Subcontracting Scenario

[former_member193587]

hi experts

I am working on scenario for 57f4 where we give purchase order to vendor & vendor provides this material to subcontractor directly & we recive final finish product from the subcontracting vendor, So please help me how to map this scenario with accounting entries?

[former_member187965]

Hi Ragini,

In the purchase order of main vendor under the 'delivery address' tab enter the sub-contracting vendor and activate the 'SC vend' check mark.

In the GR for this PO system posts '101 O' movement type and the stock is directly posted to the sub-contracting vendor. Select no excise entry during goods receipt. The accounting entry will be, BSX....Debit and WRX.....Credit.

From excise point of view,

Maintain '101 O' movement type for the 0001 movement type group. This configuration is required to create sub-contracting challan. Create 57F4 challan with respect to the GR document created in the above step.

As per excise rule, company can not avail the excise duty credit (Part 2 entry should not be posted) for the material which is directly transferred to sub-contractor from vendor. Excise duty credit can be availed when the finished material is received in the factory premises from sub-contracting vendor.

Update 'Part 1' register by J1I5 transaction for the GR document posted with 101 O mvt type. After posting GR (for sub-contracting PO) for the finished material, avail the excise duty credit by posting 'Part 2' entry by J1IEX.

[former_member193587]

thanks for quick reply,

Please clear my basic querry,

When i do gr  & miro  with respect to po ? & how i know material reach to vendor?

[former_member187965]

Hi Ragini,

Well, in many firms, the GR is posted after receipt of confirmation (email or any other document) from sub-contractor about the physical receipt of material from vendor. You will receive the an excise invoice, copy of delivery challan from vendor which will be a proof of material dispatch from vendor to sub-contractor. 

[Former Member]

When you do GR for your vendor it will post material to your subcontractor with 101 O - which as equal to 541 mvt type. Then with this document challan 57f4 challan by using J1IF01 -> receive material from your subcontracting vendor by doing GR for finished product.

For PO1 which has your Vendor - post GR (101 O - system determines automatically because of SC indicator) - create 57F4 challan with this document- Then MIRO for this vendor after Posting GR.

Report: MBLB & MMBE To check material provided to Vendor.

For PO2 - Subcontracting - Post GR (101 - 543 mvt types) - > Update Challan - J1FQ & J1IF13 - MIRO

[former_member193587]

hi

Can you explain in detail po1 & po2 ?

[Former Member]

PO1 - Vendor X1 providing your raw material M1 but you want him to transport material to your subcontracting vendor for further process. For this you have to raise PO but in delivery tab tick SC vendor X2 (mention your subcontracting vendor X2 code here). When you do GR for this material - Vendor - system transfer's material to Vendor X2 by 101 O (this you can confirm from vendor's acknowledgement/bill). Then after GR - Post MIRO normally & Pay to vendor.

After GR check MBLB & MMBE : material transferred to SC vendor. Create 57F4 for this GR document by using J1IF01. Report: J1IFR (tick Annexure IV)

PO2 - Vendor X2 - Raise subcontracting PO with component M1 & finished material F1. Do GR (101 -543) - Reconcile challan by using J1IFQ for material document - (if material receives after 180 days system asks you to reverse the challan (J1IF13) and reconcile) then finally MIRO & Payment.

[former_member187965]

Hi Ragini,

As you said "we give purchase order to vendor" this is PO1 and in this PO you have to enter sub-contracting vendor as i shown 'screen shot' in my previous reply. After GR for this PO1 system posts '101 O' movement type and the stock is posted directly to sub-contractor.

PO2 is which you give to sub-contracting vendor for purchase of finished material. After posting GR for this PO, reconcile the 57F4 challan.

[Former Member]

Hi Ragini

You can map this in 2 different ways.

1. In the PO to supplier, in delivery tab, give tick mark 'SC vendor' and enter the subcontractor in the field specified.

In doing so, GRN of this PO brings the stock directly to special stock 'O'.

Then you can do MIRO.

2. Do not follow procedure 1.

Take vendor PO as normal PO. Bring the stock to own storage location, and subsequently do transfer posting 541 to special stock 'O'

Pls revert for any clarifications

sBk