Dynamics 365 Business Central: Item Costing, part 5

Dynamics 365 Business Central: Item Costing, part 5

Hey guys!

It’s costing and we're up to 5, or still talking about expected costs postings. What happened before is, we have the spring coffee mug. We purchased for 2500, but we received and did not invoice.

What happened is that in the accounting, since we have checked off expected costs postings, we get an inventory interim, which it gets posted to. It doesn't get posted to straight inventory, but inventory interim. 

Then, sort of like a purchase interim as well, which is 2500. I'm sorry direct cost interim. So it posts, but only on the similar accounts as the inventory would get posted. The offsetting accounts for this, what it would normally post, if we didn't have the expected set, would be inventory. And it would be direct cost.

But you would also, obviously, once you post the invoice, have AP and purchases.

What we're going to do now is actually sell this product. We got it in, we have in inventory interim here, and direct cost interval. Now we're going to sell the product.

We hit AR for sale and then we hit cost of goods sold, and we hit revenue.

Let's say we sell this for 3,000 - for revenue. That gives us AR 3,000. Then the cost of goods sold that gets posted, what is that?

Obviously that's going to be 2500.

It's going to go out of inventory, 2500 and the cost of goods sold. Basically if this is transaction to 2,2,2, and this is 1 and 1.

It's transacting just like just like the inventory was real except hitting the inventory interim. Then when we actually push this out, there was one question. 

Does it hit cost of goods sold interim? Because there is a cost of goods sold interim in the system.

It does not and you'll see that in the system as we post in a little bit.

Then when we actually purchase, we post the post the invoice, which is then 3. It flushes out everything. It basically flushes out this one into inventory, so inventory gets hit for 2500, and then exited as well, 2500, because we have that it in cost of goods sold.

The same thing with the direct cost, and then over to purchases on the AP side. AP 2500 and purchasing 2500.

We're actually going to go through that in the system. It's interesting how these things sort of get scaffolded up with the interim. Up all the way into the revenue, and then when you purchase, when you actually post the invoice, it's sort of scaffolds down into the real account. Or fills in the scaffolding, so to speak.

Let's take a look at the system, this is getting crazy complicated!

Okay so let's continue with this. We have the posting that we did before, where expected cost got hit in the interim inventory accrual offsets.

What I want to do now is just sell the spring coffee mug. If I go into items, take a look at the coffee mug that we have there.

I'm just going to take a look at the list, make it a little bit simpler. We have the spring coffee mug. I got 1,300 and they are all in the main location, so some of them have the expected cost posting some of them have not. I'm just going to go ahead and sell all of it.

Let's just create a sales order. Items, just double check how many we have. We have 1300. I go ahead and hit sales order.

Create a new one to the Adatum corporation. There we go. For this spring coffee mug, out of the main location, for 1300. Sell it for 20 bucks.

Now we go ahead and post it. I'm going to ship and invoice and it's going out on 4/3. I guess that's the date that we're on. Nope, so we close this out and take a look at the chart of accounts.

I'm going to just to refresh it because, who knows, it might show the old numbers. Chart of accounts, and I'm going to go ahead and filter the totals by a date. I think it was 4/3/19 and here we go.

We sold for 26,000. Inventory went down. The interim accounts have not been flushed, obviously, because we still haven't posted the purchase invoice, so that's hanging out there.

As we go further down we have cost of goods sold, going out for 6850. There is no interim getting posted in this case, even though everything got flushed out, the postings are still just hanging in expected costs and inventory accrual, right here.

It does not hit the cost of goods sold interim account. I just flushed out the entire inventory, which was 6850, and that's it.

Let's go ahead and close out this purchase order and see how that actually flushes out.

I'm going to do that on the 4^th, next day after. Let's go into the purchase orders. I think it's the latest one right here. So we're going to go ahead and post this out. I just hit post.

In this case we've already received it. You can see that here, but I'm just going to hit receive and invoice. It's not going to receive anything because we don't have anything there. But the invoicing is going to go through. So now it invoices, oops, I did it on the3rd, all right, so that's fine.

Okay so that's moved. Don't want to open up the posted one. Now we go back and let's go ahead and just refresh this. Go back out here and go into the chart of accounts. The data filter is on, okay so that's great.

Now we can see that the expected cost interim accrual accounts are flushed out. Nothing there. That's out. There was an overhead applied account, that's because we did add the overhead applied to the item. That gets posted too.

Everything gets moved here into purchases and direct cost applied. It's flushed out of these and into these, and into the overhead applied account.

This is basically the net effect of the sale. That's why that's negative, because we did have that sale going out for 6,000. Basically the expected cost in interim inventory accrual gets flushed out. It gets put into direct cost into inventory and direct cost applied, purchases in direct cost applied.

Things basically look fine going through. See Accounts Payable 2500 against purchases. Direct cost applied to less than 2500 against inventory. You can see that in here. Then indirect cost 250 against overhead applied account. That hits inventory. Then we had this 6849.70 hitting sales. 

It makes me curious to see what this is, but we'll leave that for later. That might be some rounding. 

That's basically how it works. That's how it flushes out the expected cost.

As you can see, the cost of goods sold interim did not get hit. There's nothing in there. It's interesting to know what that is. Why that is. Maybe if we go negative inventory, the cost of goods sold, it gets hit like that. We can try to figure that out in later videos.