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1. XYZ Company
1 | P a g e
Bookkeeping methodology for XYZ
Company using Odoo Accounting
software and Xero
Background:
 XYZ Company does not keep stock of the fruits and all the fruits are owned by the suppliers and
they are kept in XYZ Company warehouse for sale.
 XYZ Company Manages to get customer for that and sells the fruits to customers. The payments
received from the customers are wholly paid to the suppliers. Suppliers are charged a service
fees and reimbursement of expenses incurred for them
 Fruit purchases and sales for YVF are always equal in a particular date as YVF does not have any
stock of fruits.
 Customer pays YVF for the amount of fruit sales and the suppliers are tagged in Food Farms
against the said OUTDOC number.
 The payments are processed to suppliers on a single date and they are paid for the remittances
received.
How we account in Xero for Same?
 Fruit purchases are entered in Xero against the amount of payment done to the suppliers.
 Sales invoices are created for the amount received from the customer and they are settled
against the receipts from the customer.
 Sales invoices and purchases are created on the same date to ensure that the fruit purchases
and sales remains equal on a particular date.
 Fruit purchases and Sales do not have GST element in that.
Cluster Invoices
 Cluster invoices are accumulated in Food farms and are accounted for as sales at the end of
month.
 The fruit purchases is increased by the amount of cluster invoices by a manual journal in Xero.
 Cluster invoice mainly consists of following element:
At the end of month Following Journal is entered for Cluster invoices accumulated till month
end:
Journal to be passed at end of month
Freight income
Fruit Levy
Service income
Settlement Discount
Supermarket Discount
GST Payable

2. XYZ Company
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Particulars Debit Credit
Freight income XXX
Fruit Levy XXX
Service income XXX
Settlement Discount XXX
Supermarket Discount XXX
GST Payable XXX
Fruit Purchases XXX
Total XXX XXX
 Another journal is also passed for supermarket discount as the fruit sales are recorded as net of
supermarket discounts. This journal is as under
Supermarket Discount charge Dr. XXX
To, Fruit Sales Cr. XXX
Accounting for Fruit Purchase and sales in Xero:
 A file is prepared matching the totals of the suppliers invoice and customer invoices based on
the date on which the payment is processed in Food farms.
 The file has fruit purchases and sales figures matching with each other to ensure that the
suppliers are paid the exact amount and no underpayment or over payment to the suppliers.
 The receipts in Xero bank are matched with the sales as per the file and the payments are
matched with the purchases as per the file. Both are on the same date. Hence fruit purchases
and sales match in Xero.
 Profit and loss account of that particular date is extracted from Xero and placed in the sheet as a
part of reconciliation process of Fruit Purchases and sales.
 The remittances which are yet to be processed remain un reconciled in Xero. At the end of
reporting period they are transferred to Suppliers pending payment as no suppliers are paid
against the receipts from the customers.
Accounting for Expenses in Xero:
 A master file of all the invoices received is prepared by the bookkeeper and all the invoices are
recorded in it. All the invoices are numerically numbered in order to ensure that they remain
traceable. The same are attached with the entry in Xero.
 Freight is tagged by inventory to get a report of freight expense per state which is compared
with the freight income per state. Any over receipts/ Over payments in Freight expenses are
adjusted by the % of freight charged in Cluster invoices.
 Payroll is processed through calculation in Xero.
Payment of Various taxes:
 Fruit Levy: A report for fruit levy payable is extracted from Food farms ERP and is paid at end of
every quarter.
 PAYG Withheld: A report of PAYG withheld is prepared from Xero and the payment is done
accordingly.

3. XYZ Company
3 | P a g e
 GST: The Amount of GST credit receivable is set off against GST payable in Xero and a report is
generated for GST amount to be paid.
Supplier payments pending at end of period:
 There might be some customer remittances at the end of Accounting period for which the
suppliers are yet to be paid. (Accounting period means: Quarter end for Finalization of BAS and
Year end for Finalization of Annual accounts).
 These are the customer remittances received but not yet paid to the suppliers. They are pending
to be processed at the period end.
 Such receipts from customer are in fact a liability for XYZ Company as the Suppliers are to be
paid for the money received by YVF on their behalf.
 Hence at the period end such payments are transferred to "Creditor's payable Food
Farms"(Code 201-A in Xero) and they appear as a liability at the end of period. (The total
amount consists of part amount payable for fruit purchases and part amount for the cluster
invoices towards the revenue of XYZ Company and shall be accounted for accordingly when the
corresponding payments are made).