Inventory Analysis and CDD 2011 National Conference
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Transcript of Inventory Analysis and CDD 2011 National Conference
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Inventory Analysis and CDD
2011 National Conference
Inventory Analysis and CDD
2011 National Conference
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Agenda
• Review 4 sided vs 2 sided G/L entries
• Things that will cause large month end adjustments
• Eagvantage margin analysis
• Inventory Receiving
• Month end adjustments
• Icost file
• Inventory CDD
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2-Sided Entries
Inventory
When you bring an item in through an Inventory Receiver the following entry is made:
Debit 504010 $500 Soybean Meal Purchases
Credit 200200 $500 Inventory Received not Invoiced
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2-Sided Entries
Sales
When you Sell an item the following entry is made:
Debit 404010 $500 Soybean Meal Sales
Credit 101010 $500 Accounts Receivable
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4-Sided Entries
Inventory
When you bring an item in through an Inventory Receiver the following entry is made:
Debit 104010 $500 Soybean Meal Inventory
Credit 200200 $500 Inventory Received not Invoiced
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4-Sided Entries
Counter Invoicing
When you invoice the item in Counter Invoicing the following entry is made:
Debit 101010 $600 Accounts Receivable
Credit 404010 $600 Soybean Meal Sales
Debit 504010 $500 Soybean Meal Cost of Sales
Credit 104010 $500 Soybean Meal Inventory
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Advantages of 2-Sided Entries
• Incorrect cost of sales are fixed at the end of the month adjustments.
• Margin adjustments on products that are not inventoried.
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Disadvantages of 2-Sided Entries
• You can’t see what cost of sales your sales are getting.
– You generally don’t realize you have erroneous cost of sales until it is to late to correct them easily.
• Need to make month end adjustments before printing financials.
– Generally based on margin % which leads to large journal entries when adjusting to actual inventory.
• When you run sales analysis you may have erroneous cost of sales.
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Advantages of 4-Sided Entries
• Inventory GL accounts (Assets) are always up to date• Cost of Sales and Purchase accounts are always up
to date • Can run financial statements anytime during the
month and have relatively complete information• Financial statements closely match sales reports.• Reduces the need to create GL inventory adjustments
at the end of each month– Still probably want to do them to account for times when the product
is sold prior to the purchase. If the cost changes significantly.
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Disadvantages of 4-Sided Entries
• You really need to be using inventory or the cost of sales will be erroneous.
– Although the new margin function can eliminate this.
• If you turn this on without properly preparing, your financials will be erroneous.
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Causes of big adjustments
• Dropped receiving records
• Item transfer # issues
• Blends not set up right
• Posting accounts payable invoices directly to GL accounts
• Date of receiving/transfers do not match GL month
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Eagvantage Online reporting
• Management tools
• Sales information
• Sales by department/fine line code
• Can drill down for departments/fine line codes margins out of line
• Include unmerged to get a jump start on errors before they are merged
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Receiving
• Most errors caught here before being merged
• Retail price established here
• Margin not correct must be fixed
• Receivers must be merged before sale
• Dropped duplicate receivers
• Purchase factors
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Monthly Journal entries
• General ledger - journal processing – Enter Inventory adjustments (set up needed)
• Inventory – Inventory Reports – Summary Inventory Report in GL Sequence
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Summary Inventory Report by GL
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Journal entries for Inventory Adjustments
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Icost file
• Quantity should balance to actual count– Base on Merged as the U8ICOST on purchases is updated in
the merge
– If the cost is wrong manually fix it as backing out and putting back in will not necessarily fix the u8icost file.
• V7 puts costs in U8icost for last cost valuation.
• Negative quantities in file causes incorrect costing
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Summary
• Earlier the problem is identified the less the impact is on the margin
• Once error identified can take months to clear up
• Takes a long time to fine tune the reports to run with very few errors
• Must be willing to be ‘close’
• Team commitment from item setup, to receiving, to sales
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