Physical Count Posting

 

The cost amounts associated with adjustments made to the quantity on hand during the Physical Count process are posted to the general ledger. If a positive adjustment is made (the quantity on hand is increased), the Inventory account is debited and the Adjustment account is credited with the associated cost amount.

The following general ledger postings are made for an item with a unit cost of $100.00. This example assumes the quantity on hand is increased by one.

Physical Count:

G/L Account

Debit

Credit

 

Inventory

100.00

 

 

Adjustment

 

100.00

The item’s valuation method and whether the adjustment is positive or negative determine the cost amount of the adjustment.

For standard cost and average cost items, the adjustment amount is calculated as the standard cost or average cost, multiplied by the quantity adjusted.

For LIFO/FIFO items with a positive quantity adjustment, the last total unit cost in the Item file is used. If that value is zero, the standard cost is used instead. If the standard cost is also zero, the average cost is used.

For LIFO/FIFO items with a negative quantity adjustment, the cost associated with actual tiers against which the adjustment was applied is used. The cost is calculated in the same manner as an issue for the same amount.

For lot/serial items, the cost associated with the lot or serial number adjusted is used. If a new lot or serial number is added, the last cost for the item is used.

For more information, see Account Maintenance.