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The 2 important functions of Cost Adjustment in D365 BC (NAV).

Updated: Jul 6, 2022

Purpose:

Purpose of Adjust Cost -Item Entries (Or purpose of Cost Adjustment - doesn't matter if it is Manual or Automatic) Primary Purpose: To update COGS (Cost of Goods Sold) for Sales entries. Secondary Purpose: To update the Unit Cost on the Item card. Now, let's try to understand why the COGS cannot be always completely realized and posted at the time of Sales.

Scenario:

Let's say I purchased an item and then sell it. After I sell it, I received an invoice for shipping charges from my vendor for the purchased item. Now, I will create a Purchase Invoice to load the Shipment Charges through Item Charges on the Purchase. This will update the inventory cost on the purchase side. But, on the Sales Side, still, COGS is lying with the old cost. This is because on the Purchase side we used Item Charge to load the impact of Shipment Charge. But, we didn't do anything on the Sales side.

So, now we run the Cost Adjustment to transfer the impact of the Shipment Charge to the COGS on the sales side.


Understand with Actual Transactional Entries

  1. One Qty purchased in cost 100 LCY on 15th Dec 2021.

  2. One Qty sold in price 110 LCY on 16th Dec 2021.

  3. A Freight Invoice is received for 1 LCY on 17th Dec 2021 for the above purchase.

  4. Cost Adustmnet run on 18th Dec 2021. In this example, we will be manually adjusting the cost using Adjust Cost - Item Entries batch job

All entries before Cost Adjustment Posted Purchase Invoice

General Ledger Entries:

Value Entries:

Posted Sales Invoice General Ledger Entries:


Value Entries:

Posted Purchase Invoice for Item Charge (assigned Freight of 1 LCY on above Purchase) General Ledger Entries:

Value Entries:

Item Card (Unit Cost)

Adjust Cost


All entries after Cost Adjustment

Posted Sales Invoice General Ledger Entries:


The entries highlighted in yellow are generated due to cost adjustment. Notice that the entries are generated on the date of original sales entries. Also, the same Document No. as Posted Sales Inv. is assigned to it.

This is how the COGS is getting updated in the general ledgers. Value Entries:


The value entry highlighted in yellow is created due to cost adjustment. Notice the Adjustment checkbox ticked on the line which highlights the same.

Item Card (Unit Cost)

Notice the Unit Cost updated to 101 and the Cost is Adjusted boolean is now switched on.

Hope it helps! Cheers!

2 comments

2 Comments


Amit Pandey
Amit Pandey
Jun 10, 2022

Sir, I have seen with my customer that he purchase some qty. of an Item which is still showing in Item card and value entry. But when I go to ILE then at Remaining Qty field 0 value is showing .Means (Pur.Qty=10,Invoiced Qty =10,Remaining Qty =0,Open=No)I am am unable to understand how its possible but Now customer unable to create the sales invoice or any negative transaction for this ITEM as it shows Insufficient QTY but neither this item have any other posted entry nor pending entry .


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Gulshan Shubham
Gulshan Shubham
Dec 19, 2021

G

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