Steps for Reconciling the Inventory Valuation Report to the by rjt20314

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									Steps for Reconciling the Inventory
Valuation Report to the General Ledger
Inventory Account
Document #      Product              Module                 Category
Doc #           TurningPoint         Inventory              Processes (How To)


This procedure will help you reconcile Inventory Valuation to the balance of your Inventory account in
the TurningPoint General Ledger.

Reconciled balance
In order to reconcile, you must begin with the last known reconciled balance of the Inventory account. If you have
not been consistently reconciling your Inventory to the General Ledger, you will need to first follow the Steps to
Determine a Beginning Balance below. Once this is completed, then you can begin auditing on a regular basis.

Steps to Determine a Reconciled Beginning Balance
If you do not have a reconciled balance, you must enter an adjustment to the General Ledger to force the
balance in General Ledger to equal the balance of your total inventory. To determine the adjustment amount do
the following:
1. Post all transactions in Accounts Payable that are not on hold. To verify that everything is posted, select ALL
     activity dates within the post screen (A/P, Processes, Post to GL) and click on verify. All entries that are
     printed on the report created must be posted to the General Ledger before proceeding to step 3. NOTE:
     They must be posted because all of these entries have affected you’re Inventory reports but have not yet
     affected your general ledger.
2. Post all transactions in the Inventory module.
3. Post all transactions in the General Ledger for all periods (G/L, Transactions, Post). Note: in the post screen
     be sure to take the check mark out of “locked periods” and “out of balance” so you can see all unposted
     entries.
4. Print a Valuation report for the current day in Inventory (Inventory, Reports, Management Reports,
     Valuation).
5. Print a list of all invoices in a/p that have a status of “held” (Accounts Payable, Transactions, Transaction
     Entry, List Button – select invoice status of “Not Posted”). Deduct the total from this report from your
     Inventory Valuation report – this amount will be referred to as the “modified valuation amount”. NOTE: If
     there are transactions on the Transaction List which are for non-inventory items, they should be deducted
     from the total of the report for this scenario.
6. In the General Ledger print a Trial Balance for the last period of the current year and for the current period of
     the current year.
7. If the two Trial Balance reports match, then you can continue to step 8. If they do not match, then you have
     transactions posted to a future period. In that case, you should use your Trial Balance for period 13 in step
     8.
8. Compare the balance from you’re modified valuation report to the inventory account on the Trial Balance.
9. If they do not match, do a manual adjusting entry in General Ledger to bring the two values in line. This will
     provide you with a valid starting point and you can begin to reconcile from this point forward. If they do
     match, no entries are needed and your reconciliation is complete.

Reconcile Process With All Entries Posted
1. Post all transactions in the Accounts Payable. To verify that everything is posted, select ALL activity dates
Red Wing Software
491 Highway 19
Red Wing, MN 55066
support@redwingsoftware.com                                                                           Page 1 of 3
www.redwingsoftware.com                                                                   Last Reviewed: 05/13/08
     within the posting screen and click on verify. All entries that are printed on the report created must be posted
     to the General Ledger before proceeding to step 3.
2.   Post all transactions in the inventory module.
3.   Print the Valuation report in I/N for the last day of the month you want to reconcile.
4.   Print a list of all unposted invoices in A/P from the Transaction Entry list button. Deduct this amount from
     your Inventory Valuation report – this becomes your modified Valuation amount. NOTE: If there are
     transactions on the Transaction List which are for non-inventory items, they should be deducted from the
     total of the report for this scenario.
5.   Post all transactions in the General Ledger for the period you are reconciling.
6.   In the General Ledger print the Trial Balance for the period you are reconciling.
7.   Compare the balance on your modified Valuation report to the inventory account balance on the Trial
     Balance
8.   If the balances match, congratulations your books are in balance! If they do not match, something has
     affected the valuation report that hasn’t affected the inventory account in the general ledger, or vice versa.
     You will need to follow the steps below to research the situation.

What to do if the Inventory Valuation Report does not match the General Ledger Trial Balance.

        If you have not reconciled recently (within 30 days), Red Wing recommends you do a physical inventory
        before starting this process so you are confident you have accurate on-hand quantities in your Inventory
        module. If you choose not to do a physical inventory, print an Item Status Report. After printing the report,
        review it for items with negative on-hand quantities. Correct any item with a negative on-hand quantity
        before continuing with the processes below. To do this, make manual adjusting transactions in Inventory
        (Inventory > Transactions > Adjustments).

        Print a new Valuation Report in Inventory. Look over the unit costs to be sure everything is correct. If you
        find items that are not showing the correct costs, review your Transaction History report to which
        purchases were entered incorrectly. Make any needed corrections.

        From the General Ledger, print the Journal report. Select the inventory account number you are
        reconciling, for the period you are closing. This shows all of the transactions and what module they
        posted from. Any transaction that has a source of AP or AR should be for an inventory item – if it’s not,
        then a non inventory item was posted to the inventory account in general ledger but would not be on the
        inventory valuation report.. The entries should be corrected by creating a g/l entry that takes it out of the
        inventory account and moves it to the appropriate account. Also, if you find transactions on this report
        with a source code of GJ – manual transactions were entered in the General Ledger. These transactions
        affected the General Ledger, but not the Inventory module or reports. They must also be reversed out
        and put to the appropriate account.

        Review the posting logs received in Inventory, Accounts Payable and Accounts Receivable (after posting
        to the general ledger) since this account was reconciled. Each inventory item on an A/P invoice should
        debit an inventory account, each inventory item on an A/R invoice should credit the inventory account
        and each transaction from inventory should either debit or credit the inventory account, but never should
        it affect both in the same transaction.- if you are seeing anything other than that then those entries must
        be corrected.

        Compare the posting logs received when you posted in Accounts Payable, Accounts Receivable and
        Inventory to the General Ledger to the Journal report. The transactions that show on the Posting report
        should also be seen on the Journal report. Verify that all transactions were posted to the correct period
        and year. Also, review your posting reports to verify that all transactions were entered with an
        appropriate inventory account

Red Wing Software
491 Highway 19
Red Wing, MN 55066
support@redwingsoftware.com                                                                             Page 2 of 3
www.redwingsoftware.com                                                                     Last Reviewed: 05/13/08
       Check the Accounts Payable & Inventory modules to see if there are unposted transactions in prior
       periods by clicking the Verify button in Post to General Ledger. Be sure to select ALL dates so you can
       review all unposted transactions. The unposted transactions affect your Inventory module, but would not
       affect your General Ledger module.

       Print the Trial Balance for the last period of the current year to verify if any A/P transactions were posted
       to a future period.



Reconcile Process – Without Posting

Once you have completed the original Reconciled Balance, some customers prefer to balance their Inventory
module to the G/L on a daily or weekly basis. This can easily be accomplished at anytime by using the Financial
Snapshot in the General Ledger. The Financial Snapshot provides the current balance for key accounts without
having to post in the sub-modules or within the General Ledger.

   1. Print a Valuation report in Inventory as of today.
   2. Print or preview a Financial Snapshot for the current fiscal period. NOTE: be sure General Ledger,
      Customization, Fiscal Period is the CURRENT fiscal period or the financial snapshot will not give you
      current numbers.
   3. Compare the total inventory from the Valuation report to the Inventory account on the Financial Snapshot.
   4. If the totals are not equal:

           A. Verify that your General Ledger is in the correct current period. The Financial Snapshot always
              shows balances for the current date in the current period. If your General Ledger is still sitting in a
              prior period, then the balances would be incorrect.

If the reports continue to be out of balance after verifying the items in Step A, then we recommend that you
follow the steps noted in the “What if the Inventory Valuation Report does not match the General Ledger Trial
Balance” section above.




Red Wing Software
491 Highway 19
Red Wing, MN 55066
support@redwingsoftware.com                                                                            Page 3 of 3
www.redwingsoftware.com                                                                    Last Reviewed: 05/13/08

								
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