An invoice was created and paid in may 2010 and the invoice and payment information has been transfered to GL and the may period is closed.In october we now found out that the invoice was charged to the wrong account, i mean the expense account on the invoice.How do we adjust in that scenario, i mean to do adjustment on the GL side.Please iwill appreciate a step by step explanation.Thanks for the help in advance

Hello Scorpion,

The easiest and best way would be to pass a JE debiting the correct expense account and crediting the present expense account after you open may period and making sure that JE date is having the May period. Other more cumbersome process would be to do it in the subledger itself -unreconcile the payment, void the payment, cancel the invoice and then redo the invoice and the payment reconcile this payment with the old payment in the Bank statement. But you have to also make sure you delete this from the payment file so that the payment does not reach the customer. Hope this helps.

Thanks,

Arun

I mostly agree with what Arun said. However in my opinion you should not be touching MAY. It is not considered a good practice to open past periods, and for public companies it is a big no no.
Simply enter this journal in GL in the current period:
DEBIT: CORRECT EXPENSE ACCOUNT
CREDIT: WRONG EXPENSE ACCOUNT

Given the above, what would be the solution if a wrong supplier has been paid? Would you do a correction in GL, or should it be done a Accounts Payables? Would it be a matter of a choice where the correction is carried out?

It is better to do the corrections in AP so that suppliers' balances remain correct.

Good! It is better to do the corrections in AP so that suppliers' balances remain correct.
MAY is closed, and we are in OCTOBER. How do we go about the correction relating to to wrong paid supplier? Do we issue a Debit Memo against that supplier, say, for $100, and issue a payment of the same amount, $100, to the rightful supplier? Are those the correct steps? Thank you.

It depends on what happened with the wrong check.

1) Wrongly paid supplier returned the check to you without cashing it.
2) Wrongly paid supplier cashed the wrong check and then paid you back with one of its own check
3) Wrongly paid supplied cashed the check and called it a day.

Depending on the above you might end up voiding the payment and canceling the invoice.

Since your original invoice is associated with the wrong supplier anyways, you might end you entering another invoice in the system for the correct supplier irrespective of which of the above 3 plays out. And then pay the correct supplier with this new invoice.