The Goods Clearing Account is used when manually closing a Goods Receipt PO or Goods Return transaction through the Data -> Close option. The Goods Clearing Account is defined in the Item Group, Warehouse, or Item Level. This account clears the posted amounts in the Allocation Account.
When posting goods receipt PO and goods return transactions, the journal entries are as follows:
Dr. Allocation Account xxx
Cr. StockAccount xxx
Goods Receipt PO
Dr. Stock Account xxx
Cr. Allocation Account xxx
When the documents are manually closed through the Data -> Close function, there will be no effect on the stock account and quantities. A journal entry is created to transfer the balances of the Allocation Account to the Goods Clearing Account.
In this scenario, Goods Return 1 is created for supplier V10000. The journal entry is shown as:
Dr. Stock Account, (GBP 2,000.00)
Cr. Allocation Account, (GBP 2,000.00)
When Goods Return 1 is manually closed using the Data -> Close function, a warning message is displayed to remind user that no further target documents can be created for the goods return transaction.
Click on Continue to proceed closing the document.
In the next window, select the applicable posting date for the reversing journal entry.
Finally, click on Yes to close the document.
A journal entry is now created to clear the Allocation Account.
At the end of the accounting period, the transactions posted to the Goods Clearing Account must be analysed to determine whether they should be properly written off to a miscellaneous income or expense account. For example, a goods return transaction that was manually closed may indicate that the supplier refused to give credit. Accordingly, this transaction may be treated as a miscellaneous expense in the profit and loss report. On the other hand, when a goods receipt PO is manually closed, it may indicate that the supplier did not invoice the company and the items received are treated as complimentary items. Hence, this transaction may be a form of income in the profit and loss report.