Wednesday, October 31, 2007

Loading Inventory Opening Balances

There could be two scenarios under this topic based on when the chart of accounts is live or not.
  1. When the company is going live and the chart of accounts also has to be imported. In this case we know that the inventory account in the COA will also have some balance which would account for the inventory cost. Now when the inventory journal is passed with some positive adjustments then the inventory account will get updated in the GL which mean the opening JV should not update the inventory again else the inventory amount would double. So this is how it is done
    1. Post the positive adjustments which will update the quantities in the inventory sub-ledger and the stock adjustment account with a credit of an equivalent amount.
    2. When posting the opening JV the debit of inventory is posted to the stock adjustment account instead of the actual stock account.
    3. For clarity sake we can created a new suspense account and use that instead of the regular stock adjustment account
  2. The second case is when the chart of accounts has been already imported and the inventory cost is already sitting in the respective accounts. In this case we only want the quantities to be imported and we do not want to have any effect on the GL. This is how it would be done
    1. Temporarily for the sake of posting the opening inventory map the GL accounts for inventory to an interim account.
    2. Map the stock adjustment account to the same interim account.
    3. Post the Inventory JV now the debit and credit would both go to the same account and nullify.
    4. Revert back the account mappings to the original settings.

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