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Free of Charge Sales - CIN - Accounting Entry

Former Member
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Hi,

I have the following issue in the Free of Charge Sales - CIN - Accounting Entry.

<Text removed by Moderator for normalizing the priority.>

Thanks in advance.

Creating a Sales Order for FOC Sales.

Created:

  • Sales Order ZIDF (Domestic Sales Order for FOC)
  • Item Category ZIKL (FOC)
  • Assigned of Item Category done
  • Created a new movement type 985
  • Schedule Line Category ZI (FOC Goods Issue)
  • Assigned Schedule line Category to Item Category
  • Separate account key ZDI


Pricing Procedure:

Step              Cond type   Description                 From      to                  

10                  ZPR1          Price                                                        Stat-X, Acc Key – ZDI, Acckey accru-ZDI

200               JEXP            BED12%                      10                       Acc Key -EXD                 

425               JECP            Cess2%                     200       200         Acc Key -ECE

426               JA1X           SHECess1%               200       200         Acc Key -HSC

435                              Net Value Base+Exc         10       426         Cal type -2

650               DIFF             Rounding off                                          Required-X, Req-13, Cal type-16, Bas ty-2, Acc Key ERS

941               EK02            Calculated Costs                                    Stat-X, Sub tot-B

Account Determination – VKOA

APP               COND TY    Chart of Acc        SOrg              Cus AAG     Mtl AAG     Act Key       G/L Acc                                          Provision Acc

V                     KOFI              XXXX                SO1               A1                  B1                  ZDI           5000 (Sales Promo Acc)             5000 (Sales Promo Acc)

V                     KOFI              XXXX                SO1               A1                  B1                  EXD          5001 (BEDpayable)    

V                     KOFI              XXXX                SO1               A1                  B1                  ECE          5002 (Cess paybl)

V                     KOFI              XXXX                SO1               A1                  B1                  HSC         5003 (SHECess Paybl)

After I create the Billing document, I get the following accounting entries:

Customer Account Dr.                          1236.00

Sales Promo Acc Dr.                          10000.00

Sales Promo Acc Cr.                                                  10000.00

BED Payable 12%                                                         1200.00

ECess Payable 2%                                                           24.00

SHECess Payable 1%                                                      12.00

The Customer Account Dr. entry should not come. It again has to hit the Sales Promo Acc only.

What are the changes to be made?


Regards

Vydeesh

Message was edited by: Jyoti Prakash

Accepted Solutions (0)

Answers (4)

Answers (4)

jpfriends079
Active Contributor
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The Customer Account Dr. entry should not come. It again has to hit the Sales Promo Acc only.

I didn't think it is a right idea/way to include excise amount to Sales Promo Acc for free of charge sales.

You need to get those duty amount different to "Duty adjustment a/c". B'coz you are liable to pay those duty to Govt, until you have proper exemption for paying those duty. Which you will not be able to differentiate, if take to Sales Promo a/c. For hint on this, refer my suggestion in following thread,

- Need seperate GL for Export Pricing procedure in commercial billing

Alternatively, you can follow, what is been suggested by Lakshmipathi Sir.

But in my opinion, you should have discussion with your Finance for this.

Regards, JP

Former Member
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Hi,

I have taken your suggestion. But my Client requires the same to hit the Sales Promo A/c only.

Need your inputs.

Regards

Vydeesh

jpfriends079
Active Contributor
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Very well. Then ask them, how are they going to differentiate the duty amount which is payable to Govt, if taken to one single Promotional a/c.

Else customer is the king and comply with their requirement.

Best Wishes, JP

Former Member
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Hi

As you have said, Customer is the King. I need to do as per his requirement.

Need more input.

Regards

Vydeesh

jpfriends079
Active Contributor
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Hope you refer the link which I referred in my earlier post. Then, you should not use accrual config from pricing condition type. Instead, add a new 100% discount condition type.

Thanks, JP

former_member205178
Contributor
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Hi,

While I do not know very much in detail about the Taxation and Indian Excise rules in India, I think what Jyoti has pointed out about the duty amount payable to the Govt. is most likely the scenario you still have to deal with.

Normally, there are two scenarios in the case of FOC Orders:

1) The Item is Free to the Customer to the extent of the value of the goods, but the customer has to pay the Taxes pertaining to that;

2) The Item is in essence totally Free to the Customer and he does not have to pay anything - not even the taxes. That being said, these Taxes have still to be paid by the Client/Company as they are due to the Govt.

I think you are referring to the Second Scenario ! Right ?

Assuming that being the case, from the system's SAP Accounting Auto Postings Point of View, what you are looking for probably is that the Promotion Account has to be hit with the Tax Amount and the Customer Reconciliation Account has to be zero.

For the above scenario, what Jyoti has pointed out is the most likely solution that of having 100 % Discount.

He might be able to give more details, else, I can pitch in.

Thanks.

Former Member
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Hi

You are right with the second scenario.

What is the work around needed.

Regards

former_member205178
Contributor
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Hi,

As mentioned by Jyoti in his replies, this is similar to the settings done in Export Scenarios. I saw his other thread of discussion through the link. That is fairly straight forward and pretty detailed.

You should be getting a good idea from that link. 

Basically the point is to keep the Tax Condition Types as is and have New Negative % Discount Condition Types for each of these as a copy [referencing their From Steps]. Link this to the Account Key of Promotion Account.

Hope Jyoti's detailed explanation in his post link helps.

Thanks.

former_member205178
Contributor
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Hi Vaid,

Did you get your ideas of solution from Jyoti's inputs ??

Thanks.

Lakshmipathi
Active Contributor
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To post value in Sales Promotion expenses, you need to have a separate Account Key assigned to that condition type and for this Account Key, you need to maintain the same G/L Account in VKOA which you maintained for 10K you have shown in the break-up.

G. Lakshmipathi

Former Member
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Dear Lakshmipathi,

A new account key and same G/L - 5000 (Sales Promo account) to be created.

Which is the condition type you are referring to - ?

Vydeesh

Lakshmipathi
Active Contributor
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The requirement is not related to CIN but general and hence, moved back to Sales and Distribution

G. Lakshmipathi

Lakshmipathi
Active Contributor
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Moved from SAP ERP Sales and Distribution (SAP SD) to Internationalization and Unicode.  Please post all CIN related queries here.

G. Lakshmipathi