby Zeroing it out.

This 7.5% is supposed to be accumulating into this account not zeroing it out.

Thanks.

[Former Member]

Hi Basil,

I think, the Basic design need to be changed.

Please think this as a simple charge that you are chargning to your customer.

Customer is paying 50 USD

     Sales Revenue     30 USD

     Taxes                  10 USD

     Freight                  6 USD

     Royalty                 4 USD

As far as customer is concerned, he is paying 50 USD, internally, wherever you want to post this, you can post this.

Let us take Freight as example in the above example, you collect frieght from Customer and you pay to Vendor.

In the similar way, you collect the royalty from the customer and pay it to the third party vendor.

To make that, create this condition type, same as Freight or any other chargable item and pass thsi to your respective account.  Please remember, this is not statistical, as you are chargning to your customer.

Hope this helps.

Regards

Raju

[suman_sardar2]

HI Basil,

I fully agree with Raju still I think if this is the need we have only one option.Please see the below points;

1. I think you have Maintain the Same Royalty G/L in VKOA G/L Account field & Provision A/c field.

Solution:

1.Maintain the Royalty G/L in G/L account field and create another G/L which will be treated as helpful G/L to make this entry in the RV documents.

In this way you can see the line item entries in the FBL3N with Royalty G/L.

Which is your need.

Or else what you could do?

Thanks,

Suman