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Sales and Distribution Accounting Entries INVOICE GENERATION Invoices will be generated at the Smelters and stock points. The accounting entries for the sale of goods despatched will flow from the Sales invoice generated in SAP Sales and Distribution module. The following entries shall be passed Customer Account Dr Revenue Cr Excise Duty Payable Cr Sales Tax Payable (local or central) Cr Note: As mentioned above in the FI document, which is created in the background, the SD invoice number shall be captured. However as per the current accounting procedure the accounting entry passed is as follows :- Customer Account Dr Revenue Cr Excise Duty Billed Cr Sales Tax Payable (local or central) Cr Excise duty paid a/c Dr Excise duty payable a/c Cr EXPORT SALES There have been very few export transactions in the past. SAP system will be designed to handle export business. Exports are mainly from the mines and will be handled at the mines, however the documentation part will be taken care at the Head Office. The accounting entry is: Customer Account Dr Revenue (Exports) Cr The realisation of export sales will be directly credited to the bank. The accounting entries will be as follow: Bank Dr Customer Cr Exchange Fluctuation Dr/ Cr The accounting entries will be: Rebates/Discounts Dr Customer Cr
DEBIT MEMOS Debit Memos shall be issued in case of price difference, sale tax difference and interest on usance period and overdue payments. The accounting entries for two possible scenarios are as follows: Price Undercharged: Customer Account Dr. Revenue Cr. Sales tax payable Cr. Sales tax undercharged Customer Account Dr. Sales tax adjustment Cr. Interest on delayed payments/usance period and other charges Customer Account Dr. Interest Others Cr. In case of HZL a complete retirement or a partial retirement of asset is done. The system uses the asset retirement date to determine the amount to be charged off for each depreciation area. The existing accounting policy is to provide depreciation for the full quarter in which the asset is sold/discarded, recommended that the depreciation be provided from the date of acquisition on prorata basis . Accounting entry for sale of Asset to customers: Customer Account Dr Asset Sale Cr Accumulated Depreciation Dr Loss on Sale (if applicable) Dr Asset Sale account Dr Asset account Cr Profit on sale (if applicable) Cr Note: In case of any Sales Tax /Excise duty applicable for this transaction, SAP will calculate the Sales Tax/Excise Duty based on the Tax Code selected the entry is posted to the GL Account (Sales Tax Payable) Accounting entry for sale without a customer: Accumulated Depreciation Dr Loss on Sale (if applicable) Dr Asset Sale account Dr Asset account Cr Profit on sale (if applicable) Cr Accounting entry for scrap Accumulated Depreciation Dr Loss on Sale of Assets Dr Asset account Cr SALE OF SCRAP The sale of scrap (non-stock) shall be mapped as a direct manual FI entry. The customer will be created as a FI customer. No Logistics module will be involved in the process. A FI Invoice will be prepared for the sale of scrap with the following entries: Customer Dr Sale of Scrap Cr Excise Duty Payable Cr ADVANCES FROM CUSTOMERS Advances are received from the customers against delivery. These advances will be recorded in a special general ledger account. The accounting entry for the same will be: Bank Account Dr Advance Customer Payments Cr These advances will be later on adjusted against the invoices raised on the customers. Advances can be adjusted against more than one invoice at the time of clearing of the invoices against advances. Adjustment of Advances Customer Account Cr Advance Customer Payments Dr A financial document would be created for each Bank Guarantee received and this document number will be referred to in the Sales Order which would then monitor the value and the validity of the of the Bank Guarantee instrument wise while doing the billing.The letter of credit /Bank guarantee given will be recorded as a noted item. Accounting Entry for Goods receipt Stock/Inventory account Dr GR/IR account Cr Freight clearing account Cr Accounting Entry on invoice verification of supplier GR/IR Dr Vendor account Cr Accounting Entry on invoice verification of freight vendor Freight clearing account Dr Freight Vendor account Cr GOODS RECEIPT Based on the Purchase order and the Quantity actually received Goods Receipts (GR) will be done. Based on the GR done the following accounting entry will be passed in the Financial Accounts RM/PM Stock Account Dr GR/IR Account Cr Freight Clearing Account Cr EXCISE INVOICE VERIFICATION On receipt of the excise invoice cum gate pass the following entry will be passed RG 23 A / RG 23 C Part 2 Account Dr Cenvat Clearing Account Cr |