87 - Posting Groups in Dynamics NAV 2017 - Part 9     

What I’m gonna do right now is throw the wrench into the posting groups, this is gonna be the final posting group video for a little bit, I’m gonna move into something else.

We’ve actually taken probably three weeks in this, it was important and It's proving a point and for anyone who need to really know posting groups I hope this is gonna be really helpful and sort of at the end of trying to explain the whole idea behind those four accounts in purchasing that are a little bit elusive and people don’t get really why they're there, and what I’m gonna do is go through exactly what is the reason behind those accounts, and you'll see and have like an “aha moment” and that’s why.

So what I’m gonna do is go back here into NAV and if you jumped into this without seeing the previous videos I encourage you to look at them first because I’m actually starting pretty far into the whole posting explanation.

Overhead rate
I'm gonna go here and look at items, and I have created a thanksgiving coffee mug and In my thanksgiving coffee mug basically set up here pretty simple it's a FIFO, it’s setup with general protocols to the retail and so what I’m gonna do now is add something called an overhead rate, that is right here, For five dollars, I actually had not put that in before.

So what that means is that whenever I buy this product I want the system to put aside $5 for each of the items. so if I buy 5, $25 dollars will be actually put aside, and we are gonna see how that posts.

I’m gonna go here into purchase order so please go right ahead into buying, I’ll do it similar to what I’ve done before, I just create a new one. We are gonna buy from the American wood exports and the posting, I’m actually gonna throw this one on 11/11/18 and I have to put in the invoice number that gonna be ABC it ends on 66, and the type is item thanksgiving coffee mug, I’m buying it into the blue locations, so I’m gonna get 10, so that's gonna be $150.

I go ahead an post that, In not gonna look at the post invoice, So now we are gonna go into the dart of accounts and I’m going to take a look at a limit total for 11/11 like I have done before, 18 now you can see my posting here, and I’m gonna take a look at only the net change, and then I am going to filter on only posting.

I could have actually saved this view, I always have the data I have to change, but you can actually save without saving the date, the net change on zero and posting, It's kind of a cool feature where you can save view as, and then it gets added to the system but anyways without going on the tangent.

Here we can see it’s actually hitting five accounts, and that is because I added the overhead so there is a new account called overhead applied coming in. So what I’m gonna do is I’m gonna bring out my T accounts and we just go ahead and copy this and paste here and I’m gonna create a new T account which is called overhead cost applied and now I’m gonna go through actually how this posts on the T accounts.

We are buying as we are buying we get inventory and we incur debt to the vendor, so let's take a look at that first. The inventory gets increased by 200 so we get 200 into the inventory, these numbers here are from previous postings for previous videos so I just kept them here, and I just keep going with T account so don't worry about this actual example.

Now 200 is what goes into inventory but accounts payable what gets hit there? that's vendor domestic that's actually 150 so if we only had accounts payable and inventory as her accounts here, we couldn't do overhead cost because the $50 where are they going?, so I put $150, nos what offset accounts payable if it's not gonna be the same thing as inventory? we have talked about that before, it's actually purchase.

The purchase is the one that offsets and that makes accounts payable happy because it has an offset and its accounts called purchase, so what offsets the rest? well, let's take a look at that.

We have something called direct cost applied, that gets hit with 150 so that is the direct cost played to the vendor. That's why its called direct cost applied and that gets hit with 150 and now we’ve offset inventory but 150 of the 200 and where does the rest go? that goes into overhead cost applied which is the $50, so that goes here. So you can see that accounts payable has to be in balance with purchase, it's not in balance with inventory necessarily.

If you don't use something like overhead cost and you know other things, but if you are using those, it will not balance out. Accounts payable will balance out with purchase, direct cost applied was overhead cost applied in this case will balance out the inventory. It could be more accounts that go in here, it could be purchased variances, all kinds of things.

But you can see how inventory needs more accounts to balance to it, and that's why it's broken up, so you cannot just work with two accounts, its not sufficient to do kind of like the acrobatics you need to do when it comes to costing, and this is an excellent example if you need to accrue and your increasing your inventory value, you can use this, and there are many reasons for that, they could be handling that you are bringing into the warehouse, you might be renting the warehouse and you want an accrue for that rent.

Or something like that, and you want to actually build that into the entry value and you know there are certain circumstances where that actually works.

Anyways that worked, now where did these cost accounts come from?, let me just go ahead and go into the general posting setup, and I actually show one more account here.

So I did show column and we were once working with domestic retail, and I added this column right here, overhead applied, so you can see we have direct cost applied an overhead applied account and there are all here, and the system is taking into account those and of course you have your purchase accounts, so those are the offsetting accounts to inventory. Purchase accounts, offsets, AP, direct cost applied, and overhead applied account, in this case, offset inventory.

And that is the wrench but I hope it makes perfect sense, so try it out yourself. And thanks for watching.