INV101: Set Up Inventory

Transcription

1 INV101: Set Up Inventory CERTIFIED COURSE CURRICULUM SAGE UNIVERSITY

2 IMPORTANT NOTICE This document and the Sage 100 Contractor software may be used only in accordance with the Sage 100 Contractor End User License Agreement applicable to the Sage 100 Contractor software. You may not use, copy, modify, or transfer the Sage 100 Contractor software or this documentation except as expressly provided in the license agreement. Visit Sage's training services Web site at call , or us at to learn about training classes that Sage adds throughout the year. Contact your business partner to learn about local training options. Information in this document is intended solely as general information with respect to common business issues and is not to be construed as professional advice. Consult a tax or accounting professional for all tax and account related questions. THE INFORMATION HEREIN IS PROVIDED AS IS AND ALL WARRANTIES ARE EXPRESSLY DISCLAIMED, INCLUDING BUT NOT LIMITED TO ANY WARRANTY: OF MERCHANTABILITY; OF FITNESS FOR ANY PARTICULAR PURPOSE; OF NON-INFRINGEMENT OF ANY PROPRIETARY RIGHT OF ANY THIRD PARTY IN ANY COUNTRY; OTHERWISE ARISING OUT OF ANY PRODUCT, PROPOSAL, SPECIFICATION OR SAMPLE; AND ANY WARRANTY THAT THE DOCUMENT IS ERROR FREE. No license, express, implied, by estoppel or otherwise, to any intellectual property right is granted by this document. Sage Software may make changes to the information in this document at any time, without notice. Recipient is solely responsible for assessing the suitability of the information and assumes all risk of use Sage Software, Inc. All rights reserved. Sage, the Sage logos, and the Sage product and service names mentioned herein are registered trademarks or trademarks of Sage Software, Inc., or its affiliated entities. All other trademarks are the property of their respective owners. 01/2013

3 Inventory Contents Contents Welcome Course Pre-Requisites Training Data for Lecture and Activities Conventions Used in This Workbook Set Up Inventory What You Will Learn Definition of Inventory Purpose of Inventory Other Benefits of Inventory Costs of Inventory Minimize Cost with JUST-IN-TIME Inventory Activity 1 Answer Inventory Questions Inventory Setup AVERAGE COST Valuation Method Activity 2 Use Weighted Average Cost First-In, First-Out (FIFO) Valuation Method Activity 3 Use FIFO Last-In, First-Out (LIFO) Valuation Method Activity 4 Use LIFO Summary of Valuation Methods Activity 5 Setup Inventory Valuation Method Activity 6 Set Up Inventory Locations Activity 7 Set Up Inventory Parts Enter Beginning Inventory Balances Activity 8 Enter Startup Allocations The Results of the Startup Entry Activity 9 Use Footer Buttons Summary Evaluate the Course Sage Software, Inc. Online Training at 3

4 Inventory Contents 2013 Sage Software, Inc. Online Training at 4

5 Inventory Welcome Welcome This handout has been designed for use in an instructor-led class for Sage 100 Contractor. Detailed instructions help you recall the procedures introduced by your instructor. Depending on how your training class is conducted, some sections may not be addressed. Refer to these sections in the future as you continue to work with the software. Course Pre-Requisites This course assumes that you have completed the NCT102 course. You should also have Sage 100 Contractor installed with the Sample Company selected. Training Data for Lecture and Activities As your instructor demonstrates procedures in the software, he or she will access the training data set that has been used to capture application screens in this workbook. You will also use the training data set to complete the activities. You can download the training data sets on the Sage University Web site ( using the procedure explained on the next page. Transactions in the Training Data Set In certain cases, transactions in the data set that you use may show a different year than the illustrations in this book, or than the instructor shows in class. If your data set transactions show a different year, but all other details such as the prefix and account setup, vendor names, and jobs are identical, your data set will correspond to the materials in all respects but the date. When you complete the activities that involve dates, you may see a different year in the instructions or screen shot than in your data. Use the appropriate year based on the data you are using for activities. For example, if 2012 is the current year in your data and the activity prompts you to enter prior year information, enter a date in If the activity prompts you to enter current year information, enter a date in Sage Software, Inc. Online Training at 5

6 Welcome Sage 100 Contractor If you already have an older version of the training data installed, you can upgrade it using the directions below to download the latest training data set. If you prefer to use another data set for the activities, you may do so, but your results may not resemble the images you see in the workbook. To Download the Training Data Set 1. In an Internet browser, go to 2. In the right-hand area under QuickLinks, click Training Data. 3. Select the ReadMe File file for instructions on load the sample data. 4. Click the Download the Sample Company Training Data link. 5. Click Run to install the training data. If you see a security warning about the publisher, click Run. 6. Browse to your MB7 folder, then click Unzip, and then click OK. Menu Paths In this workbook, menu paths show you the steps required to start a task. This is a sample menu path: 4-Accounts Payable > 3-Vendor Payments > 2-Pay Vendors Many modules and tasks are also available through Sage 100 Contractor Desktop. The Desktop has a tree structure that reflects the same logical progression as the steps of a menu path. Where to Get Additional Information Application Help Files Each application contains an extensive Help system. The Help is your primary resource for reference and how-to information for all tasks. Help includes Contents, Index, and Search features that help you locate information quickly. You can start Help in two easy ways: Select About this Window from the Help menu in any application. Press the F1 key on the window in any application. Technical Support Knowledgebase The Technical Support Knowledgebase contains the latest information about application features. You must have a current service plan to access the knowledgebase. 6 Local Training From Business Partners 2013 Sage Software, Inc.

7 Inventory Welcome InfoCenter Be sure to check the InfoCenter for product news, announcements, support, and training. Access the InfoCenter from Home & Resources tab > Customer Resources. Submit Enhancement Requests Do you have a suggestion for how we can improve our software? We want to hear your ideas! Open the Product Enhancement Request option from Home & Resources tab > Customer Resources. Ideas you enter will be submitted to our Product Management team. Conventions Used in This Workbook This workbook uses the following conventions: The names of screens, windows, fields, buttons, and other features displayed by the software are shown in bold type. Information you enter into the software is in bold type, as in the example below: Type Miscellaneous in the Amount Type field. Names of keys are shown in capitals; for example, ENTER, TAB. A plus sign (+) between two key names indicates that you should press both keys at the same time; for example, SHIFT + TAB. NOTE: This symbol draws your attention to information of particular interest. TIP: This symbol draws your attention to tips about using a helpful feature of the software. WARNING: This symbol draws your attention to information that is important because it can help you avoid a costly or time-consuming error. FOR MORE INFORMATION: This symbol draws your attention to a reference to another document or to another section in this document Sage Software, Inc. Online Training at 7

8 Welcome Sage 100 Contractor 8 Local Training From Business Partners 2013 Sage Software, Inc.

9 Inventory Set Up Inventory Set Up Inventory This course discusses basic inventory theory and teaches you how to set up inventory in Sage 100 Contractor. What You Will Learn At the completion of this course you will be able to: Explain the purpose, benefits, and costs of inventory. Select the inventory valuation method. Setup inventory locations. Setup Inventory parts. Enter beginning balances of inventory Sage Software, Inc. Online Training at 9

10 Set Up Inventory Sage 100 Contractor Definition of Inventory Materials may be either: Purchased and expensed directly to a job, or Purchased and received into inventory as an Asset and expensed to the job as they are used. Sage 100 Contractor provides an affordable, easy to use inventory system designed specifically for construction companies. Sage 100 Contractor inventory is integrated with estimating, purchase orders, accounts payable, job cost and service receivables. Purpose of Inventory Improved Financial and Job Cost Reporting. Matching Principal recognize the cost at consumption and revenue recognition. Track the movement and location of materials. To protect the asset from loss. Maintain accurate valuation of remaining inventory. Other Benefits of Inventory Avoid shortages on the job by having materials on hand to improve workflow. Take advantage of volume discounts. Lock in current prices. Costs of Inventory Storage costs. Carrying costs what else could your money be doing? Depletion loss due to weather, theft, damage, etc. Decreased value due to obsolescence. Possible taxation of tangible property. 10 Local Training From Business Partners 2013 Sage Software, Inc.

11 Inventory Set Up Inventory Minimize Cost with JUST-IN-TIME Inventory Materials are ordered to arrive just as they are needed for production and in the minimum required quantity. This holds down the cost of inventory while maintaining the stock necessary to do business. Activity 1 Answer Inventory Questions Please answer the following questions: 1. Inventory is: a. an asset b. a liability c. revenue d. expense 2. The Matching Principal applies to: a. The Income Statement b. Job Cost Reporting c. Wall paper d. A and B 3. The more inventory in stock the better. True or False? 2013 Sage Software, Inc. Online Training at 11

12 Set Up Inventory Sage 100 Contractor Inventory Setup Setting up the inventory module in Sage 100 Contractor involves four steps: 1. Set up the General Ledger interface and select the valuation method. 2. Create the Inventory Locations. 3. Set up the Inventory Parts. 4. Enter the beginning quantities and values. AVERAGE COST Valuation Method One of the three inventory valuation methods available in Sage 100 Contractor is the Weighted Average Cost method. The weighted average cost (WAC) method assumes that when items are removed from inventory, the general ledger inventory account is reduced by the average cost of all items existing in inventory. This generates an average cost of goods sold, net income, and an average tax liability of the specific part being removed. Weighted Average Cost is based upon the cost of items received divided by the quantity on hand. Average cost can only be affected when items are added to inventory. All parts go out of inventory at Weighted Average Cost and therefore don t affect the Weighted Average Cost. 12 Local Training From Business Partners 2013 Sage Software, Inc.

13 Inventory Set Up Inventory Activity 2 Use Weighted Average Cost In the table on the previous page add the following transactions and compute average cost. 1. Purchase 7 items at a unit cost of Purchase 6 items at a unit cost of Reduce inventory by 12 items used on a job. First-In, First-Out (FIFO) Valuation Method A second valuation method available is FIFO. You can think of this as a conveyor belt that moves through a building. Everything goes in the front door and out the back door. Each item has its purchase price stamped on it and this never changes. When it comes out the back door (to be used on a job) it reduces the total value of inventory by the exact amount spent when it was procured. It does not matter whether other units of the same type were purchased for more or less money and whether they were purchased before or after it. If it is the fifteenth item purchased then it will be the fifteenth item to leave the warehouse. Activity 3 Use FIFO Recalculate the inventory values in the Average Cost table, but using FIFO valuation. Begin with the first line in the table. 1. Reduce inventory by 10 items used on a job. 2. Purchase 6 items at a unit cost of Reduce inventory by 12 items used on a job. 4. What was the total cost of the items taken out of inventory in line 4 of the table? 5. What was the total cost of the items taken out of inventory in step #1? 6. What was the total cost of the items taken out of inventory in step #3? 7. What will be the unit cost of the next unit removed from inventory? 2013 Sage Software, Inc. Online Training at 13

14 Set Up Inventory Sage 100 Contractor Last-In, First-Out (LIFO) Valuation Method The final valuation method available is LIFO. You can think of this as a refrigerator. The first items placed in the refrigerator go to the back. Items added are placed in front. People grab the item in front. (Meanwhile the milk in the back goes out of date.) The advantage to using this method is that items come out of inventory at their most recent value, which is usually the higher price. Therefore a larger value is expensed which reduces taxes. It doesn t matter if physically the item removed is the most recent; LIFO (as with FIFO) is only concerned with valuation. Everything goes in the front door is stacked at the back of the warehouse and then pulled from the front of the stack and taken out the front door. Each item has its purchase price stamped on it and this never changes. When it comes out the front door (to be used on a job) it reduces the total value of inventory by the exact amount spent when it was procured. It does not matter whether other units of the same type were purchased for more or less money and whether they were purchased before or after it. If it is the second-most-recently purchased item then it will be the second item to leave the warehouse. Activity 4 Use LIFO Recalculate the inventory values in the Average Cost table, but using LIFO valuation. Begin with the first line in the table. 1. Reduce inventory by 10 items used on a job. 2. Purchase 6 items at a unit cost of Reduce inventory by 12 items used on a job. 4. What was the total cost of the items taken out of inventory in line 4 of the table? 5. What was the total cost of the items taken out of inventory in step #1? 6. What was the total cost of the items taken out of inventory in step #3? 7. What will be the unit cost of the next unit removed from inventory? 14 Local Training From Business Partners 2013 Sage Software, Inc.

15 Inventory Set Up Inventory Summary of Valuation Methods In all three cases the total value expensed was $ since the entire inventory was consumed. But the amounts of the individual transactions varied. Before making a selection of valuation methods you consult with your accountant and tax advisor before selecting an inventory valuation method in Sage 100 Contractor. Once you have entered your choice and made any inventory transactions you will never be able to change it. Step #1: Set up Inventory Your choice of inventory valuation is selected in 1-8 General Ledger Setup. You must also specify an offset account in the overhead expense range to use in special situations, such as when Purchase Order Receipts don t exactly match Payable Invoices. Select the desired Inventory Valuation Method. Remember that you can t change this after any inventory entries have been made. Inventory control account (Asset) Select an Offset Account (or create a new account for this. It must be an overhead expense account. (Note the prompt at the bottom of the screen.) 2013 Sage Software, Inc. Online Training at 15

16 Set Up Inventory Sage 100 Contractor Activity 5 Setup Inventory Valuation Method Please return to your desktop. 1. Start Sage 100 Contractor and select the Sample Company, if you have not already done so. 2. In the 1-8 General Ledger Setup menu > Posting Accounts tab, and select LIFO Valuation Method. 3. Use account 6710 (new: Inventory Value Adjustments) as the Offset Account. 4. File > Save. Please return to the conference when you have completed this exercise. Step #2: Set Up Inventory Locations Inventory locations are like a sub-ledger for Sage 100 Contractor inventory. When moving parts into and out of inventory you will be required to designate a source or destination inventory location. You must set up at least one inventory location. Menu 12-3 Inventory Locations stores the number and name of inventory locations. These may be warehouses, virtual warehouses, trucks, cages, job-site storage facilities or locations within a warehouse. If applicable, an employee can be assigned to each inventory location. 16 Local Training From Business Partners 2013 Sage Software, Inc.

17 Inventory Set Up Inventory Activity 6 Set Up Inventory Locations Please return to your desktop. Open menu 12-3 Inventory Locations and set up inventory locations as shown on the previous screen. Please return to the conference when you have completed this exercise. Step #3: Set Up Inventory Parts Sage 100 Contractor parts are fully integrated between inventory, estimating, purchase orders, accounts payable, accounts receivable and service receivables. Inventory section of Parts screen, including Stock Item, Serialized, Location & Bin, Reorder, Minimum Order and Package quantities. The parts screen has fields that are for use by each of these applications. In today s class we will focus on the inventory fields on the part screen. General Information tab: Manufacturer and Manuf. Part# Reorder Quantity the point at which item should be re-ordered Cost, Billing and Ordering tab: Average Cost displays current average cost of item (this is the amount used for job costing even if LIFO or FIFO is used for accounting. More about this later in the series.) Minimum Order Qty the smallest number of units to order Package Quantity after meeting the minimum, the number of units to an order or package 2013 Sage Software, Inc. Online Training at 17

18 Set Up Inventory Sage 100 Contractor Unit Weight Optional Inventory tab: Stock Item must be checked to receive into inventory Serialized Item Inventory parts are either serialized or non-serialized. Serialized units have a unique serial number that must be tracked from purchase to installation for warranty purposes and to control the location of more expensive items. Non-serialized stock items are not tracked individually Required from Inv. mandatory that the part come from inventory. Part cannot be purchased and expensed directly Default Location location where item is normally held Bin# - optional Quantity on Hand displays current quantity in all locations Activity 7 Set Up Inventory Parts Please return to your desktop.. 1. On Part #4442 Used Red Brick, select the Stock Item check box. 2. Enter 500 for Reorder Quantity. 3. Enter 200 for the Minimum Order Qty and the Package Quantity. 4. Enter 10-Main Warehouse as the Default Location. 5. On Part #15261 W.H.-10gal, Electric, select the Stock Item and check boxes. 6. Enter 3 as the Reorder Quantity, and 10-Main Warehouse as the Default Location. Please return to the conference when you have completed this exercise. 18 Local Training From Business Partners 2013 Sage Software, Inc.

19 Inventory Set Up Inventory Enter Beginning Inventory Balances When the General Ledger balances were entered, the inventory balance was put in an Inventory Clearing account. The inventory allocation screen is used to record Inventory usage and movement. It is also used to move the inventory dollars from the Startup Inventory account to the Inventory controlling account. The screen shot below has many hidden columns that we will cover in detail in the next class, INV111. We will enter our beginning quantities at startup at Menu Each item in inventory must be posted to the appropriate inventory location, using the quantity and value from the startup balances. Post the opening balance entries to the period prior to going live on Sage 100 Contractor. Beginning balances can be entered in one transaction or with multiple entries by location, part class, etc. Enter each part quantity on hand and the value from the existing accounting system s reports. The total of the extended balance for all of the parts should equal the balance of the Inventory Startup account. The Account in the grid will be the Inventory Startup account. The Destination is the Inventory Location where the parts are held. Any parts that are Serialized require that the quantity always be one and a serial number is entered Sage Software, Inc. Online Training at 19

20 Set Up Inventory Sage 100 Contractor Activity 8 Enter Startup Allocations Please return to your desktop. 1. At menu 12-2 enter the Startup allocation on the previous screen image. Either hide the unused columns or skip over them (leave them blank) when making the entries. 2. Change the Posting Period to 5 then save the allocation. Please return to the conference when you have completed this exercise The Results of the Startup Entry This entry created a balance in inventory and established a quantity and average cost for our stock item Red Brick. After you save the allocation, the screen will clear. We can recall the transaction and drill down to both the ledger Transaction and the Part to see the effects of our entry. Go to Transaction: Go to the Journal Transaction screen (1-3) and view the resulting GL transaction. Go to Part: Go to the Parts screen (9-2) and view the part that occurs on this current row of the grid. View Inventory: Displays a quick review of the inventory for the parts on this allocation. 20 Local Training From Business Partners 2013 Sage Software, Inc.

21 Inventory Set Up Inventory When you select Go to Transaction, the Journal Transaction (1-3) screen display. In this case the Ledger Transaction debited Inventory and credited the Inventory Clearing Account. To drill down to the part, select the part on the allocation grid first and then click on Go to Part. Notice the Average Cost and Quantity on Hand now have values. Select the Inventory option at the bottom of the screen to see inventory details Sage Software, Inc. Online Training at 21

22 Set Up Inventory Sage 100 Contractor Using the Inventory window displays the pertinent information on the part on the current row of the grid. (More detailed information is available by using the Inventory button on the Parts (9-2) screen.) Activity 9 Use Footer Buttons Please return to your desktop. 1. From the 12-2 Inventory Allocation menu, recall your opening balance allocation. 2. Go to Transaction to view the GL entry made. 3. Go to Part to view average cost and total quantity on hand. 4. View Inventory to view the details. Please return to the conference when you have completed this exercise. 22 Local Training From Business Partners 2013 Sage Software, Inc.

23 Inventory Set Up Inventory Summary You are now ready to: Know the purpose, benefits and costs of inventory. Use average Cost method of inventory. Set up inventory locations. Set up Inventory GL Accounts. Set up Inventory Parts. Enter beginning balances of inventory. Evaluate the Course You will receive an survey for you to evaluate the class. Please complete the survey to provide us feedback about how to improve this course Sage Software, Inc. Online Training at 23

24 Set Up Inventory Sage 100 Contractor 24 Local Training From Business Partners 2013 Sage Software, Inc.