KB20201123/01: Sage 200 Evolution Tip & Trick – Observing a difference between the Inventory Valuation report and the Inventory Control Account

Let’s show you how to fix observing a difference between the Inventory Valuation report and the Inventory Control Account in a Sage 200 Evolution company.

Cause

This issue may be caused by a setup issue and can be recreated as below:

1. Create Inventory Item ABC, and set it to use Manual Cost

2. Before saving the new item, enter a Unit Cost of R100

3. Process a GRV to receive 10 units of ABC at @ R1OO each (VAT Excl)

4. Run the Valuation Report

5. Notice the valuation = R1000 (10 UNITS @ R100 each)

6. Run the GL | Reports | Trail Balance and notice the relevant Inventory Control Account = R1000

7. Process a RTS for the same item for 1 unit but change the cost to R75

8. Run the Valuation Report.

9. Notice that the valuation is now R900

10. Run the GL | Reports | Trail Balance and notice the relevant Inventory Control Account = R925, thus meaning a variance of R25 with the Valuation report. 

11. It seems that the Inventory Control account is overstated by the value of the above Stock variance.

Resolution

The above issue can be prevented by doing the following:

1. Go to Inventory | Maintenance | Inventory Defaults

2. On the Return to Suppliers tab select the ‘Post Average Cost Variance’ 

3. When done, click the OK button below to save the change. 

4. Finally, please note: Applying the above steps will not fix the current variance (as discussed above) but will only prevent more variances from occurring for future transactions. 

To correct the current variance, consult with your senior financial officer on the best way forward. You can for instance decide to simply post a GL Journal on the Inventory Control account to balance it with the Inventory Valuation report.

For more information on Sage 200 Evolution please contact us on info@sysfinpro.com or by phone on +27 12 880 0258.