Sale of Raw Material

[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

[YAGAY andSUN]

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.

AI Summary

Sale of raw material treated as sales when invoiced to the customer; returned processed goods recorded as purchase. If the supply of parts is made against the customer's purchase order and the company issues an invoice and debits the customer, the transfer is treated as sales; upon receipt of reprocessed goods, the vendor's invoice is recorded as a purchase.