Inventory adjustments are used to increase or decrease the on-hand quantity and the cost of inventory items in a branch/plant without conducting a complete physical inventory. The major setup for inventory adjustment is, to set up the processing options for the Inventory Adjustment Application (P4114).
Before you complete the tasks in this recipe, you should verify that the following information is set up:
The Inventory Adjustments Program (P4114) enables you to enter an adjustment for the parent item, although the system does not update quantity information for the components. To adjust inventory, you must enter Transaction, Item, and Lot Information. You can enter adjustment information for each branch/plant in which an item is stored. When you enter a transaction, the system displays a document type, batch number, and document number. Record the document number so that you can locate the transaction later.
You can correct an adjustment that was made in error by entering a Reversing Entry. Because the system records each inventory transaction for accounting purposes, you cannot delete the record. A reversing entry enters a negative quantity and cost amount back into the item information.
You can use the primary location as the default only if all secondary locations have a physical location (for example, aisle and bin). If any of the secondary locations have a blank location or lot, you cannot set the primary location as the default.
The Inventory Adjustments Program (P4114) creates a transaction with a Batch Type of N. This processing option affects journal entries for the F0911 table only. The AAIs (Automatic Accounting Instruction) that are most commonly used are 4122 (Inventory Valuation Account) and 4124 (Expense or Cost of Goods Sold Account). If you use standard costs, the system might create journal entries for the variance, based on AAI 4141. The F4111 table contains entries for each detail line in each adjustment, regardless of how you set this processing option.
Journal entries specify whether detailed or summarized journal entries are created for the general ledger. For summarized journal entries, the system creates a summarized debit total and a summarized credit total by account number for each line in an adjustment. For detailed journal entries, the system creates one journal entry (debit or credit) for each line in an adjustment.
The system changes the unit cost field to zero to enable the zero cost, select the row, and select Zero Cost from the row menu. To disable zero cost, select the row and select Cancel Zero Cost from the row menu for the Extended Amount field to be set to blank. The fields are not available for entry. When you move the cursor to the next row, the program uses the default value in the F4105 table to complete the unit cost and extended amount fields.
You can set up processing options to provide default values and to display cost and lot information. The lot information that appears depends on how you set up duplicate lot processing in System Constants.