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
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.
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.
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
