Background
Prior to
release 370, all legislations uses the same method to generate financial
entries for various production processes. Depending on the production process,
double entries created in the production order, uses a single General Ledger
(GL) in the Settings, which is linked to production cost, revenue, waste,
result, Work In Progress (WIP) and scrap.
This
production journalizing method is not acceptable in some of the countries due
to the accounting practices/policies in the respective country. Due to this, in
release 370 for Czech Republic, Hungary ,
Slovakia
and Vietnam
,
there is a different method implemented for production order
journals; more information can be found in Release
370: Countries specific production journalization.
However,
for
Romania
, the main concern is to segregate the double entries according to different
item types. With the current existing logic, regardless of finish goods,
sub-assemblies or materials, all the journals will be booked into same GL account during
the production process and it is not possible to identify the cost derived
from production and differentiate them by item types. To complywith
Romania’s requirement, it is required to segregate the
financial entries according to production item category.
What has been changed
Menu path
System/Settings/General ledger settings
Manufacturing/Entries/Production orders
Manufacturing/Entries/Issue
Manufacturing/Entries/Receipts production
Manufacturing/To be processed/Complete
Manufacturing/Statistics/Rejected
In order to complywith Romania accounting policy in production order, a new
method has been implemented in release 370.
Main changes for
Romania
legislation will be the
double entries in production order; system will now refer to Cost Of Goods Sold (COGS) GL
in item maintenance to generate the financial entries accordingly, other than the WIP and
scrap ledgers that will still be referred in general ledger settings.
In order to have
financial entries with different GL for each item category, it is important to
setup all the items correctly.
Another point to note is
that the production waste GL is no longer in use, and as such, if there are any
rejected finish goods in the production order, the system will not be able to
print this information correctly in [Manufacturing/Statistics/Rejected].
Concept
The illustration above shows
the distinction between the old and new logic. For old logic, every financial
entry will be made according to single GL ledger that defined in the settings. In
the new logic, user can define the desire GL ledger in item maintenance, such
as the COGS ledger. Since this COGS Ledger resides in every item, therefore, it
is possible to have a different ledger for different items/item types. And with
this function, the user can have better insight when they want to view the
total production cost per item type in production order.
For example, to view the
total cost for materials regardless of number of production orders, user can
easily access the GL card to obtain the information.
General ledger settings
With the Romanian license in Settings, all the production GL in
[System/Settings/General ledger] are hidden, except for Production WIP and
Production scrap.
This is to prevent any
confusion that may arise, such as, if the user might possibly assume/think that
the production GL ledgers are maintained here. With this new logic, all the
respective applications should obtain the correct GL from item master and
general ledger settings accordingly.
For WIP GL ledger, the
default GL account will obtain from the settings but system will allow the
change of ledger in project master, just like the current logic. All the
production GL value in the general ledger settings will remain but not be
maintainable anymore.
For scrap GL ledger, the
system will only accept Balance Sheet (BS) ledgers with neutral or stock type.
When saving a new GL that is neutral type, the system will automatically save
the type to stock.
Recoding logic for
existing transactions upon changing of scrap GL ledger will remained the same.
NOTE: For
existing customers, there is no B2B script to convert the incomplete production
order to map to this new logic. As such, user must aware that all the
outstanding production orders have to set to “Complete” before they can make
use of this new logic. Inconsistency will be there if user has open production
orders with old logic, then followed by using new logic at later stage.
Before the change
|
Production = No WIP
|
|
Issue
|
Debit
|
Credit
|
|
Materials
|
Production
cost
|
Stock
|
|
Materials waste
|
Production cost
|
Stock
|
|
Hours
item |
Production cost |
Salary
payment |
|
Receipts |
Debit |
Credit |
|
Finish
goods |
Stock |
Production revenue |
|
By-product |
Stock |
Production cost |
|
Extra
charges |
Production cost |
Stock |
|
Extra
issue |
Debit |
Credit |
|
Materials (issue) |
Production cost |
Stock |
|
Finish
goods (returns) |
Production revenue |
Stock |
|
By-product (returns) |
Production cost |
Stock |
|
Hours
item (extra consumption) |
Production cost |
Salary
payment |
|
Extra
receipts |
Debit |
Credit |
|
Materials (returns) |
Stock |
Production cost |
|
Finish
goods (receipts) |
Stock |
Production revenue |
|
Hours
item (correction) |
Salary
payment |
Production cost |
|
Complete |
Debit |
Credit |
|
Materials |
Production result |
Production cost |
|
Materials waste |
Production result |
Waste |
|
Finish
goods |
Production revenue |
Production result |
|
Hours
item |
Production result |
Production cost |
|
Extra
charges |
Production result |
Production cost |
|
Scrap |
Debit |
Credit |
|
Materials |
Production scrap |
Production cost |
|
Finish
goods |
Production scrap |
Stock |
|
By-products |
Production scrap |
Stock |
|
Production = WIP |
|
Issue |
Debit |
Credit |
|
Materials |
Production WIP |
Stock |
|
Materials waste |
Production waste |
Stock |
|
Hours
item |
Production WIP |
Salary
payment |
|
Receipts |
Debit |
Credit |
|
Finish
goods |
Stock |
Production WIP |
|
By-product |
Stock |
Production WIP |
|
Extra
charges |
Production WIP |
Stock |
|
Extra
issue |
Debit |
Credit |
|
Materials (issue) |
Production WIP |
Stock |
|
Finish
goods (returns) |
Production WIP |
Stock |
|
By-product (returns) |
Production WIP |
Stock |
|
Hours
item (extra consumption) |
Production WIP |
Salary
payment |
|
Extra
receipts |
Debit |
Credit |
|
Materials (returns) |
Stock |
Production WIP |
|
Finish
goods (receipts) |
Stock |
Production WIP |
|
Hours
item (correction) |
Salary
payment |
Production WIP |
|
Complete |
Debit |
Credit |
|
Materials |
Production cost |
Production WIP |
|
Production result |
Production cost |
|
Materials waste |
Production result |
Production waste |
|
Finish
goods |
Production WIP |
Production revenue |
|
Production revenue |
Production result |
|
By-product |
Production WIP |
Production cost |
|
Production cost |
Production result |
|
Hours
item |
Production cost |
Production WIP |
|
Production result |
Production cost |
|
Extra
charges |
Production cost |
Production WIP |
|
Production result |
Production cost |
|
Scrap |
Debit |
Credit |
|
Materials |
Production scrap |
Production WIP |
|
Finish
goods |
Production scrap |
Stock |
|
By-products |
Production scrap |
Stock |
After the change
|
Case data |
|
Items |
Item
master |
Production WIP |
Production scrap |
|
Finish
goods |
Stock =
4010
COGS = 5010 |
5555 |
4060 |
|
Subassemblies |
Stock =
4020
COGS = 5020 |
5555 |
4060 |
|
Materials |
Stock =
4030
COGS = 5030 |
5555 |
4060 |
|
By-products |
Stock =
4040
COGS = 5040 |
5555 |
4060 |
Note: Assuming machine/labor hour/extra charges are having
the same GL setup as materials example above.
|
Production = No WIP |
|
Issue |
Debit |
Credit |
|
Subassemblies |
5020 |
COGS |
4020 |
Stock |
|
Materials |
5030 |
COGS |
4030 |
Stock |
|
Materials waste |
5030 |
COGS |
4030 |
Stock |
|
Hours
item |
5030 |
COGS |
4030 |
Stock |
|
Receipts |
Debit |
Credit |
|
Subassemblies |
4020 |
Stock |
5020 |
COGS |
|
Finish
goods |
4010 |
Stock |
5010 |
COGS |
|
By-product |
4040 |
Stock |
5040 |
COGS |
|
Extra
charges |
4030 |
Stock |
5030 |
COGS |
|
Extra
issue |
Debit |
Credit |
|
Materials (issue) |
5030 |
COGS |
4030 |
Stock |
|
Finish
goods (returns) |
4010 |
COGS |
5010 |
Stock |
|
By-product (returns) |
5040 |
COGS |
4040 |
Stock |
|
Hours
item (extra consumption) |
5030 |
COGS |
4030 |
Stock |
|
Extra
receipts |
Debit |
Credit |
|
Materials (returns) |
5030 |
Stock |
4030 |
COGS |
|
Subassemblies (return) |
5020 |
Stock |
4020 |
COGS |
|
Finish
goods (receipts) |
4010 |
Stock |
5010 |
COGS |
|
Hours
item (correction) |
5030 |
Stock |
4030 |
COGS |
|
Complete |
Debit |
Credit |
|
Materials |
- |
- |
|
Materials waste |
- |
- |
|
Finish
goods |
- |
- |
|
Hours
item |
- |
- |
|
Extra
charges |
- |
- |
|
Scrap |
Debit |
Credit |
|
Materials |
4060 |
Scrap |
5030 |
COGS |
|
Finish
goods |
5010 |
COGS |
4010 |
Stock |
|
4060 |
Scrap |
5010 |
COGS |
|
By-products |
5040 |
COGS |
4040 |
Stock |
|
4060 |
Scrap |
5040 |
COGS |
|
Production = WIP |
|
Issue |
Debit |
Credit |
|
Subassemblies |
5555 |
WIP |
4020 |
Stock |
|
Materials |
5555 |
WIP |
4030 |
Stock |
|
Materials waste |
5030 |
COGS |
4030 |
Stock |
|
Hours
item |
5555 |
WIP |
4030 |
Stock |
|
Receipts |
Debit |
Credit |
|
Subassemblies |
4020 |
Stock |
5555 |
WIP |
|
Finish
goods |
4010 |
Stock |
5555 |
WIP |
|
By-product |
4040 |
Stock |
5555 |
WIP |
|
Extra
charges |
4030 |
Stock |
5555 |
WIP |
|
Extra
issue |
Debit |
Credit |
|
Materials (issue) |
5555 |
WIP |
4030 |
Stock |
|
Finish
goods (returns) |
4010 |
WIP |
5555 |
Stock |
|
By-product (returns) |
5040 |
WIP |
4040 |
Stock |
|
Hours
item (extra consumption) |
5555 |
WIP |
4030 |
Stock |
|
Extra
receipts |
Debit |
Credit |
|
Materials (returns) |
5555 |
Stock |
4030 |
WIP |
|
Subassemblies (return) |
5555 |
Stock |
4020 |
WIP |
|
Finish
goods (receipts) |
4010 |
Stock |
5555 |
WIP |
|
Hours
item (correction) |
5030 |
Stock |
5555 |
WIP |
|
Complete |
Debit |
Credit |
|
Materials |
5030 |
COGS |
5555 |
WIP |
|
Materials waste |
- |
- |
|
Subassemblies |
5020 |
COGS |
5555 |
WIP |
|
Finish
goods |
5555 |
WIP |
5010 |
COGS |
|
Hours
item |
5030 |
COGS |
5555 |
WIP |
|
Extra
charges |
5555 |
WIP |
5030 |
COGS |
|
Scrap |
Debit |
Credit |
|
Materials |
4060 |
Scrap |
5030 |
COGS |
|
Finish
goods |
5010 |
COGS |
4010 |
Stock |
|
4060 |
Scrap |
5010 |
COGS |
|
By-products |
5040 |
COGS |
4040 |
Stock |
|
4060 |
Scrap |
5040 |
COGS |