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
Accounting Guidance: Treat Raw Materials Supplied for Reprocessing as Sales and Processed Goods as Purchases A manufacturing company inquires about the accounting treatment for supplying raw materials to vendors for reprocessing, which are then returned on the vendor's sales invoice. The company sells the finished parts to customers. The response clarifies that if the raw materials are supplied based on a customer purchase order and an invoice is issued, it should be treated as a sale. When processed goods are received from the supplier, it should be treated as a purchase in the company's books. (AI Summary)
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