Journalizing INVENTORY-Related Transactions Slideshow 8 B
Entering INVENTORY-Related Sales Transactions - Inventory Sales on Credit 3 - Inventory Sales Returns 4 - COD Sale with Discount 5 Entering INVENTORY-Related Purchase Transactions - Inventory Purchases on Credit 6 - Inventory Purchase Returns 7 - Pending Purchase Orders Report 8 INVENTORY Module Housekeeping - Determining What Inventory Items to Order 9 - Changing Selling Prices 10 Making INVENTORY Adjustments 11 Assembling a New Inventory Item 13 - Using Build from Bill of Materials 14 Service Sales 16 Contents Slideshow 8 B
Entering Inventory-Related Sales Transactions: Inventory Sales on Credit You would enter sales transactions in the RECEIVABLES module as usual. You can convert a sales quote to a sales order and then to a sales invoice; or directly create an invoice. Study the sales invoice at the right and the resulting Sales Journal entry. Remember, this company is using the Perpetual Inventory system. Notice in the Sales Journal entry, cost of goods sold, although not shown on the invoice, is automatically entered by Sage 50 Accounting as a debit and inventory for each item sold is entered as a credit since inventory decreases in a sale. Click The amount of COST OF GOODS SOLD (for example for C-01 cable) is based on the purchase price per unit as recorded on the Inventory & Services Ledger, times the number of units sold. Click to continue.
Entering Inventory-Related Sales Transactions: Inventory Sales Returns To process a sales return, Click. …enter the sales return as a negative sale (enter quantity with a minus sign). See red arrow at right. Click. Because you would enter the sales return in an invoice, Acct will default to SALES. Be sure to change to SALES RETURNS. Click. Notice that the taxes apply only to the returned goods and not to the total of the original invoice. Enter an appropriate comment in the Message box. Click and study the sales journal entry. Notice that ACCOUNTS RECEIVABLE is credited equal to the total of the negative invoice. Also observe what happens to the Inventory and Cost of Goods Sold accounts. Click to continue.
Entering Inventory-Related Sales Transactions: Journalizing a COD Sale with Discount You would normally offer a discount to a regular customer for early payment. You may also offer a discount to a one-time customer for a COD (Cash on Delivery) transaction. Click. You would enter the transaction on a Sales Journal – Sales Invoice with Cash or Cheque for Payment Method. Click. Enter the discount in the Early Payment Discount box and Sage 50 Accounting would automatically calculate the discount amount and reflect it on the invoice total. Click. Study the resulting Sales Journal Entry. Click to continue.
Entering Inventory-Related Purchase Transactions: Inventory Purchases on Credit Remember that merchandise items purchased under the Perpetual Inventory system are recorded in the individual INVENTORY account(s). In the Periodic Inventory system, purchases of merchandise are recorded in the PURCHASES account. In this chapter, the Perpetual Inventory system is used; therefore, the purchase transaction is entered as an increase in the corresponding INVENTORY account(s). Click. Study the vendor invoice at the right, with the corresponding Purchases Journal Entry. Notice that the two purchased items are classified as 1270 Inventory Ink Cartridges Inkjets which is increased (debited) when purchases of these items are made. Click to continue. Notice that there are 10 units ordered but not delivered, so they were back ordered.
Entering Inventory-Related Purchases Transactions: Inventory Purchase Returns When the company returns merchandise items that have been previously recorded, the value of the items returned must be removed from the INVENTORY ledger by journalizing a negative purchase. Assume you are returning one of the laser printers you purchased earlier. Study the negative purchase invoice at the right. Similar to what you have done in the PAYABLES module earlier, use the original invoice with suffixes that will indicate that it was a return (e.g., Rt, C or CM for credit memo). Click. In the Purchases Journal Entry, notice that the return will be posted as a credit to Acct 1260 INVENTORY LASER PRINTERS because a Purchase Return is a credit (decrease) on Inventory. Click to continue. Quantity returned is entered as a negative number. Use the same invoice number as the original purchase with the suffix Rt. HST is applicable to the returned goods only.
Entering Inventory-Related Purchase Transactions: Pending Purchase Orders As mentioned earlier in the PAYABLES module, it is important to print the Pending Purchase Orders report to check if there are goods that have been ordered but not yet shipped. To be able to view this report, the proper settings must be turned on (see right). Click. From the PAYABLES Report Centre, you would select PENDING PURCHASE ORDERS DETAIL BY VENDOR. Click. For each pending purchase order, the report displays the purchase order number and date, the requested ship date, the total amount of the purchase order, the item description and the number of units back ordered (pending shipment).. Click to continue.
INVENTORY Module Housekeeping: Determining What Inventory Items to Order It is good practice to display or print the Inventory Quantity report periodically. It reports what is currently on each individual Inventory ledger. Starting from the Inventory & Services Report Center, select Inventory Quantity. The numbers in the To Order column indicates by how many units the specific item has dropped below the minimum quantity. Click It also indicates which items are On Purchase Order and how many have already been ordered. In this example, Items IP-001 and C-01 need to be ordered. Click to continue.
INVENTORY Module Housekeeping: Changing Selling Prices You may increase or decrease the selling price of goods. Companies usually change prices when the purchase price changes. From the INVENTORY & SERVICES Home window, you would click on the Inventory & Services icon and select MODIFY INVENTORY & SERVICE. Click Modify INVENTORY & SERVICES. You would then select the item that you want to re-price. Click the highlighted item. The corresponding Inventory & Services Ledger will appear. On the Pricing page, you can make the price change(s) you want. For “regular” customers, the Regular price is the default on a sales order/sales invoice. Remember to check the Preferred price when you change the regular selling price, as it is the price for preferred customers or for special promotions. Click to continue.
Making Inventory Adjustments Although your company may be using a Perpetual Inventory system, it is good practice to periodically have an inventory count, as merchandise could be damaged, lost or stolen. Sage 50 Accounting allows you to use the Adjustments Journal to make two types of adjustments: Adjustment to cost only Adjustment to quantity only. Click and study the report at the right. As you have learned earlier, adjustments are usually done after a physical count of Inventory. Click. You then need to print the Inventory Quantity report and compare the physical count with the quantity of each item in the Inventory & Services Ledgers. Click to continue
Making Inventory Adjustments (continued) You would need to adjust inventory quantity and value due to loss, theft, damage, etc. Use the Adjust Inventory icon in the INVENTORY & SERVICES desktop to open the Inventory Adjustments Journal. Click. Identify the source of your information, enter the proper date and comment. Click. For each Inventory item, enter the difference between the quantity on record and the actual count under Qty as negative if actual is less than the quantity on record; otherwise enter as positive (see C-01). The amount of each item is automatically calculated and totaled. This total is recorded as a debit (if negative) or a credit in the 5050 INVENTORY ADJUSTMENTS account Click. Study the Inventory Adjustments Journal Entry. Click to continue. Inventory Physical Count Report
Assembling a New Inventory Item There are two ways to combine inventory items to create one new inventory item. Study the comparison at the right. Example: In this example, you will set up a special package, INKJET PACKAGE DEAL, each package consisting of 1 printer, 1 colour cartridge and 1 printer cable. Using BUILD FROM BILL OF MATERIALS, you will assemble 5 special packages. You would start by clicking the Build from Bill of Materials icon on the Home window (see right). Click to continue. This is used when you are building packages of items for sale that you normally build or assemble on a regular basis. This is used when you are building packages for special promotions and which do not occur on a regular basis.
Assembling a New Inventory Item (continued) Step 1: Create a New Inventory Item. First, you must make sure that the package deal has a ledger in the Inventory & Services ledger; otherwise, you need to create one. Study the information on each tab for the assembled InkJet Package Deal. Study the Quantities page at the right now. Note which tab to click next. Pay particular attention to the Build page. It shows the individual Inventory items that comprises InkJet Package Promotion. The slide will move forward when you click the ADDITIONAL INFORMATION tab. Click each tab from left to right now, starting from UNITS. This page shows that there are 5 packages existing, and based on the number in the VALUE field, each of the package costs $203.67 each. Click next. When you add an inventory or service item, you can specify its unit of measure, such as Each (inventory) or Hour (for service).You can have up to 3 units of measure: Stocking. Used to keep track of inventory on hand. Selling. This is the default unit that appears in sales-related transactions. It can be the greater than, less than, or equal to the Stocking unit. Buying. This is the default unit that appears in purchase-related transactions. It can be the greater than, less than, or equal to the Stocking unit. If the selling unit is different from the stocking unit, you would remove the in the Selling Units box; similarly, you would remove the in the Buying Units box if the buying unit is different from the stocking unit. Click next Click next. Sage Simply Accounting automatically sets up three price lists for you: regular, preferred, and Web pricing. Each item or service record contains fields which allow you to enter a price for each of these preset price lists, if you want to use them. The ASSET linked account increases whenever more of the package deal is built and decreases whenever a package deal is sold. Revenue earned on the sale of this package deal is recorded in the REVENUE linked account shown here. The Cost of Goods Sold (COGS) linked account increases whenever a package deal is sold. Click Next. The BUILD page shows the Inventory items that the package deal include. Notice that there are no additional costs associated with this package deal. Click Next. HST is charged on sales of the package deal. Click next.
Assembling a New Inventory Item (continued) Step 2: Enter the information in the Bill of Materials Journal. Enter the number of assembled packages under Quantity to Build. In this case, it is 5. Click. In the resulting Bill of Materials & Item Assembly Journal Entry, notice that Sage 50 Accounting debits the cost of the package to the new Inventory account, and credits costs of individual Inventory items because they come out of Inventory as previously entered. Click to continue.
Entering Inventory-Related Sales Transactions: Service Sales Study the columns included in the Sales Journal for service sales. You would customize the journal to display only the columns required. Quantity must be based on the time increments used to bill the specific service as shown in the Unit column. In this example, a unit is equal to 20 minutes; therefore, for a job that requires 40 minutes, Quantity is equal to 2. Click to view the Sales Journal Entry. Click to continue.
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