Design Details: Inventory Posting

Each inventory transaction, such as a purchase receipt or a sales shipment, posts two entries of different types.

Entry type Description

Quantity

Reflects the change of quantity in inventory. This information is stored in item ledger entries.

Accompanied by item application entries.

Value

Reflects the change of inventory value. This information is stored in value entries.

One or more value entries can exist for each item ledger entry or capacity ledger entry.

For information about capacity value entries related to the use of production or assembly resources, see Design Details: Production Order Costing.

In relation to quantity postings, item application entries exist to link inventory increase with inventory decrease. This enables the costing engine to forward costs from increases to the related decreases and vice versa. For more information, see Design Details: Item Application.

Item ledger entries, value entries, and item application entries are created as a result of posting an item journal line, either indirectly by posting an order line or directly in the Item Journal window.

At regular intervals of dynamically, value entries that are created in the inventory ledger are posted to the general ledger to reconcile the two ledgers for financial control reasons. For more information, see Design Details: Reconciliation with the General Ledger.

Entry flow between inventory and G/L

Example

The following example shows how item ledger entries, value entries, and item application entries result in general ledger entries.

You post a purchase order as received and invoiced for 10 items with a direct unit cost of LCY 7 and an overhead rate of LCY 1. The posting date is 01-01-20. The following entries are created.

Item Ledger Entries

Posting Date Entry Type Cost Amount (Actual) Quantity Entry No.

01-01-20

Purchase

80.00

10

1

Value Entries

Posting Date Entry Type Cost Amount (Actual) Item Ledger Entry No. Entry No.

01-01-20

Direct Cost

70.00

1

1

01-01-20

Indirect Cost

10.00

1

2

Item Application Entries

Entry No. Item Ledger Entry No. Inbound Item Entry No. Outbound Item Entry No. Quantity

1

1

1

0

10

Next, you post a sale of 10 units of the item with a posting date of 01-15-20.

Item Ledger Entries

Posting Date Entry Type Cost Amount (Actual) Quantity Entry No.

01-15-20

Sale

-80.00

-10

2

Value Entries

Posting Date Entry Type Cost Amount (Actual) Item Ledger Entry No. Entry No.

01-15-20

Direct Cost

-80.00

2

3

Item Application Entries

Entry No. Item Ledger Entry No. Inbound Item Entry No. Outbound Item Entry No. Quantity

2

2

1

2

-10

At the end of the accounting period, you run the Post Inventory Cost to G/L batch job to reconcile these inventory transactions with the general ledger.

For more information, see Design Details: Reconciliation with the General Ledger. For information about the general ledger accounts that are mentioned in the example, see Design Details: Accounts in the General Ledger.

The following tables show the result of reconciling the inventory transactions in this example with the general ledger.

Value Entries

Posting Date Entry Type Cost Amount (Actual) Cost Posted to G/L Item Ledger Entry No. Entry No.

01-01-20

Direct Cost

70.00

70.00

1

1

01-01-20

Indirect Cost

10.00

10.00

1

2

01-15-20

Direct Cost

-80.00

-80.00

2

3

General Ledger Entries

Posting Date G/L Account Account No. (En-US Demo) Amount Entry No.

01-01-20

[Inventory Account]

2130

70.00

1

01-01-20

[Direct Cost Applied Account]

7291

-70.00

2

01-01-20

[Inventory Account]

2130

10.00

3

01-01-07

[Overhead Applied Account]

7292

-10.00

4

01-15-20

[Inventory Account]

2130

-80.00

5

01-15-20

[COGS Account]

7290

80.00

6

Hh997354.note(en-us,NAV.70).gifNote
The posting date of the general ledger entries is the same as for the related value entries.

The Cost Posted to G/L field in the Value Entry table is filled.

The relation between value entries and general ledger entries is stored in the G/L - Item Ledger Relation table.

Relation Entries in the G/L – Item Ledger Relation table

G/L Entry No. Value Entry No. G/L Register No.

1

1

1

2

1

1

3

2

1

4

2

1

5

3

1

6

3

1

Assembly and Production Posting

Capacity and resource ledger entries represent the time that is posted as consumed in production or assembly. These process costs are posted as value entries to the general ledger along with the involved material costs in a similar structure as described for item ledger entries in this topic.

For more information, see Design Details: Assembly Order Costing and Design Details: Production Order Costing.

See Also

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