Free Merchandise Received into Inventory

This document explains what to do when you receive free inventory from a vendor.

• In P/O (Module 7)
• When you post the receiver (Task 2):
  • The I/C (Module 5) Task 19 Warehouse master (Task 19) field 3 Qty on hand: is updated
  • The items are also posted to P/O (Task 22) Received items (no invoice).  They stay there until you voucher them in Task 3 Vendor invoice entry & editing.

• In P/O (Module 7)
  • Vendor invoice entry & editing (Task 3) for a free item:
  • The merchandise amount for the free item is zero.
  • The line item amount for the free item is zero.
  • After the receiver # is typed in you will need to go up to the line item and when the cursor is on the line item, at the end of the line will be a Y, N or P.  For the free items you want to make sure this is changed to an N; on this voucher.  This will prevent the Last cost of the item from changing to a zero.  The average will still be affected by the zero cost but not the last cost.
  • Post the vendor invoice to the PO module.

• Example:
  • Ink cartridge has an average and last cost of $10.00
  • There is a quantity of 10 in inventory
  • Total of $100.00 inventory value for the ink cartridge
  • 2 ink cartridges are received into inventory.
  • Now the inventory value report is $120.00 [12 @ $10.00 each]
    • G/L still has the value of this item @ $100.00, but the inventory value report has $120.00. The vendor invoice needs to be posted for zero cost to reduce the average cost of the item.
  • Vendor invoice is posted for zero cost
  • The new average cost is $8.33 in the Item Master
  • Quantity on hand 12 x $8.33 = $99.96 inventory value report.
    • G/L still has the value of this item @ $100.00 only off .04 cents.

NOT VOUCHERING FOR ZERO COST:

• If you aren’t going to do a vendor invoice in Task 3 for the items, go into Task 22 Received items (no invoice) and delete or erase the items.  If there are only a couple items on the receiver you can just go into Task 22, Sub-task 3 Delete, type in the vendor #, item #, and Receiver #, when the item comes up make sure it is the one you want to delete & type in YES to delete it.  If there are many items on the receiver you want to get rid of, go into Task 22, Sub-task 5 Erase, type in YES you are sure you want to erase; type in the vendor # & receiver #.  After you delete or erase the items, write on the receiver that it was a free item so you deleted it from Task 22 Received items.  Then go into Task 1 P/O entry & editing, Sub-task 1, bring up the PO & select the action 13 Force Close P/O.

• There is no tracking for items deleted or erased from Task 22 Received items (no invoice).
• If you have received the items into inventory BUT you are NOT going to vendor invoice them for a zero cost, your inventory value report will have a different value then the G/L.

Parameter to consider:

Purchase Order (Module 7)

• System Management functions (Task 32)
  • Modify Parameter files (Sub-task 22)
    • 3 Vendor invoice entry

DFLT'CHG'FLG=Y

This parameter doesn’t need to be changed, but it can be considered.                

Update I/C item master Last Cost (Y/N/P)

• Y - Yes, update last cost (Normal)
• N - No, do not update last cost
• P - Update & recalculate prices 1-9
  • When the vendor invoice entry (Task 3, P/O) the item always updates the average cost in I/C Task 17 Item master.
  • This parameter determines if it also updates the I/C last cost