Dear @lubos, I really appreciate it if you let me know if there is a way to complete the production order with the items in hand(before receiving purchase invoice but goods received).
If I can achieve this by a purchase order also fine for time being.
Dear @lubos,
As this matter still in ideas,
I’m facing another issue:
We have Inventory Write-off feature in Manager for any loss of inventory items (damage, stolen, loss in transport etc.).
The same way I have gain on transport too. That means supplier invoiced 500Kgs of item A, but I received 505Kgs of the item (purely gain: not going to pay for it, supplier not going to invoice for the 5kg extra)
As we do not have inventory gain option, I normally create Inventory Write-off with negative qty in it. And It is working fine to track item qty.
But when it comes to Production Order, I cannot use that extra qty for production which is not bought but gained (by inventory write-off) entry. (`Insufficient Quantity’) appears.
Its being so, I think Production order might be possible with the written off item (which has been purchased but not in hand as it had been written off already), but I did not try it.
My question is how can I used an item which is not purchased but gained.
You really need to contact an accountant if this is “legal” because it could be similar to donations which in many countries would have to be recorded as income. So the extra 5kg, if part of sales as you indicate because you want to track qty, is not for free. The value of each item is the value of the invoice, so if the invoice is 1000 then the value of each item is not 1000/500=2 but 1000/505=1.98
In a nutshell, according to financial principles you must report any asset that you control, such as in this case the extra 5kg. It is a misstatement if you ignore your free asset if you use it but do not show it in your financial statements.
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You’re correct @eko , its surely an income.
As we do write-off a quantity as expense (loss), this gain will be/is an income, and it is being recorded so.
When I create write-off of $100.00, it is being debited in “Inventory write-off” expense account.
When I create write-of of -$20.00(negative) for gaining (same as the 5Kgs), it is being credited to the same “Inventory write-off”.
So here the gain income also recorded and the asset also recorded.
My bad,
And quantity gained through inventory write-off negative value is being able to use for production order.
It was my mistake, some other factors stopped the production to be with insufficient quantity.
Now this new matter is cleared. Sorry for any inconvenience caused.
And thank you @eko
This is incorrect. Inventory loss is in essence the lack of control of that asset and as such is being recorded as a write-off of a certain quantity of items, which represent the inventory value of these items at the point of being written off. However, when getting free items that become part of your assets these are under your control and can not be seen as the reverse of a write-off, they are essentially part of your purchase. There is thus no such thing as a negative write-off value except when you find by some means that you erroneously have written off something, found it and reverse into inventory.
I understood @eko ,
But in this case, because of the total purchase quantity in one invoice too big, the supplier is not bothered about the small portion of extra quantity we received. (this is usual in some kind of business: like weigh with vehicle to get the item quantity in tons)
Even though we inform the supplier, he is not going to re issue his invoice.
In this situation, how can I record this item added to my stock without the currently available feature Inventory write-off ?
We also experienced a similar case.
The quantity we receive is sometimes more, sometimes less than the quantity stated on the invoice. For items with units that are easy to measure, we choose to separate them as entrusted items and record them separately. Usually we will use these items to replace the goods at the next receipt if they are damaged or lost in transit.
And for items that are difficult to measure, such as items in liquid form, we record the quantity we receive according to the quantity in the invoice.
At the end of the year we make adjustments to our inventory using Journal Entries.
@Mabaega Thank you for sharing your experiences,
Adjusting inventory in the end of the year using Journal Entries also good solution,
But in my case, I’m using the items received including extra for production. So I need to do something to avoid the Production Order to show me ‘Insufficient Quantity’ , which effect my balance at the end of the month statements.
Sorry bit you are not understanding this. The beauty of the new Inventory system where you need to use Purchase Order and Goods receipt to monitor quantities makes that you just create the invoice against this which would mean you received the extra 5kg and is in Inventory while at the same time the amount paid is for the total of 505kg.
This is done with journal entries. See the Guide about inventory write-ons.