Ownership of goods is transferred when vendor ships them.

In this case, the system can use the advanced shipment notification records to post an accounts payable invoice for the inbound shipment.  This allows in transit inventory owned by the buyer to be recorded and tracked in the system.  The accounts payable invoice is flagged to indicate that it is for in-transit inventory and the value of the goods are posted to accounts payable and to in transit inventory.  The ASN line item records are also updated to indicate that they have been linked to an accounts payable invoice.  Later, when the actual goods are received, the value of the inventory received is moved from the in transit inventory account to the inventory control account.  The inventory liability account is not updated in this situation.

Processing steps.

1. AP register record is created.  Information includes

Vendor

Vendor Invoice Number

Vendor PO

Invoice date

Description

The accounts payable invoice is initially created with a status of S (submitted).  This status is used prior to the point that the accounts payable invoices is either posted, or until it is determined that it cannot be posted due to variances between the invoice and the shipment detail.  The accounts payable invoice is assigned a source of  AN (advance notification).

2. Compare ap information to asn information.  Once the submitted invoice has been created, the invoice amount is compared to the total of the asn detail for the invoice, and shipping amount in asn header record for that shipment.

3.  If there is no discrepancy between ap and asn amounts, the system automatically converts the accounts payable invoice to hold status and then updates the appropriate asn records with the transaction number of the acounts payable invoice.  The invoice is also posted to the general ledger.  The general ledger entry made at this time is

Debit Inventory in transit (extended line item total of goods from asn records)

Debit Shipping expense inbound frt  (total from asn header record).

Credit Accounts Payable (invoice amount)

ASN records have In Transit status and an internal ap invoice number (tran number) assigned to them at this point.

If there is a discrepancy between the actual invoice amount and the asn detail and header records, the invoice is left as a submitted invoice and handled manually (this should not happen if the po price has been synchronized with the asn detail information).