Transferring Interunit Stock Using Interunit Receivables and Payables

These examples illustrate stock transfers for inventory business units that post to different PeopleSoft General Ledgers.

Example 2.1

This example illustrates a stock transfer from inventory business unit US001 to inventory business unit US012. These inventory business units post to different general ledgers; inventory unit US001 reports to the GL unit US001 and inventory unit US012 reports to the GL unit US003. The source inventory business unit, US001, owns the intransit inventory until it is received. The item uses an actual or average-cost method. The units use the same currency. In this case there is a difference between the item cost and the transfer price for the item. During setup, the intercompany (interunit sales approach) method was not selected for these two units.

The following diagram illustrates the accounting entry for the shipping transaction in the source business unit US001 (transaction group 031 - InterBU Transfer Shipments). The inventory account is credited, at item cost, for the material and landed costs. The intransit account contains the transfer price of material, landed, and additional transfer costs. The gain and loss on transfer price account contains the additional transfer cost plus any difference between the transfer price and the cost of the item.

The following diagram illustrates the accounting entry for the putaway transaction in the destination business unit US012 (transaction group 022 - IBU Transfer Receipts). The entire shipment arrives intact and the intransit account is credited for the transfer price (material, landed, and additional transfer costs). The interunit receivable account in the source business unit and the interunit payables account in the destination business unit are posted with the transfer price (material, landed, and additional transfer costs). Since the item uses the actual or average-cost method, the inventory account in US012 is debited for the material and landed costs portions of the transfer price. Since the Expense Transfer Fees check box has been selected on Inventory Definition - Business Unit Definition page for US012, the additional transfer costs are written off to the gain and loss on transfer price account rather than added to the cost of the item.

Example 2.2

This example has the same conditions as Example 2.1 except that the intransit account is owned by the destination business unit (US012).

The following diagram illustrates the accounting entry for the shipping transaction in the source business unit US001 (transaction group 031 - InterBU Transfer Shipments). The interunit receivable and interunit payable transactions are recorded at shipment time because the intransit stock is owned by the destination business unit. The inventory account is credited, at item cost, for the material and landed costs. The intransit account contains the transfer price of material, landed, and additional transfer costs. The gain and loss on transfer price account contains the additional transfer cost plus any difference between the transfer price and the cost of the item.

The following diagram illustrates the accounting entry for the putaway transaction in the destination business unit US012 (transaction group 022 - IBU Transfer Receipts).

Example 2.3

This example has the same conditions as Example 2.1 except that the quantity of the item shipped is different from the quantity of the item received.

The following diagram illustrates the accounting entry for the shipping transaction in the source business unit US001 (transaction group 031 - InterBU Transfer Shipments). The inventory account is credited, at item cost, for the material and landed costs. The intransit account contains the transfer price of material, landed, and additional transfer costs. The gain and loss on transfer price account contains the additional transfer cost plus any difference between the transfer price and the cost of the item.

During transit, half of the shipment was stolen. The source business unit (US001) shipped 10 units, but the destination business unit (US012) received only 5 units. Since the source business unit owned the intransit stock, it must absorb the loss for the stolen items.

Example of receiving interunit stock when shipping quantity is more than received quantity.