Transferring Interunit Stock Using Only an Intransit Account

This example illustrates a stock transfer from inventory business unit US012 to inventory business unit US013. Both of these business units post to the same general ledge (US003); in this case, US012 owns the intransit inventory until it is received at the requesting business unit. The item uses the actual-cost method. In this example, the item cost and the transfer price for the item differ.

Example 1

The following diagram illustrates the accounting entry for the shipping transaction in the source business unit US012 (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 cost, 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 US013 (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). Since the item uses the actual-cost method, the inventory account in US013 is debited for transfer price of the material and landed costs portions. Since the Expense Transfer Fees check box for US013 is selected on Inventory Definition - Business Unit Definition page, 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.