High Sea Sale - Invoicing and Inventory

Others 2808 views 2 replies

Animesh Jain

24 Points Joined October 2008

Dear All,

Please advice.

A Company has its ship carrying material to India after purchase from vendor. Now, A company has executed a High-Sea Sale agreement with B Company before the ship enters the Indian shores.

Queries

1. On entering into sale agreement, should A company continue showing the purchased material as Inventory? If yes, how to show it as Goods in Transit/ Raw Material or any other form.

2. Is it not mandatory for A Company to invoice the B Company along with the high sea sale agreement?

3. How B Company will treat the said dealings? In other words, when B Company will record it as purchase in its book?

Replies (2)

deepti

none

39 Points Joined May 2011

1. title of goods is transfered to B co before it enters territorial water of India. hence inventory will be shown in the books of B co ie HSS buyer.

2. there wont be any issue of invoice. bill of lading will be endorsed in the name of B co.

3. i think date of purchase is date of endorsement of bill of lading.

satish kumar Chauhan

accountant

361 Points Joined May 2011

in the books of A Co.

ist entry to be Dr to Purchase a/c and cr to Supplier a/c and 2dt entry Dr to B co. and Cr to sales in Transit a/c(HSS) at the time of sale of aggrement and bill to be issue in fav of Bco.along with the endorsemnnt of the reqiuerd document.

In the books of B Co.

Dr to Purchase a/c and cr to A.co