P2P overview and accounting entries

. PS: This process is from the financial accounting point of view:

. From FI point of view, the purchasing process is as follow: Purchase order (PO)  goods receipt 
Post invoice.

1- PO (created by purchasing department or commercial department clerk): our agreement

with the supplier on: (Tcode ME21N)
o What we are going to buy.
o What is the quantity that we are going to buy.
o And for how much.

 No accounting entries.

2- Goods receipt (MIGO): Supplier is sending us the goods to our warehouse, and someone in
the warehouse is going to send them and he is going to record on the system:
o What he received.
o What quantity he received.
o With reference to which PO.

 Accounting entries:
dr : inventory stock account
cr : GR/IR account
cr : fright GR/IR account (freight clearing MM)
The 2 GR/IR accounts are going to be offsetted when we post the invoice.

3- The supplier is going to send the invoice to the accounts payable accountant and the
accountant has to compare the invoice against the goods receipt and the PO: a 3-way
matching. (MIRO)

. In most of the cases the supplier of the goods purchased is different from the supplier of the
transport cost (freight costs), this should be handled in PO so that the total cost should be allocated
to the goods purchased(Net price + freight cost) and the inventory G/L account

. In SAP best practice is when creating PO, goods price should be allocated to 1 vendor and the
transportation cost (freight cost) should be allocated to another vendor, so later we can send the
invoice to each of them separately.

System Demo:

PS: we are going to use PO n° 1167613 as a reference

. PO creation with fright cost added to goods purchased cost and with different vendor account for
the goods cost and the freight cost.
 PO Header Data: organizational structure and assignment data

PO Item overview data: Quantity and price, material grp and plant

Steps to add freight condition.

Freight by quantity condition.

Change the vendor account for fright cost supplier.

 Steps to choose the vendor for freight cost

. Release the PO (Tcode ME29N)

. Post goods receipt against Purchase order (MIGO)

. Display financial document

 Inventory cost = Net price cost+ Freight cost

. Invoice verification (MIRO)

1st invoice: Invoice for goods supplier.

Financial entry.
 2nd invoice: invoice for freight cost (transportation supplier).

Financial entry.

 We have posted 2 different invoices: one for the supplier of the delivered goods
and one for the supplier of the transport (freight) cost. Because at the time of PO
creation we have selected 2 different suppliers one for the goods and the other
for the transport request.