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    LCM Accounting in P2P

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    ramthilak2007gmailcom
    1. When goods are received, estimated landed cost entries are made to receiving inspection, AP accrual, and landed cost absorption accounts. Actual costs are calculated when invoices are received. 2. Goods are delivered to inventory, making entries to material valuation, receiving inspection, and purchase price variance accounts. 3. When invoices arrive, adjustments are made to correct estimated costs, updating receiving inspection and landed cost accounts. Average costs are also updated. 4. Invoices are accounted for, updating AP accrual, tax, liability, and variance accounts. Charge invoices also update liability accounts. 5. Returns are accounted for by crediting receiving inspection and debiting AP accrual and landed cost absorption accounts.

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    LCM Accounting in P2P

    Uploaded by

    ramthilak2007gmailcom
    202 views4 pages
    1. When goods are received, estimated landed cost entries are made to receiving inspection, AP accrual, and landed cost absorption accounts. Actual costs are calculated when invoices are received. 2. Goods are delivered to inventory, making entries to material valuation, receiving inspection, and purchase price variance accounts. 3. When invoices arrive, adjustments are made to correct estimated costs, updating receiving inspection and landed cost accounts. Average costs are also updated. 4. Invoices are accounted for, updating AP accrual, tax, liability, and variance accounts. Charge invoices also update liability accounts. 5. Returns are accounted for by crediting receiving inspection and debiting AP accrual and landed cost absorption accounts.

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    LCM Accounting in P2P

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    1. When goods are received, estimated landed cost entries are made to receiving inspection, AP accrual, and landed cost absorption accounts. Actual costs are calculated when invoices are received. 2. Goods are delivered to inventory, making entries to material valuation, receiving inspection, and purchase price variance accounts. 3. When invoices arrive, adjustments are made to correct estimated costs, updating receiving inspection and landed cost accounts. Average costs are also updated. 4. Invoices are accounted for, updating AP accrual, tax, liability, and variance accounts. Charge invoices also update liability accounts. 5. Returns are accounted for by crediting receiving inspection and debiting AP accrual and landed cost absorption accounts.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    202 views4 pages

    LCM Accounting in P2P

    Uploaded by

    ramthilak2007gmailcom
    1. When goods are received, estimated landed cost entries are made to receiving inspection, AP accrual, and landed cost absorption accounts. Actual costs are calculated when invoices are received. 2. Goods are delivered to inventory, making entries to material valuation, receiving inspection, and purchase price variance accounts. 3. When invoices arrive, adjustments are made to correct estimated costs, updating receiving inspection and landed cost accounts. Average costs are also updated. 4. Invoices are accounted for, updating AP accrual, tax, liability, and variance accounts. Charge invoices also update liability accounts. 5. Returns are accounted for by crediting receiving inspection and debiting AP accrual and landed cost absorption accounts.

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    of 4

    Landed Cost Accounting in P2P Cycle:

    1. Receive the PO with estimated landed cost calculated


    - Receiving Inspection a/c DR @ Estimated Landed Cost
    - AP Accrual a/c CR @ PO Price inclusive of Non-Recoverable tax
    - Landed Cost Absorption a/c CR @ (Estimated Landed cost - PO Price
    inclusive of Non-Recoverable tax) (This a/c is defined in Receiving options)

    These accounting entries can be viewed from Receiving Transaction


    summary > Transactions > Tools > View Accounting

    These entries get created in rcv_receiving_sub_ledger

    2. Deliver the PO to Inventory destination


    For Standard Costing organization
    - Material Valuation a/c DR @ Std Cost
    - Receiving Inspection a/c CR @ Estimated Landed Cost
    - Purchase Price Variance a/c DR @ difference between Std Cost and
    Estimated Landed Cost
    For Average Costing organization
    - Material Valuation a/c DR @ Estimated Landed Cost
    - Receiving Inspection a/c CR @ Estimated Landed Cost

    These entries can be viewed from Inventory > Material Transactions >
    Distributions

    These entries get created in mtl_transaction_accounts

    3. Invoice validated and actual landed cost calculated


    Once the Actual Landed Cost is calculated, LCM will populate this information
    in cst_lc_adj_interface with rcv_transaction_id corresponding to the receipt to
    which the invoice is matched. Then the adjustment entries would get created
    as given below on running the Landed Cost Adjustment Processor

    Landed cost Adjustment - Receiving


    - Receiving Inspection a/c DR @ difference between Actual LC and Estimated
    LC
    - Landed Cost Absorption a/c CR @ difference between Actual LC and
    Estimated LC
    Landed cost Adjustment - Delivery (Standard Costing)
    - Receiving Inspection a/c CR @ difference between Actual LC and Estimated
    LC
    - Purchase Price Variance a/c DR @ difference between Actual LC and
    Estimated LC
    Landed cost Adjustment - Delivery (Average Costing)
    - Receiving Inspection a/c CR @ difference between Actual LC and Estimated
    LC
    - Landed Cost Absorption a/c DR @ difference between Actual LC and
    Estimated LC

    These accounting entries can be viewed from Receiving Transaction


    summary > Transactions > Tools > View Accounting

    These entries get created in rcv_receiving_sub_ledger

    Average Cost Update (Average Costing)


    - Material Valuation a/c DR @ difference between Actual LC and Estimated
    LC
    - Landed Cost Absorption a/c CR @ difference between Actual LC and
    Estimated LC
    LC Variance account is hit ONLY when the available onhand quantity is less
    that the received (to be adjusted) quantity but NOT zero. When the onhand
    balance is zero or negative, the average cost variance account is hit
    If this Average cost update happens for updating the item cost with the
    difference between Actual and Estimated landed cost for an item which has 0
    or negative on-hand quantity, then the accounting entries would be as
    follows:
    - Material Valuation a/c DR @ 0
    - Landed Cost Absorption a/c CR @ difference between Actual LC and

    Estimated LC
    - Average Cost Variance a/c DR

    These entries can be viewed from Inventory > Material Transactions >
    Distributions

    These entries get created in mtl_transaction_accounts

    The link between the Receiving transaction and Average Cost update is
    done through txn_source_line_id. Rcv_transaction_id of deliver
    transaction is stamped as txn_source_line_id in
    mtl_material_transactions for the LCM adjustment transaction which has
    the transaction type as Average Cost Update.

    4. Create accounting for item invoice


    - AP Accrual a/c DR @ PO Price
    - Tax a/c DR @ tax rate
    - Liability a/c CR @ Invoice Price including tax
    - LCM: Invoice Price Variance a/c DR @ difference between PO Price and
    Invoice Price (This IPV a/c is defined in Receiving options)
    - LCM:Exchange Rate Variance a/c DR @ difference between receipt
    exchange rate and Invoice exchange rate (This ERV a/c is defined in
    Receiving options)
    5. Create accounting for charge invoice
    - Default Charge a/c DR @ invoice price (This charge a/c is defined in
    Receiving options)
    - Liability a/c CR @ invoice price
    6. Perform Return transaction or negative correction after invoice is
    accounted and actual landed cost is calculated
    Return to Vendor /Negative Correction

    - Receiving Inspection a/c CR @ Actual Landed Cost


    - AP Accrual a/c DR @ PO Price + Non-Recoverable Tax
    - Landed Cost Absorption a/c DR (Actual Landed Cost - {PO Price+NonRecoverable Tax})

    These accounting entries can be viewed from Receiving Transaction


    summary > Transactions > Tools > View Accounting

    These entries get created in rcv_receiving_sub_ledger

    Return to Receiving/Negative Correction (Standard Costing)


    - Material Valuation a/c CR @ Std Cost
    - Receiving Inspection a/c DR @ Actual Landed Cost
    - Purchase Price Variance a/c CR @ difference between Std cost and Actual
    Landed Cost

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