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.

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Sales and Distribution Accounting Entries

INVOICE GENERATION
Invoices will be generated at the Smelters and stock points. The accounting entries for the sale of goods despatched will flow from the Sales invoice generated in SAP Sales and Distribution module. The following entries shall be passed
Customer Account Dr
Revenue Cr
Excise Duty Payable Cr
Sales Tax Payable (local or central) Cr

Note: As mentioned above in the FI document, which is created in the background, the SD invoice number shall be captured. However as per the current accounting procedure the accounting entry passed is as follows :-
Customer Account Dr
Revenue Cr
Excise Duty Billed Cr
Sales Tax Payable (local or central) Cr

Excise duty paid a/c Dr
Excise duty payable a/c Cr

EXPORT SALES
There have been very few export transactions in the past. SAP system will be designed to handle export business. Exports are mainly from the mines and will be handled at the mines, however the documentation part will be taken care at the Head Office. The accounting entry is:
Customer Account Dr
Revenue (Exports) Cr

The realisation of export sales will be directly credited to the bank. The accounting entries will be as follow:
Bank Dr
Customer Cr
Exchange Fluctuation Dr/ Cr

The accounting entries will be:
Rebates/Discounts Dr
Customer

Cr

DEBIT MEMOS
Debit Memos shall be issued in case of price difference, sale tax difference and interest on usance period and overdue payments.

The accounting entries for two possible scenarios are as follows:
Price Undercharged:
Customer Account Dr.
Revenue Cr.
Sales tax payable Cr.
Sales tax undercharged
Customer Account Dr.
Sales tax adjustment Cr.

Interest on delayed payments/usance period and other charges
Customer Account Dr.
Interest Others Cr.

In case of HZL a complete retirement or a partial retirement of asset is done. The system uses the asset retirement date to determine the amount to be charged off for each depreciation area. The existing accounting policy is to provide depreciation for the full quarter in which the asset is sold/discarded, recommended that the depreciation be provided from the date of acquisition on prorata basis .

Accounting entry for sale of Asset to customers:
Customer Account Dr
Asset Sale Cr
Accumulated Depreciation Dr
Loss on Sale (if applicable) Dr
Asset Sale account Dr
Asset account Cr
Profit on sale (if applicable) Cr

Note: In case of any Sales Tax /Excise duty applicable for this transaction, SAP will calculate the Sales Tax/Excise Duty based on the Tax Code selected the entry is posted to the GL Account (Sales Tax Payable)

Accounting entry for sale without a customer:
Accumulated Depreciation Dr
Loss on Sale (if applicable) Dr
Asset Sale account Dr
Asset account Cr
Profit on sale (if applicable) Cr

Accounting entry for scrap
Accumulated Depreciation Dr
Loss on Sale of Assets Dr
Asset account Cr

SALE OF SCRAP
The sale of scrap (non-stock) shall be mapped as a direct manual FI entry. The customer will be created as a FI customer. No Logistics module will be involved in the process.

A FI Invoice will be prepared for the sale of scrap with the following entries:
Customer Dr
Sale of Scrap Cr
Excise Duty Payable Cr

ADVANCES FROM CUSTOMERS
Advances are received from the customers against delivery. These advances will be recorded in a special general ledger account. The accounting entry for the same will be:
Bank Account Dr
Advance Customer Payments Cr

These advances will be later on adjusted against the invoices raised on the customers. Advances can be adjusted against more than one invoice at the time of clearing of the invoices against advances.

Adjustment of Advances
Customer Account Cr
Advance Customer Payments Dr

A financial document would be created for each Bank Guarantee received and this document number will be referred to in the Sales Order which would then monitor the value and the validity of the of the Bank Guarantee instrument wise while doing the billing.The letter of credit /Bank guarantee given will be recorded as a noted item.

Accounting Entry for Goods receipt
Stock/Inventory account Dr
GR/IR account Cr
Freight clearing account Cr

Accounting Entry on invoice verification of supplier
GR/IR Dr
Vendor account Cr

Accounting Entry on invoice verification of freight vendor
Freight clearing account Dr
Freight Vendor account Cr

GOODS RECEIPT
Based on the Purchase order and the Quantity actually received Goods Receipts (GR) will be done. Based on the GR done the following accounting entry will be passed in the Financial Accounts
RM/PM Stock Account Dr
GR/IR Account Cr
Freight Clearing Account Cr

EXCISE INVOICE VERIFICATION
On receipt of the excise invoice cum gate pass the following entry will be passed
RG 23 A / RG 23 C Part 2 Account Dr
Cenvat Clearing Account Cr

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