Variance due to MR11 reversals?

[Former Member]

Hello Everyone,

Please share your thoughts on this issue.

When I ran MB5L report there was a difference in Stock and Stock account.  I reconciled the GL account with stock and checked the documents.  The variance is due to PO’s with GR but no IR. 

I ran MR11 to settle off the variance but the difference was still the same.  So I reversed the MR11 Document and realized that the system did not do the exact reversal of the original document. 

These are the accounting entries system posted:-

At the time of GR:-

Material               D             400

GR/IR                    C             400

There is no invoice but MR11 Document:-

GR/IR                    D             400

PRD                        C             400

MR11 reversal entry – MR11SHOW:-

Material               D             400

GR/IR                    C             400

The difference still remains, so I performed manual adjustment entries to reverse MR11SHOW & MR11 accounting entries:-

Manual adjustment MR11SHOW:-

GR/IR                    D             400

Material               C             400

Manual adjustment MR11:-

PRD                        D             400

GR/IR                    C             400

Now, there is no Variance but PO is still open i.e. there is a GR but no IR and if the invoice comes & I post MIRO there will be Variance.  How to tackle this issue?

Thanks in advance.

A

[Former Member]

Hi,

As explained by others this is pretty standard behavior. You use MR11 to reverse the GR/IR provision.

There can be two cases, if there is sufficient stock coverage system will reduce the stock from the balance sheet.

Material                 C            400

GR/IR                    D             400

If there is no sufficient stock coverage (assuming material is fully consumed), system will post to the P&L (PRD)

PRD                      C           400

GR/IR                    D             400

That's it. There is no need to pass additional JVs because the accounting is correct at this point.

If you want you can pass a JV from PRD to credit RM consumption or such account depending on how you are presenting your financial statements.

Of course before doing MR11 take a decision whether Invoice is likely to be received or not.

Regards,

Arjun

[former_member183424]

Your scenario has happened like that.

When you have posted the MR11, at that time you haven't the sufficient stock for your material master. That's because system has posted the credit entry to PRD account.

Now when you have gone for MR11 cancel, then at that time you have the sufficient stock for your material, so system has posted the debit entry to material's account.

Now if you want to stop the invoice, then either you can block the PO line item or you can set the deletion flag for the PO line item.

[Former Member]

Thank you Mukthar & Dibyendu,

Mukthar – When you say that I can post the invoice but wouldn’t the GR/IR line item during MIRO impact the Stock Value (I am not referring to GL account value)? 

Dibyendu – you have suggested the ways to stop the invoice But if I have to Post the invoice than what should I do?

Regards,

Kamal

[Former Member]

Hi All,

Any suggestions??

Thanks,

A

[former_member198650]

Hi Arjun,

If you will not receive any invoice against the PO , then you can reverse the GR by movement type 102. Or if you receive the invoice then you can post it and there will not any variance will post. The GR/IR balance will be nullified.

Regards,

Mukthar

[Former Member]

Thank you Mukthar & Dibyendu,

Mukthar – When you say that I can post the invoice but wouldn’t the GR/IR line item during MIRO impact the Stock Value (I am not referring to GL account value)? 

Dibyendu – you have suggested the ways to stop the invoice But if I have to Post the invoice than what should I do?

Regards,

Kamal

[former_member198650]

Hi Arjun,

It would not impact the stock value when you post at MIRO. Because the stock value get impacted at MIGO. If any price difference between PO & MIRO will arise in that case it impacts to stock value at MIRO. Otherwise it would not impact.

Regards,

Mukthar

[Former Member]

Thank you very much Mukthar. Can you please elaborate the 2nd line where you say "If any price diff between PO & MIRO arise in that case it impacts Stock value at MIRO".  how would this impact to a material with MAP?

regards,

A

[former_member198650]

Hi Arjun,

Suppose your PO price is 10 and you did GRN with the price. Later your revise PO price with 11 and this difference 1 will post at the time of MIRO. If the material has enough stock then it posts to inventory a/c else it posts to price difference a/c. The accounting entry in both cases will  be:

GR/IR Clearing A/c Dr 10

Inventory A/c Dr 1

Vendor A/c Cr  11

GR/IR Clearing A/c Dr 10

Price difference A/c Dr 1

Vendor A/c Cr  11

Hope it clears now.

Regards,

Mukthar