Ledger Transactions Reference

Accounts Receivable

COD Shipments and Receipts

In accounting terms, when the order is shipped to the recipient, the responsibility to pay resides with the recipient. Once the carrier has delivered the shipment, the responsibility to pay changes to the carrier. When payment is received from the carrier, then it is applied to the carrier’s receivables balance. In this process, we added a “Pending” state to the responsibility of the carrier to pay shipping charges, so that adjustments to the carrier’s payment could be made before it is made official and posted to the ledger.

Thus, the accounting transactions are:

1. Order is Shipped:

  DR Accounts Receivable for Recipient (asset), 
     CR Sales, etc. (revenue)

2. Shipment is delivered:

  DR Uninvoiced COD Receipts (asset), 
     CR Accounts Receivable for Recipient (asset)

3. Carrier COD bill is reviewed and approved:

  DR Accounts Receivable for Carrier (asset), 
  DR COD Fees (expenses)
     CR Uninvoiced COD Receipts (asset)

The Receive COD Statement Screen is specifically designed to facilitate this particular process.

4. Carrier forwards COD payment

  DR Undeposited Receipts or other Cash account (asset)
     CR Accounts Receivable for Carrier (asset)

If the recipient of the shipment declines to pay, then the receivable for the shipment remains with the recipient as in #1 above. When the package is returned, it should be processed as a return for “Store Credit”, and the billing account credit should be applied to the outstanding invoice of the recipient.

Inventory

Adjust Inventory Values

When inventory values are adjusted, the value of the change in inventory value (quantity * change in unit cost) is recorded as a

DR Inventory Value Adjustment (expense)
   CR Inventory (asset)

This is recorded for each item whose value is adjusted.