Account entries generated in PO receipt transaction

Pre-Requisite Setup Required

- Create below Items as Buy Item and setup the unit cost in costing module with cost type as
Pending
- Run Update standard cost to freeze the cost
- Check “Create Debit memo for RTS transaction” for the supplier (Nav: Supply
Base>Supplier>Purchasing

Create PO for the below items

Setup the shipment for each line.

Navigate to Shipments/Receiving Controls

- Set delivery as “Direct Delivery” for 1st & 2nd line.

- Set Delivery as “Standard Delivery” for 3rd line.
Navigate to Receiving/Receipt and query the PO#, the transaction types for first 2 lines creates both
receiving & Inventory destination type since the delivery type is “Direct Delivery”

For last line only one destination type “Receiving” gets created since the delivery type is “Standard
Delivery”.

Select “View Accounting” from Tools to view the account entries in receipt transaction.
Navigate to View receiving transaction/T Accounts to view for receiving destination type

Material Inspection Account - Dr

Accounts Payable Clearing -Cr

Navigate to material transaction to view for Inventory destination type transaction

Once the material is received from Main Inventory Org to Sub inventory, the account entries generated
in Inventory Modules are,

Inv Valuation accnt- Dr

Purchase Price Variance accnt- Dr ( Since the PO price is $12 and standard cost of item is $10, for 500 Ltr
of milk the variance recorded is $2*500=$1000

Material Inspection Accnt-Cr ( The $6000 Dr in PO receipt gets distributed for above accnts, -ve accnt
entries will get nullify the material inspection accnt)

Inventory account entries for Sugar & Cocoa

Inv Valuation accnt- Dr

Material Inspection accnt- Cr

Note: Since the PO price and standard cost is same, no purchase price variance is created.
Account entries for Return to Supplier Transaction (RTS)

Return 50 ltr of Milk to supplier, now 2 lines will get generated for “Inventory” & “Receiving” destination
type.

For Receiving Destination Type

Navigate to View receiving transaction/T Accounts to view for receiving destination type for RTS
transaction

Material Inspection Account - Cr

Accounts Payable Clearing -Dr

As we observe when we receipt the 500 ltrs, the account payable account credited for 6000$ &
Inventory accnt got debited for 6000$, since we are returning 50ltrs, $12*50=$600 is getting reversed
for the first transaction as shown above.

For Inventory Destination Type

Navigate to material transaction to view for Inventory destination type transaction.

Material Inspection Accnt- Dr

Inventory Val Accnt- Cr

Purchase Price variance- Cr

Note: Since the transaction is reverse to receiving the material, the account entries gets reversed
compared to entries generated at the receipt of PO for “Inventory” transaction type.
Make payment for supplier, generate Invoice and match for PO for 450ltr of milk.

The account entries generated for the invoice matching are as follows,

Account Payables accnt- Cr

Account payables clearing accnt- dr (This accnt gets nullify by debiting, as this accnt was credited at the
receipt)
Account entries generated in WIP transaction
Create Discrete Job for the assembly “Caramilk”

In this case, since component inventory exist in “Stores” sub inventory, change the supply Inventory to
stores from default sub inventory.
Complete the 1 qty & reject rest
Now check the account entries for the above scenario

WIP / Discrete / WIP Value Summary

Material Cost:

Milk: Qty/Asy=10, Unit Cost=10, Tot=100

Sugar: Qty/Asy=5 Unit Cost=10, Tot=50

Cocoa: Qty/Asy=4, Unit Cost=25, Tot=100

Material Cost Incurred is 250$, since the unit qty of Job is completed the cost is relieved from WIP
valuation and added to Inv Valuation account (since the finished good on hand inventory increased by
unit qty)

Resource Cost:

Resource Cost to complete Op Seq 10=10Hr, Rate=$20/Hr, Tot=200$

Resource Cost to complete Op Seq 20=1Hr, Rate=$50/Hr, Tot=50$

Total Resource cost=450$

1081098

Since unit qty of Job completed the resource cost relieved is 250$, and net activity cost is 200$ incurred
for operation 10 for 2nd component.

Now scrap the 2nd job which was rejected at op seq 10 and view the WIP value summary for the scrap.