If there are incurred costs such as freight or other outside costs charged by your vendor that should be added to the value of your product, can either use the Added Cost feature or Landed Cost feature. Landed Cost is a separate module which allows you to track the true Cost of Goods Sold per item without any manual reconciliation.
Note: If your added cost is an inventoried item, then you should use the assembly option instead of this process.
In the following steps, there are two options demonstrated to account for the vendor invoice, one with a purchase order and one without. It is critical that one of these options is followed to ensure the accounting transactions are handled properly.
Adding additional costs
Turn on the feature to allow added cost
- Select File > Configuration Management
- Go to Inventory > Inventory Options
- Make sure that the Allow added cost transactions checkbox is checked. If it is not checked, click the Edit button (or Ctrl + E) and click the checkbox.
Add the cost to the item
- Select Inventory > Inventory Receipts to start a new receipt session.
- Click the New button. A new transaction will automatically be created in the session.
- Complete the header information as appropriate.
Note: The receipt is not required to be associated with a purchase order as the added cost in this scenario would not be an inventoried item, so the Purchase Order field can remain blank.
- In the data grid, click inside the Product ID field. Then click the Lookup (or press F4) button that appears.
- From the Find Product Lookup window that opens, select the product that will receive the additional cost.
- In the Received field, enter a quantity of 0.
- In the Unit Cost field, enter 0.
- In the Amount field enter the total value of the added cost.
- In the Note field you should enter a note that identifies the cost, which will show for the product in Product Information > Transactions tab.
- Click the Post button to post the transaction to the system.
Invoicing for the added cost
Now that the cost has been added to the product (inventory asset) it will not process to Cost of Goods Sold (COGS) until after a sale is completed. With this in mind the matching vendor invoice should not be coded to either Inventory or COGS.
When the “Receipt” transaction was posted in Acctivate, it posted a Debit to Inventory and a Credit to the Accrued Purchase Receipts account (or whichever account is specified on the warehouse as the Purchases account). To complete the transaction properly we need to offset the value in the Accrued Purchase Receipts account.
Processing with a purchase order
If you have chosen to run this cost through a purchase order then you have three choices:
- Associate the cost with a non-inventoried item.
- Create a purchase order line as a non-standard item.
- Add it on the Purchase Invoice as an Other Amount.
Associate the cost with a non-inventoried or non-standard item
- In the purchase order, select the Detail tab.
- In the Product ID field, select or enter the product that has the added cost.
- In the GL Expense Account field enter Accrued Purchase Receipts or click the Lookup button and select it from the Find General Ledger Account window.
Note: If this item will be a non-inventoried item only used for added cost transactions, then you also have the option to create a special product class that is associated with the product that has the COGS account set as the Accrued Purchase Receipts account, so that it will automatically pull the proper GL account each time used.
Add to a Purchase Invoice as an Other Amount
Add the cost when the Purchase Invoice is processed on the Other Amounts tab.
- In the Purchase Invoice select the Other Amounts tab.
- In the Expense Account field enter Accrued Purchase Receipts or click the Lookup button and select it from the Find General Ledger Account window.
- In the Amount field enter the added cost.
Processing invoice without a purchase order
If your vendor will not require a purchase order to process the request for the additional cost then do the following:
- Change to your accounting program and go to the Vendor or Accounts Payable section.
- Choose to enter a new bill and record the vendor name, invoice number, amount and date.
- Choose to enter the details by selecting the Accrued Purchase Receipts account and set the amount to be the same value as the receipt entered into Acctivate.