Doubt reg: MIGO GR/IR Reclass accounting entries

Question

Hi ,
When MIGO is done , we have the below accounting entries.
Stock a/c - Dr
GR/IR clg a/c - Cr
On month end when we run F.19 , if MIGO is done and MIRO is not done,
the accounting entry is
GR/IR Adjustment a/c DR
GR/IR clg a/c - Cr
Is this correct?
Because the purpose of running F.19 is to reclassify the balances in GR/IR clg a/c to
GR/IR Adjustment a/c.
But as per the above entries, the GR/IR clg a/c, is credited twice.
Please explain, where I am getting the flow wrong.

Answer 1

Hi Rudra,
When MIGO is done , the below accounting entry is posted
Stock a/c - Dr
GR/IR clg a/c - Cr
Now, when you run F.19, then, based on whether the MIGO is done and IR is not done and IR is done but MIGO is not done, the entries would get posted.
Please remember, the entries are only mirror entries of GR/IR Account and no posting is made to GR/IR Account.
Note the scheme of entries below:-
Delivered but Not Invoiced:-
GR/IR Adjustment A/C..Dr
To Provision Account (GNB)
Invoiced but not yet Delivered:-
Claims A/C...Dr(BNG)
To GR/IR Adjustment A/c
The GR/IR Adjustment Account and GR/IR Account can be clubbed together in the FSV, so the effect gets nullified.. and the actual Claim or liability is shown in the specific GL's like provision (GNB) and Claims(BNG).
The entries also gets reversed the next month.. so this reclassification is for reporting purpose only. And then it is business as usual..
Hope this helps you..
Regards,
SAPFICO