We just received a report from K.C. Oh & Co., CPA that there are discrepancies between the Invoice Journal and the Journal Entries. Upon careful analysis, we found out that the problem arises from the incorrect entry of the client deposits into Service Charges in negative amount. The correct way is to first set up that 100,000 in Client Advances and Deposit. Then apply that 100,000 deposit in Invoicing so that the actual accounts receivable is 100,000 less than the gross invoice amount. By putting a negative number in Service Charges and then apply it to Invoicing in negative amount, the face value of the invoice is correct but the underlying journal entries are all incorrect. In order to avoid this situation, we will do the following:
This has been a great exercise. It took us three persons, one whole day and many programming in order to find out the problem. We surely do not want our users to suffered the same. So, we will put those necessary analysis and correlation into the System immediately. It looks like that our user had created the wrong entries in the wrong place but it is in fact our responsibility to prevent things like this from happening. If you do find out any slightest problem please do let us know so that we can make it better. Thank you!