Appendix A - AP Retention

 

Handling of Accounts Payable Retention

Retention is an optional parameter in Accounts Payable and is used in accrual-based systems. You may use retention in any situation in which payments are withheld from a vendor's or supplier's invoice. The amount withheld may be due to damaged goods, contractual arrangements, a dispute, and so forth. When the General Ledger module is installed, the retention amount is recorded in an accounts payable general ledger account.

 

Retention is entered in the Invoice Entry task. When an invoice is entered, the retention amount is declared. Then, when the invoice is updated, the following accounting takes place:

 

Invoice amount

Discount amount

Retention amount

100

10

20

 

Accounts Payable

Retention Payable

Expense Account

20

100

 

20

100

 

 

When a retention invoice is selected for payment, the amount of payment will be the invoice amount less the retention amount. When the invoice is paid, the following accounting takes place:

 

Accounts Payable

Discounts Taken

Cash in Bank

80

   

10

 

70



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