Both the Inventory Valuation Summary Report (in the Reports module) and the General Ledger (GL) Summary (manually created in the Paladin Data Viewer) can be used to calculate day-to-day changes in your store’s inventory value. If you notice a discrepancy between these calculations, this article will provide you with some reasons for why this can happen.

About the Inventory Valuation Summary report

The Inventory Valuation Summary report, available in the Reports module (Inventory > General section), gives you a snapshot of your inventory value at the time you run the report. The inventory data includes a breakdown and total of your inventory stock value, along with retail value and other information.

When run regularly, this report lets you observe inventory changes over time. Because you cannot run the Inventory Valuation Summary  report for a previous time, we recommend that you schedule the report to run automatically daily or at a periodic time interval. To learn how to schedule a report to run automatically, see How to create a report preset

Important: To get a complete inventory assessment, when you run the report, select the Include Inventory On-Hold report setting. This setting is especially important if you compare daily stock value changes from the report with your general ledger.

About the General Ledger Summary

The GL Summary Report  run form the Data Viewer, generates the general ledger values for any time period. The data can then be exported in multiple formats. This report is manually created in the Paladin Data Viewer. To learn how, see How to create and export the General Ledger Summary Report

Reconciling stock value differences:
The Inventory Valuation Summary Valuation Report vs. your General Ledger Summary

Daily inventory value changes can be calculated from Inventory Summary Valuation reports, by comparing day-to-day changes in the report’s total stock value.

Daily stock value change using the Inventory Valuation Report
= Yesterday’s Stock Value – Today’s Stock Value

You can also calculate daily inventory value changes from your General Ledger (GL) Summary values

Daily stock value change using GL Summary data
= Inventory Asset – Received – COGS Inventory (cost of goods sold) – Inventory Shrinkage

GL Summary values that change inventory value

Ideally, both calculations would produce the same result. However, in practice, these calculations often have minor differences. To help you understand why differences occur, consider the following examples:

An item was sold when its stock on hand (SOH) was zero or negative. An item with a negative SOH has a no ($0) inventory value. If you sell an item when your inventory SOH says you don’t have one to sell (SOH < 0), the SOH stays negative and your inventory stock value will remain zero.

A discrepancy in the stock value calculations will appear in this scenario because:

  • The Inventory Valuation Summary report stock value will not change.
  • The GL COGS Inventory value will increase by the sold item’s cost.

An item with a negative SOH is received. When you receive new stock for an item that has a negative SOH, the number of items received will be offset by the negative SOH. For example, if the initial SOH is -1, and you receive 5 items, the SOH is set to -1+ 5 = 4.
A discrepancy in the stock value calculations will appear in this scenario because:

  • The Inventory Valuation Summary report will increase the stock value by 4 x item’s cost.
  • The GL Inventory Asset – Received value will increase by 5 x item’s cost.

A negative SOH is manually updated to a positive number. In the Inventory module, when you use the Count (F4) feature on the bottom ribbon to manually change an item’s negative SOH of -1 to 1 (total change = 2), the inventory item’s stock value will only increase by 1 x item’s cost (instead of 2).

A discrepancy in the stock value calculations will appear in this scenario because:

  • The Inventory Valuation Summary report stock value will increase by 1 x item’s cost.
  • The GL Inventory Shrinkage value will increase by 2 x item’s cost.

You use the PO auto-transfer integration feature for Sage or QuickBooks.
If you use the PO auto-transfer feature in one of our accounting integrations (Sage or QuickBooks), completed POs are automatically transferred to your accounting software when they are completed (received) in Paladin.

A discrepancy in the stock value calculations will appear in this scenario because:

  • The Inventory Valuation Summary report will show a stock value change for the received items on the transferred PO.
  • The transferred PO will not update the GL Inventory Asset – Received value.

A dump SKU item with a reference margin is sold. If you set a reference margin for a Dump SKU item, a COGS value will be calculated for each sale.

A discrepancy in the stock value calculations will appear in this scenario because:

  • The Inventory Valuation Summary report will not show a stock value change because the dump SKU is designated as a non-inventory item.
  • The GL Summary COGS Inventory value will increase.

The Avg Cost of an item is manually changed after you receive new items. An item’s Avg Cost automatically show the average over time of all items that you’ve received. If you change this value, this history is lost.

A discrepancy in the stock value calculations will appear in this scenario because:

  • The Inventory Valuation Summary report stock value will be calculated using your modified average cost.
  • A GL Inventory Asset – Received value will use the actual cost of the received items.

A new inventory item was manually added with a non-zero SOH. In the Inventory module, when you use the Add Item (F2) feature to create a new inventory item, you can optionally include a non-zero SOH. 

A discrepancy in the stock value calculations will appear in this scenario because:

  • The Inventory Valuation Summary report stock value will increase because of the new SOH.
  • The GL Inventory Asset – Received value will not increase because the new items were not received through a purchase order.

Tip It is a best practice to always add new inventory using a purchase order.  

An item with a locked cost was received during EDI processing. When you lock the cost value for an item, and the cost changes, EDI processing is prevented from modifying the item’s cost value.

A discrepancy in the stock value calculations will appear in this scenario because:

  • The Inventory Valuation Summary report stock value will be calculated using an out-of-date average cost.
  • The GL Inventory Asset – Received value will be calculated using the new cost.

These are just a few scenarios that can cause your Inventory Valuation Summary report and General Ledger Summary data to calculate different inventory stock values. This list is meant to guide you in your reconciliation efforts and is not comprehensive set of scenarios.

If you have questions or suggestions about this information, contact support@paladinpos.com.

*Content is subject to change. For the most recent version, visit the Help Portal.
Printed on: 7/15/20