Sub Contractor given contract to third vendor

Question

Hi all,
i have scenario. suppose client given sub contact to vendor 'A'  then vendor A given subcontract to vendor 'B'.  Now vendor B returned material to the client. then How to deal this in MM. please explain with all accounts. Thank in advance.

Answer 1

Hello Babu,
I think you missed out to reply my question for the first post.
I repeat,
- Are you dealing with Vendor A or Vendor B?
- Are you raising PO for Vendor A or Vendor B?
- Are you paying to Vendor A or Vendor B?
If you are raising subcontracting PO for Vendor A, providing material to Vendor A and paying to him only then B will not come into the picture at all even if A is doing subcontracting with B, we have nothing to do with B.
If you are raising sub con PO for Vendor A, Vendor B is providing component material to Vendor A, and receiving material from Vendor A then there will be two saperate business transaction.
1. Subcontracting scenario with Vendor A
  Accountig entry will be as follow:
There will be three accounting posting for three processes:
At the time of GR:
(For finished goods received) 
DR FG Stock/ SC By-Product Stock 
CR Change in Stock (FG/ SC By-Product ) 
(For moneys payable to Subcontractor) 
DR Subcontracting Charges 
CR GR/IR Clg 
(Material provided to Vendor is now charged for consumption) 
DR Consumption (Components) 
CR Change in Stock (FG/ SC By-Product ) 
At the time of IR:
GR/IR will be debited
Vendor will be credited
2. Normal purchaising scenario with vendor B
GR:
Inventory will be debited (component material)
GR/IR will be credited
IR:
GR/IR will be debited
Vendor will be credited
Hope this helps.
Regards
Arif Mansuri