Discrepancies between Inventory Control Account and Inventory Valuation

Discrepancies between Inventory Control Account and Inventory Valuation

Discrepancies between Inventory Control Account and Inventory Valuation

Differences between the Inventory Control Account and the Inventory Valuation Report will be the result of the following:

  • Inventory being integrated into the General Ledger.
  • Allowing negative inventory processing.
  • A customer invoice with a specific inventory item being captured before the corresponding supplier invoice has been captured.
  • Changing the cost price when processing a customer invoice.

If this situation arises, the following corrective steps should be taken:


Please ensure that a backup is made before doing this.


The corrective steps are divided into three parts:

  1. Reversing the incorrectly stated (e.g. average cost, quantities etc.) inventory items.
  2. Entering the correct figures for the inventory items.
  3. Correcting the General Ledger accounts.

Step 1 and 2 will be done using Inventory Journals, step 3 can be done using the General Journal.


Step 1 - Reversing inventory items

Before any journals are done, the following options must be selected (Ensure that the checkboxes for these options are checked):

  • The option under Setup…Inventory…Configuration…Allow Negative Inventory.
  • The option under Setup…Inventory…Prices…Make Average cost 0.00 when Zero on Hand.

  1. Print an inventory valuation report for the current period under View…Inventory…Inventory 
    Valuation. This report will show you the inventory quantities and the average cost of the specific 
    item.
  2. To reverse the inventory items go to Process…Inventory Journals.
  3. Process entries to make the quantities on hand zero, leaving the average cost at the incorrect 
    amount.
  4. Update the batch.

Step 2 - Entering correct inventory items

  1. Print an inventory valuation report under View…Inventory…Inventory Valuation. Ensure that the 
    quantities and average costs of all inventory items are zero.
  2. To enter the correct quantities and average prices of the inventory items go to Process…Inventory 
    Journals and enter the correct quantity on hand as well as the correct average cost price.
  3. Update the batch.

Step 3 - Correcting the General Ledger Accounts

Compare the balances of the Inventory Valuation Report to the Inventory Control Account in the Trial Balance - Any discrepancies need to be journalized. You will need to determine which accounts are affected in these journal adjustments.

Note that after the above steps have been completed, the following options must be unchecked:

  • The option under Setup…Inventory…Configuration…Allow Negative Inventory.
  • The option under Setup…Inventory…Prices…Make Average cost 0.00 when Zero on Hand.

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