Accounting transactions with respect to a Subcontracting Order are created in CREST ERP during Stock issue against Order and later, on
Stock receipt from Subcontractor. These are summarized below, taking one Subcontracting Order as an example.
This order is for an item, with only one child item. 5 units are ordered
Transaction 1: Material issue to Subcontract Order
This is based on the stock value
Transaction 2: Liability to Subcontractor for service charges
This is for 5 units @Rs.70=Rs.350
Transaction 3: Material received back against Subcontract Order
- a.For accepted quantity
This includes material value+service charge for 3 accepted units. (3*70)+13.58=223.58
- b.For rejected quantity
This includes material value+service charge for 2 rejected units. (2*70)+9.06=149.06
Transaction 4: Supplier invoice posted
This is only for 3 accepted units @Rs.70
Reconciliation
We can reconcile the transactions for the Subcontract as shown below
This difference must be manually charged off to an expense a/c – such as ‘Subcontracting scrap/wastage A/c”
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