Purchase Receipt Correction: Correction Inventory Issue

Inventory validation is performed on release of a correction purchase receipt for a normal purchase order. If the validation succeeds, the system generates and releases a corresponding correction inventory issue. You can find the link to this issue in the IN Ref. Nbr. box on the Purchase Receipts (PO302000) form. This issue will be released automatically, regardless of the state of the Release IN Documents Automatically check box on the Purchase Orders Preferences (PO101000) form.

The inventory issue includes transactions of the following types:

• Issue
• Receipt
• Adjustment (optional)

The transactions of the Issue and Receipt type are generated for each corrected line of the purchase receipt on the Purchase Receipts (PO302000) form, excluding the following lines:

• Those whose correction does not update the state of the inventory.
• Those whose quantity was changed to 0. For these lines, only transactions with the Issue type are generated.
• Those with the Service or Freight type. These lines are not included either in the inventory receipt for the original receipt or in the inventory issue for the correction receipt.

On release of the correction inventory issue, the system first processes the transaction with the Receipt type and then processes the transaction with the Issue type.

The correction inventory issue can also include transactions of the Adjustment type if one of the following conditions is met for an item in the correction purchase receipt:

• The unit cost or extended cost of the item has been changed while part of the received quantity has already been issued, sold, or transferred from the receiving warehouse.
• The item is issued with a cost that differs from the original cost and the resulting quantity on hand for the item is 0.

In the Adjustment transactions, the system does the following:

• Debits the inventory account
• Credits the account specified in the Purchase Receipt Correction Reason Code box on the of the Posting Classes (IN206000) form for the posting class of the stock item

If the correction purchase receipt has lines with non-stock items, the system includes them in the related correction inventory issue if at least one of the following values has been changed in the line:

• Warehouse
• Location
• UOM
• Receipt Qty.
• Unit Cost
• Ext. Cost
• Account
• Sub.
• Accrual Account
• Accrual Sub.

Example of a Correction Inventory Issue for Stock Items with FIFO and Specific Valuation Methods

The following example illustrates the process of the correction and the generated inventory issue for stock items with the FIFO and Specific valuation methods. Suppose that the company has the following items in stock:

• An item with the FIFO valuation method whose on-hand quantity is 100. This quantity has been received in a single purchase in which the unit cost of the item is 100.
• A serial-tracked item with the Specific valuation method. The serial numbers from LRF00001 to LRF000015 are on hand.
• A lot-tracked item with the Specific valuation method.

On the Purchase Receipts (PO302000), a purchase manager releases a purchase receipt for a purchase order of the Normal type. The purchase receipt includes lines with the following items:

• An item with the FIFO valuation method whose quantity is 100 and unit cost is 90.
• Two serial-tracked items with the following numbers: LRF000016 and LRF000017. Both items have a unit cost of 150.
• A lot-tracked item whose quantity is 10 and unit cost is 250.

On the Purchase Receipts form, the purchase manager clicks Correct Receipt on the More menu. The system creates a correction receipt. The manager changes the unit cost of the FIFO item from 90 to 95 and the serial number of one of the serial-tracked items from LRF000016 to LRFC00016.

The purchase manager releases the correction receipt, and the system generates a correction inventory issue with the following lines:

• A line with the Issue transaction type and the following settings for the item with the FIFO valuation method:
  • Receipt Qty.: 100
  • Unit Cost: 90

  The item is issued from the cost layer of the original purchase receipt.

• A line with the Issue transaction type and the following settings for the serial-tracked item:
  • Lot/Serial Nbr.: LRF000016 and LRF000017
  • Qty.: 2
  • Unit Cost: 150
• A line with the Receipt transaction type and the following settings for the item with the FIFO valuation method:
  • Receipt Qty.: 100
  • Unit Cost: 95
• A line with the Receipt transaction type and the following settings for the serial-tracked items:
  • Lot/Serial Nbr.: LRFC00016 and LRF000017
  • Qty.: 2
  • Unit Cost: 150

The system does not include the line with the lot-tracked item in the correction inventory issue because the purchase manager did not make any changes to this line in the correction purchase receipt.

Example of General Ledger Transactions for a Correction with Cost Adjustments

Suppose that on the Purchase Receipts (PO302000) form, a purchase manager has processed a purchase receipt with a line that contains 10 items with the Average valuation method and a unit cost of 10. Once the purchase receipt is released, the on-hand quantity of the item is 10, and its total cost is 100.

On the same day, a sales manager has sold five units of the item with a unit cost of 10. The remaining on-hand quantity of the item is 5, and the total cost is 50.

The purchase manager finds out that the unit cost of the received item should be 7, not 10. The manager clicks Correct Receipt on the Purchase Receipts form and specifies 7 as the unit cost in the line of the correction receipt. On release of the correction receipt, the system generates and releases a correction inventory issue. On release of the issue, the system posts the following transactions to the general ledger.