Inventory Costing in R12 and End to End Accounting - Inventory Expense Item
By Jag - September 12, 2012
Types of Items
1. Expense Items – Stationery (in this example Paper has been used as a stockable item but it differs from client to client based on business nature)
2. Inventory Expense Items – Stockable Items depends on the company
3. Inventory Asset Items – To capitalize the item
Let us see the Inventory Expense Items
Inventory Expense Item should be configured/migrated with the following check boxes
Create an Item
Cost Group, Cost Types etc can be created in Inventory itself.
Create and Approve PO
Receive the goods
If it is 2 way matching, we don’t need to do ‘Receiving Transactions’. If receipt routing ‘Direct Delivery’, we don’t need to do ‘Receiving Transactions’.
In the above example it is ‘Direct Delivery’.
Check the Receiving Transaction Summary
Keep the cursor as below
Entry at this time will be
Run the costing process for inventory valuation
Run the Cost Manager from Inventory – Setup>Transaction>Interface Manager or
Cost Management>Setup>Interface Manager
Launch the cost manager
Run the ‘Create Accounting’ from Cost Management
Entry will be created at this time
You can view the same entries in GL as well.
Other Entries
At the time of Creation of AP Invoice by matching against the PO
At the time of making payment in AP (if cash management is not implemented)
OR
At the time of making payment in AP (if cash management is being implemented)
After Bank Statement is being reconciled in Cash Management
1. Expense Items – Stationery (in this example Paper has been used as a stockable item but it differs from client to client based on business nature)
2. Inventory Expense Items – Stockable Items depends on the company
3. Inventory Asset Items – To capitalize the item
Let us see the Inventory Expense Items
Inventory Expense Item should be configured/migrated with the following check boxes
Inventory Expense Item | |||
Inventory TAB | Inventory Item | Stockable | Transactable |
Enable the check box | Y | Y | Y |
Purchasing TAB | Purchased | Purchasable | |
Enable the check box | Y | Y | |
Cost Group, Cost Types etc can be created in Inventory itself.
Create and Approve PO
Receive the goods
If it is 2 way matching, we don’t need to do ‘Receiving Transactions’. If receipt routing ‘Direct Delivery’, we don’t need to do ‘Receiving Transactions’.
In the above example it is ‘Direct Delivery’.
Check the Receiving Transaction Summary
Keep the cursor as below
Entry at this time will be
Line | Accounting Class | Account | Debit | Credit |
1 | Accrual | 01-000-2410-000 | 200 | |
2 | Receiving Inspection | 01-000-1400-000 | 200 |
Run the Cost Manager from Inventory – Setup>Transaction>Interface Manager or
Cost Management>Setup>Interface Manager
Launch the cost manager
Run the ‘Create Accounting’ from Cost Management
Entry will be created at this time
Line | Accounting Class | Account | Debit | Credit |
1 | Inventory Valuation | 01-000-1410-000 | 200 | |
2 | Receiving Inspection | 01-000-1400-000 | 200 |
Other Entries
At the time of Creation of AP Invoice by matching against the PO
Line | Accounting Class | Account | Debit | Credit |
1 | Accrual | 01-000-2410-000 | 200 | |
2 | Liability | 01-000-2210-000 | 200 |
Line | Accounting Class | Account | Debit | Credit |
1 | Liability | 01-000-2210-000 | 200 | |
2 | Cash | 01-000-1210-000 | 200 |
At the time of making payment in AP (if cash management is being implemented)
Line | Accounting Class | Account | Debit | Credit |
1 | Liability | 01-000-2210-000 | 200 | |
2 | Cash Clearing | 01-000-1220-000 | 200 |
Line | Accounting Class | Account | Debit | Credit |
1 | Liability | 01-000-2210-000 | 200 | |
2 | Cash | 01-000-1210-000 | 200 |
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