Monday 19 December 2011

Inventory Costing in R12 and End to End Accounting - Inventory Expense Item

 

Types of Items

 

1. Expense Items – Stationery (in this example Paper has been used as a stockable item but it differs from client to client based on  business nature)

2. Inventory Expense Items – Stockable Items depends on the company

3. Inventory Asset Items – To capitalize the item

 

Let us see the Inventory Expense Items

Inventory Expense Item should be configured/migrated with the following check boxes

 

 

Inventory Expense Item

     
       

Inventory TAB

Inventory Item

Stockable

Transactable

       

Enable the check box

Y

Y

Y
       

Purchasing TAB

Purchased

Purchasable

 
       

Enable the check box

Y Y

       

Create an Item

clip_image002[4]

clip_image004[4]

Cost Group, Cost Types etc can be created in Inventory itself.

Create and Approve PO

clip_image006[4]

Receive the goods

clip_image008[4]

If it is 2 way matching, we don’t need to do ‘Receiving Transactions’. If receipt routing ‘Direct Delivery’, we don’t need to do ‘Receiving Transactions’.

In the above example it is ‘Direct Delivery’.

Check the Receiving Transaction Summary

clip_image010[4]

Keep the cursor as below

clip_image012[4]

Entry at this time will be

Line

Accounting Class

Account

Debit

Credit

         

1

Accrual

01-000-2410-000

200

 

2

Receiving Inspection

01-000-1400-000

 

200

Run the costing process for inventory valuation

Run the Cost Manager from Inventory – Setup>Transaction>Interface Manager or

Cost Management>Setup>Interface Manager

Launch the cost manager

clip_image014[4]

Run the ‘Create Accounting’ from Cost Management

clip_image016[4]

Entry will be created at this time

Line

Accounting Class

Account

Debit

Credit

         

1

Inventory Valuation

01-000-1410-000

200

 

2

Receiving Inspection

01-000-1400-000

 

200

You can view the same entries in GL as well.

Other Entries

At the time of Creation of AP Invoice by matching against the PO

Line

Accounting Class

Account

Debit

Credit

         

1

Accrual

01-000-2410-000

200

 

2

Liability

01-000-2210-000

 

200

At the time of making payment in AP (if cash management is not implemented)

Line

Accounting Class

Account

Debit

Credit

         

1

Liability

01-000-2210-000

200

 

2

Cash

01-000-1210-000

 

200

OR

At the time of making payment in AP (if cash management is being implemented)

Line

Accounting Class

Account

Debit

Credit

         

1

Liability

01-000-2210-000

200

 

2

Cash Clearing

01-000-1220-000

 

200

After Bank Statement is being reconciled in Cash Management

Line

Accounting Class

Account

Debit

Credit

         

1

Liability

01-000-2210-000

200

 

2

Cash

01-000-1210-000

 

200

2 comments:

Anonymous said...

Hi,

When we receive material

Receiving Debit

AP Accrual Credit

but you have written in other way, please change the same.

Unknown said...

Hi,

Correct me if am wrong,
After creation of receipt, the accounting entries for receipt transaction should be like

Receiving Inspection A/c Dr. and
Accrual A/c Cr.

Regards
Rajkuamr