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CM-R accounting entries

Zuora

CM-R accounting entries

Two examples are provided to explain CM-R accounting behaviors.

Example 1 - Invoiced based CM-R

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 $180 is collected, which is associated with the original SO line. A one-sided initial entry is created for $180 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-R line is collected, which is associated with the previous invoice line. The EXT_SLL_PRC value of the CM-R line is -$100 for the return. The impact of the CM-R line on the initial entry is as follows:

Impact Balance
Account type Dr Cr Account type Dr Cr Initial Entry Flag
Contract Liability 100   Contract Liability   80 = (180 - 100) Y

The impact and balance of the accounting entries for the billed revenue will be as follows:

Impact Balance
Account type Dr Cr Account type Dr Cr
Contract Liability 100   Contract Liability 80  
Revenue   100 Revenue   80

Example 2 - SO based CM-R

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, a CM-R line is collected, which is associated with the original SO line. The EXT_SLL_PRC value of the CM-R line is -$100 for the return. A one-sided initial entry is created for the CM-R line as follows:

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

After that, an invoice line of $180 is collected and another initial entry is created for this invoice line.

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

The balance of the accounting entries is as follows for the billed revenue:

Balance
Account type Dr Cr Initial Entry Flag
Contract Liability   80 Y
Contract Liability 80   N
Revenue   80 N