Is there any way I can quickly fix this?

At month end my total inventory value goes to my GL. I have noticed that I have many items whose net quantity is 0, but whose net value is in the negative. (I'm not sure if there are or could be positive values as well) This has occurred because we sold that item before it was received into inventory. I believe that this gets fixed automatically the next time we have a positive quantity in inventory and then something gets sold. BUT from an accounting standpoint, at the point when the quantity is at 0, the value should be at $0, so that costs of sale are accurate in the GL.

If there's not such a fix, is this something that doing month end could accomplish in the future?

Hi,

We have had a lot of experience with Adagio Inventory sites and also are Chartered Accountants. Years ago we insisted to most clients that they run with FIFO to ensure GAAP and struggled to deal with these same issues mentioned above.

Now we are older and wiser, and more practical. There are very few situations that really warrant FIFO where you need the lots for separate tracking of costs for accounting or real cost tracking purposes. It's more practical to convert your data to Weighted Average and eliminate most residual cost issues, and problems with loading count values, or adjustments to the wrong cost pools.

You should consider the quick fix to permanently collapse your cost pools to Weighted Average, and your problem goes away. You backup your data and change the cost method in your control account set.

There will be tons of feedback saying that this is just wrong for accounting but we live in a practical solutions world, and it just makes sense. And we've seen the numbers and the differences today in most businesses using Weighted Average instead of FIFO, are nominal.

But for those have have a defined requirement and your accountant insists on FIFO, you should stay with FIFO and dream about what if I could only make this way simpler.

Best,
Brian

I'll second Brian comments. For a long time I thought FIFO was the only answer for my clients but Average costs eliminates a lot of the headaces that come with maintaining FIFO costing.

With Average costing its a fairly easy task to convert the reported residual costs into an Item Adjustment import. If you need assistance your Adagio dealer should be able to help you out.

Thank you Brian and Douglas for your input. Directing this question to Softrak, is that something that can be considered for inclusion in month-end processing in the future?

Thanks.

Hi,

I can enter the suggestion for R&D.

Are you asking for a maintenance function that writes off all the residual costs to a single g/l account? Do you need to be able to approve each entry? Do the write-offs have to be to different g/l accounts?

I do not need to approve each change as long as they could be charged to the account for costs of sales of that item--the same account number that would have been used if the item had been received into inventory through PO's prior to it being sold. Thanks.