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 following 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 I

n 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