Correcting Mistakes in a Physical Inventory (Part I)

Tip: Adjusting for overlooked or "missed" items during a physical inventory count.

Last month's tip reviewed how to identify overlooked items using the reports included in the Hand-Held Data Processing (HDP) application. This month's tip shows you how to correct for overlooked items.

To keep our example simple, we'll focus only on Aquafina 20-ounce bottles of water provided in cases of 24 assumed already to be part of the store's inventory. Our task is to perform a spot physical inventory of this item will compare its quantity as recorded in CDBWin (book value) to the count on the store's shelves (physical value).

Step 1: Finding the problem

In our hypothetical sample, the Quantity on Hand resident in CDBWin is 264 as is displayed in the Inventory Maintenance window shown below (on the Setup menu, click Inventory > Item (PLU/UPC/SKU > select the item > Edit):



To compare the above book quantity to the item's physical count we are going to view an Exception report after we scan the item in the store and send the inventory session to the HDP application. A detailed explanation of this process is located in the Physical Inventory QuickStart Guide. Keep in mind that a best practice for spot checking is performing the count at times of low sales activity, ideally at the beginning for a shift. This helps ensure the most accurate result.

To view our Exception report after the inventory session has been sent to the HDP application, with the HDP application open, we:

1. Click Physical Inventory. The inventory session, which should contain all the 20-ounce Aquafinas scanned in the store, appears in the HDP window (1):
   
   
   
   We also must:
   
2. Select the correct site (2).
    
3. Select the appropriate criteria (for our example, Dept. range 4.05) (3).
    
4. Select the correct processing date-the last closed CDBWin shift (4).
    
5. With the inventory session selected, in the Report Options group box, click List Exceptions by (5).
    
6. Click View. The Exceptions report for our example displays:
   
    
    
7. The above report shows there are 48 less units in the store (Physical Qty)  than have been recorded in CDBWin (Book Qty).
   
   This is suspicious. Not only is it at the beginning of the shift, so there's no way we could have sold that many singles, it just happens to be the exact amount of two missing cases. We decide to investigate and we find that two cases of water stored in a back room that were overlooked by the person scanning the inventory. Good thing we found them before posting to CDBWin!

Step 2: Correcting the problem

We now need to correct the inaccurate count. We:

1. Scan the two overlooked cases in the back room and send them to the HDP application using the procedure in Step 1.
    
2. When  the HDP application is opened and Physical Inventory clicked, the new inventory session appears just above the first one (1):
   
   
   
   
3. Please note that viewing an Exceptions report for the new session only accounts for the 48 more recently scanned items, producing an unrealistic variance (-216):
   
   
   
   To produce an Exceptions report with an accurate variance, we must:
    
   • Select List Exceptions by selected in the Report Options group box.
      
   • Select both inventory sessions in the HDP window by clicking on them while holding down the CTRL key.
      
   • Click View to display the Merge Physical Inventory prompt:
     
     
      
   • Click Yes. In our store the item and book quantities now match meaning there are no exceptions, so the following message displays:
     
     
      
4. After we click OK to put away this message, our spot check is finished because there is no adjustment to post. If we still desired to post the two inventory sessions to CDBWin, we would close the report, and with both inventory sessions still highlighted, click Post to display the Merge Physical Inventory prompt:
   
   :
    
5. The sessions post to CDBWin after we click Yes to this prompt. To see the posted adjustment, on the Daily Work menu, we would click Sales/Receivables > Open > select the adjustment from the list > OK > the "Line Items" tab, where 0.00 Qty displays.
   
   
   
6. Though this adjustment is zero, we would like to remind you that in most real-world cases there will likely be a positive or negative number here. This makes it very important to tag and close the transaction on a separate shift to make sure your inventory book quantities are correct.

Next month...

...we'll look at how to correct an inaccurately high physical inventory count by adjusting it downward.

For more information...

A detailed look at creating and posting an inventory transaction can be found in Chapter 3 of the HDP6 User's Guide. More advice on spotting mistakes in a physical inventory can be found in last month's tip, Reports to Check Before Posting a Physical Inventory.

For Past Tips of the Month...

Consult the Tip of the Month Library now sorted by subject and by date.