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Item Reclassification Journal - General Ledger Entries

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Hi all,

When I put through a purchase invoice from a purchase order for an item with Project Code A, these are the entries created:

Account                                                                  Debit                 Credit                Project Code

Purchase Expense                                                  100                                                    A

Purchase Expense                                                                             100                         A

Trade Creditors                                                                                   100                        A

Cost of Sales (Interim)                                             100                                                   A

Cost of Sales (Interim)                                                                        100                        A

Inventory Account                                                     100                                                  A

Although I don't understand why the software has to use Purchase Expense & Cost of Sales (Interim) accounts, it's fine since they offset each other.

However, when I post an item reclassification journal to move this iten from Project A to Project B, the general ledger entries are created as:

Account                                                                  Debit                 Credit                Project Code

Inventory Account                                                  100                                                    B

Inventory Account                                                                             100                         A

Purchase Expense                                                 100                                                    A

Purchase Expense                                                                            100                         B

The lines in red mess my profit & loss statement up for both projects: now I have a negative expense in project B report.

Meanwhile, project A shows +100 in expenses although I haven't consumed the item yet.

I just want to move the amount from balance sheet A to balance sheet B without touching the expense accounts.

May I ask what I did wrong, or if my account settings are incorrect?

Thank you

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  • Suggested answer
    Dallefeld Profile Picture
    Dallefeld 11,415 UG Leader on at
    RE: Item Reclassification Journal - General Ledger Entries

    Some clarifications, in the Purchase - Cost of Sales (Interim) is actually Interim Inventory.

    Purchase Expense is Purchases and Cost Applied, I like to use two account so you can verify they offset.

    For Item Reclassification, Purchase Expense is actually Inventory Adjustments. Taking inventory one project to another which is a cost from project A and a reduction of cost for project B.  

    I would suggest using a 'Direct' Transfer Order.

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