• Registered: 03/11/2009
  • Posts: 4

Topic: Purchase Order & Adjustment of Entries question

Hi folks,

I have a question concerning the posting of purchase orders in the system. Does the software handle the adjustment of journal entries when a purchase order  is entered for a time period which has already been closed? Thanks in advance for your help.

Mitch

  • joe
  • Administrator
  • Offline
  • Registered: 03/15/2007
  • Posts: 5,107

Re: Purchase Order & Adjustment of Entries question

FA is a fully automatic system. The Journal Entries are created automatically. So you should not worry about that. Just make sure that your setup is done correctly.

/Joe

  • Registered: 03/11/2009
  • Posts: 4

Re: Purchase Order & Adjustment of Entries question

Hi Joe,

Thanks for your answer. I probably should have been more specific. How does the system handle the following scenario? Let's say I enter a purchase order into the system, and that purchase order has a date that is in the past. The past date on the purchase order falls onto a time frame for which I have already closed the books (year end or quarterly). Will the JE then adjust the quarter that had already been closed by adding journal entries into the past records, or will the JE reflect the change in the in the current time frame with the appropriate adjustment to the current time frame. It becomes a question of reconciliation I suppose. I hope that this is a more precise question. Thanks again for your help.

Regards,
Mitch

  • joe
  • Administrator
  • Offline
  • Registered: 03/15/2007
  • Posts: 5,107

Re: Purchase Order & Adjustment of Entries question

When the PO is received (GRN), the stock is updated with stock purchase prices. When the supplier invoice is received the prices are regulated and the JE entry is made into stock and AP. When the delivery is done the stock is credited and purchase is debited. If there are deliveries during the time between GRN and supplier invoice and there are differences in price, the delivery JE are adjusted. Every detail is taken care of, even currency variances.
So while you have traffice over two fiscal years, you should wait with the closing of the former year until done.

/Joe

  • Registered: 03/11/2009
  • Posts: 4

Re: Purchase Order & Adjustment of Entries question

Hi Joe,

Thanks for your detailed answer. This is very helpful.

Mitch

  • From: India
  • Registered: 11/09/2009
  • Posts: 115

Re: Purchase Order & Adjustment of Entries question

Hi Joe,

When the delivery is done the stock is credited and purchase is debited.

I checked the system but did not found any GL entry for PO delivery i.e. GRN

Am I wrong somewhere ?

Thanks

Chaitanya
  • joe
  • Administrator
  • Offline
  • Registered: 03/15/2007
  • Posts: 5,107

Re: Purchase Order & Adjustment of Entries question

Hello, No you are right. It was a little glitch in the explanation. The GL is not affected in PO delivery. Only the Stock Movements and average prices.
Thanks for being awake smile

/Joe

  • From: India
  • Registered: 11/09/2009
  • Posts: 115

Re: Purchase Order & Adjustment of Entries question

smile

Actually I have query here. When we have GRN/PO delivery done but Invoice is pending, till the time, will the Inventory account not mismatch with actual stock ?

Should this be accounted as liability against Inventory ?

Thanks

Chaitanya
  • From: India
  • Registered: 11/09/2009
  • Posts: 115

Re: Purchase Order & Adjustment of Entries question

Hi,

I tried a scenario. Made PO and accepted delivery for an item.
Item is sold. The inventory balance goes in credit, resulting in
Inventory valuation as per BS to be negative.
 
Should this be okay ? Or I am getting it wrong.

I am testing more cases related to GRN.
Will update soon.

Thanks,

Chaitanya
  • joe
  • Administrator
  • Offline
  • Registered: 03/15/2007
  • Posts: 5,107

Re: Purchase Order & Adjustment of Entries question

Differences in deliveries, if price differences, are regulated when the supplier invoice is received.

These operations were tested and implented some three years ago.

/Joe

  • From: India
  • Registered: 11/09/2009
  • Posts: 115

Re: Purchase Order & Adjustment of Entries question

Hi Joe,

Thanks, this should be fine.

Company accountant advised  to pass a  'Reverse' JE to adjust the outstanding GRN at the year end.
That should take care of inventory valuation by GL and by stock.

Please correct if this is not the correct/best way.

Thanks,

Chaitanya
  • joe
  • Administrator
  • Offline
  • Registered: 03/15/2007
  • Posts: 5,107

Re: Purchase Order & Adjustment of Entries question

Yes, Chaitanya, this would be a correct disposal by the Fiscal Year End closure.

/Joe