Inventory revaluation on enter/match invoices

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Posted on by Joseph Markovich

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We had a situation happen a few months ago where the vendor sent us more than what was on the PO. This extra quantity was showing for a long time on the Received Not Invoiced report and we needed to resolve it.

2,442 items were received in May and sold shortly after. The enter/match transaction was only for 2,440 because that's what we were billed. 120 items were received in November and sold shortly after. The enter/match transaction was for 120.

RNI was showing that we had two shipped to us but not invoiced and matched from the second receipt of 120.

Yesterday, the accounting clerk did an enter/match invoices transaction for the two items that we are not going to be billed for. This had a unit cost entered of 0. When this was posted, the account distributions were debiting Accrued Purchases and crediting Inventory -- that one I understand. GP also changed the unit cost of the receipt layer of 120 to zero and created a GL transaction that debited inventory and credited cost of goods soldv for the inventory value of the 120.

Finance is reconciling the inventory GL accounts today to the subledger and it is off by this GL transaction. I do not understand why it did that. Can someone explain this to me?

Thanks.

-Joe

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Heather Roggeveen 9,146 on at

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What valuation method is used for that inventory item? I have seen this (though not quite the same) when using Average Cost. Because the cost of the inventory item changed, then that would adjust the average cost of the items and therefore impact the cost of goods sold for any items that had been sold subsequently. I can't get my head around why it would end up zero however.

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Joseph Markovich 3,976 on at

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Hi Heather-

The item is FIFO Perpetual.

-Joe

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Heather Roggeveen 9,146 on at

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So, from a pure accounting perspective, I would expect to see an adjustment to the sale of the original 2442 (assuming that they were all sold first, prior to the 120) for the value of the 2 items that was originally posted. This would debit inventory and credit Cost of Goods Sold.

The only thing I can think of that may have impacted the 120 is the setting in Item Resource Planning --> PO Gen Item that says to use last Originating Creditor (Vendor) cost for the price. I would not have thought however, that a posted transaction would be impacted in that way.

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Richard Whaley 25,195 on at

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Looks like you are on a valuation method other than Standard. The correct adjustment would be to invoice for the value of the items and issue a credit/debit memo to adjust the vendors payables account.

A second approach, if possible, would be to close the PO. Closing POs removes lines from that PO from the RNI table.

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Pam Peterson on at

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Joe,

What has happened here is that you have done 2 invoices against 1 shipment document. That one shipment is a single receipt layer in the IV10200 table so when you invoice against it at a different cost the whole layer is revalued.

Take a look at KB 2021869 titled "The Unit Cost of the receipt layer is not what you would expect when 2 invoices are matched to 1 shipment in Microsoft Dynamics GP" for more information.

mbs2.microsoft.com/.../KbDisplay.aspx

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Pam Peterson on at

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Hi Joe,

It has been a few days since we have heard from you. Please update the post if you need anything else.

-Pam

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Joseph Markovich 3,976 on at

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Hi Pam-

Thank you for sending over the link to the KB article -- it explained this situation perfectly and everything is OK now!

Thanks again.

-J

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Pam Peterson on at

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Great! Thanks for letting me know.

I'm glad I could help you out!

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