Debit to cost of goods sold in assembly build.

An Assembly Build GL Impact shows a debit to COGS. This looks unusual since the usual debit in an assembly build is an inventory account.

• Debit
  • Assembly Item Asset Account
  • COGS
    
• Credit
  • Assembly Item Inventory Asset
  • Member Item Inventory Asset

Solution

This happens when an Assembly Unbuild is back-dated. The COGS is recorded as a debit to the Assembly Build and it is offset by COGS recorded in the Assembly Unbuild.  Notice when the GL impact of the Assembly Unbuild is clicked, the following shows:

• Debit
  • Assembly Item Inventory Asset
  • Member Item Inventory Asset
    
• Credit
  • Assembly Item Asset Account
  • COGS

Upon the Unbuild of the Assembly, it triggers the Assembly item to go underwater, hence, the Assembly Build transaction re-calculates. It will have a Cost of Sales Adjustment at a point where the quantity is increased coming from a negative number to zero or a positive number.

Example

1. Go to Transactions > Manufacturing > Build Assemblies. 
– Select Assembly XXX 
– Qty. to Build = 10
– Date = 7/10/2016 

> Check GL Impact:
Dr. Asset account – Assembly —- 300
Cr. Asset account — Component 1 —- 100
Cr. Asset account — Component 2 —- 200

2. Go to Transactions > Inventory > Adjust Inventory Worksheet. 
– Date = 7/11/2016
– Set the following New Qty. and Values:
— Assembly XXX | New Qty. = 10 | New Value = 500
— Component 1 | New Qty. = 5 | New Value = 2450
— Component 2 | New Qty. = 90 | New Value = 2700

> Check Ave. Cost as of 7/11/2016
— Assembly XXX | Ave. Cost = 50
— Component 1 | Ave. Cost = 5
— Component 2 | Ave. Cost = 30

3. Go to Transactions > Manufacturing > Unbuild Assemblies.
– Select Assembly XXX
– Qty. to Unbuild = 1
– Date = 7/12/2016
 
> Check Projected Value: 35.
This is based on the sum of Components’ cost as of the Assembly Unbuild Transaction Date, 7/12/2016. (5+30)

> Check the GL impact.
Dr. Asset account — Component 1 —- 5
Dr. Asset account — Component 2 —- 30
Cr. Asset account — Assembly —- 35
Dr. COGS account — Assembly —- 15
Cr. Asset account — Assembly —- 15

Assembly and Components are recognized at their Location Average Cost as of the Assembly Unbuild Transaction Date, 7/12/2016, with any difference (50-35) accounted in COGS account of the Assembly item if Unbuild Variance account is not set on the Assembly Item record