Sales and Distribution Accounting Entries

a) At the time of delivery of goods (PGI) (COGS) Cost of goods sold account Dr Inventory account Cr (This entry is passed by the cost of the item delivered) b) During generation of Invoice Customer / Debtors account Dr Sales/ evenue account Cr Ta!es Cr - (This entry is passed by the selling price) c) During collection of Payment "an# account Dr Discount Dr Customer/ Debtors account Cr I !"ICE GE E#A$I" Invoices $ill be generated at the Smelters and stoc# points% The accounting entries for the sale of goods despatched $ill flo$ from the Sales invoice generated in S&' Sales and Distribution module% The follo$ing entries shall be passed Customer &ccount Dr evenue (!cise Duty 'ayable Sales Ta! 'ayable (local or central)

Customer &ccount Dr evenue (!cise Duty "illed Sales Ta! 'ayable (local or central) (!cise duty paid a/c Dr (!cise duty payable a/c

Cr Cr Cr Cr

E%P"#$ SA&ES There have been very fe$ e!port transactions in the past% S&' system $ill be designed to handle e!port business% (!ports are mainly from the mines and $ill be handled at the mines, ho$ever the documentation part $ill be ta#en care at the -ead Office% The accounting entry is* Customer &ccount evenue ((!ports) Dr Cr

The realisation of e!port sales $ill be directly Credited to the ban#% The accounting entries $ill be as follo$* "an# Dr Customer (!change +luctuation Dr/ Cr $he accounting entries 'ill be( ebates/Discounts Dr Customer

Cr

Cr

Cr Cr Cr

)ote* &s mentioned above in the +I document, $hich is Created in the bac#ground, the SD invoice number shall be captured% -o$ever as per the current accounting procedure the accounting entry passed is as follo$s *.

DE)I$ *E*"S Debit /emos shall be issued in case of price difference, sale ta! difference and interest on usance period and overdue payments% The accounting entries for t$o possible scenarios are as follo$s* Price +ndercharged( Customer &ccount Dr% evenue Cr% Sales ta! payable Cr%

Sales ta, undercharged Customer &ccount Dr% Sales ta! ad0ustment

Cr%

Accounting entry for scrap( &ccumulated Depreciation Dr 2oss on Sale of &ssets Dr &sset account

Cr

Interest on delayed payments/usance period and other charges Customer &ccount Dr% Interest Others Cr% In case of -12 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 e!isting accounting policy is to provide depreciation for the full 3uarter in $hich the asset is sold/discarded, recommended that the depreciation be provided from the date of ac3uisition on prorata basis % &ccounting entry for sale of &sset to customers* Customer &ccount &sset Sale Dr Cr

SA&E "- SC &' The sale of scrap (non.stoc#) shall be mapped as a direct manual +I entry% The customer $ill be Created as a +I customer% )o 2ogistics module $ill be involved in the process% & +I Invoice $ill be prepared for the sale of scrap $ith the follo$ing entries* Customer Dr Sale of Scrap Cr (!cise Duty 'ayable Cr AD!A CES -#"* C+S$"*E#S &dvances are received from the customers against delivery% These advances $ill be recorded in a special general ledger account% The accounting entry for the same $ill be* "an# &ccount Dr &dvance Customer 'ayments

&ccumulated Depreciation Dr 2oss on Sale (if applicable) Dr &sset Sale account Dr &sset account 'rofit on sale (if applicable)

Cr

Cr Cr

These advances $ill be later on ad0usted against the invoices raised on the customers% &dvances can be ad0usted against more than one invoice at the time of clearing of the invoices against advances% Ad.ustment of Advances * Customer &ccount &dvance Customer 'ayments Cr Dr

)ote* In case of any Sales Ta! /(!cise duty applicable for this transaction, S&' $ill calculate the Sales Ta!/(!cise Duty based on the Ta! Code selected the entry is posted to the G2 &ccount (Sales Ta! 'ayable)

Accounting entry for sale 'ithout a customer( &ccumulated Depreciation Dr 2oss on Sale (if applicable) Dr &sset Sale account Dr &sset account 'rofit on sale (if applicable)

Cr Cr

& financial document $ould be Created for each "an# Guarantee received and this document number $ill be referred to in the Sales Order $hich $ould then monitor the value and the validity of the of the "an# Guarantee instrument $ise $hile doing the billing%The letter of Credit /"an# guarantee given $ill be recorded as a noted item%

Accounting Entry for Goods recei/t Stoc#/Inventory account Dr G /I account Cr +reight clearing account Cr Accounting Entry on invoice verification of su//lier( G /I Dr 4endor account Cr Accounting Entry on invoice verification of freight vendor( +reight clearing account Dr +reight 4endor account Cr G""DS #ECEIP$ "ased on the 'urchase order and the 5uantity actually received Goods eceipts (G ) $ill be done% "ased on the G done the follo$ing accounting entry $ill be passed in the +inancial &ccounts% //'/ Stoc# &ccount Dr G /I &ccount +reight Clearing &ccount

Cr Cr

E%CISE I !"ICE !E#I-ICA$I" On receipt of the e!cise invoice cum gate pass the follo$ing entry $ill be passed G 67 & / G 67 C 'art 6 &ccount Cenvat Clearing &ccount Dr Cr