Accounting for Material Transactions in an Average Cost Organization

Transaction	Accounting Entries			Average Cost Recalculated?
	Accounts		Value
PO Receipt	DB	Receiving Inspection	PO price	No, same as current.
	CR	A/P Accrual	PO price
PO Delivery to subinventory	DB	Subinventory Valuation	PO price +MOH	Yes.
	CR	Receiving Inspection	PO price
	CR	Material OH Absorption	calc’d MOH
Return to Receiving from subinventory	DB	Receiving Inspection	PO price	Yes, if MOH had changed since receipt, must use original rate— DOCUMENT.
	DB	Material OH Absorption	MOH
	CR	Subinventory Valuation	PO price +MOH
Return to Vendor from Receiving Inspection	DB	A/P Accrual	PO price	No.
	CR	Receiving Inspection	PO price
Subinventory Transfer—asset subinventory to asset subinventory	DB	Subinventory Valuation— receiver	Current average	No
	CR	Subinventory Valuation—sender	Current average
Subinventory Transfer—expense subinventory to expense subinventory		No Entries		Not Applicable
Subinventory Transfer—asset to expense or vice verse	DB	Subinventory Valuation or Expense—receiver	Current average	No
	CR	Subinventory. Valuation or Expense—sender	Current average
Miscellaneous Receipt	DB	Subinventory Valuation	Current average or U.S.	Yes, if user overrides, new average is calculated.
	CR	User-specified Account	Current average or user-specified (U.S.)
Miscellaneous Issue	DB	User-specified Account	Current average or U.S.	Yes, if user overrides, new average is calculated.
	CR	Subinventory Valuation	Current average or U.S.
RMA Receipt	DB	Subinventory Valuation	Average cost of original shipments on sales order line	Y es, if reference to sales order line exists.
	CR	Cost of Goods Sold	Average cost of original shipments on sales order line
RMA Return	DB	Cost of Goods Sold	Current average	No.
	CR	Subinventory Valuation	Current average
Direct Interorg Transfer—expense to expense	DB	No entries		Average Cost Recalculated? Not applicable. Applies to both standard and average organizations.
	CR
Direct Interorg Transfer— Std org to Average org except expense to expense	DB	Subinventory Valuation—receiver Standard	Current average	Yes
	CR	Subinventory Valuation—sender
	DB	Interorg Receivable
	CR	Interorg Payable
Direct Interorg Transfer— Average org to Average org excluding exp to expense	DB	Subinventory Valuation—receiver	Current average	Yes, (receiving org) recalculation of average cost is not applicable if receiving subinventory is expense.
	CR	Subinventory Valuation—sender
	DB	Interorg Payable
	CR	Interorg Receivable (sending org)
Direct Interorg Transfer— Average org to Standard org excluding expense to expense	DB	Subinventory Valuation—receiver		No. there is no PPV if receiving subinventory is expense.
	CR	Interorg Payable (sending org)
	DB	Interorg Receivable
	DB	PPV—receiving org
	CR	Subinventory Val—sender
Receipt from Intransit (Standard org) into Average org— FOB Receipt	DB	Subinventory Valuation—receiver	Standard	No, same as standard asset to average (intransit is an asset subinventory).
	CR	Interorg Payable
	DB	Interorg Receivable
	CR	Intransit Inventory
Receipt from Intransit (Average org) into Average org— FOB Receipt	DB	Subinventory Valuation—receiver		Yes, recalculation of average cost is not applicable if receiving subinventory is expense.
	CR	Interorg Payable	Current average
	DB	Interorg Receivable
	CR	Intransit Inventory
Shipment to Intransit from Average org—FOB Receipt	DB	Intransit Inventory	Current average	No, intransit is booked elementally, asset to intransit washes.
	CR	Subinventory Valuation or Expense
Receipt from Intransit into Average org—FOB Shipment	DB	Subinventory Valuation or Expense	Current average	No, intransit to asset in and out of the same accounts.
	CR	Intransit Inventory	Current average
Shipment to Intransit (Average org ) from Standard org asset subinv—FOB Shipment	DB	Intransit Inventory		Yes.
	CR	Interorg Payable	Standard
	DB	Interorg Receivable
	CR	Subinventory Valuation—sender
Shipment to Intransit (Avg org) from Std org expense subinventory—FOB Shipment	DB	Intransit Inventory	Standard	Yes.
	CR	Interorg Payable
	DB	Interorg Receivable
	CR	Subinventory Valuation—sender
Shipment to Intransit (Avg) from Avg org—FOB Shipment	DB	Intransit Inventory	Current average	Yes, unit cost recalculated in receiving organization.
	CR	Interorg Payable(sending organization)
	DB	Interorg Receivable
	CR	Subinventory Valuation—sender
Inventory Adj— cycle count or physical inv	DB	Inventory Adjustments	Current average	No, same as current
	CR	Subinventory Valuation
Sales Order Shipment	DB	Cost of Goods Sold	Current average	No.
	CR	Subinventory Valuation
Receipt of Vendor Invoice	DB	A/P Accrual	PO Price	Not applicable.
	CR	Accounts Payable	Invoice
	DB	IPV
Issue to Job from subinventory	DB	Work in Process Inv	Current average	No, expense subinventory to expense job carries no cost.
	CR	Subinventory Valuation
Component Return to subinventory	DB	Subinventory Valuation	Current average	No.
	CR	Work in Process Inv
Charge Labor Resource to WIP job	DB	Work in Process Inv	Actual	Not applicable. standard rate = No; charge type = Manual; actual employee rate.
	CR	Resource Absorption
Charge Non-Labor Resource to WIP job	DB	Work in Process Inv	User-defined	Not applicable. Pre-defined rate or actual rate.
	CR	Resource Absorption
Charge Overhead to WIP job	DB	Work in Process Inv	Calculated OH	Not applicable
	CR	Overhead Absorption
Charge Outside Processing to WIP job	DB	Work in Process Inv	PO price	No
	CR	OSP Resource Absorption
Complete Assemblies	DB	Subinventory Valuation	Calc avg +MOH	Yes, completion algorithm calculations based on job charges.
	CR	Work in Process Inv	calc avg
	CR	Material OH Absorption	calc’d MOH
Return Assemblies to WIP	DB	Work in Process Inv	Average cost of job completions	Yes.
	DB	Material OH Absorption
	CR	Subinventory Valuation
Scrap Assemblies from WIP	DB	Scrap	Calculated	Not applicable. If checkbox Require Scrap Account is checked, scrap calcs are based on job charges
	CR	Work in Process Inv
Reverse Scrap	DB	Work in Process Inv	Average cost of job scrap	No.
	CR	Scrap
Close WIP Jobs	DB	Variance		Not applicable. Entries only if job has a residual
	CR	Work in Process Inv
Average Cost Update	DB	Subinventory Valuation	User-specified	Yes, enter % or amount of change, or new unit cost.
	CR	Inventory Adjustment