Vendor Invoice Verification Accounting Entries

Vendor Invoice Verification Accounting Entries:
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 follo wing 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
In 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    

Reversal Entry In Accounting:
At times some incorrect documents might have been entered in the systems. 
    
If you have entered an incorrect document, you can reverse it.  Note that R/3 can reverse a document only if the following conditions are met: 
    
- Contains no cleared items 
- Contains only vendor, customer, or G/L line items 
- Was posted within the FI system 
- Contains only valid values, such as business areas, cost centers, and tax codes 
    
Ordinarily, you post a reversing document in the same period you posted the original document.  The period of the original document must be open to post a reversing document. If the period is not open, you can overwrite the posting date field with a date in an open period, such as the current period. 
    
Reversal can be done individually - FB08 or Mass F.80. 
    
If the document to be reveresed contain cleared items, then cleared item must be reset before the reversal of document.