PURCHASE RELATED ACTIVITIES
Accounting entries get generated at the time of GR/IR, and invoice verification.
At the time of GR/IR, the following entry gets generated.
Inventory a/c………….…………..Dr. xxx
To GR/IR a/c……………………………..xxx
On doing the Invoice verification, the following entry gets generated and the liability is booked.
GR/IR a/c…………………………..Dr. xxx
To Vendor a/c……………………………xxx
At the time of invoice verification if there are differences between GR value and IR and if stock is not available the difference amount would go to price differences A/c.
1) PURCHASE – RAW MATERIAL
At the time of Goods Receipt the following entry gets generated (Ex. with notional figures).
For a P.O of Rs. 100(Basic 70 + Freight 10 ) (when freight is borne by the company)
Inventory (Raw-material) a/c………………….Dr 80
To GR/IR Clearing a/c……………………………….70
To Freight clearing a/c………………………………10
On doing the Invoice Verification, the following entry gets generated.
GR/IR Clearing a/c……..……………..Dr. 70
Freight Clearing a/c……………………Dr. 10
To Vendor a/c ……………………………….70
To Vendor a/c………….……………………10
2) PURCHASE – TRADED GOODS
In case of traded goods, the entries would be as below:
On receipt of the goods
Inventory (Traded) a/c…………………………..Dr. xxx
To GR/IR Clearing a/c………………………………….xxx
On doing the Invoice Verification, the following entry is generated.
GR/IR Clearing a/c……………………………Dr. xxx
To Vendor a/c…………………………………………..xxx
3) PURCHASE – CONSUMABLES
In case of Consumables, the entries would be as below:
On receipt of the Consumables
Inventory (Consumables) a/c…………………………..Dr. xxx
To GR/IR Clearing a/c………………………………….xxx
On doing the Invoice Verification, the following entry is generated.
GR/IR Clearing a/c……………………………Dr. xxx
To Vendor a/c…………………………………………..xxx
4) PURCHASE – PACKING MATERIAL
In case of Packing Material, the entries would be as below:
On receipt of the Packing Material
Inventory (Packing Material) a/c…………………………..Dr. xxx
To GR/IR Clearing a/c………………………………….xxx
On doing the Invoice Verification, the following entry is generated.
GR/IR Clearing a/c……………………………Dr. xxx
To Vendor a/c…………………………………………..xxx
5) IMPORT PURCHASES
In case of Import Purchases, the process remains the same but for the additional charges, which are included in the cost of inventory.
The same is processed in MM module.
The following accounting entry gets generated on receipt of goods.
Inventory a/c……………………………..Dr. xxx
To GR/IR Clearing a/c………………………..xxx
To Freight Clearing…………………………..xxx
On doing the Invoice Verification, the following entry gets generated.
GR/IR Clearing a/c………………………Dr. xxx
Freight Clearing a/c…………………….Dr. xxx
To Vendor a/c…………………………………xxx
To C&F Vendor……………………………….xxx
6) PURCHASE RETURNS
The transactions related to purchase returns are processed in MM.
The entries that get generated on processing such transactions are:
GR/IR a/c…………………………………..Dr. xxx
To Inventory a/c……………………………….xxx
SAP SIMPLE Docs 
I know these entries will be used predominantly in the manufacturing industry. but why is GR/IR getting credited? & can you also explain the accounting basics around GR/IR (I mean the way or manner in which the journal entries are passed for better understanding).
GR/IR account is Offsetting account, no direct postings will be permitted to this account, we will maintain it as automatic postings.
basically this account is used to track the good, when invoice is verified account will be zero.
Really good. Thanks a lot
can you also explain the planned entries and non planned entries in sap… and have any details belongs to abnormal losses!
can you please provide us planned entries and non planned entries in sap, and entries belongings to abnormal losses ……
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