Parts Transfer Accounting Options
There are two separate parts accounting solutions available:
Topics in this section include:
Parts Transfer Option #1
In the parts transfer system, the following accounting entries are triggered by the billing run that processes the transfer invoice:
Senario: A part is being transferred from location 02 to location 01 within the same division.
Process: Debit to transfer asset account from CASHTAB location 02 - Credit to Parts inventory account location 02
Debit to Parts inventory account location 01- Credit to transfer asset account from CASHTAB location 01
These entries occur at the average cost of the sending store.
VitalEdge recommends that the transfer asset account be common across all locations to eliminate the need for offsetting journal entries.
In this scenario, location 01's inventory G/L is debited when the transfer invoice is processed by a billing run, NOT when the part is received.
Parts Transfer Option #2
Specify a 'parts in transit account' on the Location Transfers screen after selecting a store.
If this is used, it replaces the transfer asset account in CASHTAB (See Cash Codes) and works in two separate steps:
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Transfer of invoice is processed by a location 02 billing run.
Debit to parts in transit account from POTOSO (location 01 receiving store, location 02 vendor) - Credit to parts inventory account location 02
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Location 01 receives the transfer parts order. The parts ordering system will make the following entry:
Debit to parts inventory account location 01- Credit to parts in transit account from POTOSO (location 01 receiving store, location 02 vendor)
This keeps the inventory in balance with the general ledger as the accounting and on hands are updated at the same time. The 'parts in transit' account holds the value of parts that are truly in transit.
Here's an example of the entries made using the second transfer method: Sample