Allocate Bulk Disposals
Back Office Menu -> Allocate Bulk Disposals
Reports Menu -> Automatic Reporting -> Function RSBS02 -> runs Bulk Disposals Report
Selling Non-Bulk Rental Inventory:
Non-bulk rental inventory refers to items that are tracked individually, often by serial number and by status code. Each non-bulk product is assigned a unique product number and the quantity per product number is always 1.
Non-bulk rental products are identified by the Bulk flag in the Rental Inventory file.
When Non-bulk rental inventory is sold, and the sales invoice is posted using Daily Close 1, Daily Close 2, and Daily Close 3 programs, the revenue from the sale and the cost on disposal are automatically posted to the General Ledger.
At the same time a Disposal Record is written, which can later be reviewed in Disposal Transactions Report to determine if any depreciation adjustments are required.
When the sale of a Non-bulk rental product is reversed, the equipment is returned on a credit invoice with a negative quantity. This "negative sale" is recorded in the Bulk Disposals file until the relevant Fixed Asset Tag is determined.
When the Disposal Transaction is selected, the corresponding Fixed Asset Tag is updated and the appropriate transactions to reverse the Inventory and COGS postings are written to the Rental Journal Transactions file in preparation for posting on the next Daily Close posting to the G/L.
If the post Depreciation feature has been activated from the Company Posting Parameters, then the posting to clear Depreciation for the sold equipment is now also reversed in the G/L.
Selling Bulk Rental Inventory:
Bulk rental inventory refers to rental inventory where the quantity per Product number is greater than one. Examples of bulk rental items include: points, chisels, air hoses, cutlery, dinner plates, etc.
Bulk rental products are identified by the Bulk flag in the Rental Inventory file, where multiple Fixed Asset Tags can be setup for each product to track costs by purchase lot.
Two Options for Selecting Costs for Bulk Items:
1.When Bulk rental inventory is sold, and the sales (disposal) invoice is posted using Daily Close 1, Daily Close 2, and Daily Close 3, the revenue from the sale is automatically recorded. The cost of the equipment, however, is not clear at the time of the posting because bulk equipment allow for multiple Fixed Asset Tags with varying costs.
To handle multiple tags, the sale of any bulk rental equipment writes a record into the Bulk Disposals file, and the cost posting is temporarily held out of Daily Close 2 . The revenues, services and taxes which result from the invoice are immediately posted, and will appear on reports from Daily Close 3.
On a regular basis, usually part of month end close, the Bulk Disposals must be reviewed to pick the Fixed Asset Tags and complete the cost postings. The costs will appear on the Rental Journal Report next time Daily Close 3 is run.
It is important to complete Bulk Disposals regularly in order for the correct costs of the equipment to be recognized in the General Ledger, Detailed Product History and Monthly Product History, and Disposal Transactions.
2.A flag in the Company Posting Parameters, can be set to automate the selection of the Fixed Asset Tag in the Daily Close for the disposal or sale of Bulk Rental products with multiple Fixed Asset Tags.
When this feature is activated the tag with the oldest acquisition date is automatically updated with the disposal information and the inventory value posting reflects the value from that oldest tag.
Records are only written to Bulk Disposals when there are insufficient Asset Tag quantities, or when a disposal is being reversed, and the tag then needs to be selected manually.
The Disposal Transaction Record is written, that can be review in Disposal Transaction Report to determine if any depreciation adjustments is required.
Since the Salesman Commission Report relies on the costs of equipment to determine Gross Margins on Sales and Disposals, the Bulk Disposals must be completed before the report can be run.
Posting Asset Value on Disposal:
•POSTING BOOK VALUE ON DISPOSALS
When equipment is disposed, the Book Value can be posted to the G/L as the cost of the equipment, instead of the Average Cost.
This is option can be activated in the Company Posting Parameters. This is useful, if the depreciation on the fixed assets is accurate.
The Bulk Disposal formula to calculate the Book Value Cost is:
BOOK VALUE EACH at disposal for the selected tag, multiplied by the Fixed Asset Tag QUANTITY, to equal the TOTAL COST at disposal
The Total Cost is displayed on the screen when accepting the Fixed Asset Tag.
The disposal costs are posted to the G/L Accounts defined in the Rental Product Classes assigned to the product.
The INVENTORY ACCOUNT is credited and the COST OF GOODS SOLD ACCOUNT is debited with the TOTAL COST amount.
Example: Rental Item is sold (i.e. a drill)
SELLING PRICE $ 400.00 SELLING PRICE 400.00
COST - 300.00 BOOK VALUE - 250.00
ACCUM. DEP. + 50.00
----------- -----------
PROFIT ON DISPOSAL $ 150.00 $ 150.00
System Generated posting records:
Sale of Rental Equip CREDIT 4090 for the selling price $400.00
Accounts Receivable DEBIT 1200 for the selling price 400.00
Rental Inventory CREDIT 1300 for the Book Value 250.00
Cost of Rental Equip Sold DEBIT 4510 for the Book Value 250.00
•POSTING AVERAGE COST ON DISPOSALS
Many firms do not want the Book Value to post automatically to the General Ledger.
This is because:
•Many firms do not keep accurate fixed asset registers.
•Accumulated depreciation totals per item are not known.
•Depreciation figures are not entered into the system.
•The accountant controls the depreciation schedule
The alternative choice to post disposals by Average Cost is controlled by the same setting in the Company Posting Parameters.
The Bulk Disposal formula to calculate the Average Cost is:
COST EACH at disposal for the selected tag, multiplied by the Fixed Asset Tag QUANTITY to equal the TOTAL COST at disposal.
The Total Cost is displayed on the screen when accepting the Fixed Asset Tag.
The Depreciation on the Tag selected is NOT automatically posted to the General Ledger. The Depreciation which does apply to that item is recorded automatically on the Disposals Transactions Report and the Fixed Asset Tag is updated. The depreciation does NOT automatically post to the General Ledger, so that Accountants and Controllers can review the depreciation amount and make an independent assessment. By printing the Disposal Transactions Report, your accounting staff can see each disposal, the costs and depreciation associated with each. They will be able to determine if a Journal Entry is required for the Depreciation adjustments.
The depreciation would be recorded later by the accountant, or controller, after reviewing the Disposal Transaction Report.
Example: A Rental Item is Sold
SELLING PRICE $ 400.00 SELLING PRICE 400.00
COST - 300.00 BOOK VALUE - 250.00
ACCUM. DEP. + 50.00
----------- -----------
PROFIT ON DISPOSAL $ 150.00 $ 150.00
System Generated posting records:
Sale of Rental Equip CREDIT 4090 for the selling price $400.00
Accounts Receivable DEBIT 1200 for the selling price 400.00
Rental Inventory CREDIT 1300 for the purchase cost 300.00
Cost of Rental Equip Sold DEBIT 4510 for the purchase cost 300.00
•MANUAL POSTING FOR THE DEPRECIATION using Miscellaneous G/L Journals
The net of the selling price and the cost posted to the General Ledger equals the profit on the sale without the recaptured accumulated depreciation at this point. The true profit on disposal must include the recaptured accumulated depreciation, which must be posted manually:
Accumulated Depreciation (Rental Equipment) Acct #1301 DEBIT $ 50.00
Cost of Rental Equip Sold Acct #4510 CREDIT $ 50.00
For the Date, use the Month End.
For the Reference, use DEPRECIATION ON EQUIPMENT SALE.
For the Details, use the product number and/or Invoice number.
To help determine when the accumulated depreciation journal entries are required, the system tracks every rental equipment disposal and produces a Disposal Transactions Report.
Print this report monthly and review it to determine the accumulated depreciation to be recaptured for each item. Post the RECAPTURE total to the General Ledger using Miscellaneous G/L Journals according to the manual posting instructions above.
Recapture & Gain/Loss Definition
Rule 1: When the Selling Price is greater than the Cost:
GAIN = Selling Price - Cost
RECAPTURE = Cost - Book Value
Rule 2: When the Selling Price is less than or equal to Cost but is Greater than the Book Value:
GAIN = Zero
RECAPTURE = Selling Price - Book Value
Rule 3 When the Selling Price is less than the Book Value:
LOSS = Selling Price - Book Value
RECAPTURE = Zero
Using the definitions above, the Disposal Transactions Report shows the Recapture and Gain/Loss like this:
COST DEPRECIATION BOOK VAL SALE PRICE RECAPTURE GAIN/(LOSS)
---- ------------ -------- ---------- --------- -----------
Rule 1 300.00 50.00 250.00 400.00 50.00 100.00
Rule 2 300.00 50.00 250.00 275.00 25.00 0.00
Rule 3 300.00 50.00 250.00 180.00 0.00 -70.00
Note: The security by division feature as determined by Divisional Restricted Views, does NOT apply to the Bulk Disposals utilities.
ALLOCATE BULK DISPOSALS:
The prompts to clear the disposal records in preparation for completing the posting include:
TAG DIVISION, OR 'ALL'
Accept ALL to include Asset Tags from all divisions, or select a division from the drop-down list.
This is the Owning Division of the equipment as determined on the Fixed Asset Tag.
INVOICE DIVISION, OR 'ALL'
Accept ALL to include products sold on invoices from all divisions, or select a division from the drop-down list to include only products sold on invoices from that division.
Resulting Product Disposal List
The Bulk Disposal details lists the bulk items which have been sold on an invoice and any reversals of rental sale transactions, that have not yet been cleared, with the Product #, Invoice #, Date, Quantity Sold, and Selling Price Each.
Invoice Details:
A window is provided on the Invoice# field to drill down to the details of the sale invoice, as outlined in View Document Information.
To select a tag and to clear a bulk disposal record, window on the Allocate field:
ALLOCATE
Window to select the Fixed Asset Tag for that product, as outlined in Allocate Bulk Disposals Window displaying the detailed selling information
Once the tag selection is completed , the outstanding quantity to be allocated is reduced and the balance to be allocated is redisplayed.
When the balance to be allocated reaches zero, the product disappears from the Bulk Disposals list.
Finished?
Click ACCEPT to accept the information, and run Daily Close 3 to complete the postings. The Bulk Disposal posting amounts appear on the Rental Journal Transactions Report.
A Reminder to Contact Leasing Vendor warning is triggered if the rental product has been assigned one in the Lease Information window in Rental Inventory.
Tag Quantity Discrepancy Problems in Bulk Disposals
If the tag quantity did not equal the location quantity in Rental Inventory prior to the sale, both quantities must be adjusted to correct the tag quantity and to be able to clear the item in Allocate Bulk Disposals.
Quantity discrepancies can be checked by running the report in Verify Tag Quantity = Loc Qty.
If there is not enough quantity on the tag in Allocate Bulk Disposals, or if there is no tag at all adjustments can be made as follows:
•Calculate how many of that product have been sold and not cleared in Allocate Bulk Disposals.
•In Rental Inventory view the Product Locations and note the current quantity. Then increase this location quantity by the number sold per the count from Allocate Bulk Disposals.
•Add an asset tag for the rental item. The tag quantity should default to this additional quantity just added. Insert the correct total cost.
•Return to the Location window in Rental Inventory and now decrease the quantity back to the correct location quantity as was originally noted in step 1.
•In Allocate Bulk Disposals select the new asset tag to complete the sale of this product in the inventory sub-ledger.
•Run Daily Close 3 to post the cost of goods sold to the General Ledger.
If the product is a non-bulk product and it is listed in Allocate Bulk Disposals it could be because the product did not have an asset tag when it was sold. In this case, follow these procedures:
•Change the product from non-bulk to bulk in Change Bulk Status.
•Follow the above steps to increase quantity and add a tag.
•Upon completion of Allocate Bulk Disposals, go back to Change Bulk Status and change the product back to non-bulk.
For large volume party rental companies, the following is suggested as a daily procedure:
Daily Close 1
Daily Close 2
Allocate Bulk Disposals
Daily Close 3
Prior to the close of each month, run Verify Tag Quantity = Loc Qty and then check Allocate Bulk Disposals.
ACTIONS:
Additional actions provided by buttons on the Bulk Disposal screen include:
•Print Pending Bulk Disposals:
Click the REPORT button to print a list of the Bulk Disposal transactions that have not yet been assigned a Fixed Asset Tag and posted, for a selected date range.
Topic Keyword: RSBS02