Inventory Posting Groups

gemini_shooter

Hello All,

I am trying to set this up for a client but I already have horrors about the kind of setup they want. The client wants to buy inventory to one account and sell out of another account.The client has the setup with the following inventory accounts:

Inventory In 14210 (Purch Account)
Inventory Out 14220 (Inventory Account)
Inventory Adjustment 14230 (Inventory Adjustment)
AR 12610
AP 22530
Sales 47100
COGS 56510

The client wants the following:

Purchase
14210 DR
AP 22530 <CR>
Direct Cost Applied ?
What do I do here (Currently I have a setup as below)
14220 DR
14220 <CR>

Sales
Sales 47100 <CR>
AR 12610 DR
Post Cost to GL
COGS 56510 DR
Inventory 14220 <CR>

I am not sure if this setup works from a costing perspective for Sales returns and purchase returns?

The client does not want the usual nav setup with the purchase account being an expense account.

Can anyone help me to see if the above setup is conceptually wrong, especially for purchase returns and sales returns?

Also, what is the ususal setup as per GAAP in NAV for clients in the US, this is pertianing to purch. account/purch. return account, direct cost & inventory account, inventory adjustment +ve and -ve

I know this is a very broad question, but I am seeking some comments on a good GAAP setup for NAV.

Any help is highly appreciated.

Thank you

kapil4dynamics

Returns will come later, I cud see only credit figure in so called Inventory account of ur client after sometime r they fine with that. Reason being

for ur incoming transactions it is bound to get 0 but in case of sales u r taking in all the credits that means CR sitting in always in one of ur BS account.

Alex_Chow

The G/L Setup has nothing to do with inventory costing. What you're asking requires some modification.

Ask your client if it's okay to see all the Debit and Credit transactions instead of having it on a different account.

gemini_shooter

Thank you guys, Alex I read your blog and thats why I posted this. I tried to do a detail flow of the entires below.

Kapil, thanks for the input, yes I can see 14210 only have credit figures, is that what you are refering to?

Here is how it is flowing as of now in the test setup:

INITIAL ENTRIES

PURCHASE
(Purch. Acc) Inventory IN 14210 (DR) - (Payables Acc) AP 22530 <CR>

SALES
(Sales Acc) Sales 47100 <CR> - (Receviables Acc) AR 12610 (DR)

SALES RETURN
(Receviables Acc) AR 12610 <CR> - (Sales Cr Memo Acc) Sales Return 47110(DR)

PURCHASE RETURN
(Payables Acc) AP 22530 (DR) - (Purch Cr. Memo Acc.) Invnetory IN 14210 <CR>

SECOND LEVEL ENTRIES (After Post Cost to G/L)

PURCHASE
(Direct cost applied) Inventory OUT 14220 <CR> - (Inventory Acc) Inventory OUT 14220 (DR)

SALES
(COGS) COGS 56510 (DR) - (Inventory Acc) Inventory OUT 14220 <CR>

SALES RETURN
(Inventory Acc) Inventory OUT 14220 (DR) - (COGS) COGS 56510 <CR>

PURCHASE RETURN
(Inventory Acc) Inventory OUT 14220 <CR> - (Direct cost applied) Inventory OUT 14220 (DR)

This one is scary because it reverses including the freight; but the client understands that they would have to eat that freight cost.

Do you see any major flaws in this kind of a setup for the posting group?

Physical Inventory Adjustment

This one I am little confused it did the following for a negative adjustment

-ve ADJUSTMENT
(Direct cost applied) Inventory OUT 14220 <CR> (-88.00) - (Inventory Ad) Inventory Adj 14235 (DR)(88.00)

SECOND ENTRY
(Direct Cost applied) Inventory OUT 14220 <CR> (-5.00) - (Inventory Ad) Inventory Adj 14235 (DR)(5.00)

I do not understand why it took the extra 5 dollars out ?

Much appreciated

Thank you
Saurav

kapil4dynamics

gemini_shooter wrote:

I can see 14210 only have credit figures, is that what you are refering to?

Yup.

I would suggest you to consult with some colleague of urs and show ur client with some sample transactions what they wud be getting.