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Wrong category is populating in on-hand screen

in Inventory Management

This is cloud to cloud migration

When creating miscellaneous receipt, the on hand is populating purchasing category for the item rather than item catalog and category. We have both item and purchasing category setup for same item.

Is there any additional setup missing to get item category/catalog?

We are not observing this issue in source instance, this is only in Target instance,

Is there any impact if purchasing category is populated on On-hand, will it impact costing?
Thanks,
Prajwal

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