Dynamics 365 Business Central: The Magic of Item Charge

Dynamics 365 Business Central: The Magic of Item Charge

Hey guys, Item charges, item charges you know, got to keep going with it. There is one scenario which we didn't really cover in the first three videos, which is probably the most brilliant scenario of the item charges. I'm going to do that right now. 

We have a purchase order, for let's say a 100 lbs, let's say eight dollars a pound for 800 totals. This is coffee beans again, and then we immediately turn around and sell it. So, we have a sales order and we sell half of it, 50 lbs. Let's say twelve dollars and so that's total 600.  

This happens maybe in sequence, this is one three and this is one four, and so we know that the cost of goods sold for the sale is going to be half of the 800, so it's going to be 400. We know that our profit is 200 of this sale, so now what happens is that the vendor gives us a credit, so it's a vendor credit. For one reason or another, could have been a rebate, it could be the product was not great, whatever, we're a great customer. So, this vendor wants to give us credit. They give us a credit of let's say, a $100 flat for this purchase.  

What we want to do now, is do an item charge. We do an item charge for a $100 and we apply that item charge to this purchase, to this receipt, so what happens is that this becomes 700 and that means that this here, is now let me see, the cost of goods sold here, this 400 becomes 350 because half of 700 is 350. So our profit on this now is 250, and this happens in the item ledger entries, so now when you report out of the item ledger entries your profit is higher because you got this credit, that's really neat, it's hard to do in system and business central has you cover when it comes to this. 

Let's keep going on item charges, I have here Jamaican coffee beans, I'm going to go ahead and create a purchase order for those, let's go into the purchase orders, create new. We're going to get it from the fabrikam.  I'll pick the Jamaican coffee beans into the East location, it's going to be a 100lbs and we're buying it at$8, I put in the vendor invoice number and we go ahead and post this. 

Now we received a 100lbs at $8s each, I'm going to go ahead and turn around and sell this immediately. I go on a sales order, create a new sales order and that's going to be to the Adatum Corporation for the same item, Jamaican coffee beans out of the east location. We're going to sell 50, hallf of what we have for 15 dollars. Now I just go ahead and post this, you go here and hit post all right, shipping invoice.  

Now we want to go into the items, and just take a look at this item. If I go into the Jamaican coffee beans, click on the item itself, go into navigate, history, entries, ledger entries, so I can see here that I bought a 100 for $800, we sold 50 for $750 and the cost is $400 because 100 were $800 so 50 would be $400. 

Purchase credit memo 
The vendor gives us a credit for some of the product, and what we want to do is lower the cost of it sold for this sale, so how do we do that? we use the magic item charge, so we'll go in and create a purchase credit memo so let's go ahead and get into that, we just hit new and it's to the same vendor. I pick an item Charge, and this is going to be purchase allowance, I'm going to just say here vendor we don't have to put in the location, just put in quantity 1, and it's going to be for a $100, so we get our $100 credit. 

I put in the vendor credit memo,  like so, what I want to do is apply the Item charge to the receipt. Let's go in here get your receipt lines, and all the way at the bottom where the receipt is, right here, okay and then we want to suggest the item charge 100, so we now assigned the item Charge to the receipt. 

We go ahead and post this, the brilliant thing here, is that the item charge is applied to the item ledger entry, which means now we've lowered the cost of goods sold or lower the cost and it should update the cost of goods sold. Let's just take a look at that, so if we go into Cronus again, into items, I can take a look at my Jamaican coffee beans and go into navigate, history, entries, ledger entries. Now I can see that the cost is $700 and if I click on that I can see it was a lowered by 100, and then if I go out of here, I can see the cost for this transaction here is $350 so that has been lowered by 50 so it has updated their sales shipment and the which is actually the cost of goods sold. That's absolutely brilliant use of item charge.