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Can we assign a standard cost to non-inventory item for the sales document

helen_jim
Participant
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365

Dear Expert,

I want to know how to do the setup for a non-inventory ( service item) with item cost posted to the COS account.

Here is the scenario:

1) A non-inventory item for sales is created with the valuation method: Standard and item cost: $50

2) Issue a SO and it is converted to Delivery and Invoice.

3) The item cost, $50, is reflected in the GP window and the Sales Analysis Report

4) No journal posting is generated for the delivery as it is a non-inventory item

5) For the journal posting of the A/R Invoice, it debits the customer account and credits the sales account

Item cost indicated in the row of Delivery and Invoice is $50, but no posting is created. I can see that there is a Cost of Goods Sold Account in the row. I wonder if it is the default posting code copied from G/L Account Determination. Unlike the Inventory item, the system debits Stock and credits inventory for $50, there is no journal entry created for the non-inventory item.

The standard cost of $50 defined in the item master is used for calculating the GP(if Item cost is selected for GP calculation) for reporting purposes and is reflected in the sales analysis report. There is no accounting effect at all.

My question is: How to do the setup to assign a fixed labour cost for the service performed to a customer? There is no account tab to define the posting code as the' Advanced G/L Account Determination' is enabled in the Basic Initialization tab for Company Setup.

Best regards,

Helen Jim

Accepted Solutions (1)

Accepted Solutions (1)

hdolenec
Contributor
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I think it is not possible to post non-inventory items or drop-ship warehouses to general ledger. However, if you define standard cost then this cost will be used for gross profit calculation, so you can create custom report from INV1.

helen_jim
Participant
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Hi Hrvoie,

Thanks your for your reply. The GP calculation has not accounting effect. May I know is there any work around to book the cost for the delivery .

Best regards,

Helen Jim

hdolenec
Contributor
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Well you can book it manually 🙂 Or develop addon that will automatically add journal entry.

I don't think there is any standard way, and I do believe this is correct. You cannot post something to debit expense if there is no stock to credit. It would create discrepancy in your trial balance.

Also, I do not agree that GP is not supported by JE postings. It is, only not directly on AR Invoice. If you are providing a service for someone, there are costs: supplier costs posted on AP Invoice, salary of youe employees who performed the service posted in Journal Entry, cost of materials used to provide a service posted in Goods Issue. Basically, the point of setting standard cost for this service and calculating GP is connecting all those expenses with revenue that is posted on AR Invoice, in order to see profitability of this service.

helen_jim
Participant
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Hi Hrvoje,

Thank you very much for the information provided.

Regards,

Helen Jim

Answers (0)