3/12/2018 Accounting entries Sub-Contracting

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Accounting entries Sub-Contracting

This question is answered

Hi,

I am working on Sub-contracting, what would be the excise related accounting entries at the time of creating
Sub-contracting challan. It will be helpful if someone can tell me the end to end flow of excise entries in sub-
contracting, also, when should i create the challan - Before issuing the goods or after issueing the goods and
also provide the details of reconciliation of challan once i receive the finished product from sub-contractor.

https://archive.sap.com/discussions/thread/1166137 1/10
3/12/2018 Accounting entries Sub-Contracting

Thanks

(https://people.sap.com/rahul.tyagi2)

rahul tyagi (https://people.sap.com/rahul.tyagi2)

December 15, 2008 at 05:52 AM
0 Likes

Correct Answer

Kunal Ingale (https://people.sap.com/kunal.ingale) replied

(https://people.sap.com/kunal.ingale)
December 15, 2008 at 05:09 AM
hi

Subcontracting without Payment of

Duty

u2022 Creation of Subcontracting PO

(ME21N)

u2022 Transfer Posting of

Components to Subcontractor (Mvmt
Type - 541) (MB1B/ME2O/MIGO)

u2022 Creation of Subcontracting

Challan w.r.t. Transfer Posting Doc
(J1IF01)

u2022 Goods Receipt w.r.t.

Subcontracting PO and Refer
Subcontracting Challan at the time of
GR (MIGO) {GR with 101 and auto
consumption of components with 543
movement}

u2022 Reconciliation of
Subcontracting Challan (J1IFQ)

u2022 Completion of Subcontracting

Challan (J1IF13)

u2022 Generation of Annexure IV

(J1IFR)

Note: - In this case, you have to

maintain the Assessable Value for the
Components to be supplied to Vendor
in J1ID and also Excise Tax rates for
https://archive.sap.com/discussions/thread/1166137 2/10
3/12/2018 Accounting entries Sub-Contracting

the Chapter IDs linked with these

components. So during J1IF01,
system will take the Assessable Value
as Excise base Value and calculates
the Excise Duties by taking Excise Tax
Rates.

Subcontracting under Full Payment

of Duty

u2022 Creation of Subcontracting PO

(ME21N)

u2022 Transfer Posting of

Components to Subcontractor
(MB1B/ME2O/MIGO)

u2022 Creation of Outgoing Excise

Invoice w.r.t. Transfer Posting
Document (J1IS) - Used to send the
components to Subcontractor's. Here
57F4 Challan is not created.

Accounting Entry: -

CENVAT Input BED - Cr

CENVAT Input ECS - Cr

CENVAT Input ECS - Cr

CENVAT Suspense A/c - Dr

u2022 Capture Vendor Excise Invoice

at the time of GR of Finished Goods
w.r.t. Subcontracting PO (MIGO)

u2022 Post Excise Invoice for FG

received from Subcontractor (J1IEX)

Accounting Entry: -

CENVAT Input BED - Dr

CENVAT Input ECS - Dr

CENVAT Input ECS - Dr

CENVAT Clearing A/c - Cr

subcontracting accounting

If Material has Price Control as "V"

(MAP)

(BSX) Stock A/c of Assembly - Dr

https://archive.sap.com/discussions/thread/1166137 (BSV) Ch i S b S k C 3/10

3/12/2018 Accounting entries Sub-Contracting
(BSV) Change in Subcon Stock - Cr

(FRL) Subcontracting Charges - Dr

(WRX) GR/IR Clearing A/c - Cr

(BSX) Stock A/c of Components - Cr

(GBB-VBO) Consumption A/c of

Components - Dr

If Material has Price Control as "S"

(Std. Price)

If Material is having Price Control as

"S" then Price Difference A/c will also
in picture.

This depends on configuration; SPRO

> MM > Inventory Management and
Physical Inventory > Goods Receipt >
Price Differences for Subcontract
Orders at Goods Receipt

Price Differences for Subcontract

Orders at Goods Receipt

In this step, you configure for each

valuation area whether price
differences are generated for a
Subcontract order at the time of a
goods receipt if the manufactured
material is managed at standard price
and the standard price varies from the
receipt value (externally performed
service + value of components +
delivery costs).

Example

Finished product: $400 (value at

standard price)

Subcontract order:

o Ext. service : $250

o Components : $100

Posting schema without price

differences:

Stock account FERT : 400 +

Stock change : 400 -

https://archive.sap.com/discussions/thread/1166137 GR/IR l i 2 0 4/10

3/12/2018 Accounting entries Sub-Contracting
GR/IR clearing acct : 250 -

External service acct : 250 +

Compon. stock account : 100 -

Consumption account : 100 +

Posting schema with price differences:

Stock account FERT : 400 +

Stock change : 350 -

Price difference : 50 -

GR/IR clearing acct : 250 -

External service acct : 250 +

Compon. stock account : 100 -

Consumption account : 100 +

hope it help

regards

kunal

0
View this answer in context (/discussions/message/6710086#6710086)

Helpful Answer by KARI SRINIVASA RAO (/discussions/message/6710068#6710068)

oking for? View more on this topic (https://go.sap.com/community/tag.html?

3261950044802925335) or

tps://answers.sap.com/questions/ask.html?primaryTagId=477297786799213261950044802925335)

5 replies

Correct Answer

(https://people.sap.com/kunal.ingale)
Kunal Ingale (https://people.sap.com/kunal.ingale)replied

December 15, 2008 at 05:10 AM

hi

https://archive.sap.com/discussions/thread/1166137 5/10
3/12/2018 Accounting entries Sub-Contracting

Subcontracting without Payment of Duty

u2022 Creation of Subcontracting PO (ME21N)

u2022 Transfer Posting of Components to Subcontractor

(Mvmt Type - 541) (MB1B/ME2O/MIGO)

u2022 Creation of Subcontracting Challan w.r.t. Transfer

Posting Doc (J1IF01)

u2022 Goods Receipt w.r.t. Subcontracting PO and Refer

Subcontracting Challan at the time of GR (MIGO) {GR with
101 and auto consumption of components with 543
movement}

u2022 Reconciliation of Subcontracting Challan (J1IFQ)

u2022 Completion of Subcontracting Challan (J1IF13)

u2022 Generation of Annexure IV (J1IFR)

Note: - In this case, you have to maintain the Assessable

Value for the Components to be supplied to Vendor in J1ID
and also Excise Tax rates for the Chapter IDs linked with
these components. So during J1IF01, system will take the
Assessable Value as Excise base Value and calculates the
Excise Duties by taking Excise Tax Rates.

Subcontracting under Full Payment of Duty

u2022 Creation of Subcontracting PO (ME21N)

u2022 Transfer Posting of Components to Subcontractor

(MB1B/ME2O/MIGO)

u2022 Creation of Outgoing Excise Invoice w.r.t. Transfer

Posting Document (J1IS) - Used to send the components to
Subcontractor's. Here 57F4 Challan is not created.

Accounting Entry: -

CENVAT Input BED - Cr

CENVAT Input ECS - Cr

CENVAT Input ECS - Cr

CENVAT Suspense A/c - Dr

u2022 Capture Vendor Excise Invoice at the time of GR of

Finished Goods w.r.t. Subcontracting PO (MIGO)

u2022 Post Excise Invoice for FG received from

Subcontractor (J1IEX)

Accounting Entry: -

https://archive.sap.com/discussions/thread/1166137 6/10
3/12/2018 Accounting entries Sub-Contracting

CENVAT Input BED - Dr

CENVAT Input ECS - Dr

CENVAT Input ECS - Dr

CENVAT Clearing A/c - Cr

subcontracting accounting

If Material has Price Control as "V" (MAP)

(BSX) Stock A/c of Assembly - Dr

(BSV) Change in Subcon Stock - Cr

(FRL) Subcontracting Charges - Dr

(WRX) GR/IR Clearing A/c - Cr

(BSX) Stock A/c of Components - Cr

(GBB-VBO) Consumption A/c of Components - Dr

If Material has Price Control as "S" (Std. Price)

If Material is having Price Control as "S" then Price Difference

A/c will also in picture.

This depends on configuration; SPRO > MM > Inventory

Management and Physical Inventory > Goods Receipt > Price
Differences for Subcontract Orders at Goods Receipt

Price Differences for Subcontract Orders at Goods Receipt

In this step, you configure for each valuation area whether

price differences are generated for a Subcontract order at the
time of a goods receipt if the manufactured material is
managed at standard price and the standard price varies from
the receipt value (externally performed service + value of
components + delivery costs).

Example

Finished product: $400 (value at standard price)

Subcontract order:

o Ext. service : $250

o Components : $100

Posting schema without price differences:

Stock account FERT : 400 +

Stock change : 400 -

GR/IR clearing acct : 250 -

External service acct : 250 +

https://archive.sap.com/discussions/thread/1166137 7/10
3/12/2018 Accounting entries Sub-Contracting

Compon. stock account : 100 -

Consumption account : 100 +

Posting schema with price differences:

Stock account FERT : 400 +

Stock change : 350 -

Price difference : 50 -

GR/IR clearing acct : 250 -

External service acct : 250 +

Compon. stock account : 100 -

Consumption account : 100 +

hope it help

regards

kunal

(https://people.sap.com/rahul.tyagi2)
rahul tyagi (https://people.sap.com/rahul.tyagi2)replied

December 15, 2008 at 05:25 AM

What is the SC challan description, in my system I have these
entries for 57FC

57FC Credit PLA BED account

57FC Credit RG 23 BED account

57FC Debit CENVAT clearing account

are these entries correct or do i need to modify them because

u have given the accounting entries as Suspense to BED

(https://people.sap.com/kunal.ingale)
Kunal Ingale (https://people.sap.com/kunal.ingale)replied

December 15, 2008 at 05:52 AM

hi

plz check following

https://archive.sap.com/discussions/thread/1166137 8/10
3/12/2018 Accounting entries Sub-Contracting

57FC 01 Credit PLA BED account

57FC 01 Credit PLA ECS Account

57FC 01 Credit RG 23 BED account

57FC 01 Credit RG 23 ECS Account

57FC 01 Debit CENVAT clearing account

this should be the entries

plz check following

http://help.sap.com/bestpractices/BBLibrary/HTML/J75_Third
PartyOrdProcwithSub_EN_KO.htm

http://help.sap.com/saphelp_erp2005vp/helpdata/en/b9/c2df3
ae710c60ae10000000a114084/frameset.htm

regards

kunal

 Helpful Answer

(https://people.sap.com/kari.srinivasarao)

KARI SRINIVASA RAO (https://people.sap.com/kari.srinivasarao)replied December 15, 2008 at 05:11 AM

Hi,

While issueing the components to sub contracting vendor the material document will be
genarated. With refrence this document you will do the Excise Chalan. And after reciving
the finished goods that means after consuming the compnents you will do the
Reconsilation. After reconsiling total quantity you will complete the excise chalan.Here we
are not paying any excise amount to the concerned authoritees.

Hence na accounting entriees.If it crose the 180 days period also we will bring back the
components and require we will do another chalan.

https://archive.sap.com/discussions/thread/1166137 9/10
3/12/2018 Accounting entries Sub-Contracting

(https://people.sap.com/rahul.tyagi2)
rahul tyagi (https://people.sap.com/rahul.tyagi2)replied

December 15, 2008 at 05:25 AM

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