This is Part 1 in a five-part series for Dynamics SL year-end closing best practices. This post outlines year-end closing for the Inventory Module in Dynamics SL. It contains a checklist of steps and detailed information.
The series covers the following:
- Part 1: Dynamics SL – Inventory Module
- Part 2: Dynamics SL – Purchasing and Accounts Payable Modules
- Part 3: Dynamics SL – Flexible Billings, Order Management and Accounts Receivable Modules
- Part 4: Dynamics SL – Project Controller Module
- Part 5: Dynamics SL – General Ledger Module
Note: Year end is a good time for IT Support to test the Dynamics SL Database Backups to make sure they are working. You don’t want to discover the backups are not working when you need them. After you test, perform a backup before closing the year.
Year-end Closing for Inventory Module- A Balancing Act
The biggest challenge closing the Inventory Module is reconciling Inventory to the General Ledger. If the Inventory and the General Ledger don’t agree, you’ll need to identify the cause and reconcile the two, as they’re out of balance. Here are common causes for out-of-balance conditions:
- General Ledger Journal Transactions (01.010.00) entered to Inventory Accounts. General Ledger transactions do not update the Inventory Module. Inventory Module transactions will update the General Ledger.
- Drop Shipments coded to Inventory. These shipments are not received into Inventory and should not be coded to Inventory accounts.
- Landed costs paid in Accounts Payable are coded to Inventory accounts. Charges such as freight, duty and custom charges capitalized as Inventory should be processed through the Inventory Adjustments screen (10.030.00).
Inventory Closing Checklist
To close Inventory, follow these steps:
1. Review open Inventory batches in the IN Edit Report or IN Batch Register (Summary) Report. A template can be created in either report to locate open batches using this format. Generate the reports from Period 01 through Period 12.
2. Select Tab settings:
- H, B, S
3. Release the open Inventory batches identified in the previous step. Resolve Suspended batches.
4. Post the batches in General Ledger - Post Transactions (01.520.00).
5. Generate and print the following:
- Inventory > Inventory Valuation Report (10.620.00)
- Inventory > Inventory Trial Balance Report (10.630.00)
- General Ledger > Trial Balance Report for all Inventory Accounts (01.520.00)
6. Compare the Inventory Valuation Report totals to the total of the Inventory Account(s) on the General Ledger Trial Balance Report and the Inventory Trial Balance Report. If the amounts agree, the Inventory Module can be closed for the year.
If the amounts do not agree, follow these steps:
A. Generate and print/review these reports to identify/resolve the differences:
- Detail General Ledger (01.620.00) – Inventory Account(s)
- GL Transactions – Report Format: Posted (01.680.00) – Inventory Account(s)
- GL Transactions – Report Format: Unposted (01.680.00) – Inventory Account(s)
- Account Distribution (10.690.00)
- IN Transactions (10.680.00)
B. Review the following reports:
- GL Transactions – Format: Posted: Filter for the Inventory Account/Subaccount(s) to determine if any transactions have been entered as General Ledger > Journal Transactions (Jrnl Type = GJ).
- GL Transactions – Format: Unposted: Use this report to determine if any transactions from the Inventory have been entered to future periods in the General Ledger.
- Detail General Ledger: Inventory Account/Subaccount(s) Period 1 Beginning Balances agree to ending balance for Period 12 of the previous year. This will confirm no entries entered to prior year.
- IN Transactions: This report provides batch details that may be needed.
C. After corrections are processed, compare the Inventory Valuation Report (10.620.00) totals to the total of the Inventory Account(s) on the General Ledger Trial Balance Report (01.520.00) and the Inventory Trial Balance Report (10.630.00). If the amounts agree, the Inventory Module can be closed for the Year.
7. Generate the reports and save as electronic files.
8. Log off Dynamics SL and back up the database.
9. Log in to Dynamics SL. Go to General Ledger > Processes > Closing (01.560.00) and close the Inventory Module for the Closing Type: Year
Expert Tip: When an Inventory case comes into the Enavate Customer Care SL queue and Inventory is out of balance between the General Ledger and Inventory, I work with the User to determine the first period Inventory that went out of balance. Focus on that period and subsequent periods, if needed, to determine and resolve the balance issue.
Part 2 in this series will cover year-end closing best practices for the Purchasing and Accounts Payable Modules.
For additional resources to help with year-end closing, join our webinar 5 Best Practices for a Successful Year-End Closing on Tuesday, November 17 @ 1pm ET. Register to attend here!
Reach out to our Dynamics SL Team for additional information or answers to any questions.
About the Author
Jane Nygren is a Senior Consultant with the Customer Care SL Team, for Enavate Managed Services, a DXC Services Partner. She is a CPA with certifications in the States of Texas and Wyoming. Her MBA Degree is from the University of Tulsa. In additional to her Dynamics SL experience, Jane uses her Accounting knowledge and experience to resolve financial cases in the Customer Care SL Queue. She enjoys the simple things like going to the local Whataburger every Saturday (drive thru during the pandemic) and just hanging out with her husband and cat named ‘Little Girl’. Jane stays involved at her church. Her Hometown is Tulsa, Oklahoma. She currently lives in the Houston area.