Vendor ship sales are recorded at the actual cost based on the vendor purchase order for the shipment. When the invoicing program closes the PO lines as the order is invoiced, a journal entry is created to add the value of the goods to the inventory account. No cost averaging is done as the sales posting programs will remove the goods from inventory and charge them to cost of sales at the actual costs. The cost and the current cost fields in each vendor ship invoice line items will be updated to reflect the actual cost of the goods based on the vendor purchase order.
An option also allows you to update the commission cost in each vendor shipment sales order line based on the vendor cost for the item – this option is controlled by a system parameter.