Purchase Account do not balance zero

Andwian · 2010-10-21

Dear Experts,

In General Posting Setup, I setup the same Account No. for these Account:

1. Purchase Account. 2. Purchase Credit Memo Account 3. Direct Cost Applied Account.
The Direct Posting is set to False in the Account Card.

The Automatic Post Cost to GL is False.

For the initial weeks of go-live, the Account balance zero. Unfortunately, afterward, it did not balance zero, although I have run the Adjust Cost-Item Entries and Post Cost to GL batch job.

Does anyone has any experience on this or have any insight that don't mind to share with?

Thank you.

rajatkalia · 2010-10-22

Hi Andwian

In the first place when u had posted the entries, Purchase acc will always show amount because after posting, Purch and Payble Acc will get updated. Purch acc will become 0 only when Post Inventory cost to GL batch is run since you have given same acc for Purch and Direct cost applied.

Are there any charges posted?, Are different accounts mapped to Purch and Direct cost in the gen posting setup for the Charges?

Regards,
Rajat.

Andwian · 2010-10-22

Hi Rajat,

Thank you for replying.

rajatkalia wrote:

Are there any charges posted?, Are different accounts mapped to Purch and Direct cost in the gen posting setup for the Charges?

Of course there are many Item Charges posted, anyway all of the Item Charges No. have Gen. Posting Setup the same account for the Purchase Account and the Direct Cost Applied Account.

Alex_Chow · 2010-10-22

1. Is direct posting check box is checked off?
2. Did you merge in the purchase Resource functionality?
3. Did you run adjust cost?

Andwian · 2010-10-22

Alex Chow wrote:

1. Is direct posting check box is checked off? Yes.
2. Did you merge in the purchase Resource functionality? No.
3. Did you run adjust cost? Yes.

Thank you Alex.

Alex_Chow · 2010-10-22

Do you post item charge on the purchases?
Have you looked through the G/L account and see if there were other transactions that shouldn't be there?

ssingla · 2010-10-23

When you cannot identify prima-facie reason for difference in these accounts, I like to dig in deep to the root of difference i.e. move day by day (initially try to find out 1st month, then 1st forthnight, then week and then single day) in COA to identify from which date the difference starts to appear (You said in the start they were matching). You can then copy the data of both the accounts to excel and find out which document has created the difference and can possibly found the logical reason.

Andwian · 2010-10-23

Alex Chow wrote:

Do you post item charge on the purchases?

Yes

Alex Chow wrote:

Have you looked through the G/L account and see if there were other transactions that shouldn't be there?

I am currently in progress of looking at it thoroughly. Unfortunately, when doing Post Cost to GL batch job, I used the Post Per Posting Group option, instead of the Posting per Entry. It will make me difficult to trace the anomaly by Document No. (Each Document No. should be a pair).

ssingla wrote:

When you cannot identify prima-facie reason for difference in these accounts, I like to dig in deep to the root of difference i.e. move day by day (initially try to find out 1st month, then 1st forthnight, then week and then single day) in COA to identify from which date the difference starts to appear (You said in the start they were matching). You can then copy the data of both the accounts to excel and find out which document has created the difference and can possibly found the logical reason.

I am investigating now using the suggestion you mentioned.

Thank you all for your suggestions.

ayhan06 · 2010-10-24

Hi,

possible reason for this is that purchase credit amount is different than "actual cost" of items on hand when posting credit memo.(it is valid for average or FIFO method).

for example: you have two items on hand and their total cost is 10. if you return items to vendor with amount of 6, than balance of that account will be -1.

if you buy items in different currency and return items at different date than purchase date, exchange rate differences may also cause this imbalance.

also, posting item charges to SALES SHIPMENTS may cause this due to wrong account setup.

follow ssingla's method.it is best method for finding difference .

Andwian · 2010-10-25

Hi Ayhan,

Thank you for commenting.

ayhan06 wrote:

possible reason for this is that purchase credit amount is different than "actual cost" of items on hand when posting credit memo.(it is valid for average or FIFO method).

for example: you have two items on hand and their total cost is 10. if you return items to vendor with amount of 6, than balance of that account will be -1.

How can? Would you explain it to me in more detail?
I am using Average Costing Metod.

ayhan06 wrote:

if you buy items in different currency and return items at different date than purchase date, exchange rate differences may also cause this imbalance.

I am only using LCY, no FCY.

ayhan06 wrote:

also, posting item charges to SALES SHIPMENTS may cause this due to wrong account setup.

I am having Item Charges posted to Sales Shipment, but I have double-check the Setup, and it was right.

ayhan06 wrote:

follow ssingla's method.it is best method for finding difference .

I am still processing further.

Alex_Chow · 2010-10-25

The item charge posts to your purchase account and the direct cost applied account for the specific GPPG under the item charge.

You may have missed that account when you're summing up the purchase accounts.

ayhan06 · 2010-10-25

Andwian wrote:

Hi Ayhan,

Thank you for commenting.

ayhan06 wrote:

possible reason for this is that purchase credit amount is different than "actual cost" of items on hand when posting credit memo.(it is valid for average or FIFO method).

for example: you have two items on hand and their total cost is 10. if you return items to vendor with amount of 6, than balance of that account will be -1.

How can? Would you explain it to me in more detail?
I am using Average Costing Metod.

Hi,
regarding average costing,let's say you have two items on hand with total of 10 lcy. at the time of purchase return, average cost of the item is 5. if you issue purchase credit and write 6 lcy into "Direct Unit Cost" field in credit memo, following figures are created:

purchase account -> -6
direct cost applied account -> +5
inventory -> -5

for this transaction:
the balance of accounts is -6.
cost amount (actual) at inventory side is -5. is this clear now?

Alex_Chow · 2010-10-25

What you've described is explained in detail here:
http://mibuso.com/blogs/alexchow/2009/03/17/how-to-calculate-cogs-on-account-schedules-the-cpa-way/

Andwian · 2010-10-26

Alex Chow wrote:

The item charge posts to your purchase account and the direct cost applied account for the specific GPPG under the item charge.

You may have missed that account when you're summing up the purchase accounts.

No. I have checked them.

ayhan06 wrote:

Hi,
regarding average costing,let's say you have two items on hand with total of 10 lcy. at the time of purchase return, average cost of the item is 5. if you issue purchase credit and write 6 lcy into "Direct Unit Cost" field in credit memo, following figures are created:

purchase account -> -6
direct cost applied account -> +5
inventory -> -5

for this transaction:
the balance of accounts is -6.
cost amount (actual) at inventory side is -5. is this clear now?

Yes. Thank you

Alex Chow wrote:

What you've described is explained in detail here:
http://mibuso.com/blogs/alexchow/2009/0 ... e-cpa-way/

Thank you for the link.

Purchase Account do not balance zero

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