A common issue for customers is finding that their Inventory Value report doesn't match their Inventory ledger value in either their Trial Balance, or their Balance Sheet.
When comparing these two reports, there are a few things to consider:
1) the Inventory Value reports value is derived from the value of the inventory received on purchase orders, and of course, the sale of inventory. We also want to consider that any adjustment made in the item record (stock adjustment) also affects the Inventory Value report.
2) The value of the Inventory ledger account in the Trial Balance or the Balance Sheet is derived from bills created in your system to record bills received from your supplier.
How can we be sure that the two reports will reconcile?
The proper method when working within Windward System 5 can be found in the bill creation procedure itself:
You will notice that when creating a bill, to the right, there is a 'POs' tab :
By clicking on this tab, we find we now have a list of Po's ordered and received by that supplier.
In the 'select' area, we then choose which PO is relevant to the bill we are creating. We then choose the 'Add PO Items' tab . We can choose to either 'Add All Items' , or 'Add Summary'. Choosing to add all items will list all items on the PO, and the summary will summarize the PO into a single total.
Once we have made our choice, we are then taken back to the bill screen and we can see that the bill is now created. We can also see that we are posting a value to the Inventory ledger account.
By following this process, we are able to see how we can keep the Inventory Value Report (populated by the PO) and the Trial Balance Inventory ledger (populated by the bill) in reconciliation.
Because we are populating the Bill through the PO itself, we can be sure the same values are being posted to both the Inventory Value Report and the Inventory ledger account.
Another possible difference to consider are any journal entries made to the Inventory ledger outside of the PO or the Bill.
The Bill and PO Reconciliation Report
Now that we understand how the PO and the bill are linked, it is time to introduce another tool we can use to bring us closer to reconciliation between the two reports. It is called the ' Bill and Reconciliation Report'. It can be found by going to: Accounts Payable/ AP Reports in the menu.
Open the report to make your settings
By choosing the settings shown here, we can then view all PO's that do not have a corresponding Bill attached. Keeping in mind the idea that the PO populates the Inventory Value Report, and the Bill populates the Inventory Ledger, we can now see that if all the values reported in this report are on a PO, but not a bill, then the two reports can't possibly match.
CREATED BY: Robert Marsel , October 7th, 2016