Correcting Invoices:

When the purchases order, receiving report, and invoice are compared, various adjustments may be needed as a result of the circumstances described below:

1. Some of the materials ordered are not received and are not entered on the invoice. In this case no adjustment is necessary, and the invoice may be approved for immediate payment. On the purchase order the invoice clerk will make a notation of the quantity received in place of the quantity ordered. If the vendor is out of stock or otherwise unable to deliver specified merchandise, and immediate ordering from other sources may be necessary.
2. Items ordered are not received but are entered on the invoice. In this situation the shortage is noted on the invoice and is deducted from the total before payment is approved. A letter to the vendor explaining the shortage is usually in order.
3. The seller ships a quantity larger than called for on the purchase order. The purchaser may keep the entire shipment and add the excess to the invoice, if not already invoiced; or the excess may be returned or held, pending instructions from the seller. Some companies issue a supplementary purchase order that authorizes the invoice clerk to pay the over shipment.
4. Materials of a wrong size are quality, defective parts, and damaged items are received. If the items are returned, a correction on the invoice should be made before payment is approved. It may be advantageous to keep damaged or defective shipments if the seller makes adequate price concessions, or the items may be held subject to the seller's instructions.
5. It may be expedient for a purchaser to pay transportation charges, even though delivered prices are quoted and purchases are not made on this basis. The amount paid by the purchaser is deducted on the invoice, and the paid freight bill is attached to the invoice as evidence of payment.
6.  

   Invoice Approval and Data Processing:

   By the time materials reach the receiving department, the company unusually will have received the invoice from the vendor.

This invoice and a copy of the purchase order are filled in the accounting department. When the receiving report with its inspection reports arrives, the receiving report and the invoice are compared to see that materials received meet purchase order specifications as to items, quantities, price extensions, discount and credit terms, shipping instruction, and other possible conditions. I the invoice is found to be correct or has been adjusted because of rejects as noted by the inspection department, the invoice clerk approves it, attaches it to the purchase order and the receiving report, and sends these papers to another clerk for the preparation of the voucher.
Invoice approval is an important step in materials control procedure, since it certifies that the goods have been received as ordered and the payment can be made. The invoice approval information is often built into a rubber stamp and each invoice is stamped.
The verification procedure is handed by responsible invoice clerks, thus assuring systematic examination and handling of the paper work necessary for adequate control of materials purchases. The preparation of the voucher is based on the information taken from the invoice approval stamp.
The voucher data are entered first in the purchases journal and are posted to the subsidiary records. They are then entered in the cash payments journal according to the due date for payment. The original voucher and two copies are sent to the treasurer for issuance of the check. The treasurer mails the check with the original voucher to the vendor, files a voucher copy, and returns one voucher copy to the accounting department for the vendors file. Purchase transactions entered in the purchases journal affect the control accounts and the subsidiary records as shown in the chart below:

Transaction	General Ledger Control		Subsidiary Records
	Debit	Credit
Materials purchased for stock	Materials	Accounts Payable	Entry in the received section in the materials ledger card
Materials purchased for a particular job or department	Work in process	Accounts Payable	Entry in the direct materials section of the production or the job order
Materials and supplies purchased for factory overhead purposes	Materials	Accounts Payable	Entry in the received section of the materials ledger card
Supplies purchased for marketing and administrative office	Materials Marketing expenses control Administrative expenses control	Accounts Payable	Entry in the received section of the materials ledger card or in the proper columns of the marketing or administrative expenses analysis sheets
Purchases of services or repairs	Factory Overhead Marketing expenses control Administrative expenses control	Accounts Payable	Entry in the proper account columns of the expenses analysis sheet
Purchase of equipment	Equipment	Accounts Payable	Entry on the equipment ledger card