We might give advances (prepayments ) for employee expenses. Employees, might give a check for the remaining amount after expenses. We can use the following solution to capture this in oracle and have correct accounting
Suggest solution
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Step 1: create a prepayment invoice and pay it
Step 2: employee will submit expense report for the for the amount he spent , apply the prepayment to the expense invoice submitted
Step 3: when employee gives a personal check for the balance amount. create a standard invoice for the amount equal to the refund check, by using a clearing account as the expense account and apply the remaining prepayment ( advance ) amount to the invoice created
Step 4: create a debit memo (with the same clearing account we used for standard invoice in step1, as the expense account.) Then make the refund payment to the debit memo created
For example we made a advance payment of $ 1000 to an employee and after the trip, if the employee submits the expense report for $ 800 and gave personal check for remaining $ 200. following are the accounting entries in each step of the process suggested, Also please find the screen shots in the file attached
When we make advances payment to the employee
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Prepaid Expense A/c--------------Dr 1000
To Liability A/c---------------------Cr 1000
when paid
Liability A/c----------------------Dr 1000
To Cash Clearing A/c---------Cr 1000
When employee submits the expense report after the trip
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Item Expense A/c-------------Dr 800
To Liability A/c-----------------Cr 800
Prepayment is applied to the expense report submitted
Liability A/c-------------------------Dr 800
To Prepaid Expense A/c-------Cr 800
Standard invoice, when we get personal check from employee for balance amount
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Item Expense A/c (clearing account )------Dr 200
To Liability A/c--------------------------Cr 200
When prepayment is applied
Liability A/c--------------Dr 200
To Prepaid Expense A/c-------Cr 200
Debit memo for refund check
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Liability A/c----------------------------------------------Dr 200
To Item Expense (clearing account )A/c-----Cr 200
Refund Payment to debit memo
Cash Clearing A/c------------Dr 200
To Liability A/c----------------Cr 200
