Ratio Allocation Example 3 Version

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Example 3: ratio allocation: specific amount

Allocation Method: Ratio
Allocation Basis: Specific Amount
Allocation Ratio Basis: Account Balance
Specific Amount: $800,000.00
Processing Period/Year: 01/2018

From Account Code:

Account Code Period Activity Account Balance
001-100-18-0301 $715,000.00 $4,590,000.00

Ratio Account Codes:

Account Code Period Activity Account Balance
001-604-92-0000     1.00 $20.00
001-605-92-0000 0.00 $10.00
001-606-92-0000 0.00 $6.67
001-704-92-0000 0.00 $9.00
001-705-92-0000 0.00 $3.00
001-706-92-0000 (1.00) $13.33
001-804-92-0000 0.00 $4.00
001-806-92-0000 0.00 $14.00

To Account Codes:

001-604-72-0000
001-605-72-0000
001-606-72-0000
001-704-72-0000
001-705-72-0000
001-706-72-0000
001-804-72-0000
001-806-72-0000

Calculate the Total Allocation Amount

The Allocation Basis is Specific Amount.
Therefore the Total Allocation Amount is equal to the Specific Amount.

Total Allocation Amount = $800,000.00

Calculate the Ratio

The Allocation Ratio Basis is Account Balance.
Therefore the Ratio Total is the sum of the account balance amounts for all the "ratio" accounts for the selected processing period and year.

Ratio Total = 80.00

  1. For each "ratio" account, determine the Organization / Department.
    The location of the Organization and Department segments within the account code for our example are Segment1 and Segment2 respectively.
Account Code Segment 1 - Segment 2
001-604-92-0000     001-604
001-605-92-0000 001-605
001-606-92-0000 001-606
001-704-92-0000 001-704
001-705-92-0000 001-705
001-706-92-0000 001-706
001-804-92-0000 001-804
001-806-92-0000 001-806
  1. For each "ratio" account, divide the Ratio Total by the account's Account Balance.
    The defined account structure for this example is:
Account Code Segment 1 - Segment 2     Calculation
001-604-92-0000     001-604 20.00 / 80.00 = 0.250000 or 25.00%
001-605-92-0000 001-605 10.00 / 80.00 = 0.125000 or 12.50%
001-606-92-0000 001-606 6.67 / 80.00 = 0.083375 or 8.3375%
001-704-92-0000 001-704 9.00 / 80.00 = 0.112500 or 11.25%
001-705-92-0000 001-705 3.00 / 80.00 = 0.037500 or 3.75%
001-706-92-0000 001-706 13.33 / 80.00 = 0.166625 or 16.6625%
001-804-92-0000 001-804 4.00 / 80.00 = 0.050000 or 5.00%
001-806-92-0000 001-806 14.00 / 80.00 = 0.175000 or 17.50%
  1. For each "to" account, determine the Organization/Department.
Account Code Segment 1 - Segment 2
001-604-72-0000     001-604
001-605-72-0000 001-605
001-606-72-0000 001-606
001-704-72-0000 001-704
001-705-72-0000 001-705
001-706-72-0000 001-706
001-804-72-0000 001-804
001-806-72-0000 001-806
  1. For each "to" account, calculate the Individual Allocation Amount by multiplying the Total Allocation Amount by the "to" accounts Ratio based upon their Organization/Department.
Account Code Segment 1 - Segment 2     Calculation
001-604-72-0000     001-604 0.250000 * $800,000.00 = $200,000.00
001-605-72-0000 001-605 0.125000 * $800,000.00 = $100,000.00
001-606-72-0000 001-606 0.083375 * $800,000.00 = $66,700.00
001-704-72-0000 001-704 0.112500 * $800,000.00 = $90,000.00
001-705-72-0000 001-705 0.037500 * $800,000.00 = $30,000.00
001-706-72-0000 001-706 0.166630 * $800,000.00 = $133,300.00
001-804-72-0000 001-804 0.050000 * $800,000.00 = $40,000.00
001-806-72-0000 001-806 0.175000 * $800,000.00 = $140,000.00

Resulting Journal Voucher amounts

Account Code Debit Credit
001-100-18-0301     $0.00 $800,000.00
001-604-72-0000 $200,000.00 $0.00
001-605-72-0000 $100,000.00 $0.00
001-606-72-0000 $66,670.00 $0.00
001-704-72-0000 $90,000.00 $0.00
001-705-72-0000 $30,000.00 $0.00
001-706-72-0000 $133,300.00 $0.00
001-804-72-0000 $40,000.00 $0.00
001-806-72-0000 $140,000.00 $0.00

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