Example of Acquisition Cost Adjustment with Accrual Clearing
This example illustrates the accounting entries for an acquisition cost adjustment with accrual clearing.
Scenario
An organization has a purchase order receipt, for which it subsequently processes an invoice price variance adjustment.
Transaction Details
The details of the transactional data are listed in this table.
Transaction Type |
Cost Component |
Quantity |
Price |
Comments |
---|---|---|---|---|
PO |
10 |
$10.00 |
||
Receipt Accrual |
PO Price |
8 |
$10.00 |
|
Deliver to Inventory |
Standard Cost |
8 |
$8.00 |
|
Invoice (Match to PO) |
Invoice Price |
6 |
$12.00 |
Invoice Price Variance: $2.00 |
Accrual Clearing |
PO Price |
2 |
$10.00 |
Analysis
Run the cost processor to cost the initial PO receipt. After entering the receipt cost adjustment for the invoice price variance of $2 per unit, rerun the cost processor.
Resulting Accounting Distributions
The cost distribution processor creates these accounting entries.
Application |
Transaction Type |
Accounting Event |
Item |
Line Type |
Cost Element |
Dr. |
Cr. |
---|---|---|---|---|---|---|---|
Receipt Accounting |
Receipt |
PO Receipt |
AS54888 |
Receiving Inspection |
N/A |
$80.00 |
|
Receipt Accounting |
Receipt |
PO Receipt |
AS54888 |
Accrual |
N/A |
$80.00 |
|
Cost Accounting |
Delivery |
Deliver to Inventory |
AS54888 |
Inventory |
Material |
$64.00 |
|
Cost Accounting |
Delivery |
Deliver to Inventory |
AS54888 |
Purchase Price Variance |
Material |
$16.00 |
|
Cost Accounting |
Delivery |
Deliver to Inventory |
AS54888 |
Receiving Inspection |
Material |
$80.00 |
|
Accounts Payable |
Invoice |
Invoice |
AS54888 |
Accrual |
$60.00 |
||
Accounts Payable |
Invoice |
Invoice |
AS54888 |
Invoice Price Variance |
$12.00 |
||
Accounts Payable |
Invoice |
Invoice |
AS54888 |
Liability |
$72.00 |
||
Receipt Accounting |
Accrual Clearing |
Accrual Clearing |
AS54888 |
Accrual |
$20.00 |
||
Receipt Accounting |
Accrual Clearing |
Accrual Clearing |
AS54888 |
Receiving Inspection |
$20.00 |
||
Cost Accounting |
Acquisition Cost Adjustment |
Acquisition Cost Adjustment |
AS54888 |
Receiving Inspection |
$20.00 |
||
Cost Accounting |
Acquisition Cost Adjustment |
Acquisition Cost Adjustment |
AS54888 |
Purchase Price Variance |
$20.00 |