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Purchase Order Receipts - with Purchase Price Variance and Standard Cost Change
Purchase Order Receipts - with Purchase Price Variance and Standard Cost Change
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1
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unit received
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12.0000000
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standard acquisition cost per unit at time of receipt
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15.0000000
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accounting acquisition cost per unit at period end
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20.0000000
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purchase cost (as defined on purchase order)
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DR
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Inventory
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15.00
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DR
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Purchase Price Variance
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8.00
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CR Accrued Purchase Receipts
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20.00
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CR Standard Cost Change - PO Receipts
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3.00
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The journal entry amounts for purchase order receipts are calculated as if they had been generated on the day that the transaction was recorded; thus, the standard cost change must be calculated. This allows the purchasing performance to be evaluated against the standard that was in place at the time of the receipt, as opposed to the accounting standard that is currently in place.