Freight and Landed Costs

Purchasing assets and expense items

Purchasing for multiple locations

A/P Reserve invoice

Effects of adjusted purchase prices

Contents:

Appendix: Variations in Purchasing – A/P

Explore alternate versions of the purchasing process

Understand the consequences of each step on inventory and accounting

In this unit, you will:

Variation in Purchasing: Purpose

In your business, the purchasing process has variations. There are business needs which are better handled by different document types and require different types of accounting.

For example, you often receive items that have additional costs such as freight and customs amounts which must be allocated across multiple items in the order.

You like to group purchases for a single vendor into one purchase order even though the items may need to be shipped to multiple warehouses.

Besides purchasing inventory items, you also purchase assets or expense items.

Some times you need to use a reserve invoice to pay in advance before a vendor will ship an item

Additionally, purchase prices are sometimes adjusted in the final invoice and this may affect the cost of goods.

Purchasing Variations – A/R: Business Example

Freight and Landed Costs: Unit Overview Diagram

Topic 3: Purchasing Assets and Expense Items

Topic 4: A/P Reserve Invoice

Variation in Purchasing – A/R

Topic 1: Freight and Landed Costs

Topic 2: Purchasing for multiple locations

Topic 5: Effects of Adjusted Purchase Prices

Freight and other additional expenses/revenues

General Information (Header)

General Information (Footer)

Contents

Sales or Purchasing Document

Freight

Quantity TotalItemItem Freight

Activated and Defaulted from Document Settings

Activated by Form Settings, enter manually

10

20

60

A1000

A2000

100

200 300

600

Add. Exp./Rev. on Header Level: 30

Copying Freight with the Draw Document Wizard

Parameters1Lines Items and Line Expenses/

Revenues

2Header

Expenses/ Revenues

3

Exchange Rate Take rate from Row Take rate from Doc

and Row Take from exchange

rate tableCopy: Copy all data Copy partially

(Customize)

Line Items Select Line Items Change Quantity Change Price or

TotalLine Freight and

Expenses/ Revenues Change Total Change Base Method

Header Freight and Expenses/ Revenues

Select Header Freight & Expenses/ Revenues

Change Total Change Base Method

The Drawing Method

Quantity Total Add. Exp.

Contents

xxx

xxx xxx

xxx 10

20

General Information (Header)

Contents

Sales or Purchasing Document

Quantity Total

100

200 300

600

Add. Exp.

10

20 Quantity Total Add. Exp.

Contents

xxx

xxx xxx

xxx 0

0

All

Quantity Total Add. Exp.

Contents

xxx

xxx 150

150 2,5

10

Quantity Total Add. Exp.

Contents

50

50 xxx

xxx 5

5

None

TotalQuantity

Influence of Freight on the Stock Price

1200

Stock AccountStock Account

1000

Allocation Allocation Costs AccountCosts Account

1250

VendorVendor

200

Expense Expense Clearing AccountClearing Account

1 2

1000 200

1

1 1

2

22

502

Distribution Method

0

0

Contents

Quantity TotalItemItem

A1000

A2000

100

200 300

600

Freight on Header Level: 30

10

20

10

20

10

20

15

1520

10

Distributed Amount

NoneQuantity

Volume

Weight

Equally

Row Total

Credit Memo with Expense Differences

1200

Stock AccountStock Account

1000

Allocation Allocation Costs AccountCosts Account

1200

VendorVendor

200

Expense Expense Clearing AccountClearing Account

1 2

1000 200

1

1 1

2

22 200

Expense Expense Variance AccountVariance Account

3

3

100031200 3

Landed Costs

CustomsInsuranceShippingStorageTax….

Supplier TransportCompany

Ex-Factory Price

FOB Price Journal Entry to adjust inventory

valuation

Freight

LandedCosts

Purchasing Process with Landed Costs:Landed Costs Document

Purchasing Process

SalesProcess

Supplier TransportCompany

Landed Costs Journal Entry

Purchase Order

GRPO

A/P Invoice A/R Invoice

Delivery

Sales Order

Landed Costs Process: Journal Entry to Allocate Costs to Inventory

SalesProcess

Supplier TransportCompany

Purchase Order

GRPO

A/P Invoice

Landed Costs

A/R Invoice

Delivery

Sales Order

Journal Entry

Setting up Landed Costs

Set up and assign G/L accounts for :

Customs Allocation Account

Customs Expense Account

Landed Costs Allocation Account

Set up units of measure for weight and item dimensions

Create entries for each type of landed cost with a distribution method

Freight and Landed Costs Exercises

Purchasing for Multiple Locations: Unit Overview Diagram

Topic 3: Purchasing Assets and Expense Items

Topic 4: A/P Reserve Invoice

Topic 5: Effects of adjusted purchase price

Variation in Purchasing – A/P

Topic 1: Freight and Landed Costs

Topic 2: Purchasing for Multiple Locations

Split Purchase Order

Purchase Order Blanket 1000

Item Quantity Warehouse

A1000 11 01

A1001 15 02

Logistics

Split PO

Purchase Order 1000-1

Item Quantity Warehouse

A1000 11 01

Purchase Order 1000-2

Item Quantity Warehouse

A1001 15 02

Ship to: Berlin Ship to: Hamburg

Purchase Order Blanket 1000

Purchasing for Multiple Locations Exercises

Purchasing Assets and Expenses: Unit Overview Diagram

Topic 3: Purchasing Assets and Expense Items

Topic 4: A/P Reserve Invoice

Topic 5: Effects of adjusted purchase prices

Variation in Purchasing – A/P

Topic 1: Freight and Landed Costs

Topic 2: Purchasing for Multiple Locations

100

Special Control Account

Postings in Purchasing Process for Assets

Purchased Item

Fixed Assets

Inventory Item

Sales Item

VendorAsset

Account

100100

A/P InvoiceA/P Invoice

Postings in Purchasing Process for Non-Inventory Items

Purchased Item

Fixed Assets

Inventory Item

Sales Item

Vendor

Expenses AccountEU Expenses Acc.Foreign Expenses Acc.

100100

Item Category:

A/P Reserve Invoice: Unit Overview Diagram

Topic 3: Purchasing Assets and Expense Items

Topic 4: A/P Reserve Invoice

Topic 5: Effects of Adjusted Purchase Prices

Variation in Purchasing – A/P

Topic 1: Freight and Landed Costs

Topic 2: Purchasing for Multiple Locations

A/P Reserve Invoice

General Ledger(Value)

Warehouse(Quantity)

1 2 3

Purchase Order A/R Reserve Invoice Goods Receipt PO

Effect of Adjusted Purchase Price: Unit Overview Diagram

Topic 3: Purchasing Assets and Expense Items

Topic 4: A/P Reserve Invoice

Topic 5: Effect of adjusted purchase prices

Variation in Purchasing – A/P

Topic 1: Freight and Landed Costs

Topic 2: Purchasing for Multiple Locations

Posting Price Differences

1000

Stock AccountStock Account

1000

Allocation Allocation Costs AccountCosts Account

1100

VendorVendor

400

Cost AccountCost Account

1

1000

1

1

3

23 40

Price Differences Price Differences AccountAccount

3

3

400 2

603

Goods Receipt PO A/P Invoice2 A/R Delivery

Enter freight and landed costs

Split a purchase order between warehouses

Describe how purchasing assets differs from purchasing stock items

Create an A/P reserve invoice

State the effect of adjusting purchase prices

You are now able to:

Purchasing – A/P Variations: Unit Summary