Item Valuation from Purchase Charges

I wanted to check the ideal way to do this.

Steps followed:

  1. Entered a PO for $11033 for 68 items. ($162.25 per item)
  2. Received these items in my warehouse at the same rate with a PR.
  3. While invoicing, I also got a bill for my transport for $250. I entered it in the Taxes and Charges selecting ‘Valuation and Total’ for the charge. My total becomes $11033 + $250 = $11283 so ideally Item valuation should be 11283/68=$165.92.

This is not happening. My valuation remains to be $162.25. Is there any step which is incorrect/I’m missing?

Thanks a lot!

Continuing the discussion from Inventory Valuation for Purchase Charges:

-If you are adding taxes then valuation rate should be 165.92.

  • but if you are not adding taxes then valuation rate should be 162.25

In following example I have explain “Valuation Rate”
Suppose you have created purchase receipt PR-2 then first check purchase receipt PR-1 is exist for same item or not . if exist , then

1.Create First purchase receipt for item ‘Book’ as PR-0001 with
Item =Book , Qtty = 10 , Rate =80

Amount = 10* 80 = 800
Taxes and Charges=250
Grand Total = 800+250 =1050

After submitting PR-0001 then Go to Stock → Main Reports → Stock Balance
Closing Qty =10 (qty of PR-0001)
Closing Value =1050 ((Grand total of PR-0001)
Valuation Rate= Grand Total /Qty

2.Create second purchase receipt for Item ‘Book’ as PR-0002
Item=Book , Qty=10 , Rate=100

Amount= 10*100=1000
Taxes and Charges=250
Grand Total = 1250

After submitting PR-0002 then Go to ‘Stock Balance’ report and check Valuation Rate
Closing Qty = 20 (qty of PR-0001 and PR-0002)
Closing Value = 2300 (Grand total of PR-0001 and PR-0002)
Valuation Rate =Closing Qty/Closing Value
= 115

Geetanjali Shitole
New Indictrans Technologies Pvt. Ltd.


Thank you Geetanjali, appreciate the illustrative response.

So, to conclude, Item Valuation is only affected in Purchase Receipts not
in Purchase Invoices is that correct?

I guess same would be the case in Sales as well for Delivery Notes.

-Item Valuation not affected after purchase Invoice.
-Stock updations are based on Stock Entry, Purchase Receipt and Delivery Note.

Geetanjali Shitole
New Indictrans Technologies Pvt. Ltd.

You should use Landed Cost Voucher to change valuation after Purchase Receipt.