What about the 'transactions' adjustment option for inventory value in D365FO (or AX)?

In the 'Periodic Tasks' of the Inventory Management module you can find the option 'Closing and adjustment':

Where this form is very well-known option because of the inventory closing, it also has the adjustment options for inventory value which in my experience are sometimes less known:

Still these options are very important to use to ensure a correct inventory valuation when for whatever reason things have not gone well. In an earlier article I have described the options for the 'On-hand' corrections. In this article I describe the 'Transactions' option, a function to correct the posted value of posted inventory transactions. This can be used to get correct transaction values afterwards when needed and being able to correct wrong posted cost of goods sold as well. This 'Transactions' option can be used for inventory models using the inventory closing.

Transaction values

Let's say that you have posted a purchased inventory transaction based on a vendor invoice with a wrong cost amount value. The invoice is already paid when you find out but still you want to correct the inventory value without reversing the invoice posting. For example in this case you can correct the wrong posted cost price value and cost of goods sold values based on the incorrect value.

For example article M9215 has two transactions:

• A purchase transaction for USD 2.736,- regarding a quantity of 240
• A sales transaction for USD 114,- regarding a quantity of 10

The purchasing value is based on a counting journal (see column 'Reference' in the print screen above). This means that the cost of goods sold value of USD 114,00 for sales order 001186 is based on the inventory value amount of the purchase transaction from the Counting journal: USD 2.736 / 240 = USD 11,40 each.

Now let's say that the counting journal value was wrong by accident. Is shouldn't be USD 11,40 each but 1,14 each. That means that my current on-hand value is wrong, but also the purchase inventory value and the cost of goods sold value of my sales transaction is wrong.

With the 'Transaction' option in the Adjustment form you can correct the wrong posted transaction with incoming inventory value. When finished you can run a inventory recalculation to correct the wrong posted cost of goods sold transactions. I will explain both options:

Correct the wrong posted purchase transaction

To do this in the Closing and adjustment form I select the option for 'Adjustment' and then the option 'Transactions':

With the option 'Select' you get a form to select items to adjust transactions for. For this article I have used the filter options to get the transactions of only item number M9215 and confirm. This will give the financially finished purchase transaction. You can select this line and click on the option 'Adjustment' at the top of the form and select one of the options to get the right cost price for the purchase transaction. I select the option 'Fixed cost price' because I want to enter the exact value that it has to be:

(If you want to know about the other options, you can find them in my article about using the 'On-hand' correction option.

Based on the fact that I chose the option 'Fixed cost price' a new form will open where the correct price (per piece) can be entered and confirmed:

Based on this entered value the column 'Edit now' of the adjustment line is entered with the amount that needs to be corrected to get this USD 1,14 each for the purchased 240 pieces:

Nothing happened yet, the adjustment line needs to be posted to make the correction definitive:

When the posting is finished, the posting types 'Inventory expenditure, loss' and 'Inventory receipt are used for the posting:

In this case it is a loss, it could also be a profit posting. The purchase transaction value on the item is changed now:

Still you can see that the cost of goods sold value is yet based on the earlier used (wrong) cost price value of the item. To correct this value as well, you can use the inventory recalculation option or Inventory closing:

Correct the wrong posted cost of goods sold

So when the purchase transaction value is corrected, you can start the 'Recalculation' option in the 'Closing and adjustment' form:

The difference between the 'Recalculation' and the 'Inventory closing' option is that the recalculation isn't definitive (period still open for inventory transactions) and can be used with a filter to only recalculate specific items. Therefore in my experience in most cased you use the Recalculation option for these cost of goods sold corrections.

In this case I filter to recalculate only the correct item M9215:

When confirmed, the Recalculation is started in the batch. You will get a notification about this in the top of the form. As long as the recalculation is running, you will see a circle in the column 'OK'. When finished this will be changed to a check mark:

The recalculation will correct the cost of goods sold value of the wrong posted sales cost value. This means that the value will be given back to inventory and the cost of goods sold Voucher when finished (cost of goods sold value back to inventory value):

Also on the item transactions the posted cost amount value of the sales transaction is changed now based on the corrected purchasing cost amount: