Inventory Movements and Revenue Recognition

General Design

Use Warehouse instead of Item to segregate inventory by GL Ledgers.
Consignment Warehouses should have 0 cost.
Use Transfer Orders to transfer inventory between warehouses with the same GL Ledger.
Use Sales Orders and Purchase Orders to transfer inventory between warehouses with different GL Ledgers.

Setup

GL Ledger	Inventory Warehouse	Physical Warehouse	Revenue/COGS Sources	Transaction Type	Accounting Entries
Ad Magic	Yongle Owned	Yongle	Purchase Products from Yongle	Purchase Order to WR to PI	DR Inventory CR AP
			Sell to BG and others, such as CAH	Sales Order to WS to SI	DR AR CR Revenue CR COGS CR Inventory
	Yongle Consignment	Yongle	Receive Sales Orders from CAH, for customers like Target	Add Inventory using 0 cost Sales Order to WS to SI	DR AR CR Client Fund Payable
Breaking Games	BG Owned	Blackbox	Purchase Products from Yongle or others	Purchase Order to WR to PI	DR Inventory CR AP
			Receive Sales Orders from CAH, for customers like Target	Sales Order to WS and SI	DR AR CR Revenue CR COGS CR Inventory
	Yongle BG Owned	Yongle	Receive Sales Orders from CAH, for customers like Target	Sales Order to WS and SI	DR AR CR Revenue CR COGS CR Inventory
	BG Consignment	Blackbox	Receive Sales Orders from CAH, for customers like Target	Sales Order to WS and SI	DR AR CR Client Fund Payable
	Amazon Owned (FBA)	Amazon	Receive Orders from Amazon	Transfer Orders Sales Invoices	DR AR CR Revenue CR COGS CR Inventory
BlackBox	BlackBox Owned	Blackbox	Boxes, Packaging Materials	Purchase Orders Cycle Counts
			Fulfillment Services for Breaking Games and others		DR AR CR Revenue

There are three different types of Sales transactions:

Breaking Games - Retailer

From Opportunity, create:

Purchase Order
- Use "Yongle Owned" Warehouse
- Create a Prepayment Invoice
- Pay the Vendor.
- Receive
- Invoice
  - Debit Inventory for "Yongle Owned", $3
  - Credit AP, $3
Use Client Sales Order to transfer ownership
- Use "Yongle Owned" Warehouse
- Create a Prepayment Invoice
- Get paid.
- Then Allocate and Ship
- Invoice
  - DR AR
  - CR Revenue (4190-BG Merchandise Sales), $10
  - DR COGS (5280-Cost of Goods Sold - Misc), $3
  - CR Inventory for "Yongle Owned"

You make $7

To add inventory to "Yongle Consignment"
- Click the Create Item Adjustment Journal button on Whse shipment - to be programmed, pending further instruction
  - This is the moment to decide which warehouse to use.
  - The warehouse will decide the division code.
- The Item Adjustment Journal may be created manually.
- Unit Cost will be 0 for all consignment inventory.
- In Youngle consignment, I will have quantity 1, at 0 cost
To transfer inventory from "Yongle Consignment" to "NJ Consignment", or from "Yongle Owned" to "NJ Owned" (only for Breaking Games), you can use Transfer Order.
- From "Yongle Consignment" to "NJ Consignment"
  - Division = Ad Magic
- From "Yongle Owned" to "NJ Breaking Games Owned"
  - To Division = Break Games
- Create and Post Transfer Shipment
- Whse Receive against Transfer Order
Receive EDI Orders from Walmart and Target with Warehouse = NJ Consignment
- Create new sales orders using "Yongle Consignment" or "NJ Consignment" Warehouses
- Allocate and ship
- Invoice
  - DR B/S Contra Consignment Inventory (Account COGS) $0
    - with 0 inventory value
  - CR Inventory (Consignment Warehouses) $0
  - DR AR $20
  - CR Client Fund Payable (Account Sales) $19
  - CR Service Revenue $1
  - Programming Note:
    - Added Account Posting Group to Warehouse and assign - done
      - Consignment to consignment Warehouses
      - Owned to owned warehouses
    - Added Sales Invoice Line trigger to look for the correct APS to use based on the Accounting Posting Group defined on Warehouse - done
When AR is received from the client's customers, then pay the client.
- Create a Payable
  - DR Client Fund Payable
  - CR AP (to your client)
- Create Cash Disbursement
  - DR AP
  - CR Bank Account

Ad Magic - Bulk Sales

From Opportunity, create:

Create a Purchase Order
- Use "Yongle Owned" Warehouse
- Create a Prepayment Invoice
- Pay the Vendor.
- Receive
- Invoice
  - DR Inventory ("Yongle Owned" Warehouse)
  - CR AP
Create a Sales Order
- Use"Yongle Owned" Warehouse
- Create a Prepayment Invoice
- Get paid.
- Then Allocate and Ship
- Invoice
  - DR COGS
  - CR Inventory ("Yongle Owned" Warehouse)
  - DR AR
  - CR Revenue

Service Invoices for 3PL Service - Still waiting for the detailed requirements

Monthly sales invoice to the Client.
- Fixed amount
- % of sales amount
- Receiving, Storage,

Link to the Excel file shared in the meeting:

Ad Magic Accounting.xlsx