Inventory Lost in Transit

(0) Share

Report

Posted on by argunn

150

Hello, my question relates to how I can account in the inventory module for acceptable inventory loss in transit. We use GP dynamics to book wholesale natural gas purchases but face assumption of gas loss as the gas is in transit from the hub to end user points. So, I can't see how I can use the return function as it isn't technically a return, more just an accepted loss. Looking for any suggestions on how to account for an inventory loss of this knind. Any assistance would be greatly appreciated.

*This post is locked for comments

All responses (9)

Answers (2)

Community Member Microsoft Employee on at

Like (0)

Report

RE: Inventory Lost in Transit

Hi, I have a similar issue to this though its on an intermittent basis, is there any way to unallocate the units that should not be received due to loss from the transfer and adjust them out of the via site, or is the only option to receive the full transfer and then adjust out of the final To Site?

Thanks in advance.
Richard Whaley 25,195 on at

Like (0)

Report

RE: Inventory Lost in Transit

EXACTLY.
Suggested answer

Mahmoud Saadi 32,738 on at

Like (0)

Report
RE: Inventory Lost in Transit

Although you don't have a "Reason Code" classification in GP 2010, although; as Mr. Richard stated above, you can still proceed with the same functionality.

In- Transit will be received with the same original amount [ Let's say: 100 unit of Item A, unit cost: 5 ]. This will result with increasing your inventory value with the extended cost of the total amount (100*5 = 500) on the Debit side.

Suppose you have an inventory loss (2%) which is 2 units out of the 100. You will do the following;

Inventory > Transactions > Adjustment out [Quantity: 2 ]

On the Distribution, change the inventory offset account to a secfici gains/loss account

Note : "The following screen shots are derived from GP 2010, as seen below no Reason Code is available"

As shown below, the inventory account is credited (decreased), with the cost of the 2 units, and recorded on a profit and loss account. I would recommend creating a specific profit and loss account to "isolate" the inventory loss amount on the General Ledger level.

Important Notes:

- One more thing to notice, since there is no "reason code" to classify the inventory loss transactions, you may need to track them on the GL level, back to the IV module.

- As for the unit cost, it may not necessarily be the same as the unit cost on the in-transit document (in the example above, 5) since it will be controled by the inventory valuation method (FIFO , Average .. etc)

Please feel free to share any further inquiries.
argunn 150 on at

Like (0)

Report

RE: Inventory Lost in Transit

thank you for helping me on this.Could you elaborate a little more on changing the distributions of my physical counts? If we reflect the receipt of inventory in our primary inventory account, then adjust out a percentage due to loss in transit, if I enter that adjustment as a reduction of inventory do I have available a way in 2010 to classify that physical count as damaged or lost?
Verified answer

Richard Whaley 25,195 on at

Like (0)

Report

RE: Inventory Lost in Transit

With 2010 you will need to change the distributions on the inventory adjustments and physical counts (depending on which system you use) as these default to the standard cost/offset account found in the setup.
Mahmoud Saadi 32,738 on at

Like (0)

Report

RE: Inventory Lost in Transit

For the functionality you mentioned, it will do

Although, "reason codes" feature has been provided with GP 2013
argunn 150 on at

Like (0)

Report

RE: Inventory Lost in Transit

So it will remove the gas from an on hand status, designating it as lost inventory and will also track that financially with an inventory gain/loss account. If we are still using 2010 can I enact the same solution?
Richard Whaley 25,195 on at

Like (0)

Report

RE: Inventory Lost in Transit

Mahmoud has exactly the correct solution. I have a client that delivers fuel to ships. They loose fuel to the leftovers in the bottom of the barges and to temperature changes. They take an inventory every evening to adjust the quantity on hand due to normal losses. YES, if you are on 2013, you can use Reason Codes and do inventory adjustments rather than physical counts and post to a different inventory gain/loss account for the differences.
Verified answer

Mahmoud Saadi 32,738 on at

Like (0)

Report

RE: Inventory Lost in Transit

I believe that you define a "Reason Code" to be included in an Adjustment Out. The original amount will be received through in-transit, and the loss will be recorded to credit the inventory account through an Adjustment Out using the reason code to keep track of your losses.

Of course, you might need to consider a separate inventory offset account (Inventory Loss) to be able to reconcile your losses on both; the inventory and GL Levels.