How to Correct Bills for Items with Zero Quantity Remaining

When a vendor bill is entered into MYOB and then the items are sold or otherwise removed from inventory (for example, by being converted to other items), and there is no inventory left, MYOB will not allow changing what was supposedly paid for the items.

The following procedure will allow correction of the invoice. It may not fully correct all of MYOB's Cost of Goods Sold calculations, so further refinement may be appropriate if it is considered that a significant error in costs or valuation will result.

An example will be given. A lot of 10 lbs of an item was received. The bill was entered at $27 per lb. In addition, the received weight was in excess of 10 lbs by 0.312 lbs. Our procedure for such overweight receipts is to enter the overweight with a zero price, before the line where the nominal value is entered. This causes MYOB to keep the nominal price as the default price, for future orders or for reporting "last cost paid."

However, the true cost was $25 per lb. for 10 lbs, and zero for .312 lbs. There is a net adjustment of $20 necessary.

All of the the item received was converted to bagged items, so MYOB would not allow correction of the bill. In this case, the refusal is based on there being zero inventory. If there were any inventory at all, MYOB would apply the change in price entirely to what inventory remains (which is one reason why MYOB sometimes reports preposterous per-unit valuations), unless that would produce a negative value. MYOB version 11 does not generally allow review of inventory transactions, which shortcoming was remedied in version 12.

So a relatively simple fix for this is as follows:

(1) Use Inventory/Adjust inventory to increase the quantity to the purchased quantity on the bill, in this case 10.312. Date the transaction as of the date of the original bill, and give the purpose (dummy inventory to allow bill correction) in the memo field.

(A) If the orginal error is that the billed amount was too low, value this increase at zero, which will allow the entry without any assigned account.

or(B) if the original error was that the billed amount was too high, as in the example, value the increase at the underbilled amount exactly (total, you can enter this value in the Amount filed, MYOB will calculate the cost per unit. Enter Cost of Goods Sold as the account (or a more specific COGS account if appropriate for the item). In the example, enter $20 as the Amount.

Then Record the adjustment.

(2) Correct the Bill and record it. This should be accepted now.

(3) Use Inventory/Adjust inventory to decrease the quantity to 0. (Enter the quantity addded above as a negative number, in this case -10.312)

(A) If it was case (A) above, MYOB will automatically fill in the correct value.) Use Cost of Goods Sold for the account. Record the adjustment.

or(B) In case (B) above, the value should be zero. Fix the value by setting it to zero. Record the adjustment.

Done.

This procedure adds inaccuracy to MYOB's valuation of items built from the original item, but, when those items are sold, the errors will cancel out and, in the end, Cost of Goods Sold will receive the actual cost of the items, which is correct. Further, MYOB's COGS calculations routinely fail to accurately value inventory whenever later corrections are made. If a significant error in inventory valuation, which will correspond to an error in Cost of Goods Sold, is expected, more complex adjustments in the third step above would need to be made. Probably the easiest way to fix it would be to adjust the values of all the relevant items to their true last cost, and assign the adjustment account to Cost of Goods Sold.