The topic of General Ledger distributions for Sales Order Processing transactions has been known to cause a fair amount of confusion for Dynamics GP users. I would like to address some of the typical questions we receive on this. Please click on the screen shots to see them larger/clearer.
Just to set the stage, I am talking about the window titled Sales Transaction Entry (Transactions > Sales > Sales Transaction Entry):
And the GL distributions that are shown when you click on the Distributions button:
Question: Why are there no distributions for Inventory and Cost of Goods (COGS)?
Answer: The distributions for Inventory and COGS are always based on the cost of the inventory items at the time the invoice is posted. Since the cost can keep changing with other transactions being posted, GP does not actually calculate the cost (and thus the Inventory and COGS distributions) until the invoice is posted.
Question: If I expand the line item to see more detail I see a cost, but it’s not correct. Why is that?
Answer: This cost is filled in at the time the invoice is created. This is informational only at this point and will not be what is used as the cost when the invoice is posted. At the time of posting the cost will be recalculated. Once posted, if you look at the invoice and drill into the detail, it will show the correct cost the invoice was posted with.
Question: How do I see what GL account numbers will be used for Inventory and COGS when the invoice is posted?
Answer: Since these accounts can be different for every item, you need to drill down on each item by clicking on the item to highlight it, clicking on the blue arrow next to the Item Number hyperlink:
And then clicking on the Distributions button:
You will see not only the Inventory and COGS distribution accounts, but any other line item specific account numbers:
Since these accounts can be different for every line item this can get quite cumbersome to look through if you have a lot of line items. If you wanted to see the Inventory and COGS accounts for all line items on a transaction you could use the Sales Line Items SmartList and bring in the COGS Account Number and Inventory Account Number columns. [Note: When testing this on versions 9.0 and 10.0 of GP I see 3 columns available with the same exact names. In my experience, the first one of these 3 will be the correct one, but since there any many various setups out there, you should test yours to make sure that you're looking at the correct columns before relying on them.]
Question: Can I change these distribution accounts?
Answer: Yes, you can change these for every transaction line – the changes will be saved for this transaction line only and will not effect any other lines or transactions. No setup will be changed by making changes to individual transactions or lines. When you make a change and save the line item, you will get the following message:
Make sure to say Yes to this.
Question: How does the system decide what GL account numbers to use?
Answer: Take a look at your Sales Order Processing Setup (Tools > Setup > Sales > Sales Order Processing):
If you have chosen to use Posting Accounts from Item, then the system looks for the accounts in this order:
- Inventory Item setup (Cards > Inventory > Item > click on Accounts)
- Posting Accounts for Inventory series (Tools > Setup > Posting > Posting Accounts > choose Inventory for Display)
If you have chosen to use Posting Accounts from Customer, then the system looks for the accounts in this order:
- Customer setup (Cards > Sales > Customer > Accounts)
- Posting Accounts for Sales series (Tools > Setup > Posting > Posting Accounts > choose Sales for Display)
Important note: Changing any of the setup options will not have any impact on already saved transactions.
Question: I am getting an error saying something similar to “This Sales distribution amount is incorrect and will not be posted. Do you want to save with errors?” What cases this and what do I do?
Answer: There are typically 2 reasons why you will get distributions errors:
- You are missing setup information so GP cannot determine what accounts to use.
- You have manually changed something in the distributions and it does not conform to the totals that GP is expecting.
To fix missing account numbers, you can just fill them in manually on the transaction or change the setup and have the system regenerate the distributions by clicking Default on the Sales Distribution Entry Screen:
When you click Default you will get the following message:
This is warning you that if you have made any manual changes they may be lost by having the system regenerate the default distributions. If you are not sure, write down or take a screen shot of the current distributions and amounts, in case you need to re-do your changes. To have the system regenerate the distributions, click Delete. (Sounds a little counter-intuitive, I know.)
Regenerating the default GL distributions will also fix most of the issues with manual changes, but I would like to explain that in a little more detail. What happens is that GP is automatically matching up the various totals on the transaction with the types and totals of the GL distributions. When it finds a mismatch, it does not allow the posting of the transaction. This is a good thing and will typically prevent reconciliation issues. Here is an example of what GP is trying to match:
Outlined in red are the most common totals that I have seen issues with. Let’s go through them one at a time:
- Subtotal: all the SALES distributions must total up to a credit equal to the Subtotal.
- Trade Discount: all the TRADE distributions must total up to a debit equal to the Trade Discount.
- Tax: all the TAXES distributions must total up to a credit equal to the Tax.
- Amount Received: all the CASH distributions must total up to a debit equal to the Amount Received.
- On Account: all the RECV distributions must total up to a debit equal to On Account.
You can find a complete list of all the distribution types and their explanations in Accolade Publications‘ Understanding Sales Order Processing book.
My 2 cents: For me one of the main benefits of using a product like Dynamics GP is that it can do a lot of the work for you. If you are finding yourself changing the GL distributions for Sales Order Processing transactions frequently (or need to often go back and reclass), I would recommend a review of your setup. In most situations the setup can be done so that you will not need to make any changes to the distributions for 99% of your transactions.