Problem:
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How to manage additional expenses if sale occurs before Additional Expenses document entered?
Solution: Use an Inventory Write Off document to allocate such costs.
NOTE Please use manual Average Cost Price to understand calculation process of average cost price and the way to track it.
Consider an example:
Invoiced received was entered on October, 25th for an 1 Item (price - Price 100 AED). Then I've entered Sales
Sale was registered with Invoice on October, 26th (the items and item's cost is deducted as 100 AED).
Then on November, 1st I receive , entity receives the bill from the transport company (for transport charges - as of 50 AED). This cost from the will be a landed cost to the concerned item and on the item balance I'll have 50 AED without qty.
Solution: If the case when invoice for additional expense is received after the sale has happened occurs during the same month the cost will be allocated according during the month end closing when you enable cost calculation option:
But when it comes to the end/beginning of the month , the additional expenses will not be .
So this amount should be added to the cost of the sold. And in the system this amount is related to the item's balance (50 AED) without any quantity.
If an Additional Expense document was received in the same month as the sale occurred, then cost is allocated due to Month End Close procedure as cost calculation options are enabled:
If an Additional Expense document was received as the month is closed, then the additional expenses are not allocated automatically, and the cost will be remaining remains on the item's balance:
There are two ways to clear the case:
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This amount will be deducted accordingly with the next purchase and sale, as Additional Expenses are included in the Average Cost Price of the item
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Inventory Write Off document is entered using Amount only option , in Correspondence already.
In case if item is not purchased again, then manual correction with Inventory Write Off document is possible. Please follow the steps.
1. Create Inventory Write Off document:
- enable an option Amount Only at Main tab
- select Cost Of Sales Expense GL Account
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- in Correspondence field
In
Inventory Tab Put the concerned item and Additional expense amount: 2. At Inventory tab put:
- the Item
- Additional Expense Amount
3. Post Inventory Write Off document will create the following transaction (in Dr side there will account specified in Correspondence field, so it creates the transaction (Cost Of Sales Expense GL Account is in Debit side):
And Check the balance of inventory has been , that amount is adjusted:
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# average cost price mismatch