Minimum Version Required: 24.07
Pre-Conditions
Required Permission - Purchase Cost Edit
Steps
How to use the FIFO Adjustment Tool
1. Using Universal Search, navigate to the FIFO Adjustment Tool dashboard
2. Select the Location you wish to adjust costing in - only one Location can be selected per adjustment
3. Select either the Product(s) you wish to adjust, or a combination of Product Type and/or Supplier then click the Adjust Costing button
4. Use the Edit Pencil icon to adjust costing information on all relevant layers, then click the Posting Options button
NOTE: FOB, Freight, Other Cost, and Deposit are available to edit
5. Choose a FIFO Adjustment Option:
COGS: Both the in and out Purchase Transactions are at the new cost. This difference will be registered in the cost of goods sold account - this is the default selection
Accounts Payable: This creates a negative Purchase Transaction at the original cost and a positive Purchase Transaction at the corrected cost. The Accounts Payable is credited or debited the difference - only use this option if you need to create an open balance with the Vendor
6. Choose a Purchase Option
If your general ledger does not support $0.00 entries, you will select Split Purchase = Yes so each Purchase Transaction will be on its own entry
If your general ledger does support $0.00 entries, select Split Purchase = No
7. Click the Create button to complete the FIFO Adjustment and correct the costing error(s)
A new Purchase has now been created, that includes a corrective pair of transactions, a negative transaction that depletes the current inventory, and a positive transaction that brings it back in with the correct cost
A FIFO Adjustment Invoice will also be created to represent the adjustment hitting the cost of goods sold and or a correction to verified sales out of the FIFO Layer
Best Practices
When to Use the FIFO Adjustment Tool
The FIFO Adjustment tool should only be used to adjust costing on Verified Purchases. If a transfer was executed from the adjusted FIFO layer, the adjustment will cascade to the destination location.
If a purchase needs to be corrected and is in New, Ordered, or Received status, it can be edited by using the Edit link in the Purchase View (see below).
If a purchase needs to be corrected and is in Confirmed status, it must first be Unconfirmed by clicking the Undo Confirm button in the Purchase view (see below).
Once a purchase is unconfirmed, it can then be edited in Purchase View by clicking the Edit link
In order to better mitigate costing discrepancies, make sure to set default costing through Product Cost Plans, or the default cost fields on the Inventory table
a. Product Cost Plans can be utilized to set costing information for a specified date range, location, and/or vendor Product Cost Plans are
b. In order to limit incorrectly entered FOB, Freight, Deposit, or Other Costs when creating a new Purchase, consider setting a Default Cost on the Inventory Record. A Default Cost will auto-populate costing information with a set cost when adding Products to a Purchase