accounting entry for grade loss

A/c entries 624 views 3 replies

sanjaya

Accountant

85 Points Joined May 2010

For a company tradaing iron ore it usually happens that supplier supply low grade material.in one such instance we lost 50 lakhs due to purchase of low grade materials.our supplier agreed to share our loss for rs 30 lakhs but sent bill for the full amount.

We can pass the entry say Supplier A/c Dr to Loss on grade fail A/c.

What will be the group for loss on grade fail ledger in tally?

Replies (3)

Venkateswara Rao Sapare

Accountant

1500 Points Joined May 2010

We can pass the entry say Supplier A/c Dr to Loss on grade fail A/c.

What will be the group for loss on grade fail ledger in tally?"

It is clear the nature of transaction comes under "Direct Expenses". We need to classify above cited account into "Direct Expenses".

sanjaya

Accountant

85 Points Joined May 2010

Further how should we bill the same to our buyer as we have to bear loss amounting rs 20 lakh.

Should i adjust the amount in bill itself by lowering the rate or send bill for the full amount and issue a credit note or ask the buyer to issue a debit note.

Venkateswara Rao Sapare

Accountant

1500 Points Joined May 2010

We need to account the bill for full amount in our books.
For the quality loss, pass an entry debiting the supplier to that extent i.e.Rs.30 lakhs by crediting to "Loss on Quality a/c"
To this extent, supplier will need rise a Credit note on you. ( Else, you may rise a debit note on supplier. Effect will be the same.)