Accounting for landed costs

Landed costs can be allocated to items on purchase orders before or after they have been received into stock, but they must still be in stock. All the accounting for landed costs will happen automatically and what journals are posted depends on whether landed costs is allocated before or after the goods have been received into stock.

(Note that once items have been shipped, all of the inventory and cost of sales accounting will already have been posted in Brightpearl, so any additional landed costs must be directly entered into the accounting.)

Accounting for landed costs is generated at the following times:

  • When items with allocated landed costs are received into stock

    A single PG journal is used to account for assets and landed costs.

  • When landed costs are allocated to items already in stock

    A PG journal is created when the items are received into stock and an additional LC journal when the landed costs are allocated.

Additional accounting entries to be aware of when using landed costs are:

  • Cost of sales accounting (shipping journals)

    These journals will use the item cost inclusive of landed costs

  • Landed cost invoice journals

    These should be posted to the same account code as used when the landed costs were allocated.

Impact of using landed costs

Without landed costs, you would create invoices for these additional costs against an expenses code (generally in the 5000 range). They'll appear all at once on the income statement, using the invoice date of the landed costs invoice.

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With landed costs, you would create these invoices against your landed cost code (2070 or 2270 by default) so you will not see this expense immediately on the income statement. Instead, the landed sosts are posted to the income statement as the items sell, as part of their cost of goods sold. 

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Receiving goods into stock with landed costs

Where landed costs had been allocated prior to receiving the goods, the items will immediately be received into stock at their uplifted value.

In order to account for the landed costs, an additional row is added to the goods-in (PG) journal.

When receiving the goods in, you will see the landed cost value by which the asset value will be uplifted, as well as the total value of each unit:

Acc for LC 1

Receiving the goods into stock automatically creates an accounting journal (type PG) to account for inventory assets and landed costs.

This means that the inventory asset value on your balance sheet is uplifted by the landed cost value:

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Allocating landed costs to items already in stock (LC)

Where items have already been received into stock, accounting entries will have already been made to increase inventory assets using the cost known at the time of receiving.

If additional landed costs are then allocated later, the value of those items will be increased via an additional journal with the extra landed cost amount. This occurs at the point the landed costs are confirmed:

Original goods-in journal without any landed costs

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Additional journal to uplift the items with landed costs

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The landed costs account code here is the one you choose when assigning landed costs to purchase order rows.

Cost of sales accounting with landed costs

When any item is sold and shipped, the cost of sales accounting is automatically posted (if active). If landed costs have been assigned to the shipped items this is recognized in the accounting as the cost of sales and inventory values in the journal include the relevant landed cost amounts.

Read more about cost of sales accounting recognition and timing.

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