Sale of Raw Material, Accounting - Auditing

[Pradeep Kaushik]

Respected all,

We are manufecturing Company.

We are supplying some parts (Raw material) to our vendors for reprocessing. After Re-processing the parts, our vender send back to us on his sales invoice.

Finally, we sales the complete finished parts to our Customer.

Please let me know:

What will be accounting treatment for Sale of Raw material to our Vendor.

Will this transaction be treated as Sales in our Books of Account. What is the impact on our financials.

Please Explain in Detail.

Best Regards.

Pradeep Kaushik

Posts / Replies

[Pradeep Khatri]

If you are supplying part against the (Purchase Order issued by your customer) by issuing an Invoice and debiting to your customer then it would be treated as sales.

At the time of receiving processed goods from your supplier on the basis of purchase order, the supplier will issue an invoice to you, and it be treated by you as purchase.