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How does the system calculate the purchase gains or loss amount

Hello Everyone,

I am using SAP Business one on premise version 9.2 Pl6. I received 2520 units of stock at 8.6953 per unit.I created a Goods receipt PO, copied it to an invoice then later created landed cost document. When i created the landed costs i wanted the costs be debited only to the stock account not the purchase price gains or loss acc.To my surprise i got the below JE. How does the system calculate the purchase gains or loss amount and how do i clear the Purchase price gains or loss account. I did not create an transfers or changed warehouses.

Stock account (Debit) 7359.09

Purchase gains or loss(Debit) 11720.02

Other payable (Credit) 3346.24

Stock in transit (Credit)426.25

Duty payment (Credit) 15306.62

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1 Answer

  • Best Answer
    Jun 22, 2017 at 08:46 PM

    Please go through the following reasons as for landed cost same reasons particularly Stock in Hand Quantity < GRPO/Landed Cost Quantity

    SAP Business One Post price difference on following transactions:

    i. A/P Invoice based on a Goods Receipt PO

    ii. Goods Return Based on Goods Receipt P.O

    iii. A/P Credit Memo based on A/P Invoice.

    When creating an A/P Invoice based on a Goods Receipt PO and there is a price difference between the documents, the G/L Accounts used when posting this difference depend on the current In Stock quantity (Stock in hand) of the item

    . i. If the Stock in Hand Quantity > = A/P Invoice Quantity, then only the Stock Account will be used (No Price Difference Account will be used).

    ii. If the Stock in Hand Quantity < A/P Invoice Quantity, the price difference will be split between the Stock and Price Difference accounts.

    iii. If the Stock in Hand Quantity = Zero, then the entire price difference will be posted to the Price Difference account. We will discuss all scenarios in detail as below,

    Stock in Hand Quantity > or = A/P Invoice Quantity

    Let us take this example:

    Figure 1: 1. Create a Goods Receipt PO for item 'PC', 10 units at PKR 100.00 each. SAP will post following entry and increase stock by 10 units. Dr. Stock Account PKR 1000.00 Asset understated as Cr. Goods Received Not Invoiced PKR 1000.00 price will increase on A/P invoice.

    2. Create Delivery of item ‘PC’, 2 units at PKR 100.00 each. SAP will post following entry and decrease stock by 2 units. Dr. Cost of Goods Sold Account PKR 200.00

    CGS understated as actual Cr. Stock Account PKR 200.00 cost is not 100/unit.

    3. Create an A/P Invoice based on the Goods Receipt PO for 2 units, with Unit Cost of PKR 125.00 & SAP will post following entry, Dr. Stock Account PKR 50.00

    Asset increase by PKR 50.00 Dr. Goods Received Not Invoiced PKR 200.00 (25*2 = 50.00) Cr. Vendor Account PKR 250.00 Price difference effect has been charged to remaining stock items and item cost will be increased accordingly and will effect on cost of goods sold account accordingly.

    SAP Business One formula to calculate Price Difference is A/P Invoice Quantity * [A/P Invoice Price - Goods Receipt PO Price] 2* [125-100] = 50 (As in Figure 1) Value of total Stock I Hand = 100*8 = 800 + 50 (Increase) = 850 The price difference has also updated the moving average cost of the item as 850/8 = 106.25/unit.

    Stock in Hand Quantity < A/P Invoice Quantity

    To clarify this point lets continue same example as above (Figure 1), now stock in hand quantity of item ‘PC’ is 8 units at cost of 106.25/unit.

    Figure 2: 1. Create a Delivery for 5 more units. This will now reduce the Stock in hand from 8 to 3 units and post following entry Dr. Cost of Goods Sold Account PKR 531.25 (106.25*5) CGS understated as Cr. Stock Account PKR 531.25 actual cost of item is PKR 125/Unit. Now stock of item is 3units at cost of 106.25/unit.

    2. Create an A/P Invoice based on the Goods Receipt PO for 5 units, with Unit price of PKR 125 & SAP will post following entry, Dr. Stock Account PKR 75 (25*3) Dr. Goods Received Not Invoiced PKR 500 (100*5) Dr. Price Difference Account PKR 50 (25*2) Cr. Vendor Account PKR 625(125*5) As 5 items has been delivered and value has been charged to cost of goods sold and Current stock (3) is not sufficient to cover the A/P Invoice quantity (5), so SAP will Charge Price difference to Price Difference Account (CGS Account). SAP Business One formula to calculate Price Difference is A/P Invoice Quantity * [A/P Invoice Price - Goods Receipt PO Price] 5* [125-100] = 125 Stock of 3 units value = 106.25 * 3 = 318.75 + 75 (Increase) = 393.75 (As in Figure 2) The price difference has also updated the moving average cost of the item as 393.75/3 = 131.25/unit.

    Detail of A/P credit Memo & A/P Goods Return

    In some scenario the 'Price Difference' account is used when posting an independent A/P Credit Memo or A/P Goods Return. Scenario and reasons are discussed below: The 'Price Difference' account is used when the 'Stock in Hand' quantity of an item is reduced to zero. This account holds the difference between the transaction amount (A/P Credit Memo or A/P Goods Return) and the item's 'Cumulative Value' in the Item table.

    For example we an item ‘PC’ with stock in hand 10 units at cost of PKR 100/unit with cumulative value of PKR 1000. If an A/P Credit Memo or A/P Goods Return is posted for the entire 10 units with the unit price of PKR 125.00. The PKR 25.00 difference per unit will be posted to the 'Price Difference' account. In A/P Credit Memo following entry will be posted Dr. Vendor A/C PKR 1250.00 Cr. Stock A/C PKR 1000.00 Cr. Price Difference A/C PKR 250.00 In A/P Goods Return same as above entry is posted but Goods Received Not Invoiced A/C is used instead of Vendor A/C.

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