19.3 Examples

The two examples that follow demonstrate the use of the inventory adjustment screens. Example 1

In this first example, a physical count has been taken of all the lumber for sale. It is discovered that the physical count of item lumfir248 is ten units less than the quantity on hand amount shown by the computer. It is decided that this difference is due to pilferage and the loss should be written off. The header screen is filled out as shown in the sample screen below.

In our example, we wish to decrease the inventory account by 10 units. The per unit cost of the lumber is $1.78.

Since we wish to decrease the inventory account, no is entered into the debit field to specify a credit entry.

The code in for inventory is entered into the Ledger field.

When making an inventory entry, the product code of the inventory item is entered into the Account field. The 10 missing units have a product code of lumfir248.

The amount of the entry is the total cost of all ten units.

The number of units is 10.

After the STORE <F5> button has been pressed, the screen is ready to accept another detail entry. The value of the debit and credit entries in the detail screen must be equal. Another entry must be made to balance the above credit entry. The balancing entry is a debit to general ledger expense account

This is a debit entry, so yes is entered into the Debit field.

The account to be debited is in the General Ledger, hence gl is entered into the Ledger field.

The chart of account number of Loss-Building Supplies is 400-00-001 which is entered into the Account field.

The money amount of the loss is 10 times 1.78 or 17.80.

You do not need to enter any units.

The STORE <F5> button is pressed to store the information on the above screen. At this point, more detail entries could be made or another adjustment entry can be entered. If another adjustment entry is to be made, the NEXT <F7> button must be pressed to return to the header screen.

In this second example, an adjustment is made to reflect the fact that 5 door knobs, inventory product code doorknob345, are being used in job activity

Since this adjustment was made in the same session as the adjustment in the first example, the entry Id is displayed when the RETURN key is pressed in this field. If a nonsequential entry Id is desired, any code may be typed in this field.

The date of this adjustment is 11/01/83. Any date not in a closed period can be entered.

This field is optional; you do not have to enter anything in this field.

After the information has been entered into the above fields, the STORE <F5> button must be pressed to store the information. After doing so, the detail screen is appended to the header screen. The detail screen is now ready to accept input.

The first detail entry in this example is a credit to inventory account doorknob234. Each doorknob costs 19.219.

We want to credit the product, so no is entered in the Debit field.

This is an inventory account, so in is entered in the Ledger field.

The product code of the door knobs, doorknob345, is entered into the Account field.

The total cost amount is entered into the Amount field. Five door knobs at 19.25 each is 26.219.

Five door knobs are being removed from inventory.

After the above entries have been made, the STORE <F5> button is pressed to store the information. The screen is ready to accept the next detail entry. Since debits must equal credits in the detail screen, a debit entry to job activity jobm678 is made.

This is a debit entry to increase jobm678, so yes is entered here.

The doorknobs are being moved to a job activity in the Job Cost Activity Ledger, jc is the code for the Job Cost Activity Ledger.

The door knobs are to be used for job activity jobm678.

The total cost of the door knobs is 26.219.

Five door knobs are being transferred to the job.

Although both examples showed adjustments that decreased inventory, adjustments to increase inventory can also be made. To increase an inventory account, a debit entry would be made to the inventory account, and a credit entry would be made to the balancing account.