Warranty Item from Supplier
Batteries with stock number in our item list.
We sold 2x batteries to a customer, which were invoiced to the customer, using our stock number from the item list.
Unfortunately the batteries were faulty & we provided replacements to the customers, we produced an invoice against the customers name, added our stock number to the invoices but changed the retail price to $0.00 - this was to take the 2x replacement batteries out of stock.
Our Supplier has sent us 2x replacement batteries with a $0 Bill. I can enter the bill using our battery stock number & change the cost price to $0 - BUT that will affect our batteries average cost.
How do I enter the bill to add the 2 replacement batteries back into stock but not affect the average cost price?
I thought maybe entering the batteries on the items tab of the bill with the normal cost amount $570.28 (for 2) & then on the expense tab coding a line to Inventory Asset & a negative amount of $570.28. Is that correct?
Any advice would be great thanks.
Comments
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Hi Kim
The system constantly re-calculates average cost based on the "total current cost / quantity in stock" of a stock Item at any given time.
If you have received $ 0 cost replacements for 2 of the original (faulty) batteries (as you should) then your current average cost should reflect this as you no longer have the original batteries you paid for - The cost of these would have been incorporated in the averages when held.
Here's an example:
You originally bought 100 batteries at $5 each. When you have 10 batteries left in stock, you order 100 more, but the price has gone up to $6 each.
RA/RAH calculates the average cost like this:
- Cost of your old stock is $50 (10 batteries x $5)
- Cost of new inventory is $600 (100 batteries x $6)
- Combined cost of old + new inventory = $650
- Average cost of your entire battery inventory is $5.91 ($650 / 110 batteries)
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