Evosus uses a holding account typically referred to as Purchases Accrued Not Due (PAND) when receiving inventory. The account is credited upon receipt and debited when items are associated to AP Invoices which causes the account to net to $0.00. You won’t typically see a $0.00 balance since you’re constantly receiving inventory, but each individual receipt should clear out of the PAND account once the receipt is associated to an AP Invoice.

If an item receipt cost adjustment is performed on an AP Invoice, then the difference between the PO purchase cost (cost on the item receipt) and the cost entered on the AP Invoice will post to the PAND account so that it properly clears when the AP Invoice is posted. For Stock and Nonstock items, the unit cost (average, LIFO, FIFO) is also updated based on the cost adjustment for all quantity of the original item receipt that remain in stock.

The PAND should be included in the list of accounts you reconcile at month-end. Compare the balance of the PAND account to the Open Item Receipts report in Evosus. Assuming all transactions for the month have posted, the PAND GL account balance should equal the Open Item Receipts report balance.

How transactions post to the PAND Account

How Transactions Post to the PAND Account

When inventory is received, the PAND account is increased by the cost of the item receipt.

Item Type
Debit
Credit
Stock
Inventory Asset
Purchases Accrued Not Due
Nonstock
Inventory Asset
Purchases Accrued Not Due
Labor
COGS Expense
Purchases Accrued Not Due
Other
COGS Expense
Purchases Accrued Not Due
Special Order
SOI Asset Clearing
Purchases Accrued Not Due

Stock and Nonstock Items

  • Inventory Asset account is increased (debit) for the receipt cost
  • Purchases Accrued Not Due account is increased (credit) for the receipt cost.

Labor and Other Items

  • COGS Expense account is increased (debit) for the receipt cost
  • Purchases Accrued Not Due account is increased (credit) for the receipt cost.

Special Order Items

  • Special Order Item Asset Clearing account is increased (debit) for the receipt cost
  • Purchases Accrued Not Due account is increased (credit) for the receipt cost.

Step 2A: Associate item receipt to AP Invoice ( No cost changes - Quantity in Stock

When an item receipt is associated to an AP Invoice, the PAND due account is cleared out. This is the most simple example of how the PAND account is cleared assuming no cost adjustments.

Item Type
Debit
Credit
Stock
Purchases Accrued Not Due
Accounts Payable
Nonstock
Purchases Accrued Not Due
Accounts Payable
Labor
Purchases Accrued Not Due
Accounts Payable
Other
Purchases Accrued Not Due
Accounts Payable
Special Order
Purchases Accrued Not Due
Accounts Payable
  • Accounts Payable is increased (credit) for the amount of the invoice.
  • Purchases Accrued Not Due is decreased (debit) for the amount of the receipts associated to the invoice.

Step 2B: Associate Item Receipt to AP Invoice (WITH Cost Changes – Quantity in Stock)

When an item receipt is associated to an AP Invoice, the PAND account is cleared out; however, additional entries are created if cost adjustments occur on the AP Invoice. The example below assumes the entire quantity of the original item receipt is still in stock and has not been sold/invoiced on a customer invoice or job. If any quantity of the original receipt has been sold, then different entries are made on the cost adjustment.

In this example, we received an item at $10 and changed the cost to $15 on the AP Invoice. The invoice total matched the new item receipt cost, so no cost variance exists and no additional fees, such as freight or tax, were entered on the invoice.

Stock and Nonstock Items

Account
Debit
Credit
Accounts Payable


$15.00
Purchases Accrued Not Due
$15.00
$5.00
Inventory Asset
$5.00


TOTALS
$20.00
$20.00

The grid above shows the postings, but here is a written explanation of what happens when cost adjustments are entered for Stock and Nonstock items on AP Invoices. The information below is based on a cost increase. A cost reduction would be the opposite:

  • Purchases Accrued Not Due is increased (credit) for the cost adjustment.
  • Inventory Asset is increased (debit) for the cost adjustment
  • Accounts Payable is increased (credit) for the total invoice amount.
  • Purchases Accrued Not Due is decreased (credit) for the total amount of the receipt, including the cost change made on the AP Invoice.

Labor and Other Items

Account
Debit
Credit
Accounts Payable


$15.00
Purchases Accrued Not Due
$15.00
$5.00
COGS Expense
$5.00


TOTALS
$20.00
$20.00

The grid above shows the postings, but here is a written explanation of what happens when cost adjustments are entered for Labor and Other items on AP Invoices. The information below is based on a cost increase. A cost reduction would be the opposite:

  • Purchases Accrued Not Due is increased (credit) for the cost adjustment.
  • COGS Expense is increased (debit) for the cost adjustment
  • Accounts Payable is increased (credit) for the total invoice amount.
  • Purchases Accrued Not Due is decreased (credit) for the total amount of the receipt, including the cost change made on the AP Invoice.

Special Order Items

Account
Debit
Credit
Accounts Payable


$15.00
Purchases Accrued Not Due
$15.00
$5.00
SOI Clearing Asset
$5.00


TOTALS
$20.00
$20.00

The grid above shows the postings, but here is a written explanation of what happens when cost adjustments are entered for Special Order items on AP Invoices. The information below is based on a cost increase. A cost reduction would be the opposite.

  • Purchases Accrued Not Due is increased (credit) for the cost adjustment .
  • Inventory Asset is increased (debit) for the cost adjustment.
  • Accounts Payable is increased (credit) for the total invoice amount.
  • Purchases Accrued Not Due is decreased (credit) for the total amount of the receipt, including the cost change made on the AP Invoice.

Step 2C: Associate Item Receipt to AP Invoice (WITH Cost Changes – Quantity Sold)

When an item receipt is associated to an AP Invoice, the PAND account is cleared out; however, additional entries are created if cost adjustments occur on the AP Invoice AND some quantity of the original receipt has been sold on customer invoices or jobs. For stock and nonstock items, this means the cost change associated to the items sold will post to the associated COGS expense account while the items left in stock will post to the associated Inventory Asset account. Labor and Other items post the same as in Step 2B above.

In this example, we received an item at $10 and changed the cost to $15 on the AP Invoice. The invoice total matched the new item receipt cost, so no cost variance exists and no additional fees, such as freight or tax, were entered on the invoice.

Stock and Nonstock Items

Account
Debit
Credit
Accounts Payable


$15.00
Purchases Accrued Not Due
$15.00
$5.00
COGS Expense
$2.50


Inventory Asset
$2.50


TOTALS
$20.00
$20.00

The grid above shows the postings, but here is a written explanation of what happens when cost adjustments are entered for Stock and Nonstock items on AP Invoices when some quantity of the original receipt has been sold:

  • Purchases Accrued Not Due is increased (credit) for the cost adjustment.
  • COGS Expense is increased (debit) for the cost adjustment ONLY for the quantity of items from the original receipt that were sold.
  • Inventory Asset is increased (debit) for the cost adjustment ONLY for the quantity of items from the original receipt that are still in stock.
  • Accounts Payable is increased (credit) for the total invoice amount.
  • Purchases Accrued Not Due is decreased (credit) for the total amount of the receipt, including the cost change made on the AP Invoice.

Labor and Other Items

Account
Debit
Credit
Accounts Payable


$15.00
Purchases Accrued Not Due
$15.00
$5.00
COGS Expense
$5.00


TOTALS
$20.00
$20.00

The grid above shows the postings, but here is a written explanation of what happens when cost adjustments are entered for Labor and Other items on AP Invoices:

  • Purchases Accrued Not Due is increased (credit) for the cost adjustment.
  • COGS Expense is increased (debit) for the cost adjustment
  • Accounts Payable is increased (credit) for the total invoice amount.
  • Purchases Accrued Not Due is decreased (credit) for the total amount of the receipt, including the cost change made on the AP Invoice

Special Order Items

Account
Debit
Credit
Accounts Payable


$15.00
Purchases Accrued Not Due
$15.00
$5.00
COGS Expense
$2.50


TOTALS
$20.00
$20.00

The grid above shows the postings, but here is a written explanation of what happens when cost adjustments are entered for Special Order Items items on AP Invoices when the original receipt has been sold:

  • Purchases Accrued Not Due is increased (credit) for the cost adjustment.
  • COGS Expense is increased (debit) for the cost adjustment ONLY if the item from the original receipt is sold.
  • Accounts Payable is increased (credit) for the total invoice amount.
  • Purchases Accrued Not Due is decreased (credit) for the total amount of the receipt, including the cost change made on the AP Invoice.