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Author's profile photo Ranjit Simon John

Impact of MR11 Execution

Impact of MR11 Execution

Author: Ranjit Simon John

I started researching on GR/IR & MR11 after we came across a business scenario. Let me explain the business scenario that we came across.

Against a Purchase Order created in 2010 Goods receipt was made in 2011 and Invoice received in 2012. As a best practice we have cleared all GR/IR balance for the year 2011 during year end through MR11. By March 2012 the vendor has sent the invoice.  Since the entry was cleared from GR/IR, we were not sure on how to make the payment to the vendor.

After detailed study research I could get more understanding on GR/IR and MR11 which I thought I will share .

Whenever a goods receipt is done GR/IR account is hit, and if the process runs smoothly i.e. Goods receipt  = Invoice Receipt, GR/IR gets cleared automatically.

But entries will be left out in GR/IR if (Practical Scenarios we came across);

1) Invoice  received is Greater than Goods Received (More number of Goods Invoiced).

2) Invoice  received is Greater than Goods Received (GR =I R goods receipt, Invoice  contains Freight Charges, transportation charges and any other charges)

3) Goods Received is Greater than Invoice Received.

4) Invoice Received and Goods not received

5) Goods Received, Invoice Received but invoice cleared not against the PO

6) Goods Received, Invoice Not Received

Now let us try to analyze the impact of MR11 in all the scenarios;

Scenario 1: Goods Received is Less than Invoice Received (More number of Goods Invoiced)

Purchase Order Quantity = 15 No’s

GL Entries during Goods Receipt = 10 No’s

Debit

Credit

Stock of Material

10

GR / IR

10

  After Invoice receipt Quantity = 15 No’s

Debit

Credit

GR / IR

15

Vendor Account

15

Assuming if the remaining 5 No’s will be received latter

Debit

Credit

Stock of Material

5

GR / IR

5

In our example we imagine that extra Quantity 5 No’s is not delivered. So in order to clear GR/IR we have to run MR11.

After executing MR11

Debit

Credit

Stock of Material

5

GR / IR

5

In this case the MAP of the material will be;

Inventory details Before Goods Receipt

Material

Quantity

Amount

MAP

material X

10

100

10

  After Goods receipt

Material

Quantity

Amount

MAP

material X

20 (10 + 10)

200 (100 + 100)

10

After Executing MR11

Material

Quantity

Amount

MAP

material X

25 (10 + 10 + 5)

300 (100 + 100 + 50)

10

Note: No Change in MAP of the material

Scenario 2: Invoice  received is Greater than Goods Received (GR =I R goods receipt, Invoice  contains Freight Charges, transportation charges and any other charges)

Purchase Order Quantity = 15 No’s +Freight Charge + Air Charge

GL Entries during Goods Receipt = 15 No’s +Freight Charge + Air Charge

Debit

Credit

Stock of Material

25

Material GR / IR

15

Freight GR / IR

7

Air Faire GR / IR

3

After Invoice receipt Quantity 15 No’s

Debit

Credit

Material GR / IR

15

Vendor Account

15

After MR11 Execution

Debit

Credit

Freight GR / IR

7

Stock of Material

7

Air Faire GR / IR

3

Stock of Material

3

In this case the MAP of the material will be;

Inventory details Before Goods Receipt

Material

Quantity

Amount

MAP

material X

10

100

10

After Goods Receipt

Material

Quantity

Amount

MAP

material X

25 (10 + 15)

350 (100 + 150 + 70 + 30)

14

After Executing MR11

Material

Quantity

Amount

MAP

material X

25 (10 + 15)

150 (100 + 150 – 70 – 30)

6

Scenario 3: Goods Received is Greater than Invoice Received

Purchase Order Quantity = 15 No’s

GL Entries during Goods Receipt = 15 No’s

Debit

Credit

Stock of Material

15

GR / IR

15

After Invoice receipt Quantity = 10 No’s

Debit

Credit

GR / IR

10

Vendor Account

10

Assuming if the remaining 5 No’s Invoice will be received latter

Debit

Credit

GR / IR

5

Vendor Account

5

In our example we imagine that extra Quantity 5 No’s Invoice is not received. So in order to clear GR/IR we have to run MR11.

After executing MR11

Debit

Credit

GR / IR

5

Stock of Material

5

In this case the MAP of the material will be;

Inventory details Before Goods Receipt

Material

Quantity

Amount

MAP

material X

10

100

10

After Goods receipt

Material

Quantity

Amount

MAP

material X

25 (10 + 15)

250 (100 + 150)

10

After Executing MR11 (Only Value of the material will be hit, quantity remains same)

Material

Quantity

Amount

MAP

material X

25 (10 + 10 + 5)

200 (100 + 150 – 50)

8

Scenario 4: Goods Received, Invoice Received but invoice cleared not against the Scenario 5: PO Goods Received, Invoice not Received

Purchase Order Quantity = 15 No’s

GL Entries during Goods Receipt = 15 No’s

Debit

Credit

Stock of Material

15

GR / IR

15

After executing MR11

Debit

Credit

GR / IR

15

Stock of Material

15

In this case the MAP of the material will be hit;

Inventory details Before Goods Receipt

Material

Quantity

Amount

MAP

material X

10

100

10

After Goods receipt

Material

Quantity

Amount

MAP

material X

25 (10 + 15)

250 (100 + 150)

10

After Executing MR11 (Only Value of the material will be hit, quantity remains same)

Material

Quantity

Amount

MAP

material X

25 (10 + 15)

100 (100 + 150 – 150)

4

All the Scenario explained above is when the Material Stock is equal to the Quantity to be Cleared.

If material Stock is not equal to Quantity to be cleared the actual stock quantity is debited or credited proportionally. The remaining amount is posted to a price difference account.

Ideally MR11 should be executed once in a year or twice after getting clearance from MM team and the FI team.

Executing MR11 can either over estimate or under estimate the stock value.

More Details Can be found from:

http://help.sap.com/saphelp_46c/helpdata/en/a8/b99471452b11d189430000e829fbbd/content.htm

Also refer the following SAP Notes;

10757    -> FAQ: MR11, clear GR/IR clearing account
790426 ->  MR11: Functionality
710865 ->  MR11: Important information on account maintenance

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      38 Comments
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      Author's profile photo Former Member
      Former Member

      A very helpful post Ranjit, Could not have been more lucid.

      Author's profile photo Ranjit Simon John
      Ranjit Simon John
      Blog Post Author

      Thank you. Great to know that it helped. Kindly "Like" or rate the article

      Author's profile photo Former Member
      Former Member

      Rated already

      Author's profile photo Ranjit Simon John
      Ranjit Simon John
      Blog Post Author

      Thank you

      Author's profile photo Sachin Jain
      Sachin Jain

      Great Article & good presentation.

      Author's profile photo Ranjit Simon John
      Ranjit Simon John
      Blog Post Author

      Thank you Sachin

      Author's profile photo Former Member
      Former Member

      this area is usually a grey in MM perspective..... Very good explanation with an example..

      Author's profile photo Ranjit Simon John
      Ranjit Simon John
      Blog Post Author

      Thank you Kumar

      Author's profile photo Narendra Konnipati
      Narendra Konnipati

      hi ,your document is very nice and we always invite to post good documents in sd and mm.

      thanks,

      Naren

      Author's profile photo Mathew George
      Mathew George

      Very good one, Ranjith.

      Mathew

      Author's profile photo Former Member
      Former Member

      Hi Ranjitth

      Doc is Nice however could you please check the 1st case  i think MAP will get chnage to 12.5 since the Invetory Value is getting loaded by 50 after executing MR11 so it will be 250/20,please correct If I am wrong.

      Author's profile photo Avinash Goswami
      Avinash Goswami

      Hi Ranjitth ,

      I think you have written wrong explanation for scenario 1 - IV qty > GRqty

      MR11 cannot actually change qty received it simply removes GR/IR value and insert offsetting entry to INV / PRD account based on Qty coverage available

      So MAP is bound to change when u run MR11 as long as there is stock in system.

      regards

      Avinash

      Author's profile photo Former Member
      Former Member

      very help full document

      Author's profile photo Former Member
      Former Member

      Hi Ranjit,

      Very nice information given by you.

      But, for 1st scenario entry will be like below mentioned:

      After Executing MR11

      Material

      Quantity

      Amount

      MAP

      material X

      20 (10 + 10)

      250 (100 + 100 + 50)

      12.50

      Author's profile photo Nitin U Kaple
      Nitin U Kaple

      Hi Ranjit,

      Very nice information.

      Author's profile photo Ranjit Simon John
      Ranjit Simon John
      Blog Post Author

      Thank you Nitin

      Author's profile photo Nishan Dev S
      Nishan Dev S

      Very good article Ranjit.... Thanks for sharing, it helpful.

      Best Luck

      Nishan Dev

      Author's profile photo Ranjit Simon John
      Ranjit Simon John
      Blog Post Author

      Thank you nishan

      Author's profile photo Former Member
      Former Member

      Hi Ranjit,

      Well prepared and presented document, helpful.

      Appreciate your efforts.

      Regards,
      Anoop Singh

      Author's profile photo Ranjit Simon John
      Ranjit Simon John
      Blog Post Author

      Thank you Anoop.

      Author's profile photo Former Member
      Former Member

      I really like your post I hope you will be able to help me. 

      Requirement:

      After running the f.13 there are still balance left in the
      GRIR account, because of need to maintain GRIR through MR11

      1. GR > IR ( need to resolve
        this issue) (in scope)
      2. IR > GR (not in scope)

      The Client is going to develop a Vendor aging report, those
      vendors who are aged out, The client then will know in which PO of a Vendor
      will not expect any more invoices against the GR’s, for that

      When the clerk will go in MR11 and will pick the target PO
      and will post them and it will clear the GRIR account. After clearing the PO
      the extra GR credit the Inventory account and create a KP account maintenance
      document, but client wants this extra GR which will not expect any more
      invoices should hit and credit a different GL account rather than the inventory. SO please let me know what to do.

      Because it  credits
      the inventory means, for example If they had 5 item after credit the extra GR
      (2 ) it will reduce the inventory account to 3 items, even though the physical
      inventory is still 5.

      Client is using Moving average price Instead of
      standard price

      Author's profile photo Former Member
      Former Member

      Dear Ranjit,

      nice post, thanks a lot

      Author's profile photo Ranjit Simon John
      Ranjit Simon John
      Blog Post Author

      Thank You

      Author's profile photo Former Member
      Former Member

      Good one...

      Author's profile photo Former Member
      Former Member

      Amazing efforts ! !

      Author's profile photo Ranjit Simon John
      Ranjit Simon John
      Blog Post Author

      Thank you Amala

      Author's profile photo Swapnil nevrekar
      Swapnil nevrekar

      Nice Informative post!

      Thanks

      Swapnil

      Author's profile photo Ranjit Simon John
      Ranjit Simon John
      Blog Post Author

      Thank You Swapnil

      Author's profile photo Former Member
      Former Member

      Great post Ranjit. Easily understandable examples.

      Author's profile photo Ranjit Simon John
      Ranjit Simon John
      Blog Post Author

      Thank you Philip

      Author's profile photo Former Member
      Former Member

      Hi Ranjith,

      I was looking at the numbers 'After executing MR11' under Scenario 2, 3 and 4. It looks like the value your mentioned is incorrect. eg. in Scenario 2

      After Goods Receipt

      Material

      Quantity

      Amount

      MAP

      material X

      25 (10 + 15)

      350 (100 + 150 + 70 + 30)

      14

      After Executing MR11

      Material

      Quantity

      Amount

      MAP

      material X

      25 (10 + 15)

      150 (100 + 150 - 70 - 30)

      6

      Before passing MR11 the quantity was 25, amount was 350 and the MAP and MAP was 14. But after executing MR11 the amount should be 250. i.e. (350 - 70 - 30) and the MAP will be 10.

      The situation is similar under Scenario 3 and 4.

      Otherwise, you did a wonderful job.

      Regards,

      Unnivelan

      Author's profile photo Ranjit Simon John
      Ranjit Simon John
      Blog Post Author

      Thanks Unnivelan. Will check and update the doc

      Author's profile photo Saurabh Patni
      Saurabh Patni

      Hi Ranjit,

      Excellent Information. Thanks for sharing the same.

      Regards,

      Saurabh

      Author's profile photo Ranjit Simon John
      Ranjit Simon John
      Blog Post Author

      Thank you Saurabh

      Author's profile photo Former Member
      Former Member

      Hi Ranjit, thank you for the useful information. It has helped me alot. I train GRIR at respective stores but wasn't clear about MR11. Its a big no by trainers who don't fully understand the impact is not letting users use MR11 but playing around the IR to assume the extra qty recipted. Can I please ask if your article has been updated as per the comments regarding calculations for MAP? Thanks

      Author's profile photo Former Member
      Former Member

      Good one

      Author's profile photo Shakeel Ahmed
      Shakeel Ahmed

      Hi Ranjit,

       

      I appreciate for the effort that you have put in. I know this is quite old blog. But "Scenario 1: Goods Received is Less than Invoice Received (More number of Goods Invoiced)" has discrepancy in it.

      MR11 will never increase the quantity of your stock. It will be scenario where you received 10 quantity for the price of 15 quantity. which means MR11 will do increase the price of the stock but not the quantity. Effect of this will increase the MAP value (of course if quantity available in the stock, otherwise it will hit P&L GL). Effect will be as below.

      After Running MR11 - Stock Status
      Material Quantity Amount MAP
      Material X 20 (10+10) 250 (100+100+50) 12.5

      Please update your blog, it will help others, as everyone will not reach to this comment.

      PS: Forget SAP (or MR11), business/ auditor can also never accept if actual quantity received 10 and we increase it to 15.

      Regards

      Shakeel

      #LEARN&SHARE

       

      Author's profile photo Bhumika dodia
      Bhumika dodia

      Very informative for MR11