You can choose which inventory transactions generate journal entries in the Inventory Configuration screen on the General tab in the Distribution section.
When selected, GL distribution for inventory journal entries is determined based on the transaction type pairs as they are configured in one of the following areas:
- GL distribution on the inventory item. If this does not exist:
- The distribution for the minor inventory group is used. If this does not exist:
- The distribution for the major inventory group is used.
Each Transaction Type will have a Debit and Credit pair. See below for a guide on which accounts to configure for each side of each inventory transaction type pair.
Purchase
- Debit Inventory Asset account (for stock items) or the Expense account (for non-stock items)
- Credit Purchase Accrual account
Return
- Debit Purchase Accrual account
- Credit Inventory Asset account (for stock items) or the Expense account (for non-stock items)
Issue
Note: Issue transactions can be created manually or, if configured, automatically based on work order completion.
- Debit Cost of Goods Sold Expense account
- Credit Inventory Asset account
Restock
- Debit Inventory Asset account
- Credit Cost of Goods Sold Expense account
Adjustment
Distribution may change depending on the circumstances for the adjustment (mark down, write-off, spoilage, etc.).
- Debit Inventory Asset account
- Credit Cost of Goods Sold Expense account
Transfer
Transfer inventory transactions have two journal entries. One for the transfer out and the other for the transfer in.
- Debit / Credit to an Inventory Clearing account
- Credit / Debit to Inventory Asset account
Count Adjustments
- Debit Inventory Asset account
- Credit Cost of Goods Sold or another Expense account
Comments
2 comments
Hi,
Thank for good information. I saw there were "Cr Receipt - Accrual","Dr Receipt - Inventory", "Cr Valuation - CGS" and "Dr Valuation - Inventory". May I ask for GL distribution of those? I'm just join in financial section.
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CR Receipt - Accrual - overrides the purchasing accrual set up in Purchasing configuration PO200, so typically not needed.
DR Receipt - Inventory gl transaction might be used on the receipt transaction if purchasing/payables did not already process a DR Inventory transactions with payables transaction. If configured, it would be a duplicate of the payable transaction.
CR & DR Valuation are normally part of the configuration. It creates gl transactions when generating the Valuation utility.
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