E1: 42: Sales Update (R42800) Creates Unbalanced Entries on Interbranch Order with Standard Cost Item and Sales Cost Override (Doc ID 2958849.1)

Last updated on NOVEMBER 30, 2023

Applies to:

Symptoms

After upgrading from World to E1, Sales Update (R42800) creates unbalanced journal entries on an Interbranch Sales Order with a Standard Cost item with a selling cost override during Sales Order Entry:

• Inventory Account for the Header (Selling) branch retains a residual Credit balance when it should be Zero.
• Interplant Sale Amount for the Detail (Supply) branch is less that the Cost of Goods Sold for the Detail (Supply) branch, resulting in a loss.

STEPS TO REPRODUCE:

1. Create a new Item in two different branches (10 and 30) in the same company.
2. Set the G/L Class Code to IN10 for the Branch 10 record to IN10.
3. Set the G/L Class Code to IN30 for the Branch 30 record to IN30.
4. Set the Sales Inventory Cost (P4105) to Standard Cost (07) and set the Standard Cost = 1,411.04 in Both Branch Plants.
5. Create an Inventory Adjustment (P4114) in Branch 30 which will be the Supply Branch for the sales order.
6. Setup a Version of Sales Order Entry (P4210) for Interbranch Orders:
   1. Process Tab Option #10 (Cost or Base Price Markup) = Blank (Use Cost).
   2. Interbranch Tab Option #2 (Interbranch Order Types) = SO.
7. Create the sales order with Branch 10 in the header. Enter branch 30 in the detail line. Manually enter a price of 1,312.60. Manually enter a cost of 1,115.00 instead of defaulting the Standard Cost of 1,411.04. Profit Margin on the sale is calculated as 15.05%.
8. In the sales order detail file, the interbranch flag is set to 1 and the Transfer Cost is 1,411.04.
9. Process the Order through Ship Confirm (P4205) and Invoice Print (R42565).
10. Setup AAIs
11. AAI 4230 (Revenue) record is setup for Company 00001, Branch Plant Blank, Object Account 5015:
    1. For IB batch 10.5015 Revenue Credit for Header Branch 10.
12. AAI 4260 (Interbranch Revenue) record is setup for Company 00001, Branch Plant Blank, Object Account 5015:
    1. For ST batch 30.5050 Revenue Credit for Detail Branch 30.
13. AAI 4220 (Cost of Goods Sold). Two records to create two Journal Entries:
    1. For IB batch 10.5050 Cost of Goods Debit for Header Branch 30.
    2. For ST batch 30.5050 Cost of Goods Debit for Detail Branch 30.
14. AAI 4240 (Inventory). Two records to create two Journal Entries:
    1. For IB batch 10.5050 Cost of Goods Debit for Header Branch 30.
    2. For ST batch 30.5050 Cost of Goods Debit for Detail Branch 30.
15. AAI 4141 (Standard Cost Variance):
    1. For IB batch 10.6315 Cost of Goods Variance for Header Branch 30.
    2. For ST batch 30.6315 Cost of Goods Variance for Detail Branch 30.
16. Setup Sales Update (R42800) Version for Interbranch for Proof Mode:
    1. Update Tab Option #2 (Proof or Final) = Blank (Run in Proof Mode).
    2. Interbranch Tab Option #1 (Interbranch Order Type) = SO.
17. Run Sales Update (R42800) Version for Interbranch for Proof Mode. View PDF Report.
    1. Selling (Header) Branch Entries:
       • Revenue (10.5015) -1,312.60 Credit.
       • COGS (10.6020) 1,115.00 Debit.
       • Inventory (10.1411) Credit -296.04 (+1,115.00 -1,115.00 - 296.04) – Unbalanced Entry.
       • Header (Selling) Branch Inventory Account should have a balance of Zero.
       • Header (Selling) Branch had no inventory. Inventory was shipped from Detail (Supply) Branch.
       • Standard Cost Variance (10.6315) Debit 296.04.
    2. Supply (Detail) Branch Entries:
       • COGS (30.6020) 1,411.04 Debit.
       • Inventory (30.1411) -1,411.04 Credit.
       • Interplant Sale (30.5050) -1,115.00 Credit.
       • Causes Revenue (1,115.00) Less than Cost (1,411.04).
18. Transferring the Journal Entry Amounts to T-Accounts shows the problem:
    1. AAI 4260 (Interplant Sales Credit) and AAI 4240 (Selling Branch Debit) should be 1,411.04 from the Sales Order Transfer Cost.

IB and ST Batch Journal Entries

T-Accounts for Selling (Header) Branch and Supplying (Detail) Branch

Proposed Solution

Use Transfer Cost of 1,411.04 to Credit AAI 4260 (Interplant Sales) for Supply Company and Debit AAI 4240 (Inventory) for Selling Company.

T-Accounts AFTER proposed Fix

Cause

My Oracle Support provides customers with access to over a million knowledge articles and a vibrant support community of peers and Oracle experts.