How To: Sale Pending Method 1A – Setups

Overview

This tutorial describes the required setups for Sale Pending Method 1A.

Step-by-Step

Click image to enlarge.

Set up a Non-Inventory Interface Item in Inventory Master File Inq/Maint (03-01). This item will be sold on the DD transaction and the parts and labor costs from the work order will write back to it.
The interface item must meet the following specifications:

There are no requirements for the item’s name. We will call ours ‘INSTALL’.
The product type for this item must be Non-Inventory (% is the third character). Additionally, to make Sales Analysis reports more useful, the product type and corresponding department assigned to this item should only be used for this item. In our example, the product type will be ‘IN%’.
In the ‘UNIT OF MEAS’ field (Field 5), enter “IN”. This code tells the system to interface this item to a work order in Service.
Enter “Y” in Field 10, ‘CUSTOMER HST.’
Do not enter any costs or selling prices for this item.

Click image to enlarge.

Create a Non-Inventory labor item in Inventory Master File Inq/Maint that will be used to capture labor costs on the work order.

There are no requirements for the item’s name. We will call ours ‘LABOR.’
You can leave the cost fields blank or enter factors (ratios) that the system will use to calculate the cost. If factors are used, the cost is calculated using a percentage of the labor item’s selling price on the work order. For example, let’s enter “.50” for the Vendor Cost (Field 13) and “1.00” for the Minimum Sell Price. If the Selling Price for the labor item on the work order is $50.00, the cost for the item will be reported as $25.00.

Click image to enlarge.

Review the ‘Post Non-Inventory Product Type Costs’ preference in Ticket G/L Interface (02-18-13).
If this box is checked, Non-Inventory Product Type (NIPT) costs are posted to the General Ledger at the end of each day (when Sales Transactions Update (02-05) is run). Note that costs are only interfaced if factors are set up for NIPT items. If factors are not set up, you need to complete manual Journal Entries to account for the costs.

With regards to Sale Pending, you will need to make a decision on how labor costs should be posted. If you are using factors on the labor item, do you want to book costs and revenue automatically or use reports to book the costs manually? Or do you not want to book costs at all for labor?

If the ‘Post Non-Inventory Product Type Costs’ box is unchecked, NIPT costs must be adjusted via Journal Entries at the end of the month.

Click image to enlarge.

Access Inventory Transaction Code Maint (03-13) and review the code ‘COP.’
If this code exists, it should be assigned to a dedicated G/L number for costs of service parts. This code is used to write the cost of parts inventory from the work order to General Ledger (during Work Order Update).

NOTE: If this code is not added, the parts costs will write to the ‘COG’ G/L number and will be combined with Merchandise Inventory Cost of Goods.

Click image to enlarge.

The offsetting entry for COP is the ‘Merchandise Inventory’ account, which is posted through the ‘I/P’ Journal Source in Auto Interface Post Acct Entry (Z Poster, 15-15).

A Journal Entry needs to be completed at month end to move the offsetting entry from Merchandise Inventory to Parts Inventory (if separating them on the Balance Sheet).