Accounts Payable Journal EntriesMarch 17, 2013

PURCHASE RELATED ACTIVITIES

Accounting entries get generated at the time of GR/IR, and invoice verification.

At the time of GR/IR, the following entry gets generated.

Inventory a/c………….…………..Dr. xxx

To GR/IR a/c……………………………..xxx

On doing the Invoice verification, the following entry gets generated and the liability is booked.

GR/IR a/c…………………………..Dr. xxx

To Vendor a/c……………………………xxx

At the time of invoice verification if there are differences between GR value and IR and if stock is not available the difference amount would go to price differences A/c.

1) PURCHASE – RAW MATERIAL

At the time of Goods Receipt the following entry gets generated   (Ex. with notional figures).

For a P.O of Rs. 100(Basic 70 + Freight 10 ) (when freight is borne by the company)

Inventory (Raw-material) a/c………………….Dr 80

To GR/IR Clearing a/c……………………………….70

To Freight clearing a/c………………………………10

On doing the Invoice Verification, the following entry gets generated.

GR/IR Clearing a/c……..……………..Dr. 70

Freight Clearing a/c……………………Dr. 10

To Vendor a/c ……………………………….70

To Vendor a/c………….……………………10

2) PURCHASE – TRADED GOODS

In case of traded goods, the entries would be as below:

On receipt of the goods

Inventory (Traded) a/c…………………………..Dr. xxx

To GR/IR Clearing a/c………………………………….xxx

On doing the Invoice Verification, the following entry is generated.

GR/IR Clearing a/c……………………………Dr. xxx

To Vendor a/c…………………………………………..xxx

3) PURCHASE – CONSUMABLES

In case of Consumables, the entries would be as below:

On receipt of the Consumables

Inventory (Consumables) a/c…………………………..Dr. xxx

To GR/IR Clearing a/c………………………………….xxx

On doing the Invoice Verification, the following entry is generated.

GR/IR Clearing a/c……………………………Dr. xxx

To Vendor a/c…………………………………………..xxx

4) PURCHASE – PACKING MATERIAL

In case of Packing Material, the entries would be as below:

On receipt of the Packing Material

Inventory (Packing Material) a/c…………………………..Dr. xxx

To GR/IR Clearing a/c………………………………….xxx

On doing the Invoice Verification, the following entry is generated.

GR/IR Clearing a/c……………………………Dr. xxx

To Vendor a/c…………………………………………..xxx

5) IMPORT PURCHASES

In case of Import Purchases, the process remains the same but for the additional charges, which are included in the cost of inventory.

The same is processed in MM module.

The following accounting entry gets generated on receipt of goods.

Inventory a/c……………………………..Dr. xxx

To GR/IR Clearing a/c………………………..xxx

To Freight Clearing…………………………..xxx

On doing the Invoice Verification, the following entry gets generated.

GR/IR Clearing a/c………………………Dr.  xxx

Freight Clearing a/c…………………….Dr. xxx

To Vendor a/c…………………………………xxx

To C&F Vendor……………………………….xxx

6) PURCHASE RETURNS

The transactions related to purchase returns are processed in MM.

The entries that get generated on processing such transactions are:

GR/IR a/c…………………………………..Dr. xxx

To Inventory a/c……………………………….xxx

SAP-ACCOUNTS PAYALBE JOUNAL ENTRIES

December 14, 2012

During GOODS RECEIPT at Store                                                          MIGO

Raw Material Stock                               Dr.        1000

GR/IR clearing                                       Cr.        1000

During Excise Invoice Credit                                                                J1INEX      

Cenvat Account                        Dr.        200

Cenvat Clearing                        Cr.        200

During Invoice Verification                                                                   MIRO   

Cenvat Clearing                        Dr.        200

 GR/IR Clearing                        Dr.        1000

Vendor Payable                        Cr.        1200

Return goods to Vendor (Credit Memo)                                          FB65

 

Vendor A/c                                        Dr.       5000

TO Raw Material A/c                      Cr.       5000

VENDOR INVOICE POSTING                                                               FB60/F-43/FV60

 

Rent Invoice, Office Stationary Purchase invoice ,Professional Fees (Charted Accountant) ,Postage &

telegram Charges invoice, Telephone Charges invoice Electric Charges invoice, Sub-contractor Service

charges invoice, mobile bill

Telephone Charges A/c                Dr.       2500

TO Vendor A/c                                Cr.       2500

TDS Accounting  Entry with Advance to Vendor            F-47/F-48

VENDOR A/C                                          Dr.       10000

            TO OUT GOINGING BANK     Cr.       9900

            TO TDS A/C                                  Cr.       100

With Invoice Posting                                                                FB60/F-43/FV60

RENT A/C                                                Dr.       20000

            TO VENDOR A/C                       Cr.       19900

            TO TDS A/C                                 Cr.       100

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CIN Accounting EntriesJanuary 7, 2013

Accounting entry in procurement~ For Domestic Procurement of Raw Material

  During GR

            Material Stock            Dr.

           GR/IR clearing                        Cr.

 During Excise Invoice Credit            

            Cenvat Account          Dr.

            Cenvat Clearing                     Cr.

  During Invoice Verification

             Cenvat Clearing         Dr.

            GR/IR Clearing           Dr.

            Vendor Payable                      Cr. 

For Domestic proceurement of Capital Goods

  During GR

             Material Stock            Dr.

            GR/IR clearing                        Cr.

  During Excise Invoice Credit            

              Cenvat Account          Dr.       (50%)

              Cenvat On-hold          Dr.       (50%)

              Cenvat Clearing                     Cr.

During Invoice Verification

               Cenvat Clearing         Dr.

                GR/IR Clearing           Dr.

                Vendor Payable                      Cr

Subsequent of Capital Goods

                 Cenvat Account          Dr.       (50%)

                Cenvat On-hold                      Cr.       (50%) 

For Import Procurement of Raw Material                       

   During Customs Duty Clearing invoice

              Custom Clearing         Dr.

              Custom Payable                      Cr.

   During GR

                Material Stock            Dr.

                 GR/IR clearing                        Cr.

   During Excise Invoice Credit            

                Cenvat Account          Dr.      

                Custom Clearing                   

During Invoice Verification

                GR/IR Clearing           Dr.

                Vendor Payable                      Cr.

 For Excise Duty Credit of Raw Material without PO                       

               Cenvat Account          Dr.      

              Cenvat Clearing                     Cr. 

 For Excise Duty Reversal through Excise JV                       

              Cenvat Clearing         Dr.      

              Cenvat Account                      Cr.

Accounting entry when the goods are issued through MM and Excise invoice is Credited(J1IS &J1IV)

During Excise Invoice Creation

             Cenvat Suspense Account       Dr.

             Cenvat payable                                   Cr.

 For TR6C Challan

PLA Account               Dr.

PLA on hold Account              Cr.

 During Fortnightly  Utilization

Cenvat payable           Dr.

Cenvat Account                       Cr.

PLA Account                           Cr. Note: Cenvat Suspense Account should be cleared apprpiately using FI JV’s.

Accounting Entry in subcontracting reversal/Recredit

For Subcontracting Challan Reversal     Cenvat Reversal          Dr.

     Cenvat Account                      Cr.

For Subcontracting Challan Recredit

      Cenvat Account          Dr.

      Cenvat Reversal                      Cr.

Accounting Entry in SD

For  Factory Sale During Billing Document

      Customer Account                  Dr.

      Sales Account                                      Cr.

       Cenvat Suspense Account                   Cr.

 During Excise Invoice Creation

       Cenvat Suspense Account       Dr.

       Cenvat payable                                   Cr.

 For TR6C Challan

PLA Account               Dr.

PLA on hold Account              Cr.

 During Fortnightly  Utilization

Cenvat payable           Dr.

Cenvat Account                       Cr.

PLA Account                           Cr. 

For  Stock Transfer through SD

No Accounting entries for Performa Billing Document During Excise Invoice Creation

    Cenvat Suspense Account       Dr.

    Cenvat payable                                   Cr.

 For TR6C Challan

PLA Account               Dr.

PLA on hold Account              Cr.

 During Fortnightly  Utilization

Cenvat payable           Dr.

Cenvat Account                       Cr.

PLA Account                           Cr. Note: Cenvat Suspense Account should be cleared appropriately using FI JV’s.

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What is Personal Ledger Account or PLA? How is it maintained?

June 20, 2013

Personal ledger Account is an account with the Central Government, which is utilized for payment of duty of excise. The account is credited when the sum is deposited into the treasury and debited on payment of excise duty. Each debit and credit entry should be made on separate lines and assigned a running serial number for the financial year. The PLA must be prepared in triplicate by writing with an indelible pencil and using double sided carbon.Original and duplicate copies of PLA shall be sent to the Central Excise Officer in chargealong with the monthly/quarterly return.The assessee may make credit in the PLA by making cash payment into the treasury or authorised bank through TR-6 challan. Copy of each such challan shall be sent by the assessee to the Central Excise Officer along with the monthly/quarterly return.No restrictions exist with regard to any minimum amount, which should necessarily remain in balance to the credit of an assessee in his PLA. With the monthly payment system, there should be enough credit at the time of payment of duty for the month.Mutilations or erasures of entries once made in the PLA are not allowed. If any correction becomes necessary, the original entry should be scored out and attested by the assessee or his authorized agent.in SAP Scenario:Personal ledger Account is a register, which is used to pay excise duty liability to the government . In Sap the process as followed is:

1.You pay the PLA through T Code F-02 through PLA on Hold A/c. The Accounting entry is:

PLA on Hold   Dr

Bank                   Cr

or

Excise Duty Deposit Dr

Bank A/c                            Cr

2. Create excise JV with Transaction code J1IH in TR6. The accounting entry is

PLA A/c             Dr

PLA on Hold    Cr

Or

Excise Duty Paid    Dr

Excise Duty Deposit Cr

3. Now run the utilization

Excise Duty Payable            Dr

Excise Duty Credit A/c      Cr

PLA A/c                                    Cr

Service Tax Credit A/c       Cr

Suppose in a particular month excise liablity is $ 100 but in CENVAT A/c $60 only balance $40 we liable to pay cash/bank in pla account through GAR-7General Scenario:When any company or manufacturer buys his good from supplier, supplier  has to get his money and excise duty on these goods. After its production, when manufacturer sells these goods to his customers and distributors, he will get his money and excise duty. On this received excised duty, he will get the power ofexcise credit on his purchased goods under Cenvat Act. It means, he will deduct

his total paid or payable excise duty from total received or receivable excise duty and balance, he will deposit in Govt. account. It is just same like VAT rules. Following are the main journal entries which are relating to excise or excise duty.In the Books of Manufacturer1. When we purchase goods with Excise duty on Purchase 

Inventory Raw material A/c  Dr $1000

Excise Duty on Purchase A/c Dr  $200

Creditor  A/c Cr $1200

2. When we sell goods with Excise duty on Sale  

Debtor  A/c Dr  $1750

Sale A/c  Cr $1500

Excise Duty on Sale  $Cr 250

3. When Excise Duty Paid in Advance Excise Duty in Advance  Dr  $20 Bank Account of Govt. Cr $20

4. Excess of Excise duty on sale over excise duty on purchase and excise duty in advance will be payable to Govt. 

Excise Duty on Sale  A/c  Dr  $250Excise Duty on Purchase A/c Cr $200Excise Duty in Advance Cr $. 20* PLA  Credit  $305. When Excise duty is paid in Govt. Account * PLA  Debit  $30 Bank Account of Govt. Credit $30As per SAP SD Scenario:During Billing Document

Customer Account                   Dr.

Sales Account                          Cr.

Cenvat Suspense Account       Cr.

During Excise Invoice Creation

 Cenvat Suspense Account       Dr.

 Cenvat payable                       Cr.

For TR6C Challan

PLA Account                           Dr.

PLA on hold Account              Cr.

During Fortnightly  Utilization

Cenvat payable                       Dr.

Cenvat Account                       Cr.

PLA Account                           Cr.

As per SAP MM Scenario:

For Domestic Procurement of Raw Material

During GR

Material Stock            Dr.

GR/IR clearing          Cr.

During Excise Invoice Credit    

Cenvat Account          Dr.

Cenvat Clearing             Cr.

During Invoice Verification

Cenvat Clearing         Dr.

GR/IR Clearing           Dr.

Vendor Payable          Cr.

For Domestic procurement of Capital Goods

During GR

Material Stock            Dr.

GR/IR clearing          Cr.

During Excise Invoice Credit       

Cenvat Account          Dr.       (50%)

Cenvat On-hold          Dr.       (50%)

Cenvat Clearing         Cr.

During Invoice Verification

Cenvat Clearing         Dr.

GR/IR Clearing           Dr.

Vendor Payable         Cr

Subsequent of Capital Goods

Cenvat Account          Dr.       (50%)

Cenvat On-hold            Cr.    

For Import Procurement of Raw Material

During Customs Duty Clearing invoice

Custom Clearing         Dr.

Custom Payable        Cr.

During GR

Material Stock            Dr.

GR/IR clearing           Cr.

During Excise Invoice Credit          

Cenvat Account          Dr.

Custom Clearing         Cr.

During Invoice Verification

GR/IR Clearing           Dr.

Vendor Payable         Cr.

 For Excise Duty Credit of Raw Material without PO

Cenvat Account          Dr.

Cenvat Clearing          Cr.

For Excise Duty Reversal through Excise JV

Cenvat Clearing         Dr.

Cenvat Account        Cr.

Accounting entry when the goods are issued through MM and excise invoice is created (J1IS & J1IV)

For Subcontracting Challan ReversalCenvat Reversal          Dr.

Cenvat Account             Cr.

For Subcontracting Challan Recredit

Cenvat Account          Dr.

Cenvat Reversal           Cr.