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6 Accounts Receivable Process

6.1 Export Sales - Iron Ore Invoice Accounting :

 Once the Vessel is sailed we raise the Provisional Export Sales Invoice for 100% of
shipment value, it is stated in the invoice that 95% provisional Invoice valuehas to be
paid by party and the balance 5% is to be settled by the party on final analysis report at
destination port.

 Provisional Invoices raised in US$, 100% of invoice value(US$) is accounted in Indian


Rupees by considering the exchange rate as on date of Bill of Lading. The Invoice shows
95% & 5% value separately. The entry will be Debit to Party and Credit to Export Sales
Income.
 After receiving the 95% Sales proceeds through our bank we account the proceeds by
crediting toparty. The exchange difference arising on account of 95% invoice value and
receipt value transferred to exchange difference - Export A/c.

 When vessel reaches the destination port, ore analysis is done by the party and reports are
send to us to raise the final invoice. Final Invoice is raised with 100% value, Less the
95% Provisional invoice value balance receivable / payable to party.

 Accounting treatment to final invoices, we reverse the 5% value which is accounted as


per Provisional Invoice (The entry will be Credit to Party and Debit to Export sales -
Income,) andthen Final Invoice is accounted on exchange rate as on date of Bill of
Lading.
 After receiving the 5% Final Invoice proceeds through the bank the exchange difference
is transferred to Exchange difference - Export A/c.
 Year end if any Provisional or Final Invoice is raised but not realised, we re-state the
Invoicevalue as at 31st March exchange rate.
 From 01-04-2017 onward all Export Sales of I/Ore Shipments are on CFR FO
Basis (Cost FreightFree Out). Wherein Ocean Freight is incurred by the companyand
debited to expenses.

6.2 Despatch on Vessel :


 Despatch on Vessel is accounted at TTB exchange rate on bill date raised on the party.
On realisation of proceed the difference in exchange is transferred to Exchange
Difference account. If at the year end the bill is not realised than it is restate as at 31st
March rate.

6.3 Sales Of Iron Ore Export


 After completing the all process of Export Sale as
per terms and condition of contract, once the
Vessel is completed and sailed, the account Dept.
receives hard copy of Provisional Invoice along
with requisition in FAS from Export Dept. The
Provisional Invoice shows 95% and 5% value of
Invoice in foreign Currency (USD), after vefifying
the correctness of the Invocie we convert the USD
in INR 95% & 5% by applying exchange rate as on
the Bill of Lading date.
 The Entry

Vessel is completed
and sailed, the
account Dept.
receives hard copy of
Provisional Invoice
along
With requisition in FAS from Export Dept. The Provisional Invoice Shows 95% and 5% value of
Invoice in foreign Currency (US$), after verifying the correctness of the Invoice we convert the US$ in
INR 95% & 5% by applying exchange rate as on the Bill of Lading date.
The Entry in the FAS is:
INR 95% & 5% by applying exchange rate as on the Bill of Lading date.
The Entry in the FAS is:

1) Debit Party Account 100%


Credit Export Sales Income 95%
Credit Export Sales Income 5%

2) After receiving 95% sale proceeds through our bank from party we
accounts the proceeds (only 95% realised in INR) the entries:
Debit to Bank
Credit to party

3) The difference in exchange on realisation of provisional invoice is accounted.

Debit to party
Credit to Exchange difference-Export
4)
On receipt of destination report the export dept raises the final Invoice, following entries are passed.
i) The 5% accounted as per Provisional invoice now being reversed ,

Debit to Sales
Credit to Party

ii) The Final Invoice is being accounted by appling exchange rate as on Bill of Lading date.

Debit to Party

Credit to Sales

5) After receiving final invoice proceeds through our bank from party we
accounts the proceeds (5% realised) the entries:

Debit to Bank
Credit to party

6) The difference in exchange on realisation of final invoice is accounted.

Debit toExchange difference-Export


Credit to Party

7) In case of contract where the rates are provisional and final rates are to determine based on the
month on arrive at destination port. In such cases many a times the final invoice is negative where
party by raising a credit note.

Note : 1) Base on Export Sales inputs the various Export related report are being
prepared for our various requirement (Format attached)
Copy of Provisional And Final Invoice is attached
(All Accounting entries in our Books are in Indian Rupees)
2) GST not applicable for Export Sale of I/Ore
3) Export Duty is not applicable for grade below 58%
4) From 01-04-2017 onward all Export Sales of I/Ore Shipments are on CFR FO Basis
(Cost Freight Free Out)

Local Sale of Iron ore:

Salesof Iron ore to local customers base on the terms and condition of contract.
Invoice is being raised by Export Dept.

The Entry:

Debit to Party
Credit to Local Sale of Iron Ore
Credit to CGST A/c
Credit to SGST A/c
Credit to TCS A/c

Note : All Local sale of Iron Ore are in Indian Rupees


2.5% CGST on Value
2.5% SGST on Value
1% TCS is applicable (Value+GST)

B) Sale of Services :

Hire Charges of Trucks


VMSB’s Trucksplied for our group company VMSSI & GMPL to transport the Ore from one locationt
The routes are pre-fixed with rate to be charged. Truckmanagement module keeps a track of rout
month the bill are being
raised & Accounted in the FAS The entry:

Debit to Party
Credit to Truck Hire Receipts

Note : The Bill raised at TMS Module and Req. in FAS along with hard copy of signe
(Copy of Bill is Enclosed)
GST is not applicable if the value of per trip is below R.1500/-

Hire Charges of Machinery/Jetty


Machinery Hire Receipt
Machinery given on hire to third parties at agreed rate, Bills are raised by us
applying the applicable rate of GST
The Entry
Debit to Party
Credit to Machinery Hire Receipts
Credit to CGST payable
Credit to CGST payable

Jetty Hire Receipts


Company’s Jetties are given on hire to third parties at an agreed rates, many a times the comp
provided which includes Jetty Hire, Barge Hire and Truck Transportation where the rates are fixed a
The bills are raised by Export Dept.

The Entry:

Debit to Party
Credit to Hire Receipts
Credit to CGST
Credit to SGST

Hire Charges of Barges

The Company does not own any barges however in case of composite services wherein the com
services to third parties, barges are hired by company from group entities for said services. The ra
Bill is being raised by our Export Dept.

The Entry
Debit to Party
Credit to Barge Hire Receipt

Note : The Barge Freight rate is as per Goa Mineral Ore Exporters Association

Transhipper Loader Receipts

Transhipper Vishal Hira is used for Loading Foreign going Vessels given to VMSSI
and outside parties as per the agreed rate. The Export Dept. raises the bill.

The accounting entry;

Debit to Party
Credit to Transhipper Income
Credit to CGST Payble
Credit to CGST Payble

Note : Transhipper Income booked by Shipping Division GST paid by H.O.


Manpower Supply:
Company provides Manpower to Group companies for which billing is done on monthly basis.
Bill is being raised by applying applicable GST

Other Income :

Interest Income:
Cash & Bank

Dividend Incime:
Investment Dept.

Profit on Sale of Assets

Asset Dept.
Proceeds from Rent Income

VMSB Flats/Houses given on Rent, every month Bills are raised as per the agreement. In case of ren
premises GST as applicable is charged.

entry
Debit to Party
Credit to Rent Income

Miscellaneous Income:
Miscellaneous Income includes:
 Vehicle accidental Insuranceclaim
 Sale of Scrap
 Sale of Loan application forms

Other Operating Revenue:


Sale of Stores, Spares and Components etc.,

HSD, Stores & Spares parts are sold to scheme Trucks and Contractors and group Companies base
from Inventory dept. Necessary Invoice are raised by applying applicable taxes.

Following Monthly reports are received from Inventory Dept.


 Monthly Consumption Entry of Stores and Spares with consumption analysis
 Consumption return Entry
 Sales Entry with Supporting
 Capital entry
 Adjustment Entry
 Store to Store transfer entry
 Entry to issues to Shipping division
 GRN Matching Report
 Value of Stock Statement
 Ledger Summary

Sale of Assets
After receiving the approval CMD for sale of any company Asset, we are raising the Tax Invoice by
applyingapplicable rate of GST and accounted in the FAS