After posting a Warehouse Confirmation (Journal Entry Type: Goods Receipt from Supplier) you notice that a difference is posted on a DIFFER G/L account and that values for the Purchase Order and its valuation don't match. You expect that these values should be the same.
Reproducing the Issue
1. Open the Work Centre General Ledger,
2. Then the View Journal Entries
3. Search and open Journal Entry XYZ, related to the Warehouse Confirmation
4. Navigate to the Line Items, the Inventory Valuation G/L account has value of ABC amount while the Purchase Order has an amount of DEF
5. A DIFFER G/L account is credited with amount GHI which is the difference between the two values.
This is the expected system behaviour which stems from having negative inventory allowed on the logistics site combined with the Perpetual Cost Method: Moving Average for the associated material.
1. Open the Work Centre Inventory Valuation
2. Open the View Material Unit Costs in Master Data
3. Show All Unit Cost, search for and select the relevant material
4. Select the one depending from the relevant Business Residence as well as from the relevant Valid to - Valid from period
5. Click on the View Cost History Button
6. In Period/ Year fields, maintain the period at which the posting went through
7. Select the Source Document ID associated to the Journal Entry
8. After posting the Goods Receipt from Suppliers with a Capitalised Quantity of X, its Resulting Inventory Quantity is Y, Y being inferior to X
9. If you look at the previous line, the Resulting Inventory Quantity presents a negative quantity of - Z
The resulting posting can be explained as such:
Since your previous quantity was -Z AND you are using the Moving Average Cost Method, the system first brings back the Inventory to 0 and then values the remaining quantity based on the cost on the Purchase Order.
This can be illustrated as follows:
- You have JKL material in Stock with a Resulting Inventory Quantity of -5 ea, the Resulting Inventory Value is - 40 XX (where is XX is the currency in use)
- You have purchased 10 ea of JKL, valued at 100 XX
=> This covers the negative inventory and more
The calculation logic in the background results in first, bringing back the Resulting Inventory Value to 0, in this case 0 - (-40) = 40 XX. These 40 XX will be deduced from the Resulting Inventory Value of the Purchase Order.
To bring the Resulting Inventory Quantity to 0 as well, 5 ea are consummed meaning that 5 units from the original Purchase Order remain.
Once this is done, the system values the remaining units based on the Purchase Order value, here 100/10 = 10 XX/ea
The final valuation posting takes into account 100 - 40 = 60 XX to which it adds the Purchase Order value for the remaining 5 units: 5*10 = 50 XX
50 + 60 = 110 XX
Since the Purchase Order has a value of 100 XX, the difference (10 XX) gets posted on the relevant DIFFER G/L account.
For further information on Negative Inventories and Moving Average Cost Method, please refer to the help documentation available from the Help Centre of your system:
- Moving Average Cost Method
- Moving Average Calculation
- Negative Inventories
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