I am having a slight confusion over here. I have read through the Guides regarding the topic and followed the steps, still I am not getting the required results.
I purchased 2 items from supplier (say Supplier A).
Made a purchase invoice against Supplier A, and picked the 2 items (Item 1 @ $800 & Item 2 @ $27) from the inventory drop down list, etc. etc.
Paid the full amount to Supplier A
Spend Money option
Receipt of goods
On the delivery date, Supplier A only gives me 1 item and tells Item 1 is not available ($800). So i only make the Goods Receipt for Item 2
Purchase Return
Made a return to the supplier by Debit Note. Selected Supplier > Selected Item 1 from Inventory drop-down > Entered qty & amt ($800).
Supplier Refund in Cash
Received money via Receive Money tab. Selected Payer (Supplier) > Accounts payable > Supplier A > Invoice # > Qty & Amt ($800)
Purchased same Item 1 from another Supplier (Supplier B) at a higher cost of $1200
Made a purchase invoice against Supplier B, and picked Item 1 from the inventory drop down list, Qty & amt ($1200)
Paid the full amount to Supplier B
Spend Money option
Receipt of goods
Thankfully received the goods. Made a goods receipt note.
Goods sent to Customer
Made a Delivery Note for the customer.
Could some one verify the above steps are correct? Please suggest me the best and accurate way to record these entries.
Also, with the “Inventory profit Margin” report, the ‘cost of sales’ for Item 1 shows as $800, even though I have raised a debit note against that and repurchased at a higher cost of $1200.
Cost of sales is the average cost of all previous purchases of in-stock items. You haven’t given enough information to know if 800 is the right figure or not.
If you purchase an item for 800 and then return it for 800 - the average cost should be zero as the in-stock items is zero, so the replacement purchase for 1200 should become the new average cost. Otherwise 800 + 1200 would give an average cost of 1000
Yes, I know. I was just pointing out to @siyab that there might be other transactions involved in the cost besides the one purchase and matching return. I guess I wasn’t clear about that.
This is the first time we made a purchase of this product.
So its +800 (Purchase) -800 (Return) +1200(re-purchase). So the COS should show as 1200 in the Inventory Profit Margin Report.
I have done that already. Sorry i missed to mention that.
The inventory transactions are all 0 as the initial purchase, return, re-purchase and delivery of goods have been accounted.
The Selling price for Item 1 is 1200. So initially i was making a profit of 400, but due to Supplier A’s mistake, I was forced to buy at 1200. So my profit for Item 1 should be 0 in the Inventory Profit Margin Report but it still shows COS as 800.
Sorry I am unable to attached the screenshot here, as the Manager is installed on another PC.
Based on my understanding of what you say you did, everything was done correctly. And under those circumstances, your expectation of 800 as COS seems correct. So your understanding of the program also seems correct.
But I can’t make the program do what you say it did. And no one else complains of this problem. So my recommendation is to follow your own sequence of events through every stage and look for somewhere you did not actually do what you think you did and what you described. Look at the Edit screens for all transactions and verify the numbers.
Now you have thrown new information into the mix. You apparently have transactions for this item you haven’t mentioned, including a cost adjustment to recover from negative inventory, whatever that was. If you entered a cost adjustment without quantity adjustment, that will affect future average cost.
Yes, but as you re-entered the transactions did you match, after each entry, your Inventory Item’s data against my series of screenshots above, if yes, at which point did you see a variance.
