Export Sale Scrapped
Hi,
Material is sold to a foreign country to a customer.
The customer inspects the material and finds that it is not suitable and informs the seller. The seller cannot take back the material since bringing back the material would be a costly affair.
Customer scraps the material and the seller will not receive any proceeds of the scrap sale. The customer informs the seller that he has incurred some scrapping expenses which the seller has to bear. Seller has to pay the same to customer.
Now, the problem is in the books of the seller, the inventory has been depleted and the item is treated as sold. But actually the sale has not happened and we need to adjust the receivables, revenue and also make an entry in payables for making payment to the customer for the scrap charges. Similarly, in inventory the item has to be adjusted from sale and treated as scrap and COGS entry has to be modified.
Material is sold to a foreign country to a customer.
The customer inspects the material and finds that it is not suitable and informs the seller. The seller cannot take back the material since bringing back the material would be a costly affair.
Customer scraps the material and the seller will not receive any proceeds of the scrap sale. The customer informs the seller that he has incurred some scrapping expenses which the seller has to bear. Seller has to pay the same to customer.
Now, the problem is in the books of the seller, the inventory has been depleted and the item is treated as sold. But actually the sale has not happened and we need to adjust the receivables, revenue and also make an entry in payables for making payment to the customer for the scrap charges. Similarly, in inventory the item has to be adjusted from sale and treated as scrap and COGS entry has to be modified.
0