Summary

The Interest Allocation feature is used to allocate the interest that is earned on a bank account to the cash account on the bank record that is set up in multiple funds.

For example:

Cash account attached to the bank account record: -0-000

Revenue account selected in Interest Allocation window: -0-001

Ending Balance of GL account 1-0-000 = $200.00

Ending Balance of GL account 2-0-000 = $400.00

Amount of interest to be distributed = $10.00

If you distribute the interest amount based on the ending balance of the cash accounts, $3.33 of the interest will be distributed to GL cash account 1-0-000 ( 200/(200+400) X $10.00), and $6.67 of the interest will be distributed to the GL cash account 2-0-000 (400/(200+400) X $10.00).

The revenue account (generally an interest income GL account) selected in the Interest Allocation window will be credited and the cash account on the bank account will be debited on the journal entry created by the process.

GL cash accounts are attached to bank account records using the Bank Account Maintenance window (SS> Maintenance> Bank Account> Cash Account field).

Step by Step

1     Create and set up a journal entries batch.

2     View the journal entries in the batch. 

• After the Settings step is complete, open the Journal Entry Selection window (GL> Journal Entries> Journal Entries) to view the journal entries in the batch. This window will be empty if you have created a new batch, but if you have opened an existing batch the window will display the journal entries in that batch.
• Select a journal entry and click Delete to delete a journal entry.
• Click the GENERATE drop-down and select Generate Interest Allocation to create a new interest allocation.
  • The GENERATE drop-down will display the name of the last journal entry generated, such as RECURRING JOURNAL ENTRY, REVERSING JOURNAL ENTRY, or INTEREST ALLOCATION.

3     Create the interest allocation.

• The Bank Account field is used to select the bank account where the interest was generated. The GL cash account attached to the selected bank account will be used to distribute the interest.
  • Bank Accounts are created and maintained using the Bank Account Maintenance window (SS> Maintenance> Bank Account). The cash account is attached to the bank account record using the Cash Account field on the Bank Account Maintenance window.
• The Revenue Account field is used to select the GL account you would like to allocate the interest to. This is the GL account that will be credited in the journal entries created in the process. The GL account selected in this field must be set up in each fund where the cash account on the bank record exists.
  • For example, if cash account 1-0-000 is attached to the bank record and exists in fund 9 (9-0-000), there must also be a revenue account in fund 9. If the revenue account does not exist in fund 9, the interest that should be allocated to the cash account in fund 9 cannot be distributed because there is no GL account to credit in the transaction.
• Enter the amount of the interest to the distributed in the Interest Amount field.
• The Allocation Type drop-down menu is used to select how the interest will be allocated.
  • Select the Average Daily Balance to distribute the interest based on the daily balance of the cash accounts.
  • Select Month End Balance if you would like to distribute the interest based on the month end balance of the cash accounts.
• Click the Save button to generate the interest allocation journal entries.
• The journal entries generated by the process will display in the Journal Entry Selection window.

4     Commit the journal entry.

• Print a Proof List Report (GL> Journal Entries> Proof List) and run the Commit step (GL> Journal Entries> Commit) to commit the journal entries.