Handling consignment stock received from a supplier

For this process you will have to do the following:

  1. Create the necessary suppliers.
  2. Receive the consignment stock using a goods received voucher.
  3. Process the invoice received from the supplier for stock sold.
  4. Process the re-allocation journal.
  5. Process the payment.

Create the necessary suppliers

To start off with, you need to create two supplier accounts for the same creditor:

  1. One you need to process a payment for (we will be referring to this creditor as CREDITOR A)
  2. The other one you should not have any payments processed for it (we will be referring to this creditor as CREDITOR B).

We recommend appending Consignment to the name of the creditor that you should not pay.

For example, if we are receiving consignment stock from ABC Ltd, I might create the following two accounts:

  1. ABC001 – ABC Ltd (This is CREDITOR A)
  2. ABC002 – ABC Ltd (Consignment) (This is CREDITOR B)

Be sure to set the ZERO TAX field to Y for the consignment creditor (CREDITOR B).

If you are unsure how to create a supplier account, refer to this guide.

Receive the consignment stock

When consignment stock is received, you need to enter a goods received voucher against CREDITOR B. Please also note that this GRV should be done at the amount excluding VAT AND NO VAT SHOULD BE CLAIMED.

If you are unsure how to enter a goods received voucher, please refer to this guide.

Process the invoice received from the creditor for stock sold

At the end of the month (or whenever the creditor provides you with an invoice), when the creditor provides you with an invoice for the stock you sold, you need to process an expenses incurred against CREDITOR A, using the cost of sales ledger account.

This expense should be captured with VAT being claimed.

If you are unsure how to process an expenses incurred, please refer to this guide.

Process the re-allocation journal

After you have captured the expenses incurred referred to in the previous step, you need process a journal to re-allocate the balance of the creditor.

The journal should have the following entries:

  1. Debit: Creditor B
  2. Credit: Cost of Sales ledger account (the same one used in the previous step)

The amount used in this journal is the amount excluding VAT on the invoice referred to in the previous step.

If you are unsure how to process a journal, please refer to this guide.

Process the payment

When processing the payment, be sure to do so against CREDITOR A.

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