Vendor Invoice Verification Accounting Entries

Vendor Invoice Verification Accounting Entries

VENDOR INVOICE VERIFICATION

The detail process related to invoice verification is documented in Materials Management Document.

On receipt of vendor bill the following entry will be passed:

- GR/IR Account - - - - DR
- Freight Clearing Account - - DR
- Cenvat Clearing Account - - DR
- Vendor Account - - - CR

Invoice Verification for Foreign Vendor -
On receipt of vendor bill the following entry will be passed:

- GR/IR Account - - - - - DR
- Vendor Account - - - - CR

Invoice Verification for Custom vendor
On receipt of Vendor bill the follo wing entry will be passed:
1) - RG 23A/RG 23C Part 2 A/c (CVD) A/c - DR
- - - - Cenvat Clearing A/c - - - - CR
2) - G/R I/R A/c - - - - DR
- - - - Cenvat Clearing A/c - - - DR
- - - - Vendor A/c - - - CR
3) - Cost of Material A/c - - - DR
- - - - Vendor A/c (Customs) - - CR

Invoice Verification for Freight / Clearing Agent
- Cost of Material A/c - - - DR
- Vendor A/c (Clearing Agent) - CR

Invoice Verification for Octroi Expenses
- - Cost of Material - - - DR
- - Vendor A/c (Octroi) - - - CR

TDS (Work Contract Tax) for Service Orders shall be calculated and deducted accordingly. -
The following entry will be passed on bill passing:

- Expenses Account - - - DR
- Vendor Account - - - - CR
- TDS Account - - - CR

The material shall be returned to the vendor using the -
- Return to vendor movement type in SAP
- Creating a Return PO -

These transactions will be processed in the MM module.
The accounting entries will be :

Returns after GRN
- GR/IR A/c - - Dr
- Stock A/c - - Cr

The accounting in respect of debit / credit memos for FI vendors, the process will be similar to that of invoice processing. - The accounting entries will be:
- On issue of debit note
- Vendor Account - - - DR
- Expenses Account - - CR

In respect of import vendor - capital goods exchange differences are to be accounted manually through a Journal Voucher for capitalization. -
Exchange rate differences will be accounted at HO. An example of the accounting entry in this case shall be:
Invoice entry @ 40 INR: 1 USD -

- Asset / Expense A/c - - DR - 100 -
- Vendor A/c - - - CR - 100 -

Payment Entry @ 41 INR: 1 USD -
- Vendor A/c - - - DR - 100 -
- Bank A/c - - - CR - 110 -
- Exchange rate loss Capital A/c DR - - - 10 -

- Asset A/c - - - DR - - 10
- Exchange rate loss Capital A/c - - - - CR - - 10

A new G/L account shall be created for the special G/L transactions. -
The accounting entry for making the down payment shall be:
- Advance to supplier - account - - - Debit
- Bank A/c - - - - - Credit -

When the invoice is booked the following entry is passed
- GR/IR account - - - - - Debit -
- Vendor account - - - - Credit -
- Clearing of Invoice against Down Payment
- Vendor A/c - - - - - - Debit -
- Vendor down payment account - - Credit -

Wherever, TDS is applicable, the TDS will be deducted at the time of down-payment to the vendor. -
Down Payment for Capital (tangible) Assets

Down payment to vendors for capital acquisitions is to be reported separately in the Balance Sheet under the head Capital Work in Progress. - - Hence down payment for capital goods would be tracked through a separate special general ledger indicator. -

The procedure to be followed is:
Definition of alternative reconciliation accounts for Accounts Payable for posting down payments made for Capital assets
Clearing the down payment in Accounts Payable with the closing invoice.
A new G/L account shall be created for the special G/L transactions. -
The accounting entry for making the down payment shall be:

Vendor Advance for Capital Goods Account Debit -
- Bank A/c - - - - - Credit -
When the invoice is booked the following entry is passed
- Asset A/c / - Asset WIP - - - Debit -
- Vendor A/c - - - - - Credit -
Clearing of Invoice against Down Payment
- Vendor A/c - - - - - - Debit -
- Vendor Advance for Capital Goods Account Credit

The Following are the TDS Rates (to be confirmed with the recent changes)
- Particulars Tax Rate Surcharge Rate Total
- Contractors � 194 C 2% 5% 2.10%
- Advertising � 194 C 1% 5% 1.05%
- Prof. Fees � 194 J 5% 5% 5.25%
- Rent � Others � 194 I 15% 5% 15.75%
- Rent � Company � 194 I 20% 5% 21%
- Commission � 194H 5% 5% 5.25%
- Interest - - Others � 194 A 10% 5% 10.50%
- Interest � Company � 194 A 20% 5% 21%
- Special Concessional Tax -
- Works Contract Tax -

SECURITY DEPOSITS /EARNEST MONEY DEPOSIT RECEIVED FROM - VENDORS -
- Bank A/c - - - - - - - - - - - - - - - - - - - - - - - - - - - - - DR
- Security Deposit Vendor - - CR

EMD to give the age so as to enable the same to be transferred to unclaimed EMD account.
PAYMENT OF TOUR ADVANCE DOMESTIC TOURS

Employee Advances will be paid by the Accounts Department unit wise based on the requisition or recommendation of the respective departmental head. -
- Employee Travel Advance A/c - DR -
- Cash / Bank Account - - CR - - - - -

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