Dynamics 365 Business Central: Item Costing, part 6

Dynamics 365 Business Central: Item Costing, part 6

Alright, so we're going to keep going on costing, it's number six!

We did talk about cost of goods sold interim and we're wondering what that field did.

We got a comment, so thanks for the comment! Stefan Piffer, you got it right! It is ship, not invoiced, and thanks for pointing that out. It's not that obvious.

We're going to go through that now, since you mentioned that. I'm going to just draw it out as well.

We have a coffee mug, the spring coffee mug, and we put that on a sales order. The quantity is going to be 50, at a price of $20. The extended price is 1000.

The quantity the ship and invoice is 50. Here on the sales order, we can first ship 50, and then later invoice the 50. That would be for the $1000. It’s a two-step process, just like receive not invoice, or then invoice on the purchase order.

When we do this step, ship 50, the system will post into an interim cost of goods sold. Basically what the system is doing, is you have a cost of goods sold interim, which gets posted when you ship and do not invoice.

Cost a good sold interim, and let's say, this is cost a good sold. And you have inventory right here. Let's say the cost for this, we know the price is going to be $1000 or $20 a piece. Let's say the cost was $10.

Now we know that 50 times $10 is $500. That's the cost, and so the cost of goods sold interim gets hit with 500, and inventory gets reduced by 500. That’s because it's out of inventory, it's no longer in your inventory account. But it can't be put into a cost of goods sold account because you haven't invoiced it yet.

It's not there yet. Then when you actually invoice the 50, the cost of goods sold interim gets cleared out and the actual cost of goods sold gets hit. So this is by 1, 1, this is 2, 2.

So let's take a look at that in the system

Interim cost of goods sold, let's check it out!

If I go into general hosting setup, the most fun table in the system. I've set up the cost of goods sold account interim to be 50105, for these two groups. And I want to get some postings into here.

So how do we actually get numbers to populate into this account?

If I go into sales order and create a new one, to the Adatum corporation, and the spring coffee mug, out of the main location. Let’s sell 50 for $20. Ok, so it's $1,000.

Now I'm going to go ahead and post this, and I am NOT going to invoice it.

I'm just going to ship it and see what happens.

I post this and the posting date is 4/3, right here. So we note that. If I go out again, out here, and I go into my chart of accounts, and I go into let's say the interim cost of goods sold, which should be in the cost of it's all set up.

You can see that we have this populated, $263.45. Click on that. I have direct cost on 4/3, and let me just see if we can go ahead and navigate on that.

We have a sales shipment and that's my coffee mug. Ship, not invoice. If I go ahead and get back to the sales order and decide to actually invoice this. Action > posting > post invoice. Okay. 

That should complete the order.

Now let's move to our sales invoice and I'll go back into the chart of accounts. You can see the interim account is now empty, so it flushed out again.

Click on this, two entries, it's been flushed. So if you ship not invoice, it gets posted in to cost of goods sold interim. That's the lesson and that's the purpose for that account.