Post on 18-Nov-2014
description
Procedures, Procedures, Documents and Documents and LCR ApplicationLCR Application
Section 1: Section 1: Purchase PaymentPurchase Payment
By : Sami Rahim Udgatty
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DOCUMENTS• OB: Blanket Order• PI : Proforma Invoice /• Inv : Supplier Invoice• BL : Bill of Lading• PL : Packing List• COO: Certificate of Origin
CHECKING / APPROVAL• OB: Signed by Authorised signatory as per delgation on value.• PI : Sealed & Signed with Bank details• Inv : Sealed & Signed reflecting OB number & itemd details• BL : Clarity on destination, Inv. #, date of shipment.• PL : Item details as per payment made for same.• COO: Type of product & concern country’s certification
ENTRIES• PP : Pre-Payment• PS : AP Vouc with PO match• PV : Expenses• PD : Deductions for discount, charges, expenses• PN : Payment entry / matching
Voucher
Copy of OB
(Blanket Order)
Supplier PI / Inv.
Accounts
Mgr.
PURCHASE
Dept.
Purchase Payment
ACCOUNTS
Dept.
Bank Seat
Voucher Supplier
Outstanding statement
Verifying Approval Payment
Payment Document (TT / Chq)
BL, Pkg List, COO
PP, PS, PV, PD entry PN entry
Intl. Audit Dept.
Auth. Signature By : Sami Rahim Udgatty
By : Sami Rahim Udgatty
1. OP : Order number used to match payments and LCR application.(OO-overseas order, OF-Centralised Local purchase)
2. Inco Term : FOB – Supplier bears all cost from his Ex-works, transport and loading on ship
3. Inco Term : C&F Sharjah – Supplier bears expenses of Ocean / Air freight till unloading at destination port
4. Shipment Ref # : Useful for LCR supplier invoices especially insurance.By : Sami Rahim Udgatty
Supporting documents required at the time of payment
Documents will vary as per payment type i.e. Advance or final payment
By : Sami Rahim Udgatty
Material inward & LCR Application Process Flow
Material Receipt
Shpg. Documents
ITEMS
3 Warehouse
1
Pur. Dept
Material Inward (GRN)
4
Accounts
2
QC Dept
Q/C Report
Quality Checking
System check abt inward
LCR application
Custom Duty 5% Freight Route Transportation Contrn size Insurance 10% + 20% Miscellaneous Actual
5
Showrooms
System check abt LCR Aplc
Contr
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Commonly, the total cost of a landed shipment including purchase price, freight, insurance, and other costs up to the port of destination. In some instances, it may also include the customs duties and other taxes levied on the shipment.
By : Sami Rahim Udgatty
Material receipt entry effect
Material Inward
Inventory
Split between Adv / Agst
outstandings
Supplier
Liability RNV – Trade Supplier PS creation agst RNV for Sundry Creditor RNV – LCR Supplier PS-PP matching to update Ledger
Current Asset Inventory is updated in form of Quantity and basic value. After LCR application, Cost of inventory goes up affecting the trade stock.
By : Sami Rahim Udgatty
FOC Treatment
Free Of Cost items : Items supplied by supplier Free of Cost to cover up the warranty or defective items if any.
FOC
Inventory Split between
Income / Inventory
FOC Receipt
Income statement Other income under FOC Receipt
Current Assets FOC plus the main quantity with value forms Trade stock
By : Sami Rahim Udgatty
Supplier Balance
Period Opening Bal.: Previous year / month end balance. Payment : Unmatched payment; advances, against material, expenses etc. Trade Creditors : Unmatched (PS) invoices of trade supplier LCR Creditors : Unmatched (PS) invoices of suppliers who provides services towards
various procurement services (Freight, Insurance, Transport, Customs, etc.) RNV Tr. Crs. : Receipts Not Vouched, these are those transactions pertaining to Trade
creditors of which material is received but liability (PS) is not considered in absence of non receipt of original invoice.
RNV LCR Crs.: LCR Applied for items but invoices of service provider is not yet received, hence these are appearing as RNV.
(a) Charges: Supplier agrees to provide additional service like packing, delivery, etc. on behalf of customer against such payment. These kind of transaction needs to be highlighted separately. (PV)
(b) Deductions: Supplier agrees to give deductions on payments, shipment delay, defective items, exhibition charges, visit charges etc. (PD)
FOC : Free Of Cost goods which is agreed by supplier to deliver against bulk orders. This is purely for meeting to cover-up few defective items, warranty coverage etc.
Blank Address : All the transactions especially the JE’s passed for solving integrity issue, rectifying closing balance etc.; does not update the G/L account as per the supplier number.
AFTER consolidating all the above G/Ls we finally arrive at the closing balance of supplier.
Period Opening Balance
Payments Trade Creditors
LCR Creditors
RNV Trade Crs.
RNV LCR Crs.
Charges / Deductions
FOC Blank Adrs
Closing Balance
O P T L RT RL CD F B C
G/L’s to be considered for arriving at CLOSING Balance of suppliers:
By : Sami Rahim Udgatty
Valuation and Valuation and Report Report
preparationpreparation
Section 2: Section 2: InventoryInventory
By : Sami Rahim Udgatty
11-Jul-09 Inventory 11
What's our inventory and its valuation ??
By : Sami Rahim Udgatty
Date Qty in hand1-Jan 40001-Feb 6000 units @ 16 each 30001-Mar 7000 units @22 each 30001-Apr 8000 units @ 17 each 50001-May 6000 units @25 each 50001-May 5000
Purchases SalesFIFO (First In First Out)
Transaction Rate Qty ValueOpening Stock 12 4000 48,000.00 Purchases 16 6000 96,000.00
17 8000 136,000.00 Cost of Goods available for SALE 280,000.00
Cost of Goods SOLD7000 12 4000 48,000.00
16 3000 48,000.00 6000 16 3000 48,000.00
17 3000 51,000.00 COGS 195,000.00
Inventory in HAND 85,000.00
LIFO (Last In First Out)Transaction Rate Qty Value
Opening Stock 12 4000 48,000.00 Purchases 16 6000 96,000.00
17 8000 136,000.00 Cost of Goods available for SALE 280,000.00
Cost of Goods SOLD7000 17 7000 119,000.00 6000 17 1000 17,000.00
16 5000 80,000.00 -
COGS 216,000.00 Inventory in HAND 64,000.00
WAC (Weighted Average Cost)Transaction Rate Qty Value
Opening Stock 12 4000 48,000.00 Purchases 16 6000 96,000.00
17 8000 136,000.00 Cost of Goods available for SALE 280,000.00 Average Unit Cost 15.56 Cost of Goods SOLD
7000 15.56 7000 108,888.89 6000 15.56 6000 93,333.33
- -
COGS 202,222.22 Inventory in HAND 77,777.78
By : Sami Rahim Udgatty
Cost of goods available for
Sale
Available Inventory Split between
COGS & Closing Stk
Cost of goods Sold
Income Statement Sales (Less) COGS Gross Profit
Balance Sheet Closing Stock
FIFO LIFO WAC
Sales 304,000.00 304,000.00 304,000.00 Cost of Goods Sold 195,000.00 216,000.00 202,222.22 Gross Profit 109,000.00 88,000.00 101,777.78
Ending Inventory 85,000.00 64,000.00 77,777.78
Material receipt entry effect
By : Sami Rahim Udgatty
11-Jul-09 Inventory 14
Transactions affecting stock value
Purchases LCR
Application Sales Return Re-costing WAC
Alignment
Sales Re-costing Purchase return WAC Alignment
Increase in stock value
Decrease in stock value
By : Sami Rahim Udgatty
12-Jul-09 Purchase and Inventory 15
Management’s report requirements
Purchases : Suppliers’ outstanding Ageing report Suppliers’ Advance ageing report Suppliers’ Turnover report
Inventory : Inventory valuation Inventory ageing report Product mix ABC Analysis
By : Sami Rahim Udgatty
12-Jul-09 Purchase and Inventory 16
Thank-you
Suggestion / ?s
By : Sami Rahim Udgatty