|Title:||Do Your Variable Allocation Accounts Vary Too Much?|
Key to this process working, the holding account must have an entry posted to it monthly. If a holding account balance is zero, the recurring clearing journal will not post.
First an understanding of Dynamics GP’s allocation accounts (skip to “The Issue" if you understand GP allocation accounts) : Allocations help you spread overhead expenses based on revenue, cost of sales, units sold, square footage, employee count, or other deciding factors. There are two types of allocation accounts: Fixed Allocation and Variable Allocation accounts.
Fixed Allocation accounts are straightforward with fixed percentages used to spread entries. An example would be to allocate a CEO’s salary between two locations with 40% against one location and 60% against the second location.
Variable Allocation accounts spread entries based on the total percentage of breakdown accounts. An example would be to allocate a CEO’s salary between locations based on revenue per month.
We find companies dislike that they have no audit trail of the entries through the allocation accounts. And they prefer to use period-to-date allocations, but they want the system to compute one percentage per month.
I'll use a simple format and example accounts: LL-AAAA represents a Location-Account format. We're going to allocate the CEO's salary.
We select Location 90 as "owners and officers," location 95 as our allocation designator, and 2 store locations, 10 and 20. We want to allocate the salary based on revenue from the stores. That revenue accumulates throughout the month in the sales accounts 10-4000 and 20-4000.
Account 90-5000 is a regular posting account named Executive Salary Holding Account. Gross salary is posted here each payday.
Accounts 10-5000 and 20-5000 are regular posting accounts named Allocated Executive Salary.
Account 95-5000 is the Variable Allocation Account named Executive Salary Variable Allocation. The Distribution Accounts are 10-5000 linked to the Breakdown Account 10-4000 and 20-5000 linked to the Breakdown Account 20-4000.
Setup a Clearing Journal marked to clear the balance for "Trx Period." Attach it to a Batch Header marked to recur monthly.
When the Clearing Journal is posted, it moves the balance of 90-5000 through 95-5000 to 10-5000 and 20-5000, based on the month-end percentage allocation the system computes between 10-4000 and 20-4000.
This leaves a nice audit trail of a debit and credit in account 90-5000. It arrives at a good compromise between Variable and Fixed Allocation accounts. It leaves an audit trail which the standard use of allocation accounts doesn’t leave. The setup of the Clearing Journal is completed only once as long as the batch header is marked to recur monthly with no limit set to the number of recurring postings.
|Category:||TIPS AND TRICKS BY MODULES: GL (General Ledger)|
|Date Added:||June 17, 2010 05:10:52 AM|