Purchase Expenses As Outstanding

Purchase Expenses As Outstanding

In business, while making purchase entry, there are several business use cases where additional costs are incurred. One of the example is freight or transportation charges. These charges under the GST, incur a tax as well and the value is added to both the invoice value and also the landing cost of the goods. Provision for this is already available in the application.

In addition to these there are other charges as well which affects only landing cost of the goods and not the invoice value. For example, lets assume that a business receives a big shipment and has to arrange for 3 to 4 additional workers for unloading and other operations. Payment to these workers are costs that can either be managed separately in Accounts by way of Journal Entry or added in purchase itself to affect only the landing cost. When we choose the purchase entry screen option, it would mean that we have made a cash payment to the party (workers) immediately as the purchase is saved in the application. Provision for this is also already available in the application.

Finally we have a business use case where additional charges are incurred during inward which affects only the landing cost and whose payment is not done immediately and instead made on a periodic basis. To achieve we have introduced the following solution. By using this, users will be able to enter value of the charges which will only affect the landing cost and which will automatically be raised as outstanding amount to the party(workers in this case). This outstanding can be paid later.

The following steps have to be followed.

Step 1: Create a calculation master



A new field called Separate Accounts Posting is given in the master. Users have to map this field as Yes. User can select ANY account ledger name as it is only for mapping purpose and not used for account posting in this case. Please note, there are few validations for selecting this field as yes.
  1. Return Applicable cannot be marked as yes.
  2. Customs Duty applicable cannot be marked as yes.
  3. Landing Cost can only be Consider only landing cost.
  4. Add/Sub has to be ADD so that charges are added to landing cost. If selected as SUB then values will be deducted from overall landing cost.

Step 2: Create Purchase Formula

Users can create purchase formula for local / interstate suppliers as per their business use. Here we have a sample purchase formula example.



Step 3: Create Accounts Ledger Master
For this example let us assume that we have loading and unloading charges while receiving the GRN and these are paid to group of workers called loading unloading party. One more expense say Unpacking / Cleaning services and Unpack / Cleaning Party is also created.

Please Note: For the expense entry SAC code is mandatory. Similarly Pur O/H GL? (Import&Local) has to be marked as Yes. The party ledgers can be created as usual.







Step 4: Make Purchase Entry

In the purchase screen, user can enter value "Additional Expenses" field in the header part. As soon as the user enters any character in the field, application will pop up a new UI to enter the expenses.



Here, we have entered 100/- for one of the charges which has no GST implication and hence selected as GST exempted. Another expense is selected with 18%. Please note, the gross amount for these additional expenses is (100+250+=350. The tax is 45. This net amount that will be added to goods value landing cost is 350+45=395.

Purchase Saved is as follows:



Verifying the Journal Entry



Here you can note that Outstanding to party has been raised which can be paid later.

Understanding Cost Calculation

For simple understanding, we have take 1 item in purchase with 1 qty.
Purchase Price           :      1000
GST                              :      50
Additional Exp Gross:      350
Additional Exp GST   :      45

Thus, Landing cost of the item = 1000 + 50 + 350 + 45 = 1445
Without Tax Value of the item  = 1000 + 350 = 1350

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