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If you have a PO line that's received but never invoiced (and you close the line because you know you're never going to get an invoice), the system will not back out the entry to the inventory account that was made when the items were received.
Can anyone explain the reasoning behind this? If you had entered an invoice for even just 1 of the items before closing the line, the system will make the necessary entries to adjust the inventory balance in the G/L, as well as adjusting the average cost of the item. However, it won't do that if there are no matching invoices. I would think it should treat it as kind of like a zero quantity invoice and adjust the inventory accordingly. After all, you didn't pay for the items, so shouldn't the cost decrease accordingly?
I suppose this should be a highly unusual condition (not posting an invoice for received goods), but it seems kind of odd that the system just totally ignores the fact that you've just received in a bunch of items at zero cost. Technically, shouldn't your inventory cost be adjusted to reflect that?
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Excuse me? If you receive additional units at the same unit cost as the units you have, Average Cost will stay the same. The cost is taken off the PO, not off the vendor invoice. If the PO lists the cost at the current Average Cost, that is what you take into inventory. If you are actually getting the items for free, you need to adjust the cost of the items, preferably on the PO prior to receipt. Otherwise, you will need to do a cost adjustment transaction.
I understand what you're saying about the Receiving Accrual, but my problem is the Average Cost for the item won't get updated properly. Now you have more units at the same cost as the original quantity, which means the average cost for each should go down.
I guess since it's such an unusual event it's nothing to get too worried about....
This is the correct process. When you receive the items and place them in stock, the Inventory Asset account is adjusted to match inventory. If you backed out the transaction, you would still have the item but not the matching GL. Do you balance GL inventory to Stock Status as part of each month's closing process?
When you close the line, the PO is taken off of received not invoiced list but the system does not know where you want the GL amounts in the Receiving Accrual account to be placed. Normally, with an invoice, RA is moved to Payables. But you have no invoice in payables. Thus the balance for the receipt remains in Receiving Accrual. You need to move the dollars for the receipt from RA to misc Income (since you got a freebie)
The code to handle the partial invoice appears to be invoked when you enter the invoice. 'No invoice - no code' is my semi-educated guess.
I'm guessing this is because there is no logic in the code to reverse the accounting when you just close a PO line as opposed to enter/matching an invoice for a partial quantity.
As you know, when you enter/match an invoice for a partial quantity, Accrued Purchases gets debited and Inventory credited.
However, if you match a zero-dollar invoice to the receipt, then the accounting entries are made and value of the inventory item is adjusted.
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