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Below is the case study related to ABC Ltd:

ABC Ltd is into the business line of manufacturing 2 wheelers.

ABC Ltd is a motorcycle manufactured company having its head office in Bangalore and
manufacturing plant in Hosur.

The financial year starts from 1st of April to 31st of March of every year. For adjustment postings
each company code can use maximum of 4 special posting periods.

Their Finished goods are as below:

Two wheeler Bikes

Two wheeler Scooter

They are selling these Finished products across many countries.

This case study is based on India company code.

Org Structure

The Company has decided to create one company code for its head office operations. It would be linked
to one controlling area and one plant. AP,AR, Bank accounting and AA would be active for company
code.

GL accounting

Based on the above business process, GL accounts needs to be created with relevant fields required for
postings. Few parameters:

Revenue GL Accounts should contain profit centers mandatory during time of postings

Expenses GL Account should contain cost centers mandatory during time of postings

Sale/Purchases related GL accounts, tax codes needs to be captured during time of postings

For bank GL accounts, value date is mandatory.

Bank Accounting:

Company is having their current accounts In Axis Bank with INR currency, the below are the details:

Bank is located in Country IN

Bank key 046030796


All the outgoing payment and incoming receipts will be processed thru intermediary GL accounts. After
realization of payments, the transactions need to be transferred to Main GL Account.

Accounts Payable:

Company will procure all the raw materials from vendor based on the price, terms and quality
agreement.

They are procuring raw materials from the vendor XYZ Ltd. At the time of booking the vendor invoices,
the input tax rate 3% needs to be captured.

For this vendor company has the agreement that they will pay the total amount as per the below break
down:

1. Down payment of 20% total invoice amount.


2. Final payment after 15 days of booking the invoice

Company will get the cash discount as per the below:

If the total amount will be paid immediately: 5 % discount.

If the total amount will be paid within 10 days: 2% discount.

No discount after 15 days.

Company will make the payment thru Cheques. They will use only automatic payments for making
mode for payments.

As an exception, payments would make manually, cheque numbers needs to be allotted at the time
of payment.

There will be some cases where partial payments are made to the vendors. And some cases, residual
payment are also made.

The cheques would be pre numbered series.

All the payments to this vendor must go through only from Axis bank which is the only house bank
that the company code has.

Accounts Receivables:
Company ABC Pvt will sell their Finished Goods to various dealers.

They have sales depots in each state through this, the deliveries will happen. Customers will place the
orders thru sales depots. If the stock is available, they are directly delivered. Otherwise, stock is
procured from manufacturing plant.
Once the customer will give the order ABC Pvt Ltd will request for 25% of the down payment of the total
invoice. Once the customer will give the down payment then ABC Pvt Ltd will dispatch the order.

For each purchase the customer has to bear 10 % tax of the total invoice amount.

If the Invoice is paid by customer within 15 days , then customer will get a discount 2% on the invoice.

In case if the customer return the goods after receiving the payment, then credit memo needs to be
issued in order to correct the books.

Customers make the payments thru cheques. All these cheques are deposited in the companys
current account by respective sales depots.

Asset accounting

The Company has proposed to have two areas one which would post and other for reporting
purpose(The reporting area would be used for Tax purpose)

Company is having below assets:

Plant & Machinery


Generators
Office Furniture
Buildings
Computers

The depreciation method for the above assets is straight line. The rates of depreciation are:

Plant & Machinery 5%


Generators 6%
Furniture 8%
Buildings 10%
Computers 15%

For Tax purpose all the depreciation rates are same as book area except Plant and Machinery which
would be depreciated at 10%.