I have created Purchase receipt like this and added freight to the Taxes table considered only for valuation.
Now when i making material issue stock entry then item rate will fetch with its valuation rate.
But we need to make separate bill for the fright. then which ledger need to be choose while making purchase invoice?
Should I post Separate entry for freight using landed cost voucher?. specially while using parpetual inventory setup.
You need to book your Freight Invoice in Freight and Forwarding Account.
Yes You can also Do the entry of Landed cot voucher and select the purchase receipt and also get the items of that purchase receipt and add a freight in landed cost voucher.
So basically there are two ways for freight, one is when supplier include the freight charges in his invoice then we have add it in a purchase as per you added and second case is suppose suppliers sell you a items but the transportation service will provide by the other party in that case you have to created a landed cost voucher to add the value of freight in all over purchase cost.
When posting landed cost voucher will it affect accounting and gl entries?
Yes Obviously It Will affecting accounting and GL entries.
So basically when you posted Landed cost voucher, this points to be affected.
- Charges will be distributed proportionately based on item qty or amount, as per your selection
- Remove item if charges is not applicable to that item
- Charges are updated in Purchase Receipt against each item
- Item valuation rate is recalculated considering landed cost voucher amount
- Stock Ledger Entries and GL Entries are reposted for the selected Purchase Receipts
Can you please explain what will be the difference between posting landed cost vouchers seperately and add for ex.freight to the purchase receipt directly as I mentioned in above purchase receipt image(as valuation only in Taxes table).
For example. Item cost 100 and freight is 10 so valuation rate will be 110.
At the time of submitting material issue stock entry:
(Asset) Stock in hand : 110 cr
(Expense) Purchase : 110 dr
I also posted landed cost voucher with freight (Expenses) ledger. then my confusion here is freight will book two times first when post landed cost voucher and second while make stock entry for material issue.
And again I will post purchase receipt for the freight so which expense ledger need to take here.Purchase or freight?
So, There are no difference between adding freight directly in to a purchase receipt and Landed cost voucher.
when you receive a goods from the supplier and actually you have to do a paymnet to the supplier but some time we dont know about the correct freight charges or you were miss out to add freight charges in invoice at that time you have to cancel a Purchase invoice. So basically in these cases you have to add a landed cost voucher in place of cancel the Invoice. landed cost voucher Create a new accounting and gl entry for thr freight and update a freight charges value. So both Cases are same you canm directly add it in a Invoice If you have a freight charges and if you dont have freight and you want to add it later that time landed cost voucher will be use.
Okay that makes sense
Thank You so much
I have another query regarding stock entry accounting ledger effect while enabled perpetual inventory.
Entry Type: Manufacturing
Additional Cost added to the Entry
Asset: Stock in hand (DR)
Expense: Expense Included in valuation (CR)
Here Expense Included in valuation will decrease.
so my question is why expense account will decrease and it will directly affect P & L balances.
so when we can balance these expense accounts?
while perpetual inventory is disabled any of accounting ledger will not get affected.
Hi @poojavadher ,
In perpetual inventory systems, expenses related to inventory are typically recorded as part of the cost of goods sold (COGS) rather than as separate expenses. When additional costs are added to the entry, such as in manufacturing, these costs are capitalized into the inventory asset account rather than being expensed immediately.
Here’s how the accounting works:
- Asset: Stock in Hand (DR): This represents the increase in inventory value due to the manufacturing process. Since inventory is an asset, it is debited to increase its value.
- Expense: Expense Included in Valuation (CR): This account is credited to offset the increase in the asset account. By crediting this account, you are effectively reducing expenses recognized in the period, as the additional costs are being capitalized into the inventory value rather than expensed immediately.
By capitalizing these additional costs into the inventory asset account, you are essentially spreading out the expense over time. When the inventory is eventually sold, these costs will be recognized as part of the cost of goods sold (COGS) on the income statement, thus affecting the profitability of the company.
As for balancing these expense accounts, they will eventually be balanced when the inventory is sold and the costs are recognized as part of COGS. This will happen over time as the inventory is depleted through sales transactions.
I hope this will helps you.
Yes, its helpful
Thank You so much