Accounting entries during intercompany STO

[Former Member]

Hi Guys,

I have done inter company transfer process.. consider there are two company codes

Company code A----supplying plant RS 100

company code B-----Receiving plant RS  200

I am capturing freight cost from plant A to B Rs 50.

When issuing goods from plant A to plant B

inventory stock gets credited 100

COGS cost gets debited        100

When receiving goods in plant B

Inventory stock gets debited      100

GR/IR gets credited              100

Price difference gets debited 100     (50 rupees debited here in price difference account & showing as 150)

freight clearing gets credited      50

And my query is which account should be debited against freight clearing account...

I m getting 50 rupees gets debited in the price difference account. Is this correct process?

If you need more clarification i ll explain..

Regards

Subbu

[Prasoon · Accepted solution]

Hi,

   As per my understanding,

1. The material is standard price material in both the plants.

2. Supplying plant has the valuation price 100, Receiving plant has 100 and the PO price is 150.

3. Acrual freight is in the PO and the freight is calculated as 4000 INR for 10MT.

4. Delivery is created for 10 MT.

   In this case, the account postings will be as follows:

	Trans. Key	Value	Calculation	Logic
GI
	BSX	1000	100*10	Standard Price in supply plant  * Quantity
	GBB	1000	100*10	Standard Price in supply plant  * Quantity
GR
	BSX	1000	100*10	Standard Price in Recv Plant * Quantity
	WRX	1500	150*10	PO Price * Quantity
	PRD	4500	((150-100)*10) + 4000	((PO Price - Std Price Recv plant )* Qty) + (Total Freight)
	FR1	3000		Freight1
	FR2	1000		Freight 2

Hope its clear.

Revert back if you need further clarification.

Regards,

AKPT

[Former Member]

Hi guys,

Thanks to everyone. I have understood the accounting entries.

Regards

Subbu.

[Former Member]

Hi DEV,

I m raising bulk PO from Plant B say 1000 Qty

I need to calculate freight cost plant A to plant B

Main vendor is z0001

Supplying plant price 100

Receiving plant price 100

In purchase order  i have used price as 150

I need to calculate freight per ton & freight per Kilometer. I need to capture freight in separate account..it should not go to material cost

P101 is finished product material price

ZFSO freight per qty 100 rupees for 1000 MT so its calculating as (100*1000) =100000

ZFST freight per kilometer 3 rupees for 100000 its calculating as  (10000*3)= 300000

I don't need to calculate freight/quantity, for tracking 100000 rupees i have used ZFSO condition type

Freight/Kilometre 300000 should go separately to freight vendor... there i have used separate vendor-10000

Please see below screenshot

And i have saved the PO... based on this single bulk PO i ll be doing multiple deliveries

2) I have done vl10b

3) i did delivery & PGI using vl02N

I did delivery for 10 quantities ( i ll be doing multiple deliveries for single  bulk PO)

Delivery has been done.

Since i am using two step procedure GR will be done automatically in receiving plant.

Receving plant I am getting below entries

For 10 quantities at price of 100

wip account 1000 debited

GR/IR account 1500 credited (150*10)

Revaluation price is price difference account     (3000+1500)=4500

Freight clearing 1000 is coming from ZFSO condition type 

freight clearing 3000 is coming from ZFST condition type

Is this the correct account accounting entries

Regards

Subbu

[former_member183424]

Yes.. It is the correct accounting entry as per your settings.

See, you have used price control as S for material.

And also you haven't tick the accrual key for the freight condition type.

So system is trying to calculate the freight amount from the Inventory account, but it can't because system can't take only amount from inventory account (as you are using price control as S)

So system is taking the amount from price difference account.

If you will tick the accrual key in M/06 for the condition type, then system will take the freight amount (4000) from particular transaction event key (which is defined in M/08)

And rest 500 amount, I think you can well understand about the rest 500 amount (different between material price and PO price).

[s_raghavan]

Subburam,

Please check what is the price control maintained. If it is MAP at receiving plant, the PRD will not be hit. Instead, it will go to Material account.

If it is standard price, then it will go to PRD account only.

As there is a difference in price between both the plants it will go to PRD account only.

This will get added to your material account once CO procedure is done.

Raghavan

[binoy_vargis1]

Hi,

I think you have this Freight condition to be inventorsed in the receiving plant. Because  of Price control "S" the remaining value apart from the material value will go into Price difference account.

Regards

Binoy

[ravindra_devarapalli]

Hi,

As per my observation in your details,

Hope you are mainatained   " S " Price control for both plants in material master.

One plant you are mainatained 100 and another plant you are maintained 200 rs.

Now you are doing STO. as per standard if you are maintained  " S" in both plants then system will compare receiving  plant then system will post difference account for difference.

Here 200 Rs in receiving plant and 100 Rs in supplying plant.

200-100 = 100 Rs posted to price difference account because of Price control S.

check GR/IR getting how much amount, i hope you are entried wrong . Please share screen shot.

[former_member183424]

In that case, if price control is S for the plant B and price is 200.

Then inventory account should be debited as 200 (but here he wrote 100).

[Former Member]

Hi Ravindra,

I have posted screen shot. please check it

Regards

Subbu

[Former Member]

Sorry Dev,

Instead of 200 i have posted as 100

[former_member183424]

Hmm.. check my below reply. I have given the reason why it is taking the price difference account.

And I've also given the solution.

Check and revert back.

[former_member183424]

Can you give little explanation about your material ?

What is the price and price control for your both plant ?