How to perform parts valuation
To perform parts valuation, run the following reports:
Sales Reports->Service Orders in Progress
- Combination Status = Checked
- Show Details = Checked or Unchecked (your choice)
- Status = In Process and Completed
- Customer = ‘blank
Then run the Part in Process Valuation report. Invoice Type and part status = blank
Next, run the Inventory->General Part Inventory report for In Stock QTY valuation of total inventory
Next, run the Inventory->General Part Inventory report for Available QTY valuation of total inventory
Next – perform the following in accounting:
- Reverse your WIP accrual to the part inventory GL account so that WIP is zero
- Make sure that the value of any unrecorded return credits is identified (that is the Parts Invoices not yet posted report total). An accrual needs to be set up to reduce the inventory GL account for the value of this report.
- Compare your GL account total to the total of the General Part Inventory Valuation report based on In-Stock QTY. Any difference between the two is an adjustment to Parts Adjustments or COGS-Parts. The adjustment should be done using a general journal entry. The In-Stock General Part Inventory Valuation total is the key number - that is what the inventory GL account must say before any WIP adjustment.
- The value reported on the Sales Reports->Service Orders In Progress report should be set up as the WIP accrual. The cost value of parts on that report based on In Process (Combined Status =checked) must be deducted from parts inventory and reclassified to WIP. The cost value of parts on that report based on a Completed (Combined Status = Checked) must be deducted from parts inventory and reclassified to COGS-service parts along with an accrual for the retail value of the parts should be set up as a credit to Sales-service parts and a debit to a clearing account named “Completed Service Orders Awaiting Pickup”.