Subcontracting entries FRN and BSX

[Former Member]

Dear Experts,

Please clarify the below accounting entries,

I am using the subcontracting process and both are Raw material (parent and child material),

When we are receiving the material from subcontracting vender below entries are hitting

First BSX entry includes the service charges + freight clearing amount + raw consumption. but my question is why the FRN account is debiting and this price is already having in BSX,

Please explain the above entries.

Thanks in advance,

[Prasoon · Accepted solution]

Hi,

   The postings shown in your screenshot seems to be perfect and as per standard design. In case of subcontract GR, each posting has its own offsetting account in GR.

   During GR for subcontracting, the system posts:

• The inventory posting value is posted to the Stock account BSX as debit and to the stock change account BSV  as credit. (and PRD if its standard price material and price difference posting is activated)
• The PO value for the GR quantity to the External Service Account FRL as debit and to the GR/IR clearing account WRX as credit.
• The freight value is posted to Incidental costs of External Activities FRN as debit  and to the freight clearing accounts as credit.

    The inventory posting value is calculated based on the price control of the material.

    In your case, the final product is MAP material. In this case,  you can find the exact logic for GR posting from the example below:

    Suppose, FG is MAP material and has 2 components Raw 1 and Raw 2 . The PO contains two accrual freight conditions, say FRA1 and FRA2.

Let

A  = PO Price =  (PO net price / PO Qty ) * GR quantity

B = Total freight =  B1 + B2 (and so on ) where,

B1  = Freight value for FRA1 =  (Total Freight for FRA1 in PO / PO quantity) * GR quantity

B2 =  Freight value for FRA2 = (Total Freight for FRA2 in PO / PO quantity) * GR quantity

C = Total Consumption value = C1 + C2 (and so on) where

C1 = Value of Raw 1 consumed = (Quantity of Raw  1 consumed *  valuation price of Raw 1 from material master)

C2 =  Value of Raw 2 consumed = (Quantity of Raw  2 consumed * valuation price of Raw 2 from material master)

Now, the posting in GR will be as follows:

BSX for FG = A + B + C

BSV = A + B + C

WRX = A

FRL = A

Freight 1 = B1

Freight 2 = B2

FRN  = B

BSX for Raw 1 = C1

GBB = C1

BSX for Raw 2 = C2

GBB = C2

Hope its clear.

Regards,

AKPT

[Former Member · Accepted solution]

Thanks for nice explanation,

My client is asking, In this case the Raw1 and Raw2 are consumed (i.e GBB), why its again including value in the Finish (i.e BSV). means already raw material consumed in one account(GBB) and this value is again including in the finish material consumption (CONSP.- RM-SUB CON).

Consumption happening two times of Raw material,

I have changed the G/L account for BSV, (PUR OFF ACCOUNT in place of CONSP.- RM-SUB CON), now they accepted

Regards,

HHC

[Prasoon · Accepted solution]

Hi,

   In subcontracting GR, each posting has its own offsetting account. In case of raw material, its consumed against GBB. But the same amount has to be added to the FG, since the FG is produced by consuming the Raw material.

   Same applies for delivery cost. Even though there is an offsetting entry FRN, the same is added to the FG material cost.

Regards,

AKPT

[Former Member · Accepted solution]

Hi,

Your absolutely right, but the Finance dept not accepting those entries, anyhow it has solved by changing the G/L accounts.

Thank you for your co-operation.

[Former Member]

Dear all,

In this subcontracting GRN entries i want to maintain the separate G/L for freight charges like User fee, siding charges and other charges etc. for tracking purpose. Now it is hitting same G/L for all types of freight i.e GRIR - other charges (FR6).

FR6 does not depend on valuation class, is there any other way to maintain separate G/L. For ref please check the below screen shot.

Thanks and Regards,

HHC

[Prasoon]

Hi,

   Go to your pricing procedure in M/08 and maintain different account key for the different freight condition types. Assign corresponding GL in obyc. Test the scenario again with a new PO.

Regards,

AKPT

[former_member183424]

If you want to use different G/L account, then you have to set the different G/L account for different transaction event key.

Create new transaction event key, then assign it into condition type in calculation schema. Then maintain the corresponds G/L account to the transaction event key.

Only then you can able to pick the different G/L account for different charges.

Suppose you want to set user fee and siding charges to different G/L account.

Create two transaction event key as XXX and ZZZ.

the assign these transaction key to condition type.

Then assign G/L account for the transaction key.

Then post the GR.

[Former Member]

Hi,

I already tried but only option having FR1-Frieght clearing, FR2-Frieght Provision, FR3-Custom clearing, FR4-Consign payable, FR6- other charges clearing.

FR1 already used for Railway freight, FR2, FR3 and FR4 i can't take, only the option FR6.

Is it possible to create new accounting entries like FR7, FR8 etc. as per me not possible, is it right??

regards,

HHC

[former_member183424]

Why not possible ?

It is well possible to create new transaction event key.

Check my below reply.

You can create new transaction event key from SPRO - MATERIAL MANAGEMENT - PURCHASING - Conditions - Define Price Determination Process - Define Transaction/Event Keys.

[Former Member]

Thank you for reply,

I had cleared now.

[Prasoon]

Hi,

   Yes, it is possible to create new account keys and its a best practice too. Go to the path: OLME - Conditions - Define Price Determination Process - Define Transaction/Event Keys.

Regards,

AKPT

[Former Member]

I have done.

Thanks a lot

[former_member183424]

You must have used account key and accrual key for your freight condition type and you have the accrual key tick for condition type.

Check it on M/08 and M/06.

FRN is debited and all others (as per above screen shot) are credited.

[Former Member]

Dear Dev,

Thanks for reply

yes i have used the account key and accrual key, the client is asking why the two times debiting accounts hitting BSX and FRN, BSX already taking the all prices like Freight and services why the FRN entries.

[former_member183424]

I don't think so.. Your BSX is only carrying the PO gross price..

Can you check the accrual key tick option for condition type in M/06 ? it is ticked or not ?

Also can you check the PO price (in line item) is showing included freight charges or not.

If the accrual key is ticked, then it will post differently. If not ticked, then it will post including gross price and freight charges in BSX transaction key.

[Former Member]

accrual tick mark is done for all freight condition types, the PO line item price is not included the freight charges.

Both are raw materials (parent and child).

The thing is like that both are MAP,

The BSX price is service charge + freight + raw mat price (child material).

The first BSX should not include the freight and raw material (child material) cost.

if finish material is there means we can maintain the price is material master as a standard price but this is raw material.

Is there any way to solve this??

[former_member183424]

Whatever you want it is possible without tick mark on the accrual key.

The accrual key tick option control the freight charges will be added to BSX or not, whatever your price control is (Either standard price or MAP).

If you tick mark the accrual key for the condition type, then the condition amount will not be added into BSX transaction key. It will take the accrual key (transaction key, which is maintained in M/08).