Item model group ledger integration options – physical and financial

It’s important when you are setting up your inventory to understand the effect of the ledger integration options that are setup on the model group. The model group being attached to the released item which will effect the postings that will happen when working with an item.

There are two events that you need to look at when the goods are physically updated and when they are financially updated. Phyiscal is the result of a purchase receipt in a purchase order for example or a packing slip in a sales process. Financial is the effect of the invoice either the purchase invoice or the sales invoice.

With the physical posting turned on you will get and entry like this on a purchase receipt, which is th physical voucher

  • CR – Purchase accrual account.
    • Liability.
    • This is the future liability for the AP that will happen when the invoice comes in.
  • DR – Inventory Account.
    • Asset
    • This is the asset to record the arrival of the inventory into the company.

When then purchase invoice is posted you will get two entries which is the financial voucher.

  • CR – Inventory account.
    • Asset
    • This reverses the accrual posting that was done on the purchase receipt.
  • DR – Purchase accrual account
    • Liability
    • This reverses the accrual posting that was done on the purchase receipt.
  • CR – Accounts payable
    • Liability
    • This is the amount we owe the vendor for the purchase.
  • DR – Inventory account.
    • This is the recording of the asset for the inventory.

 

For the sales side here is the effect for the packing slip which is the physical voucher.

  • CR – Inventory account.
    • Asset.
    • This is the reduction in inventory for the goods going out. This is done at the cost amount that is the running average cost.
  • DR – Expense account
    • Expense
    • This is a accrual for the COGS that will happen when the invoice is posted.

When the sales invoice is posted then you will get the following posting, which is the financial voucher.

  • CR – Inventory account.
    • Asset
    • This is the reversal of the accrual that happened on then packing slip
  • DR – Expense account
    • Expense.
    • This is reversing the accrual that happened on the packing slip.
  • CR – COGS
    • Expense
    • This is the recognition of the expense for COGS. This is at the cost amount that is the running average.
  • DR – Inventory account
    • Asset
    • This is the reflection of the reduction of inventory. This will match the COGS posting amount.
  • CR – Sales Revenue
    • Revenue
    • This is the recognition of the sale.
  • DR – Accounts receivable
    • Asset
    • This is the amount the customer now owes for the on-account purchase.

 

Here is a quick walk through in the product.

 

It’s important to note that I’m using a model group that has the inventory valuation model set to FIFO in this example.

As well there was some changes to the posting for purchases in AX2012 R3  ans mentioned in the video with the zero entry. This is also because I’m not using any tax in this examples. This while paper will help give you more details

Accounting for Stocked Items on Product Receipts and Vendor Invoices

https://www.microsoft.com/en-us/download/details.aspx?id=28019

 

Cheers

Lachlan

2 responses to “Item model group ledger integration options – physical and financial

  1. Pingback: Running average cost price in inventory | OrganicAX·

  2. Pingback: Running average cost price in inventory - Microsoft Dynamics AX Community·

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