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zazu

Inventory adjustments and return of goods

Posted By

Greetings everyone,

I'm new to the community and have been lurking for a bit on subjects that I'm unaware of. I decided to register and stick to the community.

Welcome!

Before my time, some of the books were a complete mess. We are slowly correcting a lot of bad accounting practices. There was a problem recently in our inventory adjustment account. Here is a little background.

We received "XXX" amount of parts for $22.20 in 2017 from multiple purchase orders. They were sold to the customer in Dec 2017. New purchase orders were made and price has increased. In early 2018, price increased to $22.40.

Now, the parts that were sold are now being returned due to being defective.

When I returned the parts, the item is being returned as $22.20 but it is using our inventory price of $22.40, which makes sense. Sage knows it is being returned at $22.20 but our inventory last received was $22.40. The difference is being put into our inventory adjustment account. We want to stay clear out of this account unless it is truly material.

We are using FIFO as well.

We want to tackle the problem before it gets out of hand.

Has anyone encountered this problem? Any help or direction would be appreciative.

Regards,

Zazu

  • 0

    Good day - I too am having this problem - I end up doing all types of inventory adjustments to correct it. I am going to my  support for help on this problem.

  • 0

    How are you returning the items?  I'm assuming as a credit memo.  Are you going to scrap them or return them to your supplier?

  • 0 in reply to TomTarget

    Hi Tom,

    Thanks for the reply!

    Yes we're crediting the customer with a credit memo. 

    On our side, it varies, we both scrap and return them to the supplier.

    Does the method complicate the issue?

  • 0 in reply to JacquieP

    Hi Jacquiep,

    Have support helped you resolve this issue? 

    I did a return today for defective parts from 2017. I noticed the inventory adjustments happen when there is a price difference in receiving goods.

    For example:

    2017

    10/31/17 -- PN XXX received at $500.00

    11/01/17 -- PN XXX invoiced to customer

    2018

    1/05/18 -- PN XXX received at $407.00

    2/01/18 Customer return parts that are defective.

    4/01/18 return is made to vendor at original cost $500.00 but our inventory is valued at $407.00

    Transaction:

                              DR           CR

    Inventory                          407

    AP                    500

    Inventory I.A.                    93

    I wonder if there is a solution to this madness, if inventory is always changing; it seems that inventory adjustment will always occur.

         

  • 0 in reply to zazu

    So when I do a return from the customer using RMA I have not issues. If you link to the SO that is being returned the value of the inventory item at the time of that shipment is used. If I decide not to link it to the SO then I manually update the cost to the correct cost.

    This issue that I face is when I do a return to Vendor in PO - I could buy 5 xx at 5.00 each - sell 4 and then buy 5 more at 1.00 each. when I do a return to vendor because I wish to return the one left at 5.00 it uses the 1.00 price - my support indicates that this is the way that Sage handles the item cost during a return of goods.So adjustments are indeed needed. I now have only one person doing all returns as this is now a step to be monitored.

  • 0 in reply to JacquieP

    Hi Jacquie,

    Which module you use to correct this?

    I'm having the same issues however i'm using return of goods for correcting a earlier receiving error. 

*Community Hub is the new name for Sage City