The Purchase Order module is designed to record and process deposits paid to vendors against purchase orders before the goods and/or invoices have been received.
These prepayments are posted to the Payable Deposit asset holding account that allows you to track cash paid for items not yet invoiced. The Payable Deposit account is credited by the Accounts Payable system with the deposit amount when the Accounts Payable Invoice Data Entry or Manual Check Entry update is performed. The Payable Deposit account is debited by the Purchase Order system when a Receipt of Goods Entry or Receipt of Invoice Entry with a prepayment deposit is updated. Payable Deposit account postings are detailed with reference and vendor name information.

To verify that deposits to vendors are properly recorded and processed

1 Establish a Payable Deposit account number: In the Purchase Order Options window, enter the Payable Deposit account number as set up in your chart of accounts.

2 Enter Cash Disbursements: Although the prepayment information is entered in Purchase Order Entry, Receipt of Goods Entry, and/or Receipt of Invoice Entry, the actual cash disbursement for the payment must be recorded first in General Journal Entry in the General Ledger module, or either Invoice Data Entry or Manual Check Entry in the Accounts Payable module. Make sure that you enter the account specified in the Purchase Order Options window as the Payable Deposit account to offset the posting to cash.

The Payable Deposits account is debited with the deposit amount, and the Cash account is credited. The balance of the Payable Deposit account at any time represents the total outstanding deposits (payments issued for purchase orders that have not yet been invoiced).

3 On the Purchase Order Entry Totals tab, enter the deposit amount at the Less Prepaid Amount field and enter the check number of the Prepaid Check Number field. This entry is printed on the purchase order as a memo amount and on the Open Purchase Order Report.

NOTE General ledger postings and adjustments of the vendor balance are not made at this time.

4 Invoice the purchase order in either Receipt of Goods Entry or Receipt of Invoice Entry. The deposit amount entered on the purchase order is recorded against the invoice and reported on the Daily Purchases Journal.

When the invoice is updated to the Open Invoice file, after the Daily Receipt Registers are printed, the invoice balance will be the invoice total minus the deposit amount. General ledger postings from the Daily Receipt Registers update credit the deposit amount to the Payable Deposit account and debit the Accounts Payable account.