During this recorded webinar, learn about the year-end close process for physical inventory in Dynamics 365 Business Central.
Topics discussed during this session include:
- Physical Inventory Process Overview – 2:45
- Calculating Inventory – 4:05
- Printing Count Sheets – 10:50
- Entering and Posting Inventory Counts – 13:15
- Advanced Warehousing Physical Inventory Process – 20:15
- Cycle Counting Setup – 28:00
- Inventory and Warehouse Adjustments – 36:25
- Warehouse and Item Ledger Entry Synchronization – 45:00
- Item Attribute Reclassification – 48:20
The intended audience for this video are existing Dynamics 365 Business Central users.
Contact us if you have any questions about physical inventory year-end process in Dynamics 365 Business Central.
Tess: Hello, everyone, and thank you for taking some time out of your schedule today for our Physical Inventory Year-End Process in Dynamics 365 Business Central Webinar. My name is Tess and I’m the facilitator today. Before I pass it over to our presenter, I want to remind you that if you have any questions during the webinar, please type them into the questions area in the control panel on the right-hand side of your screen, and I’ll answer the questions at the end of the presentation. This session will be recorded and will be posted on our blog.
Now, I would like to introduce you to our presenter today, Will Haber, who is a solutions specialist on our Dynamics 365 Business Central team here at Encore. So Will, over to you.
Will: Thanks, Tess. Good morning, everyone, and good afternoon, depending on where you are. So I will start off by introducing myself, I’m Will Haber. I’ve done about four to five years now of solution specialist in terms of the NAV, and also D365 Business Central space. And today we’re gonna go over mainly the physical inventory year-end process, what that entails, as well as other different tips and tricks with items and inventory adjustments both in a basic warehousing configuration and in an advanced warehousing configuration. So just kind of showing you the different examples of, like, when you have locations and then setup, versus when you just have standard inventory setups within the system.
So in order to get started, I’m just gonna go through my agenda here. So today we’re gonna cover the physical inventory process, so basically the whole process and what it entails from a basic warehousing configuration standpoint. We’re gonna go through calculating the inventory within the inventory journal, as well as printing out the count sheet. There’s a few different ways you can do this.
You can also enter and post inventory accounts once you’re validating the counts, once you’ve validated the numbers in terms of what’s in your warehouse or location. You can post the inventory counts that way. So then I’m gonna go through the differences between the advanced and the basic process within the system. So that’s what I’m gonna cover in the advanced portion of it.
We’re also going to go through cycle counting. So, like, in terms of the year-end process, that’s pretty much the first five slides in the agenda of the year-end process, and number eight in a sense. But number six, seven, and nine are more just different processes you do throughout a yearly basis to manage your inventory. So I’m gonna go ahead and get started.
So within the physical inventory process, we have a few different basic warehousing configuration tactics and different steps to actually calculate the inventory and post the actual adjustment. So we’re gonna go through calculating the inventory of what the system has actually on hand versus what your physical inventory, what you actually physically have in the warehouse, and just kind of show you that process of how you can generate the system quantities first and then validate that against what you have in the warehouse.
We’re also gonna show you how to print the count sheet. So with the count sheet, there’s two different reports that you can use. There’s one main report that we see typically used by most clients to print the count sheet. And then once you’re done validating the count sheets and have counted the entire inventory and the year-end count process, you can go ahead and record and post the actual inventory and see what the flow is in terms of the actual historical transactions of it.
Just a quick note here, these process steps only really apply to a location that’s not using directed pick and put-away. So if you don’t have any zones or bins within your warehouse, this will apply that process there. And then we’ll go through the advanced process as well where it is directed pick and put-away.
So within the basic warehouse configuration, I’m just gonna go into my demo tenant here. And so over to this tenant. And essentially within this tenant, we have a few different processes here. So as you can see within, this is also basic and advanced warehousing. So if we go search for physical inventory journals. And we’re gonna conduct the count now.
So essentially this is the physical inventory journal. It has a few different setups in terms of quantity. A few different fields to point out in terms of the different calculations of inventory. So the quantity calculated field is the field we’re gonna focus on in the first part, it actually generates the system quantity. So this is gonna be for basic inventory. When you pull up your list, it’s gonna calculate all system quantities per item and per location.
And then the physical inventory field is the user editable field where you would actually enter what you have in your warehouse physically. And then from there, it will just essentially generate. So for example, if I had…When I calculate the inventory, you’ll see this. But in terms of this process here, if I had this line here and I use this location code. Right now there’s nothing quantity calculated, but if I use a physical inventory with that five, three in the warehouse, I can do that. And essentially, so…It’s probably easier to show you through the actual process here. But essentially, it’s gonna basically show a positive or a negative adjustment depending on if I had more or less in the warehouse.
So let me go ahead and run the calculate inventory. So in order to run calculate inventory, you would go to action, function, and calculate inventory. Or you can also go to the prepare and calculate inventory as well. So essentially this is the calculate inventory report. And then so essentially the different processes here, this is gonna be post to your work date, your posting date. So whatever your current work date is on your user settings. And then the document number is gonna default from the batch.
Items not on inventory. If you wanna include any items that have an inventory of zero in your count, you can do that as well. And typically, we see most clients doing this because you wanna validate if you actually have the item or not, regardless of whether the system has the inventory calculated or recorded.
Including items without transaction. So essentially what this means is, any items that don’t have any ledger history of sub ledger history will also be included in the report. So I’m gonna select both of these just to get a full inventory list per location of what we have. You can also filter per location and per item as well. I’m gonna go ahead and run this.
So currently, this is what we have in inventory, what you’re looking at in terms of the items per location. So just to kind of analyze this and really see what line by line we’re looking at. For this item, for example, if we filter down to it, we can see we have four unidentified locations, so just four items in inventory. And then we also have one in the East location and two in the main location.
So in order to essentially see the positive adjustments and negative adjustments, let’s say we don’t have actually anything in a non-identified location, we put everything away. So we’re gonna negatively adjust this back to four. So it’s for a quantity of four. So essentially your quantity is the difference between what the system generates and what the physical inventory is recorded as.
Let’s say we have more in the East location, this would be a positive adjustment too. And then for this we counted the accurate inventory in the main location. So would post essentially a positive adjustment of zero but it wouldn’t record anything on the quantity adjustment for the unit amount. So that’s kind of the way how you can calculate inventory. So essentially that’s the calculate inventory process there.
Now, in terms of generating the count sheet, I’m gonna actually go ahead and record some adjustments here. Let’s say, for example, we found seven here, four here. I’m just kind of going down the list. Just going through the list here. Let’s say we found nothing here. Let’s call the negatives. So making a few adjustments here. Bear with me a minute.
And so you can kind of see the process here. Like essentially you can do this on a one-by-one level, or you can actually import the journal as well. There’s another way you can actually do this manually, or to automatically upload your count sheets by going to open an Excel. So typically we see most clients export this to Excel and then re-import them. So that is an option there to upload your physical count at that point. To actually upload the counts to post the adjustments.
So essentially with the calculate inventory, now we’re gonna go ahead and print our count sheet here. So in order to print your count sheet, there’s two different reports, there’s the physical inventory list and there’s a physical inventory count report. So the count report is used more in advanced warehousing configuration where you wanna generate the shelf and the bin that the item is located in. So if you have shelves and bins set up for your different inventory items, that’s where you would generate that report. Otherwise, you would generate the post and print report and go to print. And so that’s your physical inventory list report.
So going to your physical inventory list report, you have a couple options here. So you can show the serial or lot number if you have items tracking with your actual inventory. You can also show this quantity calculated as well. I’m gonna go ahead and show the quantity calculated, show the system quantity. Some customers actually do not show this and have this disabled by default because they don’t want their warehouse employees to see what their system quantities are to validate against. So it’s more of a blind count in that scenario. So that would be that example there where you would leave this disabled to have a blind count. So I’m gonna go ahead and preview this or actually print this in this case.
So as we can see, we have a few different quantity calculators here. And this is where you can record your counts essentially, and the physical warehouse is your count sheet in a sense. So with the count sheets, it’ll show the quantity calculated, it’ll show bank codes if you have advanced warehousing set up, it’ll also show different location codes associated with each inventory item and where they’re located. So that’s an example of a count sheet essentially, in that case.
So that’s essentially the count sheet there. And so now we go print the count sheet. So that’s the way to print that in that report. Now, in order to actually enter and post the inventory, as I mentioned previously, there’s two different ways to do this, you can update it manually line by line once you have the counts recorded, or you can actually open it in Excel. You can copy the lines in Excel and then re-import them into Business Central. So I’m gonna go ahead and update a few more lines here.
And as you can see, the system automatically adjusts based on the positive or negative adjustments, based on what your count is. So for example, in this case, we found five in the warehouse of this Rome guest chair. And so we will record a positive adjustment of three into the actual default location. For this case, in terms of the main location, we found two less, so it’ll negatively adjust that inventory in the main location for two.
So that’s an example of that. And essentially if it’s the same quantity physical as what the system generated, it’ll record a zero adjustment in the journal entry. So now I’m gonna go ahead and show you how to enter and post the inventory. So we’ve already entered the inventory. You can also do it through Excel automatically. So in order to post the inventory, typically most clients have a post and print option. So essentially you would wanna post and print the document or journal of what you’re recording in your adjustments. So it gives you a printed report of what is actually about to be posted to the adjustments per item per location.
So I’m gonna go ahead and post and print this. A thing to note with inventory and warehousing as well is in order to actually test the report and see if it’s gonna post through, there’s no preview posting action as opposed to the financial aspects of the system. So in order to actually test that, you would go to actions posting, and there is a test report, you can generate it as well. So I’m gonna go ahead and generate the test reports to see if everything’s good to go.
So these will be the adjustments that will be recorded, essentially, in this inventory posting test report. So as you can see, we have the positive adjustments and negative adjustments. By default, there will be a positive of zero if there’s nothing to actually record. And it records the quantities and invoices the quantities based off of what you’re reconciling here, inventory sub ledger.
I’m gonna go ahead and actually post this test and submit the report. That’s essentially the way you would post the inventory to your inventory sub ledgers. Let me go ahead and actually change one line here. There’s the line that actually uses an in-transit locations. Therefore, we can’t post anything to an in-transit location. That’s another thing to note as well.
Let me go ahead and repost this and print the report. Adjust the value entries as well when you’re posting. The journal lines have been posted. And then it prints out and generates an item register report. So essentially, it only records the quantities that you’ve posted with a difference. In this case, so this is what’s actually posting the item ledger entries. And there’s a separate ledger entry called the physical inventory ledger entries where that would post as well. So in order to look at the different posted transactions here, what we can do is we can go to item, and we can go to actually the G/L register.
What I can do is I can actually go filter on this. And essentially this is the register that was posted for these entries. In order to view the related entries here, I can go to actions and find entries here. Actually, I can go to the item ledger from here. So I can go to the general ledger here and just see the related entries of what’s actually posted at cost. These are the different cost postings here from that entry. Alternatively, what I can do is I can go to the item ledger entries to view the inventory effect on the sub ledger.
So sort by posting date. And so essentially these are all the adjustments that we posted here on eight, nine. And essentially these are just different adjustments here. And we can see by document number what we posted essentially. So if we wanna look at all the related entries associated with that, we can go to actions and find entries here. And so these were all the actual entries that were related to what we posted. So as I mentioned before, we posted 27 adjustments. The physical inventory ledger entries are 46. So in the physical inventory ledger entries, it’ll actually record the zero quantity, so if you wanna view even further of items that had no differences when you conduct your account and your physical inventory, you can also view all your items that were counted at that point.
Another thing is you can see your value entries as well, so what is actually posted in terms of the inventory costing. So as you can see there’s a direct cost of zero in terms of a lot of these. And then some of them are item ledger entries positive and negative adjust this case at direct cost.
So that’s the value entries. So this is kind of a basic warehousing configuration of how you conduct your physical inventory year-end. A few differences with your advanced warehousing configuration here, and kind of how you do that and calculate the inventory on the warehousing side.
For advanced warehousing configuration, it’s all done through warehouse tunnel. And the first setup that you have to keep in mind for advanced warehousing configurations is you need to make sure each user that is using the warehouse location is set up as a warehouse employee for all the locations that are warehouse enabled. So in this case I’ve set myself up for all locations. But really, in practice, you only really have to set yourself up for all the warehouse enabled locations. And what I mean by that is if I go to the locations here, and I look at all the different locations for the East location, for example, this is not set up as directed pick and put-away, as I mentioned previously, so it’s essentially a basic. In terms of the system, it’s a location that’s not bin mandatory and not directed pick and put-away. So in this case, with this location, it’s not set up with bins or zones. So essentially this is an example of an inventory location where you would just use it purely for recording your inventory.
When you have a more advanced warehousing structures like the test warehouse I set up, this would be the difference here, when you have the bins mandatory as well as the directed pick and put-away. So essentially, this is where you would use the warehouse journals and then record the adjustments in the item journal.
Another key setup with the warehousing locations that you need to set up is you need to have an adjustment bin. So when you post your adjustments and synchronize your item ledger with your warehouse ledger, the system is gonna look for this adjustment bin code when you’re setting it up. You would also wanna have a receipt and the shipment bin code most likely. If you’re doing production or assembly orders, you would also wanna have this information populated as well.
So this is the locations and this is kind of all the setups that go into the advanced warehousing at a high level overview. So in order to actually calculate the inventory in the advanced warehousing, so now that I’m set up as a warehouse employee, what I can do is I can go to warehouse physical inventory journal. And so this, because I’m set up as a warehouse employee, gives me access to this journal. So essentially the first step here is very similar to the physical inventory journal. You go to process and calculate inventory here.
And so you enter a document number, we’ll do WHSE001. You can also include items that are not on the inventory similar to the physical inventory journal, so where the system hasn’t recorded an actual quantity of it and there’s zero inventory on there. So I can go ahead and leave that disabled for now.
I’m gonna go ahead and generate this. So essentially, as you can see, within the calculate inventory for the warehousing process, this is separated as bins, so this location had a zone that I set up as well as the bins that I set up. So I set up a receiving bin, a shipping bin, and a few different pick and put-away bins as well. Just to kind of illustrate that example of a location that would have, essentially, bins set up throughout the warehouse.
So that’s an example of how you can calculate the advanced configurations and how you can generate inventory. It’s very similar the process to post the inventory. You would register it. And so if you register this inventory…We’re gonna come back to this later, but essentially the registering of the inventory. So if I go ahead and I register this inventory here. Actually, let me record some quantity differences while I do that.
So essentially it’s the same process here where you’re recording quantity differences in your bins. So, for example, this bin, 001, for these items, and for all these different items in that bin, I’m recording quantity differences. So for example, the Berlin guest chair, I found 118. I’m gonna negatively adjust that bin quantity by five.
Conversely, I found 145 of the Atlanta whiteboard in that same location. So I can adjust that by 46 with a positive adjustment. And so essentially what we’re doing here is we’re doing the warehouse adjustments and then we’re gonna calculate that in the item journal at the end, which synchronize our inventory with our warehouse within our bin.
So we have a few less lines here, so I’m just gonna go through the example. Now, leave one line where it’s a difference. There’s no difference here. So essentially we have our adjustments recorded here. Similarly, you can automatically do this through the open an Excel function, and paste this back into Business Central from there. So that’s another way of recording your adjustments. So I’m gonna go ahead and register these. So it’s different in terms of the posting action here. The posting action is the register in terms of warehousing documents. So I’m gonna go ahead and register that and print out the report.
So the journal lines have been registered. And then this goes into the warehouse register report, which then generates from there. So similar to the item register. But essentially this is where the adjustment bins. So as you can see, there’s different adjusting lines. So the adjustment bin gets debited for six…Essentially gets decreased by the amount of what you’ve adjusted into the new bin.
So in this case what I mean by that, in terms of that example, if we had a positive adjustment into this bin of six, it would negatively adjust the adjustment bin by six of the offsetting entry because the inventory has to come from somewhere in terms of the system. So the adjustment bin is essentially the intermediary there, the offsetting bin in that case.
So now that we’ve registered the inventory in the warehouse register, we’re gonna come back to that and we’re gonna calculate the warehouse adjustment in that internal called the item journal. And so that’s essentially where you record your final reconciliations between your inventory sub ledger, where you actually have an inventory, and what’s in your bin from the warehousing standpoint.
So the next step I’m gonna go through is the cycle counting. So in terms of your warehouse process, you may wanna count things on a periodic basis. And this is where you would use the cycle counting functionality within Business Central. So in order to demonstrate that, we’re actually gonna go to the items.
And so within the items…Before I actually go into that, there’s one setup that needs to be done. There’s something called the physical inventory counting period that need to be set up. And so these physical inventory counting periods are essentially different frequencies of when you count your items per item. So for example, you can have this on a quarterly basis, you can have this on a once a year basis, you can have this on a half year basis. Whatever your periods are essentially, you can have them on a per period basis essentially.
So I could count this 24 times a year where I do a bi-monthly count in that case. I can also do a monthly count in this case, or I can do a semi annual count. So this is kind of just the different examples of how you can set up your counting periods per inventory item. The next step that we need to do is we need to assign this to an item, these counting periods. Because without that the system won’t know which items are to be counted and when.
So we go to our inventory list here. And essentially, within the inventory list, I’ve already set up a few different items. And so the way you would set this up is you would go down to the warehousing tab and you would specify this field called the physical inventory counting period code. And so this physical inventory counting period code, when you specify that, based on the list of what you’ve calculated, so for example, we have a high volume frequency here. So what this means is every month or every period in this case, because the fiscal year is 12 months, it’s going to calculate into a cycle count essentially. So the last physical inventory date was 8/9, the next counting end date would be 8/31, and then the next counting start date would be 8/1. So we’ve already counted it this month is what it’s telling us in terms of this item. And you would count it on a monthly basis and that’s it.
Similar to here, we have a low volume frequency, so this should be counted on a yearly basis. So we do a yearly cycle count for this item. And you can also view the last physical inventory date. So in the last physical inventory date, we counted that there was a quantity of two we adjusted in the positive and two negative in the West location. We did a count on 8/9 for this item.
So I’m gonna go ahead and set up a few new items, because these have already been counted, in terms of the yearly process and the cycle counting periodic process. So in order to do that, kind of, as mentioned before, you would go down to the warehousing first tab for this time of the month. So I have to choose another item here.
This one does not have a physical inventory counting period code. I’m gonna go ahead and assign this. Let’s say we counted on a semi annual basis. So we can do that. And essentially this would count. The next counting start date will be 7/1 and the end date will be 8/31 in this case. So now that we’ve assigned the items, the physical inventory counting period code, what we can do is we would go to the physical inventory journal.
So to go back to our physical inventory journal here. So within the physical inventory journal, in order to generate a cycle count from this journal, what we would do is we go to prepare and calculate counting period. So what this function does, essentially, is it takes the items, and you can select the items that you want to count based on the counting period set up on the item card.
Before we run this function, we can see that the last counting date, we haven’t counted anything yet, but we’ve done physical inventory on it. So we can select the items that we wanna include within our cycle count. I’m gonna go ahead and edit the list here. And I’m gonna go ahead and select all the items. You can select multiples, you can select one item, but I’m gonna go ahead and select all of them. And it will populate the journal with these items in terms of the document number. So essentially, once I go to this calculate physical inventory counting batch job, it’ll fill in the lines with a posting date of the work date, and then with the next document number in the series.
So right now I’ve filled out all those items, and it counts them per location. Essentially, this is the same process as the physical inventory year-end, but now this is not a subset of items that you wanna count based on that period. So I’m gonna go ahead and do some adjustments here just to show you the similarity. In that, there’s no difference. So as you can see, we have a few positive and negative adjustments here. So very similar to the physical inventory year-end. So in the West location, we found six, so we’re adjusting that by two, increasing the inventory in that location for this item.
So now, similar to the physical inventory year-end process, I’m gonna go ahead and post and print this report and generate the item register. The journal lines have been posted. And now just to record the register for that cycle count.
So as we can tell, if you wanna look back on that cycle count, you can look back on that by document number here, PIJ with the leading zeros, and then the two document here. So essentially if we wanna look back on this physical inventory count, we can go to the item ledger entries, similar to before, and we’re gonna analyze what was counted and what was posted as adjustment. We can search by document number here. If we don’t see it right away, essentially. So by document number, if you know the physical inventory count. So you always wanna record that document number in most cases.
So this is our cycle count from that list, essentially. So this is the ability to record that cycle count and have the entries associated with it. So similar to the year-end, we can look at all the related entries associated with it. So it filters by document number. And the physical inventory ledger entries will be nine ledger entries, because if you remember, we recorded one without a difference, so there’s an extra zero adjustment that we did. And that zero adjustment actually posts with the unit cost. So that’s something to keep in mind as well. So the amount doesn’t post but it affects your cost.
So another thing is within the cycle counting, very similar to the year-end process, and essentially that’s the ability to cycle count and perform adjustments. Now, let’s say you wanted to adjust an item on the fly, essentially, and you know the adjustment that you wanna make. It’s just a quick adjustment of inventory. Let’s say you got something for a purchase, or you need to positively adjust something quickly, what you can do is you can go to the inventory list. And so there’s this function called adjust inventory. And this really works on a per item basis.
There’s a couple different ways to actually look at this. I believe there’s an item adjust inventory here. This is one way you can get there. Another way you can get there is by selecting the item and right clicking on it, and going to adjust inventory from here. And what this will do, this function, is when I open this up, it’ll take me to a page where I can adjust inventory automatically. It pulls up by inventory availability per location. So right now I have nothing, six without a location, essentially.
I have nothing in the East bin, I have 18 in the main bin, and I have nothing in the West bin. So let’s say I wanted to adjust this and let’s say I moved this to the West bin to do an adjustment. I could do zero of the inventory here and then I could do all six into the West bin. But I made an adjustment, let’s say, on the fly, and this will just recalculate my inventory essentially.
And so now when I look at my quantity on hand, and I look at my remaining quantity, I see that I have six in the West bin, and then I have 18 in the main bin. So it essentially did the adjustment for me automatically. And you can do this with multiple locations. And to verify and validate this really, what you would do is you would go to…There’s a view to actually see what you’re about to adjust by going to related availability and items by location. This is the same view, essentially, of what your location is. So for this item, let’s say, we have 18 in the main bin and six in the West bin now, because we’ve performed that adjustment. This is kind of showing you on a high level where my items are by location.
So similar to adjusting inventory and multiple items, what you would do if, let’s say, you have multiple items and you wanna adjust it one time, you would do this through the item journal. And so the item journal is a very powerful tool within the system, and essentially, you can record warehouse adjustments, you can synchronize your warehouse with your item ledger, you can record adjustments, you can record purchases, any purchased inventory, if you sold inventory. There’s a lot of different things you can do with the item journal. And you have to remember in terms of the warehouse items journal…Anything within the system that’s a warehousing functionality, whether it’s a warehouse journal or a warehouse physical inventory journal, always make sure that your user is set up for that location, is a warehouse employee. So that’s gonna be a key there.
So if they’re not set up as a warehouse employee, so for example just to kind of illustrate that example. I removed my access from the warehouse enabled location test warehouse. And I try to access anything related to warehousing item journals, warehousing functionality, it’ll throw an error, essentially, the system. It’ll say you’re not set up as a warehouse employee.
But you can set up a location with directed pick and put-away and assign to admin. So that’s basically saying that you don’t have directed pick and put-away locations assigned to that user and you can’t access the warehousing functionality. I’m gonna go ahead and add myself back to the employees’ table.
So essentially, to adjust inventory and multiple items in a basic warehouse setup, what you would do is you would just record the inventory. Let’s say you had a few different items here and you wanted to do some inventory adjustments, you can do this item. Let’s do a positive adjustment of five on this inventory in the East location. Let’s just specify a location code as well on the item journal. That’s the key as well. Because the system wouldn’t know, essentially, where to adjust inventory into and out of.
Let’s do a negative adjustment out of the West location. And so in order to record a negative adjustment to the items, you would need to do the negative sign. So this has given me an interesting message here. It’s basically saying that I don’t have the inventory in the West location. So what I can do is, for this item, I can validate that by going to items by location, or I can decrease the quantity that I want to negatively adjust in this case, because I know I have three or four in this location for this item. So this is an example of the negative and positive adjustments here. But you can change this to a negative adjustment.
You can actually leave this to the negative. There’s two different ways to do it, essentially. So you can do a negative adjustment of two or you can do the negative two essentially positively adjusting it. It’s a little confusing, but essentially, this means the negative is gonna take it out of inventory, the positive, and put it back into inventory.
And then I’ll do a purchase here. Let’s say we purchased an inventory. And we purchased it for the main location. So 10. So as you can see, it records the unit amounts of what the inventory is from the item card, and it records the total amount, which is the quantity times the unit amount. So now in order to post these adjustments, you would go to post. You can also post and print the inventory. You can print the item register of what you’re about to post. So I’m just gonna go ahead and post this for now. And so now we can view. This is gonna have a different document number. So the theme is when you’re looking at the item ledger and item transactional history, you always wanna make sure you have that document number of what you posted and have that recorded, because the document number is the key in order to search for the related entries. In this case, the document number was IJ2. And so I can go to the related entries by going into my actions and find entries here.
And so with my access in find entries, it says that I recorded three adjustments but the G/L entries will be the offsetting accounts of six. So there will be six entries recorded to the inventory for the offsetting balances. And then it also records the value entry. So the value entry is essentially the inventory costing side of it, and it’s directly related to the items of ledger in the inventory sub ledger in a sense. So it tells you of your value quantity of what you’re actually posting and your cost per unit as well.
So that’s an example of how you can post an inventory adjustment essentially for multiple things in that sense. Now, going back to the example of the warehousing that we were doing with the advanced warehousing. Let’s say I registered my warehouse bin quantities but my item ledger is out of sync with my warehouse entry ledger at the end of the year. In order to reconcile and sync your inventory sub ledger within your bin content, you would also go to the items journal and you would run a function called calculate warehouse adjustment. And so that function, essentially, when I go to process…Well, actually when I go to action, functions, and calculate warehouse adjustment, what this function is doing is it’s gonna pull up a request page and it’s basically gonna calculate all the warehouse adjustments from my warehouse that are out of sync with my item ledger.
So this is the request page report here. And so it defaults to my work date. The document number defaults from my lines. You can filter this by location and by number. So if you wanted to record and you wanted to filter a certain location and you know that’s out of sync with your inventory sub ledger, you can do that here as well with the report filter, or you can run it open-ended. I’m gonna go ahead and run it open-ended.
This is all from the test location. If you remember, this is all the transactions from the warehouse item journal that we actually posted and registered. These are all the registered components. And this is all the different adjustments from all the positive adjustments into inventory, essentially. It’s gonna reconcile my inventory sub ledger with what’s in my bins currently.
And so that’s kind of how you synchronize the two ledgers. And this is a key. I can’t stress this enough, essentially, because it’s in advanced warehousing configuration. Really, the key is to always have your inventory synced with your warehouse on a periodic basis, because that’s gonna determine if your inventory is managed in the proper process.
So I’m gonna go ahead in order to post the transactions and sync the inventory, these two ledgers. The other you would post the journal once you calculate the warehouse adjustment. The journal lines have been posted. We can also go to the item ledger entries to view those posted entries as well. And see that our warehouse entries are actually in sync as well still. So these are the actual test warehouse transactions that we’ve posted. Now, if we go to the warehouse entries, we can see that our warehouse entries are in sync with our inventory sub ledger.
And as you can see, there’s different warehousing documents here. So the warehouse here is 01. And essentially, this shows you all your adjustments in and out of each bin, and based on the adjustment bins as well. So you always wanna make sure your overall quantities are in sync between the two ledgers.
So the last thing I do wanna show in terms of the inventory process and the physical year-end process is how to reclassify an item. So let’s say you’re doing an inventory account and you realize that items are in different locations or current inventory is in different bins, what you would do is you would go to a journal called the item reclassification journal.
And so this reclassification journal, you can specify the item number. So for example, in this case, I’ll go to this item. And if we look at the item by location, essentially, you can see it’s saying, “If we wanna adjust anything here?” What we can see about this item is it’s 75 on hand, right? But as at 75 on hand, we have 70 in the test warehouse location, and we have two in the East location. So let’s say within the warehouse enabled location we wanna change those bins that it’s located and we wanna move it to the shipping bin or the receiving bin in this case. What we can do is we can actually go to the test warehouse location here and we can specify…we can keep the location code the same but we can change where the bin locations are.
So let’s say we move 40 of these from the received bin. So essentially, this is not set up with directed pick and put-away bins, so what I’m gonna do is I’m actually going to use another example here. And so the example would be the East warehouse, because we saw we had some inventory there. We can move it to a new location of the main warehouse.
So this is essentially the example here, like how you can adjust different locations for different items for inventory. You can also adjust for warehouse and maybe the location is different bins, so specify a new bin code for that, for example. And this is where you can do your adjustments if you wanna reclassify inventory. You can also reclassify inventory by lot. So in order to do that, you can do that if you have warehouse tracked item. You can go to the line item tracking lines here.
So right now this doesn’t have an item tracking code, and my inventory is not lot tracked. So if it was lot tracked, it would bring up the item tracking lines, and that’s where you can specify the lot creation. This is a very advanced functionality and this is kind of when you wanna do inventory reclassifications. When you have multiple items that need to be reclassified per location, this is when you would use this functionality.
So that’s pretty much what I had today, and I’ll hand it over to you Tess for the questions. Thank you guys.
Tess: Great, thank you, Will. So if anyone has any questions, please type them into the questions area of the control panel. We’ll give a minute or two to do that. So thanks, Will.
Will: My pleasure.
Tess: I don’t see any questions coming in yet. All right. I think we can end a little bit early today, Will. There’s no questions that have come in, so thank you for sharing that information today. And thank you to everyone for joining us today. Hope everyone has a great rest of your day.
Will: Thank you.
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