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CM-C accounting entries

Zuora

CM-C accounting entries

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Three examples are provided to explain the CM-C accounting behaviors.

Example 1 - SO release upon booking

The initial SO line of $100 is uploaded to Zuora Revenue. The release event is Upon Booking. The impact and balance of the accounting entries will be as follows:

Impact Balance
Account type Dr Cr Account type Dr Cr
Contract Liability 100   Contract Liability 100  
Revenue   100 Revenue   100

Later, the SO line with the same SO line ID is uploaded to increase the SO value to $180. The impact and balance of the accounting entries will be as follows:

Impact Balance
Account type Dr Cr Account type Dr Cr
Contract Liability 80   Contract Liability 180  
Revenue   80 Revenue   180

Then, an invoice of $180 is collected in Zuora Revenue, which results in a one-sided initial entry created in Zuora Revenue.

Impact Balance
Account type Dr Cr Account type Dr Cr Initial Entry Flag
Contract Liability   180 Contract Liability   180 Y

The reclass entries are created by Zuora Revenue as follows. The first two lines are to reverse the journal entries created for the SO line. The other two lines are to recognize the invoice amount.

Balance
Account type Dr Cr Note
Contract Liability   180 SO reverse
Revenue 180   SO reverse
Contract Liability 180   Invoice recognized
Revenue   180 Invoice recognized

Then, a CM-C line is collected in Zuora Revenue, which is associated with the previous invoice. The EXT_SLL_PRC value of this CM-C line is -$100 so it reduces the invoice amount by $100. The initial entry for the invoice line is created as follows:

Impact Balance
Account type Dr Cr Account type Dr Cr Initial Entry Flag
Contract Liability 100   Contract Liability   80 Y

The entries for the billed revenue and unbilled revenue are as follows: 

Impact Balance
Account type Dr Cr Account type Dr Cr Note
Revenue 100   Contract Liability 80   Billed revenue
Contract Liability   100 Revenue   80 Billed revenue
Revenue   100 Revenue 100   Unbilled revenue
Contract Liability 100   Contract Liability   100 Unbilled revenue

Example 2 - SO release upon booking (overage invoice)

In this example, the initial SO line of $100 is uploaded to Zuora Revenue. The release event is Upon Booking. The impact and balance of the accounting entries will be as follows:

Impact Balance
Account type Dr Cr Account type Dr Cr
Contract Liability 100   Contract Liability 100  
Revenue   100 Revenue   100

Later, the SO line with the same SO line ID is uploaded to increase the SO value to $180. The impact and balance of the accounting entries will be as follows:

Impact Balance
Account type Dr Cr Account type Dr Cr
Contract Liability 80   Contract Liability 180  
Revenue   80 Revenue   180

Then, an invoice line of $200 is collected, which is associated with the original SO line. A one-sided initial entry is created for $200 in Zuora Revenue.

Impact Balance
Account type Dr Cr Account type Dr Cr Initial Entry Flag
Contract Liability   200 Contract Liability   200 Y

The reclass entries are created by Zuora Revenue as follows. The first two lines are to reverse the journal entries created for the SO line. The other two lines are to recognize the invoice amount.

Balance
Account type Dr Cr Note
Contract Liability   180 SO reverse
Revenue 180   SO reverse
Contract Liability 200   Invoice recognized
Revenue   200 Invoice recognized

Then, a CM-C line is collected in Zuora Revenue, which is associated with the previous invoice. The EXT_SLL_PRC value of this CM-C line is -$100 so it reduces the invoice amount by $100. The initial entry created for the CM-C line is as follows:

Impact Balance
Account type Dr Cr Account type Dr Cr Initial Entry Flag
Contract Liability 100   Contract Liability   100 Y

The entries for the billed revenue and unbilled revenue are as follows:

Impact Balance
Account type Dr Cr Account type Dr Cr Note
Revenue 100   Contract Liability 100   Billed revenue
Contract Liability   100 Revenue   100 Billed revenue
Revenue   100 Revenue 80   Unbilled revenue
Contract Liability 100   Contract Liability   80 Unbilled revenue

Example 3 - SO release upon billing (overage invoice)

In this example, the initial SO line of $100 is uploaded to Zuora Revenue. The release event is Upon Billing, so there is no impact for the initial SO upload. Then, the SO update is collected to increase the SO line value to $180. 

Later, an invoice line of $200 is collected to Zuora Revenue, which results in a one-sided initial entry in Zuora Revenue.

Impact Balance
Account type Dr Cr Account type Dr Cr Initial Entry Flag
Contract Liability   200 Contract Liability   200 Y
Contract Liability 200   Contract Liability 200   N
Revenue   200 Revenue   200 N

The release event is Upon Billing so there is no need to reverse the SO entries. No reclass entry is created.

Then, a CM-C line is collected in Zuora Revenue, which is associated with the previous invoice. The EXT_SLL_PRC value of this CM-C line is -$100 so it reduces the invoice amount by $100. The first line is the following table is the initial entry created for the CM-C line and the other two lines are the journal entries for the billed revenue.

Impact Balance
Account type Dr Cr Account type Dr Cr Initial Entry Flag
Contract Liability 100   Contract Liability   100 Y
Revenue 100   Contract Liability 100   N
Contract Liability   100 Revenue   100 N