Comprehensive Job Aid explaining the process and steps involved in reconciling Inventory in Vista.

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BEFORE STARTING THE RECONCILIATION PROCESS
Before you start your month-end reconciliation, it is suggested that you print the “IN Inventory Totals by Matl and
Location” report. This report will give you a summary of information that will be used in the reconciliation process.
Another report that is helpful during the Month End process, would be the IN Value of Inventory report which can
be used as a GL Reconciliation tool. Additionally, it is suggested that the reconciliation process is reviewed and
understood before continuing.
PROCESS: INVENTORY MONTHLY RECONCILIATION
OVERVIEW:
The IN Monthly Reconciliation form is used to capture beginning and ending
Inventory levels, accumulate activity, and calculate ending values for a month.
Based on the Valuation Method that was specified in the IN Company Parameters
form, adjustments will be generated automatically to correct Inventory GL
Balances. So the GL reflects the value of inventory based valuation method. You
will want to perform the Monthly Reconciliation only after all activity has been
posted for the month (i.e. purchases, sales, transfers, production and adjustments).
Inventory will not be checked to make sure no current batches are open for the
specified month; however, PO Receipts, AP Expense, JC,
EM or MS will not be checked. The Monthly Reconciliation process is the last
process that will need to be run before you close a month in the General Ledger. If
you reopen a month within the GL this process will need to be run again to ensure
proper beginning balances.
Note: Monthly reconciliation in Inventory must be done for every month starting
with the very first Inventory month in Viewpoint. Customers with converted data
from past years are unable to use this process.
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Technical Steps:
1. To perform a monthly reconciliation in Viewpoint, go to the Inventory module’s Programs
folder and open the IN Monthly Reconciliation form.
2. Enter the reconciliation month in the Month field.
3. Click Initialize to start the initialization process. The form will initialize beginning values
based on the prior month’s ending values, and a record is created for each location and ma-
terial. If any open batches exist, a message displays and the process cannot be completed.
4. Click Print to print and review the Reconciliation Report.
5. Click Update to create an Adjustments batch for correcting entries. The IN Batch Process
form will then display.
6. Process batch normally.
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HOW THE RECONCILIATION PROCESS WORKS
To better understand how Monthly Reconciliation works, you must first understand how the
various Cost Methods affect updates to your Inventory GL accounts as transactions are post-
ed. The examples below show how each Cost Method affects updates and the resulting value
of Inventory. The following is an example of a single material added to inventory with 0.00 units
on hand and initial unit costs of $1.25 each. Following that is an adjustment to establish the
material’s beginning balance, then a purchase, sale, and finally another purchase. This table
displays the quantity on hand and unit cost resulting from such an event.
Average Unit Cost – Cost Method: The next table illustrates how the Average Unit Cost
method affects updates and resulting value of Inventory. The posted Total Cost represents the
actual cost associated with each transaction; the Change to Inventory represents the debit or
credit posted to your GL Inventory Accounts. These two values always equal each other when
this cost method is used.
Note: The Average Unit Cost for a material is continuously updated by the system with each
purchase. Any ‘in’ transaction or adjustment will trigger an update. The total cost attributed
to a sale (any ‘out’ transaction) relies on the material’s cost method and the current value of
its Average Last, or Standard Unit Cost. Therefore, when using Average Unit Cost as your cost
method, the order of transaction processing plays a crucial role in determining this value and
the corresponding GL updates to your Inventory accounts.
Event Date Qty On Hand Last Unity Cost Avg Unit Cost Std Unit Cost
Beginning Balance 0 $1.25/ea $1.25/ea $1.25/ea
Adjustment Entry
for beginning
balance (100 @
$1.00/ea)
10/1/10 100 $1.25/ea $1.25/ea $1.25/ea
Buy 100 @ $1.00/ea 10/4/10 200 $1.00/ea $1.125/ea $1.25/ea
Sell 50 10/6/10 150 $1.00/ea $1.125/ea $1.25/ea
Buy 100 @ $2.00/ea 10/7/10 250 $2.00/ea $1.145/ea $1.25/ea
Event Posted Total Cost Change to inventory Ending Inventory
Adjustment Entry for
beginning balance
(100 @ $1.00/ea)
$125 (100*$1.25/ea) = $125 $125
Buy 100 @ $1.00/ea $100 (100*$1.00/ea) = $100 $225
Sell 50 $-56.25 (-50*$1.125/ea) = $56.25 $168.75
Buy 100 @ $2.00/ea $200 (100*$2.00/ea) = $200 $368.75
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Standard Unit Cost – Cost Method: The next table illustrates how the Standard Unit Cost
method affects updates and resulting value of Inventory. The Posted Total Cost represents the
actual cost associated with each transaction and the Change to Inventory represents the debit
and credit posted to your GL Inventory Accounts. These two values always equal each other
when this cost method is used.
Last Unit Cost – Cost Method: The next table illustrates how the Last Unit Cost method
affects updates and resulting value of Inventory. The Posted Total Cost represents the actual
cost associated with each transaction and the Change to Inventory represents the debit and
credit posted to your GL Inventory Accounts. These two values always equal each other when
this cost method is used.
Note: The Last Unit Cost for a material is continuously updated by the system with each pur-
chase. Any ‘in’ transaction or adjustment will trigger an update. The total cost attributed to
a sale (any ‘out’ transaction) relies on the material’s cost method and the current value of its
Average Last, or Standard Unit Cost. Therefore, when using Last Unit Cost as your cost meth-
od, the order of transaction processing plays a crucial role in determining this value and the
corresponding GL updates to your Inventory accounts.
The reconciliation process not only records a monthly ‘snapshot’ of your inventory, but also
summarizes all ‘ins’ and ‘outs’ to recalculate an ending value based on the selected Valua-
tion Method. For each stocked material, a beginning value is initialized from its prior month’s
ending values. If no prior entry exists in IN Monthly Activity, the beginning value will be 0.00.
Event Posted Total Cost Change to inventory Ending Inventory
Adjustment Entry for
beginning balance
(100 @ $1.00/ea)
$125 (100*$1.25/ea) = $125 $125
Buy 100 @ $1.00/ea $100 (100*$1.25/ea) = $125 $250
Sell 50 $-62.50 (-50*$1.25/ea) = $65.50 $187.50
Buy 100 @ $2.00/ea $200 (100*$1.25/ea) = $125 $312.50
Event Posted Total Cost Change to inventory Ending Inventory
Adjustment Entry for
beginning balance
(100 @ $1.00/ea)
$125 (100*$1.25/ea) = $125 $125
Buy 100 @ $1.00/ea $100 (100*$1.00/ea) = $100 $225
Sell 50 $-50 (-50*$1.00/ea) = $50 $175
Buy 100 @ $2.00/ea $200 (100*$2.00/ea) = $200 $375
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Activity is summarized by transaction type from IN Detail posted in the reconciliation month.
The sum of all activity represents total change to Inventory GL Accounts posted throughout
the month. A ‘posted’ ending value is determined from the material’s beginning value and it’s
summarized activity for the month. An ending value is then calculated based on the Valuation
Method. All values are recorded in the IN Monthly Activity.
When the Update button is pressed any difference between the ‘posted’ and calculated ending
value of a material will generate a reconciliation adjustment entry. The first month would be
reconciled as follows:
IN Monthly Activity
Begin Qty 0.00
Begin Value 0.00
Begin Last Unit Cost $0.00 E
Begin Avg Unit Cost $0.00 E
Begin Std Unit Cost $0.00 E
Purchase Qty 200
Purchase Cost $300 (Avg or Last Cost) $250 (Std Cost)
Job Sales Qty -50
Job Sales Cost -$56.25 (Avg Cost) -$62.50 (Std Cost) -$50 (Last Cost)
Adjustment Qty 100
Adjustment Cost $125
End Qty 250
End ‘Posted’ Cost $368.75 (Avg Cost) $312.50 (Std Cost) $375 (Last Cost)
End Last Unit Cost $2.00 E
End Avg Unit Cost* $1.4187 E
End Std Unit Cost $1.25 E
End Value**
As Posted
$368.75
(Avg Cost)
As Posted
$312.50
(Std Cost)
As Posted
$312.50
(Last Cost)
Avg Cost
$354.18
Std Cost
$312.50
FIFO
$362.50
LIFO
$325
* The Ending Average Unit Cost is calculated for each material as its beginning value plus the
actual value of all ‘ins’, divided by the sum of the month’s beginning quantity and all ‘in’ units (i.e.
Purcahses, prodcution, transfers in, and adjustments).
(($0 X $0/ea) + ($425)) / (0+300) = $1.4167
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This calculation will only produce an accurate result when both the beginning quantity for the
month and the sum of beginning quantity plus ‘ins’ are positive. If the month’s beginning quan-
tity is less than or equal to 0, the ending average cost will be calculated from ‘in’ units only.
If neither of these conditions is met, the ending average cost will be set equal to the month’s
beginning average cost.
Begin Qty In Qty Begin Qty + In Qty End Avg Cost Calc
>0 <0 =0 Begin avg cost
>0 <0 <0 Begin avg cost
=0 >0 >0 In avg cost
=0 =0 =0 Begin avg cost
=0 <0 <0 Begin avg cost
<0 >0 >0 In avg cost
<0 >0 =0 In avg cost
<0 >0 <0 In avg cost
<0 =0 <0 Begin avg cost
<0 <0 <0 Begin avg cost
**Ending Value is calculated as follows depending on Valuation Method:
As Posted: Ending value is the beginning value plus summarized activity for the month. Result
depends on Cost Method used. No reconciliation adjustments/GL updates will be generated.
• Average Unit Cost = $368.75
• Standard Unit Cost = $312.50
• Last Unit Cost = $375.00
Valuation Method Ending Value
Average Unit Cost Ending Qty X Ending Avg Unit Cost (Does not depend
on Cost Method) (250* $1.4167/ea) = $354.18
Standart Unit Cost Ending Qty X Ending Last Unit Cost (Does not depend
on Cost Method) (250* $1.25/ea) = $312.50
FIFO and LIFO These methods require the use of two additional
tables, IN Reconciliation In and IN Reconciliation Out,
to track the dates, unit costs and quantities as which
the material was added to stock and subsequently
removed. For illustrations on how ‘Ending Value’
is calculated using these methods, refer to the
information below.
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FIFO VALUATION METHOD (FIRST IN, FIRST OUT)
The following is an example demonstrating how the ending value is calculated using the FIFO
Valuation Method. In addition to the standard Inventory tables, this method also uses infor-
mation from the IN Reconciliation In and IN Reconciliation Out tables, which store the dates,
unit costs, and quantities at which materials were added to and removed from stock. First, all
‘ins’ for the month are loaded into IN Reconciliation In table and sorted by Location, Material,
Actual Date, and Unit Cost. Note: the posted month and actual date recorded with each IN
detail transaction determines its order of processing, so accurately recording the true order of
inventory activity is crucial.
IN Reconciliation In
Event Date Unit Cost Units
Adjustment Entry for
beginning balance
(100 @ $1.25/ea)
10/1/10 $1.25/ea 100
Buy 100 @ $1.00/ea 10/4/10 $1.00/ea 100
Buy 100 @ $2.00/ea 10/7/10 $2.00/ea 100
Event Date Unit Cost Units
Adjustment Entry for
beginning balance
(100 @ $1.25/ea)
10/1/10 $1.25/ea 50
Buy 100 @ $1.00/ea 10/4/10 $1.00/ea 100
Buy 100 @ $2.00/ea 10/7/10 $2.00/ea 100
Next, the month’s total ‘out’ units is calculated. If the prior month’s ending quantity is negative,
then those units are added to the current month’s total ‘out; units. In our example, we have no pri-
or month quantities, so its ending quantity is assumed to be 0.00, but if the prior month had end-
ed with -10 units, then 10 units would have been added to the 50 sold for a total of 60 ‘out’ units.
After the total ‘out’ units has been determined, they are ‘applied’ in ascending date order. When
an IN Reconciliation In entry is fully applied (Units = 0) it is removed.
Example: Total ‘Out’ Units = 50
Using the FIFO method the 50 ‘out’ units are applied to the oldest ‘in’ units first. Therefore,50
units are subtracted from the 100 units posted on 10/1/10. This leaves 50 remaining units in
the IN Reconciliation In entry. The 50 ‘out’ units are then recorded in the IN Reconciliation Out
table along with the Out Month, Date, Unit Cost and In Month.
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8. Job Aid: IN Monthly Reconciliation Process
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If the total ‘out’ units had been equal to or greater than 100, the 10/1/10 entry would have been
deleted and the entire 100 units recorded in the IN Reconciliation Out table. Any remaining
‘out’ units would have been applied to the 10/4/10 entry. The process would continue until all
‘out’ units for the month had been applied.
After all of the ‘outs’ had been applied the ending inventory’s ending value is calculated from
the sum of Units X Unit Cost remaining in the IN Reconciliation In table. In our example, we have
(50 * $1.25) + (100 * $1.00 + 100 * $2.00)) = $362.50.
Note: if the month’s ending quantity is 0.00 then the ending value is set equal to 0.00. If the
ending quantity is negative then it is calculated as Ending Qty * Last Unit Cost
LIFO VALUATION METHOD (LAST IN, FIRST OUT)
The following is an example demonstrating how the ending value is calculated using the LIFO
Valuation Method. In addition to the standard Inventory tables, this method also uses informa-
tion from the IN Reconciliation In and IN Reconciliation Out tables, which store the dates, unit
costs, and quantities at which materials were added to and removed from stock.
First, all ‘ins’ for the month are loaded into IN Reconciliation In table and sorted by Location,
Material, Actual Date, and Unit Cost.
Note: the posted month and actual date recorded with each IN detail transaction determines
its order of processing, so accurately recording the true order of inventory activity is crucial.
IN Reconciliation In
Event Date Unit Cost Units
Adjustment Entry for
beginning balance
(100 @ $1.25/ea)
10/1/10 $1.25/ea 100
Buy 100 @ $1.00/ea 10/4/10 $1.00/ea 100
Buy 100 @ $2.00/ea 10/7/10 $2.00/ea 100
Next, the month’s total ‘out’ units is calculated. If the prior month’s ending quantity is negative,
then those units are added to the current month’s total ‘out; units. In our example, we have
no prior month quantities, so its ending quantity is assumed to be 0.00, but if the prior month
had ended with -10 units, then 10 units would have been added to the 50 sold for a total of 60
‘out’ units.
After the total ‘out’ units has been determined, they are ‘applied’ in descending date order.
When an IN Reconciliation In entry is fully applied (Units = 0) it is removed.
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Example: Total ‘Out’ Units = 50
Using the LIFO method the 50 ‘out’ units are applied to the newest ‘in’ units first. Therefore,
50 units are subtracted from the 100 units posted on 10/7/10. This leaves 50 remaining units
in the IN Reconciliation In entry. The 50 ‘out’ units are then recorded in the IN Reconciliation
Out table along with the Out Month, Date, Unit Cost and In Month.
Event Date Unit Cost Units
Adjustment Entry for
beginning balance
(100 @ $1.25/ea)
10/1/10 $1.25/ea 100
Buy 100 @ $1.00/ea 10/4/10 $1.00/ea 100
Buy 100 @ $2.00/ea 10/7/10 $2.00/ea 100
If the total ‘out’ units had been equal to or greater than 100, the 10/7/10 entry would have been
deleted and the entire 100 units recorded in the IN Reconciliation Out table. Any remaining
‘out’ units would have been applied to the 10/4/10 entry. The process would continue until all
‘out’ units for the month had been applied.
After all of the ‘outs’ had been applied the ending inventory’s ending value is calculated from
the sum of Units X Unit Cost remaining in the IN Reconciliation In table. In our example, we have
(100 * $1.25) + (100 * $1.00 + 50 * $2.00)) = $325
10645 N. Oracle Rd., #121-245
Oro Valley, AZ. 85737
(520)230-0533
linkedin.com/company/visibility-bydesign
plus.google.com/visibility-bydesign
www.visibility-bydesign.com
consulting@visibility-bydesign.com
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