Updating Inventory Cost through Purchase Order Invoice Charge Adjustments in Microsoft Dynamics 365 Finance and Supply Chain Management

Posted on: November 21, 2024 | By: Christopher Rusing | Microsoft Dynamics AX/365

There are only a few ways in which you can update your inventory cost for items once they have been physically and financially updated in Microsoft Dynamics 365 Finance and Supply Chain Management. One of those options is utilizing the adjustment functionality from the closing and adjustment form in the inventory management module. However, the downside to that process is that you are unable to choose different offset ledger accounts. This might be an issue if you have different business reasons for posting to one ledger account or another.

Using the Adjustment Functionality

Your other option is to adjust inventory costs from the purchase order invoice that procured the material by utilizing charge codes. You can then utilize different charge codes for different business reasons, which allows you to use multiple ledger accounts. This method also allows you to update the inventory costs in either direction. You can increase or decrease the value of your inventory from this form. The limitation of this process is that you can only choose the inventory to adjust by invoice line. In contrast, the closing and adjustment form allows you to adjust by inventory dimension, regardless of the line. Here are some examples of these processes.

Configuring Charge Codes for Adjustments

Firstly, you must have an accounts payable charge code configured like this. The debit side must be ‘Item’, and your credit side must be ‘Ledger account’. This is the only combination allowed when adjusting purchase order invoices. You can create different charge codes to post to different ledger accounts.

Adjusting Inventory Costs

When you are posting your adjustment to the purchase order invoice, you can enter a negative sign to decrease the cost of inventory. The cost of the inventory will increase without the negative sign added.

 

Finally, you can adjust inventory cost per invoice line. You must select the ‘Show selections and clear specific lines’ option and then mark in the ‘Include’ column which line you would like to adjust. Theoretically, you could adjust per batch if you only had one batch number line.

Adjusting Costs by Batch

However, you must use the closing and adjustment functionality to adjust by batch if you are grouping batch numbers within the same purchase order/invoice line.

All the best!

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