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34Hi Guys,
I am looking for advice on the following issue:
A client has uses the average perpetual valuation method and manages inventory for multiple sites. Each site is linked to their specific inventory GL Account as well.
Item A value at $50.00 per unit.
Site#1 has 100 in stock (100 * $50.00) = $5,000.00
Site#2 has 50 in stock (50 * $50.00) = $2,500.00
100 was then received in Site#1 @ $75.00 per unit and as such the average cost per unit has now been recalculated to be $60.00 per unit.
Everything seems ok until they sell or adjust the stock out of Site#2
When this stock is removed it will be removed @ $60.00 per unit which will have a value of $3,000.00 (50 x $60.00)
Now not only does the GL have a negative balance for an inventory account ($2,500.00 - $3,000.00 = $-500.00),
But the subledger for the location reads as follows: Quantity on hand Zero. Valuation/balance $-500.00
For the client, though he GL balances with the subledger, it's hard for them to grasp why the quantity on hand in the subledger would be zero but the subledger (HITB) still has a negative valuation/balance.
From my view, once you are looking at the Subledger value as one report (all sites) and the same in the GL (All inventory control accounts) when the issue will net it's self off but if you are trying to pull reports per location/site, it can be confusing for clients.
So should I recommended that they only generate individual reports per location/site when they are looking analysing on-hand quantities only? And when generating reports for inventory valuation that they pull the report as one (all sites and all GL accounts)? Or is there a better way if doing this?
I hope there is a better way because clients that have individual sites and GL accounts for inventory have set their system up as such in order to generate reports individually (per site/location)
Please advise and sorry for the length of this question...
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