JD Edwards ST/OT Transfer Order Accounting
(Part 2)
Edward Gutkowski - Chief Architect - RapidReconciler
JD Edwards ST/OT transfer orders in are used to move materials between branch plants (A to B) within the same company and employs the use of a clearing account to hold the value of the goods while they are in transit. This balance sheet account differs from a perpetual account because while the goods are in transit the quantities on hand “disappear” from the perpetual counts and only remain as a balance in the clearing account.
My article for GSI from last month was about the setup of JD Edwards DMAAI's when transferring goods at cost, which is what happens the vast majority of the time. In this scenario it is important to manage the cost of the items on the ST order. It would not matter if the price for the item was 0 or $1,000,000 as the value would wash between DMAAI 4230 and 4245.
Remember the DMAAI set up for transfer at cost:
- 4230 – Revenue (Credit at price. Set up with wash account.)
- 4245 – Account receivable (Debit for price. Set up with wash account.)
- 4220 – Cost of Goods Sold (Debit for cost. Set up with in transit clearing account.)
- 4240 – Inventory (Credit at cost. Set up with perpetual account.)
But what about markups? How would the JDE DMAAI set up differ from transferring at cost? When transferring with a markup, the intent is to make money so we will need to record revenue. In this case it is crucial to manage both the price and the cost on the ST order!
The DMAAI’s would now look like this:
- 4230 – Revenue (Credit at price. Set up with revenue account.)
- RC – Account receivable (Debit for price. Set up with A/R account.)
- 4220 – Cost of Goods Sold (Debit for cost. Set up with cost of goods account.)
- 4240 – Inventory (Credit at cost. Set up with perpetual account.)
Notice that this set up looks just like a sale to an external customer, which is exactly how it should be. It should also be noted that separate versions of sales update would be required for cost vs. markup as the “cost” version would have the A/R interface disabled.
In part 3 of this series, I will discuss the purchasing side of the transfer and how the accounting should be configured. I will also point out a few “gotchas” …stay tuned!
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