The set-up screens that hold G/L accounts

Adapted from the Leahy Consulting white paper "Macola® manufacturing set-up screens that require general ledger account entries", updated June 2019. Much of the account detail was taken from the Macola® on-line help and edited for readability.

Seven screens in Macola® ES and 10 hold the general ledger accounts that distribution and manufacturing transactions post to. Between them they decide where every inventory movement, sale, receipt and shop-floor hour lands in the general ledger. This page walks each screen, then lists — account by account — which transactions post to it, whether the posting is normally a debit or a credit, and what the offsetting account is.

The two that carry the most weight are Material Cost Type/Location Maintenance and Work Center Account Group. Between them they dictate the majority of Shop Floor Control entries.

Material Cost Type/Location Account Maintenance

Material Cost Type/Location Maintenance tracks inventory costs by material cost type within a location. If you run multiple locations and track costs within each one, enter a material cost type record for every location code. I/M distributions to the G/L are based on the cross-reference of the transaction's location and the item's material cost type. When a matching record exists, the distributions go to those accounts; when one does not, Macola® falls back to I/M Setup.

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1. Material Cost Type and Location — the key to the record. Macola® matches the item's material cost type against the transaction's location; everything below applies only to that combination.
2. Inventory Asset — the value of the inventory. Debited as inventory increases, credited as it is depleted.
3. Receiving Accrual — credited from P/O receipt until the vendor's voucher arrives, then washed by Accounts Payable.
4. Inventory Issue, Inventory Receipt, Quantity Adjustment and Cost Adjustment — the offsets for manual I/M transactions and for physical and cycle counts.
5. Work In Process — holds the material, labor and absorbed costs issued to a manufacturing order.
6. Variance accounts — WIP variance, purchase price cost and quantity, transfer cost, and the material cost and quantity accounts used only by Manufacturing Cost Accounting.

Material Cost Type/Location Maintenance in Macola® 10. Walk the callouts to see what each block of accounts is for; the tables below give the transactions that post to each one.

Inventory Asset Account

The Inventory Asset Account represents the value of inventory. It is debited as inventory increases and credited when inventory is depleted.

Type of transaction	Normal distribution	Offset distribution account
IM Trx R=Receipt	Debit	Inventory Receipt
IM Trx I=Issue	Credit	Inventory Issue
IM Trx T=Transfer	Credit From Location, Debit To Location	Asset, Transfer Cost
IM Trx C=Cost Adj	Credit cost decrease, Debit cost increase	Cost Adjustment
IM Trx Q=Qty Adj	Credit negative adj, Debit positive adj	Quantity Adjustment
IM Phys/Cycle Count	Credit negative adj, Debit positive adj	Quantity Adjustment
OE Posting Invoices	Credit (non Confirm Pick/Ship setting)	Cost of Goods Sold
OE Credit Memos	Debit at credit-memo entry (not from RMA)	Cost of Goods Sold
OE Confirm Pick	Credit	Pick Offset
OE Confirm Ship	Credit	Ship Offset
OE RMA Receipt	Debit	Inventory Receipt
PO Receipt	Debit	Receiving Accrual
PO Receipt (Inspection)	Debit R/I Asset	R/I Receiving Accrual
PO R/I Disposition	Credit R/I Asset, Debit stock or MRB asset	See the disposition note below
PO MRB Disposition	Credit MRB Asset, Debit Asset	See the disposition note below
BOM Print Costed Bill	Credit cost decrease, Debit cost increase	Cost Adjustment
POP Release Orders ¹	Credit Asset of components	Debit WIP of parent
POP Unrelease Orders ¹	Debit Asset of components	Credit WIP of parent
POP Report Production	Debit Asset of parent ²	Credit WIP or component Asset ¹
POP Disassembly	Credit Asset of parent ²	Debit Asset of component ²
POP Adjust Material Issue	Debit/Credit component based on change	WIP Variance of parent
SFC Material Issue/Return	Credit on issue, Debit on return ³	Debit/Credit WIP of parent ³
SFC Online Picking	Credit component asset ³	Debit WIP of parent ³
SFC Material Reject	Debit component asset ³	Credit WIP of parent ³
SFC Act. Trx. — Backflush	Credit component asset, M count point ³	Debit WIP of parent ³
SFC Act. Trx. — Parent	Debit parent asset, Y count point ³	Credit WIP of parent ³
MCA Post Transactions	Debit/Credit parent based on quantity	Debit/Credit Material Qty ⁴

¹ Depends on the Create WIP setting when the POP order is released. With Create WIP = N, nothing is distributed at release and the component asset account is credited at reporting production instead. With W or Y, the distributions are made as listed.

² Any difference between the component cost (including value-added costs) and the parent cost goes to the WIP Variance of the parent item.

³ These distributions appear on the MCA Distributions to G/L report.

⁴ In an average-cost environment, posting the MCA transaction that closes a shop order puts any remaining variance in the inventory asset account when the on-hand quantity in the item location is greater than the completed quantity.

R/I and MRB dispositions post to several accounts

The receipt at P/O receiving distributes to R/I Asset (debit) and R/I Accrual (credit). Accepting quantities during the R/I disposition washes R/I Asset and R/I Accrual into the Asset and Accrual accounts of the stocking location. Moving quantities to the MRB location washes them again — R/I Asset (credit) and R/I Accrual (debit) against MRB Asset (debit) and MRB Accrual (credit). Quantities accepted through MRB wash MRB Asset (credit) and MRB Accrual (debit) into the stocking location's Asset (debit) and Accrual (credit). Scrap, Destroy and Return To Vendor post to the accounts defined on page two of Inventory Location Maintenance.

Receiving Accrual Account

Credited when items are received on purchase orders, and held until the vendor's voucher arrives. It offsets the distribution to Inventory Asset at P/O receiving, then Accounts Payable washes it when the voucher is processed.

Type of transaction	Normal distribution	Offset distribution account
PO Receiving	Credit	Inventory Asset, PPV Suspense
AP Vouchering	Debit	A/P, PPV Qty and Cost

The distribution varies with the inventory cost method in I/M Setup. PPV Suspense (from P/O Setup) is used only in a standard-cost environment, and takes the difference between the receipt cost and the cost on file in the item location. When receipt and voucher costs are equal, P/O receipt debits Inventory Asset and credits Receiving Accrual; A/P vouchering debits Receiving Accrual and credits Accounts Payable.

Changing this account does not touch existing purchase orders

The Receiving Accrual account is captured on the purchase order line from Material Cost Type/Location Maintenance at the moment the order is created. Changing it here leaves every existing purchase order pointing at the old account. The same is true of the PPV Cost and PPV Quantity accounts.

Inventory Issue Account

Debited when a miscellaneous issue is generated through the Enter Inventory Transactions screen in I/M. Inventory Asset takes the credit.

Type of transaction	Normal distribution	Offset distribution account
IM Trx I=Issue	Debit	Inventory Asset

Inventory Receipt Account

Credited when a miscellaneous receipt is generated through Enter Inventory Transactions in I/M, or through RMA receiving in O/E. Inventory Asset takes the debit.

Type of transaction	Normal distribution	Offset distribution account
IM Trx R=Receipt	Credit	Inventory Asset
OE RMA Receipt	Credit	Inventory Asset

Quantity Adjustment Account

Debited or credited when quantities change through physical counts or I/M adjustments, for the cost of the parts times the number adjusted. The direction follows the adjustment; Inventory Asset takes the offset.

Type of transaction	Normal distribution	Offset distribution account
IM Trx Q=Quantity Adj	Debit negative adj, Credit positive adj	Inventory Asset
IM Physical/Cycle Count	Debit negative adj, Credit positive adj	Inventory Asset

Cost Adjustment Account

Debited or credited when the cost of an inventory item changes. C=Cost Adjustment transactions in I/M, Print Costed Bill in Bill of Material, and Roll Select Cost Master in Standard Costing all change the item's inventory value, which means a distribution to Inventory Asset and to this account.

Type of transaction	Normal distribution	Offset distribution account
IM Trx C=Cost Adj	Debit reduced cost, Credit increased cost	Inventory Asset
BOM Print Costed Bill	Debit reduced cost, Credit increased cost	Inventory Asset
SC Roll Select Cost Master	Debit reduced cost, Credit increased cost	Inventory Asset

Work In Process Account

Holds the value of the material, labor and absorbed costs issued to a manufacturing order.

Type of transaction	Normal distribution	Offset distribution account
POP Release Orders ¹	Debit WIP of parent	Credit Asset of components
POP Unrelease Orders ¹	Credit WIP of parent	Debit Asset of components
POP Report Production	Credit WIP ¹ ²	Debit Asset of parent ²
SFC Material Issue	Debit WIP of parent ³	Credit Asset of component ³
SFC Material Return	Credit WIP of parent ³	Debit Asset of component ³
SFC Online Picking	Debit WIP of parent ³	Credit component asset ³
SFC Material Reject	Credit WIP of parent ³	Debit component asset ³
SFC Act. Trx. — Backflush	Debit WIP of parent, M count point ³	Credit component asset ³
SFC Act. Trx. — Parent	Credit WIP of parent, Y count point ³	Debit parent asset ³
MCA Post Transactions	Debit/Credit depending on variance	Depends on the cost method

In most average-cost environments remaining WIP posts to the Inventory Asset Account. In a standard-cost environment it posts to the WIP Variance account.

Work In Process Variance Account

Takes the postings when manufacturing costs differ from the cost of the parent.

Type of transaction	Normal distribution	Offset distribution account
POP Complete Production	Debit/Credit WIP Variance ¹	Debit parent asset, Credit WIP ¹
POP Disassembly	Debit/Credit WIP Variance ²	Credit parent, Debit component ²
MCA Post Transactions	Debit/Credit WIP Variance	Debit/Credit WIP
MCA Std Cost Distribution	Debit/Credit WIP Variance	Depends on the source of the variance

MCA Standard Cost Distribution splits the remaining WIP variance by where the variance came from, which can include the Material Cost Account, the Material Quantity Account and labor variance.

PPV Cost Account

Under the standard cost method, A/P uses the Purchase Price Variance Cost Account to accumulate the difference between the dollars invoiced and the item's standard cost. Under Average, Last, LIFO or FIFO it is the difference between the dollars invoiced and the receipt cost. Either way, PPV Cost is the dollar difference between the Receiving Accrual account and the Accounts Payable account at vouchering.

Type of transaction	Normal distribution	Offset distribution account
AP Vouchering	Debit/Credit PPV Cost Account	Accounts Payable Account

Receiving Accrual is always debited for the entire amount against the P/O line item, and Accounts Payable is credited for the entire amount vouchered. PPV Cost is debited when the amount vouchered against the line is greater than the amount in Receiving Accrual, and credited when it is less.

PPV Quantity Account

A/P uses the Purchase Price Variance Quantity Account for the difference between the quantity received and the quantity invoiced. It is used when the voucher quantity on page two of A/P → Enter Voucher Transactions is greater than the P/O receipt quantity and the line is invoiced in full.

Receive a P/O line for 10 at $8 — the same cost as the item location — then voucher it for 12 at $8. A/P is credited $96, Receiving Accrual is debited $80, and PPV Quantity takes the $16 difference.

PPV Quantity receives nothing when the voucher quantity is less than the receipt quantity. That difference stays on the books as received but not invoiced.

Type of transaction	Normal distribution	Offset distribution account
AP Vouchering	Debit	Credit A/P, Debit Accrual

Transfer Cost Account

Debited or credited for the difference in standard costs between locations. Any change in value for parts moved between locations is written here, against the FROM location.

An item costs $3.00 at location AA and $3.50 at location BB. Transfer 100 units from AA to BB and four distributions occur:

• Inventory Asset for location AA is credited $300.00
• Inventory Asset for location BB is debited $300.00
• Inventory Asset for location BB is debited a further $50.00
• Transfer Cost for location AA is credited $50.00

Type of transaction	Normal distribution	Offset distribution account
IM Trx T=Transfer	Debit or Credit FROM location	Credit FROM asset, Debit TO asset

Material Cost and Material Quantity Accounts

Both are used only by the Standard Cost Distribution application in Manufacturing Cost Accounting, when a shop order is closed. Material Cost takes the variance between the actual costs incurred on the shop order and the planned costs; Material Quantity takes the variance between the actual and planned quantity. Both offset to WIP Variance.

If you run POP rather than MCA

Production Order Processing does not use these two accounts. Point them at the 999 suspense account that should never carry a balance — anything that turns up there is worth a look.

Product Category/Location Account Maintenance

This screen decides the accounts used when customer invoices are posted, keyed by the item's product category and the shipping location.

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1. Product Category and Location — the key. Macola® matches the item's product category against the shipping location.
2. Sales — the revenue account for items in this category shipped from this location.
3. Cost of goods sold — the cost side of the same invoice line.
4. Inventory Returns and Allowances — where credit memos and returns land.

Product Cat/Location Account Maintenance. With no matching record, sales fall back to A/R Setup and cost of goods sold falls back to O/E Setup.

Order Entry Setup

The default accounts used when no Product Category and Location combination matches.

Order Entry Setup — the fallback accounts for order entry. Set these to a 99999 account so set-up gaps in the item master show up straight away.

Inventory Management Setup

The default accounts used when no valid Material Cost Type and Location combination matches.

Inventory Management Setup. These accounts back up every row of the Material Cost Type/Location screen above.

Accounts Receivable Setup

The default accounts used when no customer type record matches.

Accounts Receivable Setup — the fallback A/R and sales accounts.

Manufacturing Setup

Holds the accounts used for each shop order.

Manufacturing Setup, which dictates the accounts used for each shop order.

Work Center Account Group

Shop Floor Control users only. This screen sets the accounts used for each department and work center record, and with it every shop floor absorption and variance account.

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1. Account Group — the code you attach to a department and work center. Every work center pointing at this group posts to the accounts below.
2. Absorption accounts — fixed burden, variable burden, outside processing and direct labor, credited as the shop floor absorbs cost onto the order.
3. Variance accounts — burden, outside processing cost and quantity, labor rate and labor efficiency.
4. Outside Processing Expense — the expense account for outside operations.

Work Center Account Group. Together with Material Cost Type/Location, this screen decides the majority of Shop Floor Control entries.

Tip

Next step. Once the accounts are right, the question becomes whether every transaction actually reached the general ledger. Posting Shop Floor Control transactions to the general ledger covers the daily routine, and Avoiding inventory integrity errors covers the mistakes that put inventory and the G/L out of step.

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