I’ve added LCV of Rs. 10,000 on a Purchase Invoice, it has credited the expense (Frieght) by Rs. 10,000. Now in profit and loss account I have negative balance of expenses and net profit of Rs. 10,000 without any sale or any other transaction.
Am I missing something, do I’ve to pass another entry for the expense account? i. e.
Freight Rs. 10,000 Dr.
Cash Rs. 10,000 Cr.
Yes. You have to book this expense through purchase invoice or journal entry. Then your P&L will be zero.
Some companies keep a balance sheet account under a group Account named “Landed Cost”. It can be called the same item “Freight Landed Cost” and on monthly basis you can pass a journal to offset it against the actual account that was paid.
This helps to keep an estimated account that will either have a Dr. or Cr. balance at the end of the month once the actuals are offset and while the cost shows less/more incorrectly, it caters for advance expense booking and allows sales to be done with an estimated gross profit.
Hi, I am having the same question.
could you please be so kind and explain how it is done?
My general situation is like this:
Product purchased+ local shipping + customs +international shipping + customs + local shipping
All of them have separate people and companies to be paid but i need them all to be added to my product costs.
thanks a lot
When creating a purchase receipt/purchase invoice(with update stock ticked), your inventory value will be updated. Then you can create a landed cost voucher against that document. You can add multiple landed cost details in the landed cost voucher and divide the same into items by quantity/rate/manually. Once you submit the landed cost vouchers, the inventory account will be debited with the new values and will add to the individual item valuation rate. Now you have to create a journal entry / purchase invoice to book the same against the other parties and the accounts mentioned in landed cost voucher will be debited against that. I hope this is clear now. Thank you
thanks a lot.
I don’t get the last part about creating a journal entry/ purchase order.
So far I have included all of the above mentioned in my total cost for the product and did the rest in excel.
how do i purchase services like shipping, the purchase order allows for items.
tnx again
Hi,
You need to create a Service Item,Map the correct Expense Acocunt in Item and post Purchase Invoice.
May be this video might help
Sharing here one case of import purchase, in PO exchange rate is different & while material receipt it is different, currently we are changing it on receipt before save & submit. but we need this activity to be done on purchase invoice. If we dont change exchange rate on GRN, and generate invoice from GRN, “update Stock” checkbox is not appearing (when creating from purchase receipt) and as it is not ticked, landed cost voucher cannot be created from purchase invoice, & if I create it from purchase receipt then it will go wrong as exchange rate is not reflected on receipt.
Can you please help me in this scenario.
The Landed Cost Voucher exists to fix one thing: the price on the supplier invoice usually isn’t what the goods actually cost you. Freight, customs duty, insurance, and clearing charges all add to the real cost — and if you book them as plain expenses, they never reach your item cost, so your margins and COGS look better than they really are.
What it does: it takes those extra charges and distributes them across the items on a Purchase Receipt, raising each item’s valuation rate. After that, inventory is valued at true landed cost, and when the items sell, COGS correctly includes the freight and duty.
How to use it, short version:
New Landed Cost Voucher (Stock module).
Fetch the relevant Purchase Receipt — the received items load in automatically.
Add the charges (freight, duty, insurance, clearing) in the Taxes and Charges table, each with an amount and expense account.
Choose the distribution method — by Amount (spreads by item value), by Quantity (per unit), or Manual.
Submit — it updates the item valuations and posts the accounting entries.
The one thing to get right is the distribution method. Duty and insurance are usually value-based, so “by amount” fits; container freight is often weight/volume-based, so “by quantity” or manual is fairer on a mixed shipment. And post it while the goods are still in stock, so the cost attaches to on-hand inventory rather than what’s already sold.
I wrote up the full mechanics, including the distribution logic, here if it helps: https://mith.tech/blog/erpnext-landed-cost-voucher — it’s India-oriented, but the LCV workflow is identical everywhere.
Also the official docs for reference Landed Cost Voucher