When generating an A/R invoice from Eralis Job, SAP Business One will create a standard A/R invoice journal which essentially has two parts:
- The revenue part where the income statement is credited and the A/R (BP) Control account is debited.
- The cost section where COGS in the income statement is debited and the WIP warehouse is credited.
- A complete reversal of the cost section of the SAP Business One journal entry. Effectively, Eralis Job will take the lines that have been generated by SAP Business One and create an exact reversing journal entry.
- An alternate COGS posting. This may consist of multiple Debit and Credit lines (one for each job line invoiced) unless the consolidated journals inside Eralis Job are enabled.
The reasons for the alternate COGS posting are:
- When generating the A/R invoice, no change can be made to the standard SAP Business One journal entry regarding the cost portion of the journal (the only exception being the COGS accounts used). However, the value of the cost journal is closed and as we outline below, there are reasons why we need to change the value established by SAP Business One.
- When calculating the value of the costs of the A/R invoice, SAP Business One does not apply a cost to a non-inventory item code. Inside Eralis Job all staff timesheets, resource entries and a number of service type A/P transactions make use of non-inventory item codes and as such are not included in the costs on the A/R invoice.
- When calculating the costs for material items, SAP uses the costing method defined on the item master for the specific warehouse (the Eralis Job WIP defined warehouse). This cost is frequently different to the cost on the job line (due to standard processing). Due to the actual costing nature of Eralis Job, the unit cost on the job line is the cost that needs to be processed to the COGS account.
For these reasons, the second part of the Eralis Job adjusting journal entry creates a new COGS journal entry which:
- Includes all item codes used in the job transactions (inventory and non-inventory).
- Uses the costs from the job lines rather than the costs determined by SAP Business One (this accommodates the actual costing within Eralis Job).
- Uses the COGS GL codes set on the master job header or set on the job lines, which may be different to the standard GL determination set within SAP Business One.