Inventory in transit at month-end: what evidence to collect

Build a list of material inbound and outbound shipments still moving at month-end. Include purchase or sales order references, quantities, shipment dates, expected delivery, carrier evidence, and the related invoice. Focus on the population whose accounting could change because it straddles the cutoff.

A tracking page describes physical movement. Ownership, acceptance, risk, and the relevant accounting treatment depend on the agreement and applicable rules. Give the accountant the terms rather than deciding that every shipped item automatically belongs to the buyer.

Collect the purchase agreement, shipping terms, bill of lading or equivalent evidence, supplier invoice, and receiving record. Note any customer acceptance clause, consignment arrangement, or unusual return right. Ambiguous legal terms may need counsel's interpretation before accounting can be finalized.

Use consistent references across purchasing, warehouse, and finance. If the supplier splits one order into three shipments, the finance schedule should show which quantities were shipped and received in each period. A single purchase-order total can hide a partial delivery.

First explain where each quantity sits: with the supplier, in transit, received, rejected, or returned. Then reconcile the amount recorded using the company's costing policy. Freight and other acquisition costs may arrive on separate invoices and require their own cutoff review.

Suppose an illustrative order contains 1,000 units, of which 600 arrived before month-end and 400 remain in transit. That physical split is known, but the accounting split still requires the contract and shipping facts. Do not force the inventory entry to 600 units merely because those are the units counted in the warehouse.

After month-end, compare actual receiving records and final invoices with the in-transit schedule. Investigate missing quantities, damage, price changes, and shipments assigned to the wrong period. Keep any correction linked to the original cutoff decision.

Where an accrual or in-transit entry was posted, ensure the eventual receipt and invoice clear it through the approved workflow. Otherwise the same goods can be counted once in the month-end adjustment and again when the warehouse records arrival. Save the reconciliation and have the accounting owner sign off on remaining exceptions.