CenterPoint® Accounting - Distribute Freight Cost to Inventory

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Distribute Freight Cost to Inventory Video - Duration 3 min 14 sec

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Freight cost can be allocated to inventory items. Freight cost distribution can either be a percent of cost or percent of weight.

Caution should be taken when making freight cost distributions to inventory where invoice quantities have already been sold, especially if using the average cost valuation.

When distributions are performed where remaining quantity is less than the invoice quantity, the total of the adjustment amounts will always be less than the amount to distribute, because the remaining quantity is divided by the original invoice quantity in the adjustment amount calculation. The remaining distribution amount is deemed to have already been expensed as cost of goods sold on the Income Statement, because it is no longer in inventory. This occurs so you can enter the full freight amount and have the program distribute the correct cost to remaining inventory when some of that inventory has already been used.

Distribute Freight Cost to Inventory

  1. Select Processes > Inventory > Distribute Freight Cost to Inventory.

  1. In the Company box, enter or select the company name that this freight distribution is for.
  2. In the Vendor box, enter or select the vendor that this freight distribution is for.
  3. Select the Invoice or payment you want to distribute freight to. The lookup will display a list of the vendor invoices and payments with positive invoice totals and quantities where freight has not previously been distributed with at least one sales item type of inventory item, lotted item or serialized item. Invoices that have already had a freight cost distribution transaction posted are not included in the lookup. When an invoice/payment is selected the grid below displays the vendor invoice details. All Quantities and Unit Costs are displayed in stocking units on this screen.
  4. In the Transaction Date box, enter the distribution date or if the freight amount was entered on the original Vendor Invoice then that original invoice date will display.
  5. In the Transaction # box, enter the freight invoice or distribution number.
  6. Select the Distribution Method; Percent of Cost or Percent of Weight.
  7. If the invoice selected had a freight amount, the amount displays in the Freight Distribution Amount box. If a Freight Distribution Amount doesn't display, enter the amount.
  8. If the invoice selected has a freight amount entered, the Freight Expense account assigned to the invoice displays. If an expense account doesn't display, select a Freight Expense account.
  9. Click the Distribute button to distribute the Freight Distribution Amount to the inventory line item details that have the Adjust checkbox selected.
  10. The Adjusted Amount column will display the calculated amount. as:
  • If the Distribution Method = Percent of Cost , each row is calculated as: (Freight Distribution Amount * (row Invoice Amount / Sum of rows Invoice Amount)) * (Remaining Quantity/Quantity).
  • If the Distribution Method = Percent of Weight, each row is calculated as: (Freight Distribution Amount * (row Total Weight/Sum of rows Total Weight)) * (Remaining Quantity/Stocking Quantity).
  • The New Cost column is calculated as:
    • For FIFO or LIFO - Remaining Quantity * Unit Cost) + Adjustment Amount
    • For Average Cost - Inventory Available Balance Amount + Adjustment Amount.
  • The New Unit Cost column is calculated as: New Cost/Remaining Quantity.
  1. Click Save.

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