Changing GL Class Codes: Look Out!

Let’s use a simple scenario:

• We have 2 items set up in our item master (nothing on hand):
  1. Item1 – GL Class RM01 which is a raw material. The item has mistakenly classified as FG01 in the item branch and location records.
  2. Item2 – GL Class FG01 which is a finished good. This item has been configured correctly.
• Our balance sheet looks like (account balances = 0):
  1. Inventory
     1. 1.1411.RM Raw Materials
     2. 1.1411.FG Finished Goods

Consider the following transactions:

Do you see the issue? Of course, we would have wanted the $10 raw material cost to flow through the raw material account, especially if the time between the receipt and material issue crossed over periods. But in the end no harm, no foul.

Now consider this for a second work order:

Inventory Transactions                                    Balance Sheet    
Step    Action    Item    DocType    Quantity    Unit Cost    Amount    GLClass    Account        1.1411.RM    1,1411.FG
1    Receive item    Item1    OV    1    10    $10    FG01*    1.1411.FG        $0    $35
2    Change GL Class    Item1                    RM01    1.1411.RM        
3    Issue to Work Order    Item1    IM    1    10    ($10)    RM01    1.1411.RM    ($10)    $35
4    Complete Work Order    Item 2    IC    1    25    $25    FG01    1.1411.FG        ($10)    $60
* – GL class code should have been RM01    

Here we realized the GL class code needed to be changed, but we made the change after the receipt when there was quantity on hand! Changing a GL Class Code on the item master, branch or location record does not generate an automatic journal entry. When the change was made $10 should have been reclassified from finished goods to raw materials on the balance sheet. Also note that there are no errors generated in JD Edwards when making the change. Each account is now out of balance by$10.

So, what would have been the best way to change the code? Follow this 3-step process:

• Adjust any existing quantity on hand to zero before making the change.
• Change the GL class code on the item master, branch and locations as applicable. Note there may also be open sales and/or purchase orders that need adjusting.
• Adjust the quantities back under the new GL class.

Using the above process, although time consuming, is the way to change class codes without causing reconciling items. Happy reconciling!

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