Inventory postings to Dummy purchase A/c.

[Former Member]

Hi Team,

If I do GR for sub-con PO (Say, Parent material- P100100 and Child- C100100), current postings are as below:

Inventory A/c Cr $100 for P100100 (101):

Dummy purchase A/c Dr $100

Inventory A/c Dr $100 for C100100(543):

Dummy purchase A/c Cr $100

Please explain, what is the user of Dummy purchase A/c? Can I say ‘Dummy purchase’ is an off-set account?

Is it possible or can we set for Debit and the Credit are between P100100 and C100100? Eg as below:

Inventory A/c Cr $100 for P100100 (101)

Inventory A/c Dr $100 for C100100 (543):

Please advice, is the above postings are suggestible?

Thanks in advance for your help.

Best regards,

RAMAN,

[Former Member]

Hi,

during subcon GR the following accounts are affetced..

Finished goods stock a/c

Stock change a/c

GR/IR clearing a/c

External service a/c

Comp stock account

Consumption stock comp account

As per your first query,

Inventory A/c Cr $100 for P100100 (101): (finished goods stock a/c)

Dummy purchase A/c Dr $100 -

---

> This is supposed to be stock change account for parent

Inventory A/c Dr $100 for C100100(543):(stock account of components)

Dummy purchase A/c Cr $100 -

---

> This is consumption stock account for components.

(i assume that GR/IR account and external servcie account are already considered by you )

Second query,

Is it possible or can we set for Debit and the Credit are between P100100 and C100100? Eg as below

Inventory A/c Cr $100 for P100100 (101)

Inventory A/c Dr $100 for C100100 (543):

The valuation of parent material can not be the same as components.

Valuation of parent = valuation of comp+subcon service charges.

the above requirement is not posssible.

Please let me know if you need any clarifications further..

[Former Member]

Hi Raman,

The dummy purchase is for the information. your doing no purchase. These details may need for the legal purpose.

Because any purchase we have to pay tax and other legal obligations will be there.

Since you are working for Subcontracting Scenario. Here you are sending your own material C100100 and getting the Finished part P100100.

Here you are not purchasing the your finished part P100100. Your are just paying the service/ Value addition/ Work done by your Sub Contractor

Due to Above reason The Dummy purchase A/c Dr with - 100$.

It is for the information sake.How much amount worth material you send to Vendor and How much amount worth material you received.

It is not having no financial Impact.

And it is Vice versa for your child material C100100.

Hope above information helps.

Thanks

Giri