Landed Cost calculation (Estimated vs Actual) for Purchase order in Microsoft Dynamics 365 Finance and operations- Part:3

Now in this post I will be talking about the second use case which we discussed in first post. If you want to read the last post. You can click here …. Part-1 and Part-2

Use case 2: Actual Freight bill received after Item is Sold.

Item Cost at the time of Purchase order Invoice: 1000 + 230 = 1230 Estimated cost

Adjustment for Purchase Cost due to Actual freight Invoice = 70 USD

Adjustment for COGS due to Actual freight Invoice after Inventory recalculation = 70 USD

Financial Entries Expectation:

1. At the time of Purchase order Invoice

                    Inventory Debit 1230

                                              Landed Cost Clearing Account Credit 230

                                              Vendor Credit 1000

2. Shipper submits actual freight invoice (Using Vendor invoice Journal).

               Landed cost clearing Account Debit 300

                              Vendor Credit 300

At this time system should post the inventory adjustment to make the actual inventory cost to 1300 from 1230 by adding 70 USD.

3. Adjustment entry (Automatically by system):

                Inventory Debit 70

                              Landed Cost Clearing Account Credit 70

4. Run Inventory recalculations

             Inventory Credit 70

                             COGS Debit 70

Step-1: Create and Confirm Purchase Order

Step-2: Create Voyage against the “Inbound Purchase Order”

Navigate, Landed Cost > Voyages > All Voyages > New. > Enter Description and also specify “Shipping Company” (This should be the vendor which we configured in previous post)

Step-3: Filter require purchase order and Add to staging list.

Note: This involves the warehouse process which I will not explain in detail, here focus is to understand financial impact

Step-4: View Staging list and Add to new shipping container.

Here we can select attributes which will help in defining the transportation process like journey template, mode of delivery, ship date etc…

Step-5: View Voyage and estimated Cost on Voyage

Now new Voyage has been created, select the Voyage and click on Voyage cost and Cost inquiry.

Here we can see the auto cost added as per our setup, also if require we can add Cost type code manually.

In cost inquiry we can see the Estimated Cost calculation

Step-6: Post Product Receipt and Invoice for the purchase order

Step-7: View Inventory transaction and Voucher posting.

As we see inventory cost for the product is updated based on estimated cost.

Step-8: Create and Post sales order Invoice, View Calculated COGS

Step-9: Post Actual Freight invoice from Carrier company and allocate against Voyage cost lines.

This invoice we record using “Vendor invoice Journal”.

Step-10: View final inventory transactions and voucher posting.

Step-11: Run Inventory recalculation to correct COGS

As we see here all the voucher and costs have been posted as per expectation.

Hope this will help you in exploring this new module.

Thank you!!! Keep sharing!!!