Due to the accounting principles of the FIFO valuation method, canceling a document with FIFO items may trigger a special posting: if the document contains FIFO items whose warehouses are different from those in the base documents and the item costs in the warehouses are different, the price difference account and COGS (cost of goods sold) account cannot be reverted to the original balances by cancellation.
On the Basic Initialization tab of the Company Details window, you have selected the following checkboxes:
Use Perpetual Inventory
Manage Item Cost per Warehouse
A FIFO item F001 is received into two different warehouses with different prices (costs).
Warehouse |
Price |
Quantity |
---|---|---|
WH01 |
USD 5 |
10 |
WH02 |
USD 1 |
10 |
Create a return for item F001.
Warehouse |
Price |
Quantity |
---|---|---|
WH02 |
USD 50 |
2 |
Copy the return fully to a delivery but change the warehouse to warehouse WH01.
Account |
Debit |
Credit |
---|---|---|
Inventory Account |
$ 10 |
|
Price Difference Account |
$ 8 |
|
Cost of Goods Sold Account |
$ 2 |
Cancel the delivery.
Account |
Debit |
Credit |
---|---|---|
Inventory Account |
$ 10 |
|
Cost of Goods Sold Account |
$ 10 |
In step 3, the system revalues item F001 by its cost in the warehouse in the target document instead of using its cost in the warehouse in the base document. In step 4, as there is no price difference for item F001 in the same warehouse WH01, the system credits additional USD 8 to the COGS account.