Correcting Totcost in itemsite for 0 quantity item

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Posted on by DanCarroll

We have several inventory items which have 0 quantity on hand, but still show a value in the totcost field of Itemsite. We'd like to clean those up, and I know I can run a query in the database to 0 those out. Is there any impact on inventory value reported to GL if I do that? Should those items have an adjustment batch created to 0 them out? I know typically when there's an error releasing a batch that cause a quantity to cost imbalance, the fix is to update the totcost field to match the value of what is actually in stock. In this case, since there is nothing in stock, which is the best method of correcting it? My inclination is that this has no impact on GL, so I should just be able to 0 out the field in itemsite, but i want to doublecheck that assumption.

Thanks.

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Erich Strelow F 1,642 on at

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RE: Correcting Totcost in itemsite for 0 quantity item

In our case this scenario is related to returns to the vendor, which kind of breaks the average cost rule.

Date Description q price Value
---------------------------------------------------------
10 Delivered by Jim Fast & Co 100 1.40 1400
20 Delivered by Bob Cheap Ltd 100 1.20 1200
21 Issued at average cost -100 1.30 -1300
22 Returned to Bon Cheap Ltd -100 1.20 -1200
---------------------------------------------------------
Totals 0 100

The story is as follows:

Your usual vendor, Bob Cheap Ltd, is late again on the delivery of 100 items. You get nervous and put another Purchase Order on the same items to Jim Fast & Co.

Jim Fast & Co delivers on the 10th, but at a 1.40 unit price.

Bob Cheap also delivers on the 20th at 1.20 price.

On the 21th the warehouse issue the 100 units at the average cost of 1.30.

On the 22th you rant at Bob Cheap for being late and return the 100 items. In order to settle the vendor's statement, the transaction is posted as $1200, the same value as the original receipt.

And now you end up with 0 items but a $100 worth of stock.

On this kind of situation, the $100 are real and should be noticed in your GL. In order to get rid of it, an inventory adjustment must be posted, for $100 to recognize the extra cost, but no quantity. On some systems, probably SL itself via some configuration, this adjustment is done automatically to a "return difference" account.