Stock - Purchase Orders and Receipts
Purchase Orders (PO) is used for the purchase of stock items. The PO system allows for:
- A PO to be printed or emailed to a supplier.
- Receipts of goods to create a Goods Received accounting entry and update stock item account.
- Creation of a Bill transaction directly from the PO when a supplier invoice is received.
- Updating Stock item value, including an overhead such as Carriage-In, depending on the valuation method specified.
The PO system is accessed via the Stock menu
This guide addresses the following topics.
- Entering a New Purchase Order
- Receiving Goods
- Finally Closing a PO
- Accounting for Receipts
- Reversing a Receipt
- Creating the Supplier Bill
- Accounting for the Bill
Entering a New Purchase Order
Enter a new Purchase Order via the Purchase Order menu.
Stock - Purchase Order - Add Purchase Order
Stock - Purchase Orders - ADD
A purchase order input screen is presented. Only tick the Stock Return box if the transaction is returning stock to the supplier. Otherwise leave blank.
The PO Number will be the next in the series but an alternative can be entered if preferred. From the Supplier dropdown select the relevant supplier. If the supplier does not exist, click the to create a supplier and complete the details in the supplier maintenance dialogue box in the usual way. Users are advised to be careful not to created unwanted duplicate customers.
If the delivery is to a Branch select the relevant one from the list. Note that if a branch is selected the printed purchase order will display a 'ship-to' address for the branch.
An Expected Delivery Date is required as it is used in planning activity and reports. It will also be displayed on the PO document. Enter a Memo note if desired.
If an overhead expense such as carriage-in or a set up charge is to be reflected in the stock value of the stock items being purchased (If you are uncertain consult with your advisor), enter the amount in the Purchase Overhead box. Then select a method for allocating the overhead amount over the line items being purchased by clicking one of the buttons of the Overhead Allocation Method. If there is no overhead to be dealt with leave the fields blank.
Click ADD ITEM to start the process of selecting a stock Item. Select the Stock Item from the dropdown. A COPY COST button is visible. Any value represents a snap shot of the current unit value of the item held by the system at this point. The purpose is only to act as a guide in understanding and monitoring purchase prices from the supplier. If you wish to copy the value into the Unit Price field click the button. Note that the value in the Copy Cost field is not stored with the PO.
A Supplier Reference is displayed if one has been entered in the stock item record, it can be overwritten or if one did not exist entered. Enter the purchase Quantity Ordered and the Unit Price that will be paid. The Total Price is displayed.
Click SAVE ITEM to save the line item, if further items are to be added click ADD ITEM again. When all line items have been entered, click SUBMIT to record the Purchase Order.
The PO screen is re-presented. The PO number is displayed and if any purchase overhead was included then the amounts are allocated over the line items. The PRINT button will create a Purchase Order in pdf format for printing or emailing.
All Purchase orders and their status can be viewed in the Purchase Order listing screen.
Stock - Purchase Orders
Receiving Goods
Please take care to accurately receive goods as errors have an impact in stock valuations and in some cases cost of sales. It may be the case that transactions may have occurred involving the stock item before a receipt is reversed to correct an error, so a multi stage process is required to make the reverse, see below for details.
Use the RECEIVE button from the List Purchase Orders screen to record the receipt of goods. A Receipts screen appears.
Enter the Date Received, defaults to the current date but can be amended. Click ALL RECEIVED or if not enter the quantity received in the right hand box.
Click SUBMIT to confirm. If all the purchase order quantities have been received then the status of the PO will change to All Received if not it remains as Open.
If after partial receipts the user wishes to complete the PO anyway. Edit the PO so that the purchase quantity equals that already received. Click Receive again, click All Received again and the status will change to All Received. Create the Bill in the normal way (see below).
Return to the list of topics in this user guideFinally Closing a PO
It is necessary to finally close a PO. From the PO listing click the EDIT button adjacent to the relevant PO. Tick the Close PO box, on SUBMIT the PO is closed and removed from the listing. Only do this when all goods have been received and the bill has been raised.
If the box is ticked before any goods have been received the PO is removed with no impact. If there has been a partial receipt then the goods remain recorded in the stock and goods received accounts but no bill can be created from the PO listing; it will need to be done from the normal Create Bill process.
Return to the list of topics in this user guideAccounting for Receipts
Processing adjusts the physical stock quantities and the values as described below. For a standard cost valuation method, the received quantity is multiplied by the standard cost.
- Increase (Debit) the stock account of the stock item
- Increase (Credit) Goods Received Accrual account
For FIFO and Average valuation methods, the system calculates the required stock value from the PO information.
- Increase (Debit) the stock account of the stock item
- Increase (Credit) Goods Received Accrual account
Reversing a Receipt
From the stock account of the stock item, identify the journal entry relevant to the receipt and delete that. Then from the List Stock Movements Screen (under Manage Stock); locate the receipt transaction from the relevant stock item and click REVERSE. Finally locate the relevant PO and delete it. If necessary the PO will need to be re-created.
Return to the list of topics in this user guideCreating the Supplier Bill
When the supplier bill is received the system allows for the creation of the bill transaction. From the Purchase Order Listing screen locate the relevant PO and provided the status is All Received the left hand column will display an ADD button. Clicking this opens a dialogue box.
Enter a Reference if required. Enter the date of the bill in the Date of Transaction field. A Tax Point date can be added for VAT purposes if needed, this will default to the transaction date if left blank. Due Date is calculated by the system from the supplier details. Select an appropriate VAT Rate from the dropdown. Note if there are multiple rates it will be necessary to edit the bill once it has been created.
If the transaction is subject to Reverse Charge VAT check the box (See VAT user guides)
On SUBMIT the bill is created and the ADD button changes to EDIT. Clicking EDIT takes the user to the bill details, which can be modified if required and non-stock line items added.
Note the bill can also be accessed from the Lists menu.
Return to the list of topics in this user guideAccounting for the Bill
For a standard cost valuation method, any purchase price variance is computed as the difference between standard cost and billed amount.
- Increase (credit) the supplier account
- Decrease (Debit) Goods Received Accrual account
- Decrease (Debit) VAT Control (if VAT registered)
- Increase (Debit)/Decrease (Credit) purchase price variance account in P&L
For FIFO and Average valuation methods, the system calculates the required stock value from the PO information.
- Increase (credit) the supplier account
- Decrease (Debit) Goods Received Accrual account
- Decrease (Debit) VAT Control (if VAT registered)