When a regular Order is placed through the Orders service and the status is set to Shipped, order GL account entries are created. In the case of Advertising, however, the user does not create the Order directly from the Orders service. The user creates an Insertion Orders record from the Insertion Order service in the Advertising module, which triggers the creation of an associated Orders record. Because the income from an advertising product may be deferred income, the insertion order also creates the appropriate GL entries to move the income to the appropriate accounts.

Insertion Orders and Scheduled Transactions

Order GLs

When the Insertion Orders record status is set to Approved, the associated Orders record's status is set to Shipped, and the order GL account entries are created. Since revenue from Insertion Orders is not recognized until the Product Issue's Revenue Recognition Date, two scheduled transactions are required to correctly recognize the revenue on the deferred date. The Insertion Order creates the two Scheduled Transactions records when it is saved with an Approved status. The first scheduled transaction reverses the entries made to the Sales account in the order GL and moves the Sales credit to the Deferred Income account. On the Revenue Recognition Date the second scheduled transaction reverses the Sales and Deferred income entries and essentially returns the account balances to the original state as represented on the GL tab on the original order form.

Insertion Order Cancelled on or after Revenue Recognition Date

If the customer cancels the insertion order on or after the Product Issue's Revenue Recognition Date, the insertion order is marked cancelled and generates a cancellation order with GL entries that reverse the original order's GL entries when it is saved. Since the cancellation of the order occurs after the revenue recognition date, additional adjustments do not need to be made to balance the Deferred Income and Sales accounts.

Insertion Order Cancelled before the Revenue Recognition Date

If the customer cancels the insertion order prior to the Product Issue's Revenue Recognition Date, the insertion order is marked cancelled and generates a cancellation order with Order GL entries that reverse the original order's GL entries when it is saved. It also creates two scheduled transactions to reverse the original scheduled transactions to complete the cancellation. The first scheduled transaction is created with a creation date of the current date and a scheduled date of the current date. This scheduled transaction debits the deferred income account and credits the sales account. The transaction is necessary because it reverses the first scheduled transaction created in the original order.

The second scheduled transaction is created with a creation date of the current date and a scheduled date of the Revenue Recognition date. This transaction is an exact reversal of the second schedule transaction created from the original order. The transaction also completes the reversal cycle and creates a net zero effect of all general ledger accounts used for the original order.

Example

A customer places an order for an advertisement to be displayed in an organization's monthly publication. The cost of the advertisement is $2500, and the Product Issue chosen has a Revenue Recognition Date of November 1st of the current year. The order taker creates a new Insertion Orders record for the sale of the advertisement, and sets the Insertion Order status to Approved on September 1st.

Approved Insertion Order GLs: Creation Date Sept 1st

The order generates the order GL account entries to capture the sale of the product (the advertisement space) on the date of the order.

1st Scheduled Transaction: Creation Date Sept 1st – Scheduled Date Sept 1st

Since the revenue is not recognized on the date the Insertion Order was set to Approved, a scheduled transaction is created moving the revenue from the Sales account to the Deferred Income account.

2nd Scheduled Transaction: Creation Date Sept 1st – Scheduled Date Nov 1st

Another scheduled transaction is created at the time the insertion order is marked Shipped to recognize the deferred revenue. This is accomplished by transferring the revenue from the Deferred Income account to the Sales account, using the Revenue Recognition Date from the Insertion Order's Product Issue. This date is the scheduled date in the Scheduled Transactions record and is the date the reversing entries are batched and recognized.

Canceled Insertion Order Before the Revenue Recognition Date

Cancellation Order GLs: Creation Date – Oct 1st

If the cancellation date is October 1st, one month before the revenue recognition date, the following order GL entries are created by the associated cancellation order.

An insertion order marked Cancelled before the Revenue Recognition Date creates two scheduled transactions that reverse the two scheduled transactions from the original insertion order.

1st Scheduled Transaction: Creation Date Oct 1st – Scheduled Date Oct 1st

The first scheduled transaction reverses the deferred income and sales accounts from the original order scheduled transaction and is dated with the cancellation date of October 1st.

2nd Scheduled Transaction: Creation Date Oct 1st – Scheduled Date Nov 1st

The second Scheduled Transaction is also created on the date of the cancellation and reverses the deferred income and sales accounts on the original order scheduled transaction for the revenue recognition date November 1st. This action creates a net zero effect with the second scheduled transaction created with the original order.