These posting types were introduced in AX2012 as part of the twovoucher strategy for Purchase Distributions. The purchase expenditure forproduct is used for invoice posting and the Purchase expenditure, un-invoicedis used for posting of product receipts. Failure to set up these accounts will result in error when attempting topost a product receipt and/or invoice.
The purpose of the new posting accounts is to allow MicrosoftDynamics AX to write an accounting entry for the whole value of the purchase,without any variances, and thus allow it to handle the variances in a separatevoucher. This new posting account temporarily records the cost in controlaccount and then moves the cost into ledger account. Effectively, InventTranscredits the Purchase expenditure account for product and then debits Inventory Receiptaccount.
In the scenario below, without tax or any additional costs ordiscounts, the following journal entries will be made. Standard cost item for $10USD, Purchased fromthe vendor for $12USD.
New accounting entries for Microsoft Dynamics AX2012:
Accounts used for receipt:
Debit: $12 Purchase expenditure,un-invoiced (total PO amount)
Credit: $12 Purchase, accrual (total PO amount)
Effect: Createsliability for goods received not invoiced (balanced by Purchase expenditureuninvoiced)
Debit: $10 Product receipt (standard cost amount)
Debit/Credit: $2 Purchase price variance (for the variance amount)
Credit: $12 Purchase expenditure, un-invoiced (total PO amount)
Effect: Creates increase in value of receipted goodsand records standard cost deviation (balanced by Purchase expenditureuninvoiced)
NET EFFECT of 2 VOUCHERS:
Debit: Product receipt
Debit/Credit: Purchase Price Variance
Credit: Purchase accrual account
Accounts used for invoice:
Debit: $12 Purchase, accrual – for the whole PO amount
Credit: $12 Purchase expenditure, un-invoiced for the whole PO amount
Effect: Balances the 1st Product receipt voucher
Debit: $12 Purchase expenditure for product (total PO amount)
Credit: $12 Vendor balance (total PO amount)
Effect: Creates entry to Purchase Expenditure forProduct and created vendor liability
Debit: $12 Purchase expenditure, un-invoiced (total PO amount)
Debit: $10 Purchase, inventory receipt (standard cost amount)
Credit: $ 10 Product receipt (standard cost amount)
Credit: $ 12 Purchase expenditure for product (total PO amount)
Effect: Create an increase in inventory value andstandard cost variance and balances the product receipt.
Net effect of 3 vouchers:
Debit: Purchase, accrual
Debit: Purchase, inventory receipt
Credit: Vendor balance account
Credit: Product receipt account
The value of inventory will increase (for a normal purchase) andwhere a standard cost item is being used, if there is a variance this will berecorded in the PPV account and liability to pay the vendor will be generated inthe vendor balance account. The new Purchase expenditure for product and Purchase expenditure, un-invoiced accountssimply make the previous process in Microsoft Dynamics AX 2009 possible inconjunction with the new functionality for subledger accounting.
But what accounting ledger to hit for Purchase expenditure since, inventory, PPV, Purchase accrual is already hit at Receipt.
What are the steps for setting up said distribution accounts? Thank you!
So is the Purchase Expenditure - un-invoiced a COGS account or like a AP Clearing acocunt that is a liability?
Setting up 2012 and trying to understand this.