Inventory Shrinkage 

Purpose

If you supply a subcontractor with subcontracting components, and, during a physical inventory, it turns out that some of the components have gone missing or are otherwise unusable, you may want to invoice the subcontractor for them.

Process Flow

...

       1.      When you decide to carry out a physical inventory, you create a physical inventory document for the materials that you want to count.

       2.      You do a count, and enter and post the results.

The system generates a material document and an accounting document to record the shrinkage.

The accounting document removes the inventory from the vendor stock account and debits it to the inventory shrinkage losses account. For example, if the subcontractor loses JPY 30,000 worth of components:

       3.      You invoice the subcontractor for the shrinkage, on the basis of the material documents from the previous step.

The system generates the following documents:

¡        An accounting document to transfer the physical inventory loss to a cost of sales account:

¡        An SD credit memo for the missing components (to reverse the chargeable invoice that you issued when you first sent them to the subcontractor), and the corresponding accounting document:

This document will be offset with the rest of the chargeable invoices in step 7 of the subcontracting process.

¡        A sales document and an SD invoice to invoice the subcontractor for the missing materials, and the corresponding accounting document: