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

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

Create and Approve PO

Receive the goods

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

Keep the cursor as below

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

Run the ‘Create Accounting’ from Cost Management

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