The Inventory to GL Reconciliation (GF1003) report provides a summary of inventory values as of a specified As of Date. It is primarily used during the month-end closing process to reconcile the General Ledger (GL) inventory balance with the actual inventory valuation. The report helps determine any manual accrual entries required so that the General Ledger agrees with the inventory subledger.
The report can also be customized to display inventory valuation by Lot Number when more detailed analysis is required.
Running the Report
When running the report, set the Posting Date filter to the desired As of Date.
The report includes all inventory transactions posted on or before the specified date, providing a snapshot of inventory valuation as of that date.
Report Columns
| Column | Description |
|---|---|
| Shipped Not Invoiced | The value of inventory that has been shipped to customers, but the sales invoice has not yet been posted. |
| Received Not Invoiced | The value of inventory received from vendors, but the purchase invoice has not yet been posted. |
| Output Not Costed | The value of finished goods output from a Production Journal for a Work Order that has not yet been completed and fully costed. |
| Expected Cost | The total of Shipped Not Invoiced + Received Not Invoiced + Output Not Costed. These represent expected inventory costs that have not yet been fully recognized in the General Ledger. |
| Invoiced Cost | The inventory value that has been posted to the system Inventory GL Account through invoiced transactions. |
| Inventory Value | The total inventory valuation, calculated as Invoiced Cost + Expected Cost. |
Month-End Reconciliation
Follow the steps below during month-end closing.
Step 1 – Verify the GL Balance
Compare the Invoiced Cost on the report with the balance of the Inventory GL Account in the General Ledger.
These amounts should match because both represent inventory costs that have been fully invoiced and posted.
If they do not match, investigate the discrepancy using the Inventory Analysis reports before proceeding.
Step 2 – Accrue Expected Costs
The Expected Cost represents inventory activity that has occurred but has not yet been fully invoiced or costed.
To present inventory at its correct value for financial reporting, post a manual accrual journal entry.
| Account | Debit | Credit |
|---|---|---|
| Inventory GL Account (Manual Accrual) | Expected Cost | |
| Accrued Inventory / Inventory Accrual Account | Expected Cost |
If the Expected Cost is negative, reverse the debit and credit accordingly.
Step 3 – Verify the Final Inventory Balance
After posting the manual accrual, verify the following equation:
Inventory GL Account (System)
+ Inventory GL Account (Manual Accrual)
= Inventory Value (GF1003 Report)
When these amounts agree, the General Ledger inventory balance has been successfully reconciled to the inventory subledger as of the selected As of Date.
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