Procedure for Correcting Purchase Receipt

twdavis

What is the proper procedure for correcting a purchase receipt, if movement of the received material has occurred and undo and reverse are not possible?

ex:
received quantity should have been 1000 at xx dollars but 1500 was received at yy dollars and posted. usage occurs.

Do i do a credit memo for the entire amount received 1500 at yy and then re-invoice and receipt for the 1000 at xx?
or
Do i do a credit memo for the 500 at yy ?

Thanks

Doc9

I can tell you how I would correct the issue within my database. We are purchasing raw materials as a manufacturing company as well and do work with multiple currencies.

I would first use a negative item journal to balance the inventory and then make SURE to set the applying entry to the open and incorrect positive entry from the incorrect PO. Post and review results in ledger entries.

Now perform balancing entries to the G/L, post them and review / validate results.

Now go and set your work date to reflect your desired document dates. - Optional

Recreate and evaluate purchase order, post by receive and invoice.

This always shows good audit trail and balances inventory and purchase entries. We add correction for doc # in the description of the item journal as well.

Hope this helps!

twdavis

Hi Doc9
thanks for responding.
Forgive me for being so dense, but can you be more specific in "what" and "how much" needs to be done when?

using the example: PO for item with quantity of 1000 at cost of $5 each. Received 1500 in ERROR.

I would first use a negative item journal to balance the inventory

what qty would you do this negative adjustment for? the difference in error 500 or the entire 1500?

Now perform balancing entries to the G/L, post them and review / validate results.

I realize the "balancing entries" are to those accounts affected during the receipt, but for how much? the difference or the entire amount?

Recreate and evaluate purchase order, post by receive and invoice.

I guess this is saying create a new PO for "the entire 1500". Right?

Would a credit memo for the entire amount and then a new invoice for the correct amount received accomplish the inventory adjustments and account balances?

Thanks for your replies.

Fred_Deutsch

twdavis wrote:

What is the proper procedure for correcting a purchase receipt, if movement of the received material has occurred and undo and reverse are not possible?

ex:
received quantity should have been 1000 at xx dollars but 1500 was received at yy dollars and posted. usage occurs.

Do i do a credit memo for the entire amount received 1500 at yy and then re-invoice and receipt for the 1000 at xx?
or
Do i do a credit memo for the 500 at yy ?

Thanks

If it was my database, I would do a Credit Memo for all 1500 at yy and repurchase the 1000 at xx. Liberally Document The Credit Memo showing what Purchase Order and Receipt and Purchase Invoice are involved and if possible, do the repurchase on the same Purchase Order as the incorrect entry and document that also with the Credit Memo Number and an explanation. Seems easier and more proper to me than Inventory Adjustments and G/L adjustments.

twdavis

Thank you for your replys.

Doc9

twdavis wrote:

Thank you for your replys.

I would really like to help you understand this further to insure you get the full picture when working with purchasing & inventory. I'm sure this issue has since been resolved but have you experienced the need for a similar correction? Are you using Manufacturing? What is your item's costing method?

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