If Purchase Order is not installed on the system, one of the following drop shipment recording methods should be implemented, based on your company's procedures and personnel.

Option 1 Enter orders and invoices (make sure the Drop Ship checkbox is selected in the Order Entry > Order Details window). Enter a G/L department code that sells out of the purchase variance account rather than the inventory valuation account. (For additional information about Purchase Variance accounts, click Purchase Variance Account.)

Advantages: It allows for proper recording of drop shipment transactions in Inventory Control and the General Ledger. Accounts Payable is the same as in stock shipments (paid to the Purchase Variance).

Disadvantages: It requires a change in procedure for the Sales and Order Entry staff. It also requires a special G/L department code entry during Order/Invoice entry and a special cost entry, either during Order/Invoice Entry or as a separate function.

Option 2 Use the same Order/Invoice procedure as Option 1, except you should use the regular G/L department code. You will still need to enter cost either during Order Entry and Invoice Entry or as a separate transaction. The A/P clerk will post the invoice to the Inventory G/L account, since it was never received to inventory.

Advantages: It requires no change in Order Entry, Invoice Entry or Purchase Order Entry.

Disadvantages: The Accounts Payable (or Purchase Order Receiving) clerk will need to isolate drop ship invoices and post to Inventory instead of purchase variance.

The Inventory Control G/L Department File Maintenance screen should be completed based on the drop ship option selected:

	Option 1	Option 2
Department code:	XYZ	ABC
Description:	Drop-Ship Sales	Standard Sale
G/L Accounts Sales: Cost of sales: Inventory value (non-stock): Adjustments: Credit returns: Receipts: JC markup: JC direct cost: Mix usage: Equipment cost:	Sales Cost of Goods Sold Purchase Variance Cost of Goods Sold Purchase Variance Purchase Variance Not applicable Not applicable Not applicable Not applicable	Sales Cost of Goods Sold Inventory Cost of Goods Sold Purchase Variance Purchase Variance Not applicable Not applicable Not applicable Not applicable