Category Archives: costing

Prevent Inventory Adjust Cost Entries from Back Dating

Overview

Hopefully, by now every company that uses the inventory module in Dynamics 365 Business Central (aka Dynamics NAV) knows that they MUST run the Adjust Cost – Item Entries process.

If not, please check out my other articles on the subject on how to properly care for the inventory module in Dynamics 365 Business Central (formerly Dynamics NAV)

Adjust Cost Back Dating Transactions

While asking companies to run the adjust cost process, some people will report that they experience unwanted entries made to the previous accounting periods.

Why? The reason is because the adjust cost process will always adjust to the date of the original sales transaction (unless specified otherwise).

For example, it’s 6/30/18 and you run the adjust cost process. If you haven’t run this process in a while, and there was a sales transaction that occurred in 3/15/18 that has not been adjusted yet, the resulting adjusting entry will be on 3/15/18.

This will cause problems if you’ve already closed the books for March.

General Ledger Setup – Allow Posting From

This is where the Allow Posting From field from the General Ledger Setup screen comes to the rescue.

If you set the Allow Posting From on the General Ledger Setup, any adjust entries that are BEFORE the Allow Posting From date will have same posting date as the Allow Posting From field.

In our example above, it’s 6/30/18 and you run the adjust cost process. In addition, you set the Allow Posting From to 6/1/18. If there was a sales transaction that occurred in 3/15/18 that has not been adjusted yet, the resulting adjusting entry will be posted on 6/1/18.

Conclusion

Setting the Allow Posting From should be done after you close the month out, NOT before.

I’ve seen situations where the user changed the Allow Posting From BEFORE the adjust cost was ran. So all of the adjusting entries were posted in the current period instead of the period that they should’ve been in.

Just little things to help make your life (hopefully) easier.

Why Your Inventory Valuation Does Not Match the Inventory Account on the General Ledger

Overview

At the end of every month, we will inevitably get some questions on why their inventory valuation figures does not match the G/L inventory account. We would investigate and find out why and provide solutions on how to fix them.

Some of the reasons are pretty common so I’d thought I compile a list of reasons why your inventory valuation does not match your general ledger, and how to fix them.

Note that this is not a comprehensive list, but it’s most common symptoms we’ve come across.

Did Not Run Adjust Cost – Item Entries Process

The windows version of Navision aka Dynamics NAV aka Dynamics 365 Business Central has been out since 1995, and I’m still amazed how many NAV partners do not emphasize how important this function is to the end users.

No, setting up the Automatic Cost Adjustment on the Inventory Setup is NOT enough.

I wrote an article covering this specific topic here. The article was written in 2012 and it’s still relevant today. When I went to the Navision training class back in 1999, this was one of things that they stressed on when using inventory function in NAV.

Run Adjust Cost people! Do it before you run any inventory, costing, or financial statements!

Solution

What we do for our clients is to set it up on the Job Queue so it’s ran automatically DAILY. Don’t wait too long until this is ran or else it may take a long, long time to finish, which may lead to other problems if you’re running 24 hour shifts.

If you’re not setup to run this process automatically, run it manually! Just. Do. It.

You can read more about why this process is important on this link:

Why Your Inventory Cost is Wrong

Allow Direct Posting to Inventory Account on the G/L

This is a common one as well. This case usually happens when there’s a change in the accounting personnel, rules and procedures that was in place gets broken because of reasons.

This problem occurs when people posts directly into the inventory accounts. Here’s an example of what we found when we were analyzing why the inventory valuation didn’t match G/L entries (the amounts, document, etc has been changed to protect the innocent). The customer did not know why there was a huge variation between the inventory valuation report and what’s on the General Ledger.

Digging deeper into the ledgers, we found the entries that are causing the problem:

At some point, some within the company had allowed Direct Posting to the Inventory G/L accounts. Based on the Change Log, it was changed by their previous accounting manager for unknown reasons.

Solution

Set the Direct Posting on the G/L account for Inventory to OFF!

To look at and fix the entries that’s causing the problem, you’ll need to do the following:

  1. Go to the Chart of Accounts and bring up the G/L Entries for the Invenventory G/L Account
  2. Filter on the Source Code field with ‘<>INVTPCOST‘. You’ll probably need to show the column first.

The resulting entries you’ll need to determine what account you should reclass these entries to.

The INVTPCOST is basically the special source code that is used to mark the transactions that originated from the inventory sub ledger. If you have transactions that does not go through the inventory sub ledger, you’re inventory figure will be off.

Running the Wrong Reports

People will try to run the Inventory Valuation report and try to match it to the G/L.

The problem is, the standard Inventory Valuation report will include transactions not have hit your G/L yet (for example, items received/shipped not invoiced).

The better report to run is the Inventory to G/L Reconcile. This gives you a breakdown of what items are received/shipped not invoiced and include it with your on hand valuation.

In addition, you will need to run the Inventory Valuation – WIP report so it can match what’s in WIP to G/L.

Why is this important? Because your WIP account, and if you’ve turned on the Expected Cost Posting, will most likely be different G/L accounts. Make sure you’re matching all those up.

Solution

Turning on the Expected Cost Posting on the Inventory Setup will mitigate the problems stated above. So you can run the Inventory Valuation and match it up against your regular inventory and the inventory Interim account.

In the past, I’ve argued against turning on the Expected Cost Posting, however, I realize not everyone will become experts in NAV (nor should they need to be) and know what reports to run to close the month and go home. I’m still against turning this on, but I’m softening my stance on this.

I still believe people should truly understand the software so they know what reports to run and how to reconcile properly…

Relying on consultants is okay… Being self-reliant is better.

Inventory Posting Setup is Incorrect

Take a look at the following screenshot for the Inventory Posting Setup.

The inventory account is set to expense account. This means whenever you purchase or sell an inventory item with this inventory posting group for that location, it will go to account 70500.

This may be done in accident or on purpose, but when people reconcile inventory they’re typically going to only look at your inventory G/L accounts. When you go to your typical inventory accounts, you’ll be missing transactions entries for FINISHED Inventory Posting Group for the location GREEN.

Again, there may have been a reason this was setup in the first place. But I’m willing to guarantee that 5-6 years later or if there’s a personnel change, this will have been forgotten.

Solution

With NAV 2018 and Dynamics 365 Business Central, they’ve taken steps to reduce this problem from occuring by introducing the Account Category and Account Subcategory field on the G/L Account table. This means when you drill down to select an account, you can’t select a “wrong” account.

I would recommend hiring someone who knows what they’re doing to do the initial company setup for you. Why? Because most companies will only need to do this (hopefully) once in a lifetime. Learning and ins-and-outs of posting setup, especially when you only really need to set this up once, is not a good use of your time.

General Posting Setup is Incorrect

This scenario is similar to the above. Instead of setting the Inventory Posting Group (the balance sheet side) incorrectly, they set the General Posting Setup incorrectly.

This means everytime something is sold, it will hit the inventory G/L account instead of the sales account.

Same as the previous point, there may be a special (and probably good) reason for doing this, but over time, this knowledge will be lost.

Make anything complicated or weird and you’re almost guaranteed problems down the road. This concept applies to Dynamics 365 Business Central aka Dynamics NAV as well

Solution

Same as above. Just pay someone who knows what they’re doing to do this setup for you. The chances are, you’ll only need to do this once.

“But Alex, how do we know who says they really knows and who really knows?”

I’m not sure. I have problems identifying those who talk a big game and those who can actually deliver as well. I’m sure that’s a separate article at some point in the future.

Abnormal Posting Date

Basically, when you post a receipt on a date later than when you post the invoice. For example, you posted the receipt on 5/6/2018, but you post the purchase invoice with the posting date of 4/30/2018. The primary reason companies do this is because they want certain purchase transactions to occur in certain periods.

When you do this, the inventory valuation will not pick up this particular transaction if you run the inventory valuation as of 4/30/2018. Why? Because the inventory transaction occurred on 5/6/2018. However, the G/L transactions occurred on 4/30/2018.

Solution

The subject of Abnormal Posting Dates has been covered in an article I posted. You can read the article here.

Basically, you will need to run a supplemental report to balance out the inventory.

Conclusion

There are probably other common reasons, but these are just from the top of my head.

Note that these symptoms usually comes with follow up questions on why the inventory costing is weird. But that’s a topic for another article.

The bottom line is as long as you can reasonably explain what happened to the auditors, you will be OK. The key is understanding and setting up the system so it can’t fail you.

Changing Costing Method in Dynamics NAV (Dynamics 365)

Overview

Every once in a while, a company will want to change their costing method from whatever they have into something else for whatever reasons.

The official way of changing the costing method for any items in Dynamics 365 (Dynamics NAV) is to basically zero out the item and create a new set of item numbers with the new costing method.

However, doing this may not be feasible because you end up losing all item history, in addition, depending on how much history you have, renaming item numbers will take a long, long time.

The Unofficial Way

There’s an unofficial way that Microsoft does not promote for companies to change the costing method. This is understandable because if the user does not follow the instructions, there’s no way Microsoft can support all of the different scenarios that comes up.

The Preparation

Before the company can make such a change to the costing method, the following tasks has to be done:

  • All Receipts needs to be invoiced
  • All Shipments needs to be invoice
  • All Production consumptions needs to be output
  • All Service shipped/consumed must be invoiced
  • Remove all reservation entries in the system
  • All Drop Shipment orders needs to be removed
  • Run Adjust Cost – Item Entries process

The biggest problem that companies run into is documents that are “stuck in the middle”, basically, shipped/received not invoiced. By not having a clean break, if you were to proceed with the costing method change, you will never be able to tie out your inventory valuation to the General Ledger.

The Method

Here’s what you will need to do in Dynamics 365 (Dynamics NAV) in order to convert to a different costing method:

  1. Run Adjust Cost – Item Entries
  2. Negative adjust all items to 0 as of a specific date (for example, 03/31/2018)
  3. Run Adjust Cost – Item Entries
  4. Force change the costing method using code without running validation (a developer should do this)
  5. Positive adjust all items back in on the day after step #2 (for example, 04/01/2018)
  6. Run Adjust Cost – Item entries

Then done, you’re done.

The Aftermath

After the costing method change is done, back dating of inventory transactions cannot be allowed.

For example, if we change the items from FIFO to standard on 03/31/2018, no additional postings for these items on or prior to 03/31/2018 should be made. This will need to controlled through the Allow Posting From on the General Ledger Setup and the User Setup.

In addition, revaluation of inventory should not be done prior to 03/31/2018 as well for the items. Doing so may cause irreparable damage on the inventory value and will cause your inventory ledger to not match your G/L.

Conclusion

The method described above is not recommended by Microsoft. I think this is because there are many ways things can go wrong if not done properly.

Having said that, we’ve done this for many of our customers without problems. Strict controls on when the posting is allowed must be followed. If done properly, changing costing method is really not that big of a deal.

Common Mistake in Updating Standard Cost in Dynamics NAV

Overview
Recently, I’ve been contacted by one of our readers on why their inventory cost was wrong. This particular company utilizes standard cost and the inventory cost never matched their inventory G/L account. Learning about how they updated standard cost, it was very apparent what went wrong. It was how the user updated their standard cost.

Companies will periodically update their Standard Cost to reflect closer to what the cost of their items. The timing of this really depends on the company and the industry they’re in. I’ve seen companies revaluate their standard cost every month, some do it every quarter, some companies revaluate their standard cost every year.

Updating the standard cost is a must for every company, or else you will see big variances when you run your financials, which accountants and auditors will question every single time.

Update Standard Cost without Changing Existing Inventory on Hand
Depending on how your company wants to recalculate standard cost, you may not want it to change the inventory value on hand.

To do this, all you need to do is just updating the Standard Cost field on the Item Card of the Stockkeeping Unit Card is only part of the process.

The folks at Microsoft made it even convenient for you to do so:

Standard Cost Update

All you need to do is just change the Standard Cost to whatever you like and you’re done. For manufacturing companies they may use the Calculate Standard Cost functionality.

What’s missing is you need to revaluate what you current have on hand to the new standard cost. Just updating the standard cost on the item card will only affect purchase or incoming items going forward. It will not affect historical standard cost values!

Where the Common Mistake Occurs
Not running Adjust Cost – Item Entries aside, the problem is not with the actual update of the standard cost, but the current inventory you have on hand.

Instead of running the Inventory Valuation report or the Inventory to G/L Reconcile report to get their inventory value, most accountants do the following:

  1. Grab the Standard Cost on the item card
  2. Multiply by the standard cost from step 1 by the quantity on hand
  3. Manually adjust the inventory G/L account

The 3rd step is what kills you. Making manual G/L entries will only make reconciliation between the item ledger and general ledger extremely tough and add a tremendous amount of (unless) work. In my career, I have not met a person that wants to do more work that is useless.

Update Standard Cost and Changing Existing Inventory on Hand
If you want to change your current inventory value on hand, you have to run the Revaluation Journal AFTER you update your standard cost.

Microsoft even published an article detailing the proper way of updating standard cost for your Dynamics NAV implementation. Click here for the article.

Conclusion
Properly used, the inventory function in NAV never goes wrong and will never require human intervention. What’s wrong is the information you feed it.

Why Your Inventory Cost is Wrong

The Problem
I hate beating a dead horse to death, but there are a couple of incidences that prompted me to write this article. Navision 1.0 has been out since 1996, yet it always astounds me when I walk into a company claiming that their inventory costing and cost of goods sold is incorrect because Navision is bugged.The first question I always ask is: Have you guys ran the Adjust Cost – Item Entries process? Most of the time, I get the blank stare asking what the hell I’m talking about.

The Mandate
Straight from the Dynamics NAV help:

The Adjust Cost – Item Entries batch job adjusts inventory values in value entries so that you use the correct adjusted cost for updating the general ledger and so that sales and profit statistics are up to date. The cost adjustment forwards any cost changes from inbound entries, such as those for purchases or production output, to the related outbound entries, such as sales or transfers.

Basically, it will update your COGS and the Unit Cost on the item card to the correct cost that the item was brought in. Simply put, you HAVE to run this process BEFORE you do any meaningful financial and costing analysis.

It doesn’t matter what your costing method is. Doesn’t matter what your setup is. You HAVE to run this if you want to do inventory costing analysis in Dynamics NAV (Navision).

Here’s what the process looks like in RTC:

Adjust Cost - Item Entries RTC

 

Here’s what the process looks like in Classic Client:

Adjust Cost - Item Entries version 5.0

Note that the Adjust Cost – Item Entries will look different depending on the what version of Navision you use.

If you do not run this, no analyst in the world can begin to figure out what exactly the cost should be and address any incorrect inventory values you may have.

Side Effects
Note that if your company has never ran this before, or have not ran this in a long time, there may be detrimental affects on your inventory and COGS. Here’s a partial list of what you may encounter:

1. Your COGS on the G/L will go wild. The reason for this is that most companies, when they do not run the adjust cost, will use the general journal to “calculate” what the COGS should be. So when you do decide to let NAV do what it’s suppose to do, you will need to reverse these journal entries.

2. Your Inventory on the G/L will go wild. The reason is the same as above. The journal entries will need to be reversed.

3. Your item unit cost will go wild. The reason, again, is the same as above. A lot of times when you make an inventory journal adjustment to “take out” the inventory with the incorrect cost and positive adjust in the item with the correct cost, you are only doing it on the surface. The way NAV allocates and applies the inventory entries will most likely be different than what you adjusted.

Why Bother Going Though the Trouble?
Looking at the side affects, you may be wondering, why do I want to bother going through this process if I’m running fine as it is? The answer is simple, but it will reduce time and free up your company’s human resources to focus on important things.

Think about the manual spreadsheets and human memories that your salespeople need to figure out what cost the item should be before you can quote a competitive price to your customers. Think about the time it takes your internal accounting staff to figure out what your bottom line should look like on the financial statement. Think about if those times are freed, what other amazing things your employees can come up with to make your business even better.

Conclusion
A lot of companies will give their Trial balance to their CPA and let them make do the calculation. But realize that what they’re doing is just an estimate. It is NOT accurate. The CPA’s priority is to make the number seem reasonable so he/she can do your tax return and having paper trail if there’s an audit. His/her goal is not to get the accurate inventory cost.

Ask any good accountant, reconcilation is one of the most time consuming and useless tasks.

Ask any good salesperson, having a quote rejected because they cannot get the competitive price to the customer is not only a colossal waste of time on the company, but also for the customer. It reflects on the reputation of your company

Ask any good business owner, not having accurate profit and loss for each transaction… Well, you get the idea.

Let Dynamics NAV do its thing so it can help your business can do its thing.

Abnormal Item Charges

Overview
Dynamics NAV is a ERP software that’s built on best business practice. However, that’s not to say that the users of Navision operates on best business practice.

This post describes what I would like to call Abnormal Item Charges. Again, as with what I’ve described with Abnormal Posting Date, don’t bother looking it up on any GAAP dictionary or NAV website. It’s a term that I made up because I lack the vocabulary to think of a better name. English, afterall, is my second language.

What is Abnormal Item Charge?
Abnormal Item Charge are posted item charges that are applied to the open Purchase Order that has not been received or invoiced.

An Example
A lot of times when a company orders some items from factories, they will buy the finishes of the goods that you want to order, i.e. special metallic paint. Because of the competitiveness of factories, they will sometime offer the company to pay only partial (or no payment at all) until the products are successfully manufacturered. The special finishes they will have to pay now.

So at the time of the PO creation, the company will only have paid for the special metallic paint. The company wants to pay for the paint while allocating the cost of the paint to the inventory that they will possiblity receive in the future. So an item charge line is created on the PO and allocated the cost of the paint ot the purchase lines.

The Effects on G/L
As we discussed previously, this item charge will post to the following G/L accounts:
+ Inventory
– A/P
+ Item Charge G/L Account (Purchases)
– Direct Cost Applied

So the additional cost of the item is correctly accrued to the inventory value.

The Problem
The additional cost components of the item has been allocated and correctly posted to the G/L. The problem is, there’s no inventory for the additional cost to apply to.

This means that the value entries will be created, but it will not reflect on the inventory valuation report until the items are received.

The Solution
In version 6.0 (NAV2009), they put out a fix for this in codeunit 90. Now if you try to post an item charge when there are no item ledger entry, it’ll give an error. However, this solution causes problems for the business case described above.

The solution for this was to comment out the code in NAV2009, then create a report that captures the additional cost posted to the G/L that did not have the corrosponding item ledger. We call this report the Abnormal Item Charge report. It’s a pretty simple report. If your company has the same problem, let me know. I’ll send you the report.

EDIT: One of my colleagues reminded me that we can also use the Prepayment Functionality in the US version to handle this. Basically, we would set the item charge line prepayment percentage to 100. Doing this will post the transaction into the prepayment account instead of the inventory account.

Conclusion
Again, NAV is designed to be best practice. This cause in particular forces us to break that best practice because it makes business sense. Note that I don’t usually like to break NAV’s built in best practices, but in this situation, it was a frequent part of the some of our client’s business, especially when factories are competing for orders in a down economy.

Inventory Value to General Ledger Reconcilation in Dynamics NAV

I recently signed up to be a guest columnist on the Microsoft Dynamics NAV community site. I wrote an article with the list of common steps to finding and reconciling the difference between your inventory valuation and the inventory G/L account. The article is posted in the Dynamics NAV Community site hosted by Microsoft.

The article is found here:
https://community.dynamics.com/product/nav/navnontechnical/b/navguestcolumn/archive/2011/09/12/reconciling-inventory-value-to-your-inventory-general-ledger-account.aspx

Again, the focus is to save you time so you can go home on time.

Accounting Cost vs. True Cost

In Microsoft Dynamics NAV, when doing costing and profitability analysis, you need to differentiate between a transaction’s True Cost and Accounting Cost. Don’t bother looking up these terms in the manual, I made them up for a lack of better terms.

To better explain the difference between True Cost and Accounting Cost, we will use this example:

8/15/08 – Item A was received at 10 pieces for $2.00 each.
8/30/08 – 6 pieces of item A was sold for $5.00 per piece
9/1/08 – The vendor invoice for Item A is posted at $3.00 per piece
9/15/08 – The freight invoice came in and item charge is used to allocate an additional $1.00 per piece
9/20/08 – The rest of the 4 pieces of item A was sold for $5.00 per piece

Accounting Cost:
Assuming on 9/30/08, you’re asked to do a sales analysis for the month of August. When the costing is analyzed for the sales made on 8/30/08, the COGS that accounting recognize will be $2.00 per piece. This means that if we’re printing reports based on Value Entry posting date filter from 8/1/08 to 8/31/08, the profit margin would be 60% per piece. Not bad! For accounting, the cost is indeed $2.00 per piece since that’s the only amount that was recognized in that period. (Some companies makes an accrual on the G/L side for the expected cost of good sold, but that’s a separate topic). This number to management, of course, is incorrect.

True Cost:
In actuality, the cost of the item should be $4.00 per piece because each piece came in at $3.00 with an additional $1.00 in freight charges. The margin of the item should be 20%.

Another scenerio is you’re running the sales report from 9/1/08 to 9/15/08, you would show 0 quantities sold, but the cost recognized in that period would be $12.00 ($1.00 in the additional vendor cost + $1.00 in the freight cost * 6 pieces sold). If you did not check this report and you present this report to the management, be prepared field a load questions on the integrity of both you and the numbers.

Solution:
Both Accounting Cost and the True Cost are correct! Do not assume otherwise! It’s just a matter of how the user wants to look at the numbers. For accounting, they need the numbers to be recognized in the proper periods so the previous period numbers does not get changed. For management, they want to see the true cost of sales transaction. What to do?

As a simple rule, the Value Entry stores the accounting cost, the Item Ledger Entry stores the true cost. Since most NAV reports dealing with Contribution Margin uses Value Entry table, we typically remove those field from the report because they are misleading for everyone. We create separate reports using the Item Ledger Entry table taking the Cost Amount (Actual) since it rolls up all the costs associated with the sale transaction.

One thing to note when presenting the report off of the item ledger to the management, depending on when you post the vendor invoice and other landed cost charges, the profitability number will change. This means that, in our example, the profitability report ran on 9/1/08 will be different than the same report with the same filters ran on 9/20/08. However, in my experience, once you properly explain this concept to accounting and management, they will understand.

[EDIT] You can also use the Value Entry table for calculating True Cost. However, just filter on the Valuation Date instead of the Posting Date.

Abnormal Posting Dates

Abnormal posting date entries happens when the Posting Date of the receipt/shipments of inventory is after the Posting Date of the invoice. Why does this happen? You’ll need to ask your CFO or Controller. Typically, I found this more in return orders where the receipt of the product is a certain date, and the accounting department decides to post the credit memo in prior dates.

Either by mistake or intentional, if this happens, your Inventory Valuation will not tie to your G/L.

Here’s a step by step on how to replicate this problem, and how to solve this problem:
1. Create a sales order with posting date of 11/01/08
2. Post the Shipment with a posting date of 11/01/08
3. Change the posting date to 09/01/08
4. Post the invoice
5. Run your inventory valuation report as of 9/30/08
6. Notice that the item is not taken out? But if you look at your G/L, the inventory value is taken out.

This will work for purchase side as well. It doesn’t matter how to do it either using warehouse shipment/receive, the underlying process will net you the same problem.

Usually, problems like this won’t come up until the user is trying to do month end and gets really frustrated on why their inventory doesn’t tie to G/L. Unfortunately, there’s no easy way to reverse this transaction after it’s posted, the only way is to run a report at the end of the period to see what transactions have this “Abnormal Posting Dates”.

Here’s a report that will give you all the transactions that have abnormal posting dates. If you take this amount, add/subtract it to your inventory valuation report, it will be equal to the G/L inventory.

To run this report, just put the period you want to close on the Posting Date field. For example, if you’re trying to close November 2008, then your Posting Date filter should be 11/1/08..11/30/08.

Here’ the link for the report:

http://www.mibuso.com/dlinfo.asp?FileID=920

Why you have Negative Inventory Value with 0 Quantity – Navision 3.7b to Navision 5.0

Here are a couple of reasons why you would get inventory value if you have 0 quantities when you print Inventory Valuation report and Inventory to G/L Reconcile report as of a certain date.

Scenario 1:

If the adjust cost is processed on 7/31/07, and the Allow Posting From was 7/1/07 on General Ledger Setup, the following would occur:

 6/15/07 – Purchase Receipt – $10
6/28/07 – Ship and Invoice – $10
7/15/07 – Purchase Invoice – $12
7/31/07 – Additional Cost for the sale made on 6/28/07 – $2

In this case, when you print the inventory valuation as of 6/30/07, the inventory quantity would be 0 and the inventory value would be 0.

Scenario 2:
If the adjust cost is processed on 7/31/07, and the Allow Posting From was 6/1/07 on General Ledger Setup, the following would occur:

6/15/07 – Purchase Receipt – $10
6/28/07 – Ship and Invoice – $10
7/15/07 – Purchase Invoice – $12
6/28/07 – Additional Cost for the sale made on 6/28/07 – $2

In this case, when you print the inventory valuation as of 6/30/07, the inventory quantity would be 0 and the inventory value would be -$2.00.

Explaination
Navision will automatically post the additional cost to the original invoicing entry because that’s where the cost originally applies to. If Navision detects that the Allow Posting From is before the adjusting date, then it will use whatever the Posting Date is when the adjust cost is ran.

Scenario 3:
If the adjust cost is processed on 8/31/07, and the Allow Posting From was 7/1/07 on General Ledger Setup, the following would occur:

6/15/07 – Purchase Receipt – $10
6/28/07 – Ship and Invoice – $10
7/15/07 – Purchase Invoice – $12
8/31/07 – Additional Cost for the sale made on 6/28/07 – $2

In this case, when you print the inventory valuation as of 6/30/07, the inventory quantity would be 0 and the inventory value would be 0. When you print the inventory valuation as of 7/31/07, the inventory quantity would be 0, but the inventory value would be $2.00.

Explaination
Navision will automatically post the additional cost to the original invoicing entry because that’s where the cost originally applies to. If Navision detects that the Allow Posting From is before the adjusting date, then it will use whatever the Posting Date is when the adjust cost is ran. In this example, since the Adjust Cost process posting date is 8/31/07, it will use this date as the Posting Date for the adjusting entry.