Subcontracting Entries

[Former Member]

Dear Gurus

We are preparing a subcontracting PO. The final incoming material is valuated with Standard Price. (Rs. 50000). Subcontracting PO prepared with Rs. 55000/-. Component cost is Rs. 10000

Please let me know the accounting entries involved during MIGO.

Viral Bhinde

[Former Member]

Hi

I could not get how your BOM is designed

this is how the accounting entries happen at S/c

DR- debit

CR credit

DR FG Stock/ SC By-Product Stock

CR Change in Stock (FG/ SC By-Product ) -- 50,000 (for finished goods received)

DR Subcontracting Charges ---5,000

CR GR/IR Clg

(for moneys payable to Subcontractor)

DR Consumption (Components) --- 10,000 CR Change in Stock (FG/ SC By-Product )

(material provided to Vendor is now charged to expense)

probably you will be having 5 components of 10,000 each

Thanks

Prasanna

Prasanna

award if usefull

[Former Member]

Thanks Prassana for answering

For Items wherein Standard Price has been defined, will there be any entry regarding - gain / loss from price difference in subcontracting scenario

Thanks

Viral Bhinde