Job work
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
06 January 2011
What is/are the accounting treatment/consequenses if 1000pcs of material offered for jobwork but only 500 pcs are sent by the Co.,bill is raised by jobworker on 1000 pcs & Co. has received the bill. If in such a case Co. paid for 500pcs Then what will be the consequenses.
07 January 2011
How it possible to double the quantity. please elaborate your query
09 January 2011
If payment to be relaesed for 1000 units as per terms , expenditure to be booked for 1000 units.
Accounting depends what is the transaction in terms of money.
Accounting depends what is the transaction in terms of money.
Querist : Anonymous
Querist :
Anonymous
(Querist)
10 January 2011
In such a case if co. paid for 500pcs Then what will be the consequenses
02 August 2024
When dealing with job work in the context of GST and accounting, it’s crucial to manage discrepancies between the materials sent and billed correctly. Here’s how to handle the situation you described:
### Scenario
- **Material Offered for Job Work:** 1,000 pcs
- **Material Sent to Job Worker:** 500 pcs
- **Job Worker’s Bill:** Raised on 1,000 pcs
- **Payment Made by Company:** Only for 500 pcs
### Accounting Treatment and Consequences
1. **Material Sent to Job Worker:**
- **Inventory Transfer:** Record the transfer of 500 pcs to job worker.
- **Accounting Entry:**
```plaintext
Dr. Job Work in Progress / Job Work Expenses (500 pcs at cost)
Cr. Inventory (Raw Materials) (500 pcs at cost)
```
2. **Job Worker’s Bill:**
- Since the job worker has billed for 1,000 pcs, but only 500 pcs were sent, the company should:
- **Record the Bill:** Record the full amount as per the invoice, but this would typically be adjusted based on actual quantities sent.
- **Accounting Entry (full amount):**
```plaintext
Dr. Job Work Expenses (Full amount based on 1,000 pcs)
Cr. Accounts Payable / Creditors
```
3. **Payment Made:**
- **Payment for 500 pcs:**
- The company has only paid for 500 pcs, so the payment needs to be properly accounted for, and a dispute or adjustment should be recorded.
- **Accounting Entry:**
```plaintext
Dr. Accounts Payable / Creditors (500 pcs amount)
Cr. Bank / Cash (Payment made)
```
4. **Consequences and Adjustments:**
- **Adjust Job Work Expenses:** The company should communicate with the job worker to rectify the discrepancy. If the job worker agrees, an adjustment should be made to reflect only 500 pcs as per actual work done.
- **Revised Accounting Entry (if corrected):**
```plaintext
Dr. Job Work Expenses (adjustment for 500 pcs, if corrected)
Cr. Accounts Payable / Creditors
```
- **GST Consideration:**
- Ensure that the GST is correctly accounted for based on actual quantities sent and billed. If the GST was paid on 1,000 pcs but only 500 pcs were sent, a claim for excess GST paid or adjustment needs to be made. This may involve issuing a credit note or adjusting the GST return.
- **Communication with Job Worker:**
- Notify the job worker of the discrepancy. The job worker should ideally issue a revised invoice for the actual quantity sent. Both parties should agree on the correct amount to be settled.
### Summary
1. Record the material transfer based on the quantity actually sent.
2. Initially record the full invoice amount, but adjust for discrepancies.
3. Pay for the actual quantity sent, and adjust the accounts accordingly.
4. Address GST implications and correct records based on the actual goods received and sent.
### Recommended Actions
- **Issue a Credit Note:** If possible, request a credit note from the job worker for the discrepancy.
- **Update Accounts:** Ensure that both inventory and job work expenses reflect the actual amounts.
- **GST Adjustment:** Ensure GST returns reflect the correct input and output tax based on actual transactions.
For precise adjustments and compliance, consult with a tax advisor or accountant who can offer guidance based on specific regulatory requirements and your company’s accounting policies.
### Scenario
- **Material Offered for Job Work:** 1,000 pcs
- **Material Sent to Job Worker:** 500 pcs
- **Job Worker’s Bill:** Raised on 1,000 pcs
- **Payment Made by Company:** Only for 500 pcs
### Accounting Treatment and Consequences
1. **Material Sent to Job Worker:**
- **Inventory Transfer:** Record the transfer of 500 pcs to job worker.
- **Accounting Entry:**
```plaintext
Dr. Job Work in Progress / Job Work Expenses (500 pcs at cost)
Cr. Inventory (Raw Materials) (500 pcs at cost)
```
2. **Job Worker’s Bill:**
- Since the job worker has billed for 1,000 pcs, but only 500 pcs were sent, the company should:
- **Record the Bill:** Record the full amount as per the invoice, but this would typically be adjusted based on actual quantities sent.
- **Accounting Entry (full amount):**
```plaintext
Dr. Job Work Expenses (Full amount based on 1,000 pcs)
Cr. Accounts Payable / Creditors
```
3. **Payment Made:**
- **Payment for 500 pcs:**
- The company has only paid for 500 pcs, so the payment needs to be properly accounted for, and a dispute or adjustment should be recorded.
- **Accounting Entry:**
```plaintext
Dr. Accounts Payable / Creditors (500 pcs amount)
Cr. Bank / Cash (Payment made)
```
4. **Consequences and Adjustments:**
- **Adjust Job Work Expenses:** The company should communicate with the job worker to rectify the discrepancy. If the job worker agrees, an adjustment should be made to reflect only 500 pcs as per actual work done.
- **Revised Accounting Entry (if corrected):**
```plaintext
Dr. Job Work Expenses (adjustment for 500 pcs, if corrected)
Cr. Accounts Payable / Creditors
```
- **GST Consideration:**
- Ensure that the GST is correctly accounted for based on actual quantities sent and billed. If the GST was paid on 1,000 pcs but only 500 pcs were sent, a claim for excess GST paid or adjustment needs to be made. This may involve issuing a credit note or adjusting the GST return.
- **Communication with Job Worker:**
- Notify the job worker of the discrepancy. The job worker should ideally issue a revised invoice for the actual quantity sent. Both parties should agree on the correct amount to be settled.
### Summary
1. Record the material transfer based on the quantity actually sent.
2. Initially record the full invoice amount, but adjust for discrepancies.
3. Pay for the actual quantity sent, and adjust the accounts accordingly.
4. Address GST implications and correct records based on the actual goods received and sent.
### Recommended Actions
- **Issue a Credit Note:** If possible, request a credit note from the job worker for the discrepancy.
- **Update Accounts:** Ensure that both inventory and job work expenses reflect the actual amounts.
- **GST Adjustment:** Ensure GST returns reflect the correct input and output tax based on actual transactions.
For precise adjustments and compliance, consult with a tax advisor or accountant who can offer guidance based on specific regulatory requirements and your company’s accounting policies.
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