Accounts Payable Journal Entries

March 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/cxxx
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/c10
On doing the Invoice Verification, the following entry gets
generated.
GR/IR Clearing a/c....Dr. 70
Freight Clearing a/cDr. 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/cDr. 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/cDr. 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/cDr. 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/cDr. xxx
Freight Clearing a/c.Dr. xxx
To Vendor a/cxxx
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 Entries
January 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 J V

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 JVs.
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 JVs.
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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-7
General 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 $250
Excise Duty on Purchase A/c Cr $200
Excise Duty in Advance Cr $. 20
* PLA Credit $30
5. When Excise duty is paid in Govt. Account
* PLA Debit $30
Bank Account of Govt. Credit $30
As 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 Reversal
Cenvat Reversal Dr.
Cenvat Account Cr.
For Subcontracting Challan Recredit
Cenvat Account Dr.
Cenvat Reversal Cr.