Consignment Accounting
This query is : Resolved
22 August 2008
Hello
I have query in respect of consignment accounting for one of my client.
Client (K Ltd.) manufactures material. Sales is effected through consignments.
When material is sent to consignment agent, company prepares excise invoice to record transfer. Property of material is still with K Ltd. as sale is on consignment basis.
Consignment agent while selling the material generates excise invoice on customer (T Ltd.) and one copy of it is forwarded to K Ltd.
Based on consignment agent invoice, K Ltd. prepares dummy invoice in accounting system and books it against T Ltd.
Payment for material is directly received by K Ltd. from T. Ltd.
Is this correct practice?
1. Can company raise dummy invoice on actual customer?
2. How the payment from actual customer need to be accounted?
Please narrate stadard industry practice followed for consignment accounting.
I have query in respect of consignment accounting for one of my client.
Client (K Ltd.) manufactures material. Sales is effected through consignments.
When material is sent to consignment agent, company prepares excise invoice to record transfer. Property of material is still with K Ltd. as sale is on consignment basis.
Consignment agent while selling the material generates excise invoice on customer (T Ltd.) and one copy of it is forwarded to K Ltd.
Based on consignment agent invoice, K Ltd. prepares dummy invoice in accounting system and books it against T Ltd.
Payment for material is directly received by K Ltd. from T. Ltd.
Is this correct practice?
1. Can company raise dummy invoice on actual customer?
2. How the payment from actual customer need to be accounted?
Please narrate stadard industry practice followed for consignment accounting.
27 August 2008
In such a case the dummy bill generated may be given a nomenclature of Voucher. May be the entry is posted if the bill is generated in the software.
The payment received from actual customer will be routed through the account of the consignee.
The payment received from actual customer will be routed through the account of the consignee.
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