My company purchase goods only for the purpose of consumption within organisation. Purchase is made in bulk from procurement department using Purchase Invoice and supplied to to different department periodically upon their request.
At the time of purchase the cost is charged to Inventory account in balance sheet and and the end of the month it should be transferred to respective Income Statement Account. We should be able to generate the report which shows consumption by department at the end of the month.
For these scenarios my questions are:
a. How to setup the posting groups for inventory
b. How to post the consumption to respective department
c. How to transfer the cost from Inventory account to Expense Account
We are implementing Dynamics NAV 2009 SP1 Classic WW Version.
Thanks alot in advance.
Seems to me that your setup it not correct.
You write “At the time of purchase the cost is charged to Inventory account in balance sheet…”; this is not the way, NAV expects.
In a usual setup the purchase cost is posted in the “Income Statement”-area, as an expence. Via the “Adjust Cost”-batch the purchase cost is posted from “Income Statement” tio inventory-account, located in the “Balance Sheet”-area.
Referring to NAV’s General Posting Setup (GPS) an item’s story is like this
-Debit: Purch Account (GPS)
-Credit: Direct Cost Applied Account (usually located beside Purch Account) (GPS)
-Credit: Overhead Applied Account (if Indirect Cost is used) (GPS)
-Debit: Inventory account (according to the item’s Inventory Posting Group)
Consumption (via Item Journal):
-Credit: Inventory account (according to the item’s Inventory Posting Group)
-Debit: Inventory Adjmt. Account (usually located beside Purch Account) (GPS)
This is the way if your item’s Costing Method is not Standard. If you are not familiar with Standard-method, don’t use it! FIFO is usually the best.
The “Adjust Cost” routine can be set up to run automatically by putting a check-mark in Warehouse → Setup → Inventory Setup, field “Automatic Cost Posting”. But I will recommend to run the “Cost Adjust”-batch on a regular basis, perhaps once a week.
Take a look at CRONUS’s setups - gives you a very good overview of how NAV is supposed to be setup. Create an item, make a purchase and then a consumption. Use the Adjust Cost"-batch. Look at the entries and use Navigate to locate the G/L Entries…
Btw - you find the “Adjust Cost”-batch in Financials Management → Inventory → Costing → Adjust Cost - Item Entries.