INVENTORY PENDING ACCOUNTS

Pending Inventory
aka Received Not Vouchered (see #3), or Received Not Invoiced
aka Inventory Adjustments that were not accounted for.

*See Update Below, asset vs liability.

Inventory Pending Accounts are used when posting a Month End Inventory under the Ledger Menu. Pending Accounts accumulate inventory value amounts that can not be reconciled between the value of items in stock and the cost of goods sold. The Month End Inventory procedure compares values in the inventory file against amounts on the inventory GL Accounts. Some of the situations that would cause an amount to post to a pending account are as follows.

1. Edit the Value on the Style Master Window. This changes the value of items in stock without posting to the Ledger. The difference will post to Pending at month end. This amount needs to be expensed, either by transfering to cost of goods sold or to an inventory expense account.

2. Adjusting the quantity of inventory in stock. This changes the total value of items in stock without posting to the Ledger. The difference will post to Pending at month end.

3. Receive items on a Purchase Order at the end of the month, and insert the Payable for those items at the beginning of the next month. Payable offset account will be an Inventory asset account. On the first of the month, the inventory value amount in the inventory file will show the items received, and there will be no corresponding entry in the Ledger. This amount will post to Inventory pending. They Payable can then be entered against Inventory Pending. If the Payable is entered against the normal Inventory account, and no adjustments are made, the NEXT Month End Inventory posting will reverse the pending amount.

4. Value of finished inventory is approximate. The value is stored in the Invoice Line Item, and totals at the end of the month to calculate cost of goods sold. Over a period of time, the amounts spent to increase inventory may not match this number. Differences are posted to Pending, and should be transfered to Cost of Goods Sold.

5. Changing the Value of Goods in Stock through the normal receiving and update cost procedures. Even though Cost of goods is stored with the invoice in real time, the month end inventory valuation is using the value at the time of the Month End Procedure. This difference will cause a pending entry.

6. Allocating parts on cut tickets that have not been received – allocation against Purchase Orders.

The Pending account is required to accurately deal with the of cost of goods sold and inventory, and also provide full flexibility to the production system.

• Updated *Update, June 2011

Upon further discussion with an accountant, we think it would be prefereable to post items Received Not Vouchered to a LIABILITY Account, rather than the asset account that is the default in existing data file.

Last revision: 6/4/11 AG