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Allocation Journals

Allocation journals allow re-distribution of a transaction posting, across pre-defined rule criteria.

When the rules and methods are created, the journal can be processed through the General Ledger Allocation Journal.

Ledger Allocation Example
Allocation Rules

The first step is to create an allocation rule.

Ledger allocation rules are used to automatically calculate and generate allocation journals and account entries for the allocation of ledger balances or fixed amounts. The allocation rule defines the origination and destination of the transaction.

Example survey answer;

This example is for an electricity invoice that is distributed as fixed % allocation. This allocation % will setup during configuration.

Allocation Method

Allocation methods can be variable or fixed. The following allocation methods can be used for ledger allocation rules:

  • Basis – This variable method is used when the allocation depends on the actual ledger balance, based on filter criteria. For example, advertising expenses can be allocated based on each department’s sales in proportion to the total departmental sales.
  • Fixed percentage and Fixed weight – For these methods, the allocation percentage or weight is defined directly for the rule. For example, advertising expenses can be allocated so that Department A receives 70 percent of the advertising expense and Department B receives 30 percent.
  • Equally – This method distributes the amount equally to each defined destination. For example, if destinations are defined for Department A and Department B, advertising expenses can be allocated so that both Department A and Department B receive 50 percent of the advertising expense.

If Basis is used as the allocation method for an allocation rule, you must also define separate ledger allocation basis rules. The “Process allocation request” process lets users process the ledger allocation rule and preview the resulting allocation journal entries before they either post or delete the calculated allocations.

Additional Information