Standard Goods Receipt PO resulting in odd Journal Entries

[simonsimonian]

I posted a Goods Receipt PO which inculded quantity 3 of an item that is $77.60.

Normally, this should create a Journal Entry where Inventory gets debited $7760x3=$232.80 and the allocation Account (GOODS RECEIVED NOT INVOICED) on the credit side for the same amount (232.80).

However this time the resulting JE

(1) credited GOODS RECEIVED NOT INVOICED for the expected amount (price x quantity = 232.80)

(2) also credited COGS for $1472.37 and

(3) debited inventory by $1705.17 (the expected $232.80, plus the unexpected $1472.37).

Why is the $1472.37 included in this transaction at all - it should have only credited GOODS RECEIVED NOT INVOICED and debited INVENTORY both by $232.80.

We use FIFO. We do allow negative inventory, however this inventory item was not in negative quantity.

thanks!

Geoff

[Former Member]

Geoff,

Since you are using FIFO, the cost posted would be the earliest inventory for those items. In your case, that COGS was probably 1472.37/3.

Thanks,

Gordon

[simonsimonian]

Gordon, thanks

When you say "the cost posted would be the earliest inventory for those items" what do you mean?

I understand that if I posted an AR Invoice , the COGS would be calculated from the oldest available layer, or if the item had a negative quantity on hand, it would have posted the price difference between those transactions that caused the inventory to go negative and the actual price once a transaction occurred that brought the inventory to zero / positive. Or if there is a difference in price between a GRPO and AP Invoice, the difference is allocated to the Price Difference Account.

However in a normal GRPO inventory should be debited, and Goods Received Not Invoiced (allocation account) credited... Why is there a JE to to any other accounts period?

What circumstances could cause these?.

Prior to this GRPO, the inventory audit showed the item at 70 on hand, $670 cumulative value. After the GRPO (on which the GRPO Total is $232.80), the inventory audit says 88 on hand and $2375.34 in cumulative value. This doesn't make sense

[Former Member]

You need to check what these 70 on hand came from. I mean how many layers for them. That is what I mean for "earliest inventory for those items".

[former_member583013]

Simon,

The only time a Purchase transaction would post to a COGS account is when the Warehouse is a drop ship warehouse.

Please check if the transaction was created on a drop ship warehouse.

If you have set your Item Cost to be managed by Warehouse (Admin > Sytem Init > Company Details) the the cost from that warehouse would be taken

Regards

Suda