Trader & Manufacturer of salt in Tally

We will take the business scenario of a salt trader/manufacturer. we have divided the write up in two cases

1) Trading of Raw Salt2) Selling of Iodized salt ( manufactured in-house)

In the salt industry, the prices are very volatile. Refined iodized salt sells at Rs 1,200 to Rs 1,800 a tonne and that comes to Rs. 1.2-1.8 per kg. when the margin is small per unit, it becomes all the more important to keep accurate track of the trade and profit.Any variation than the fixed prices even in paise may actually result in a loss. so one has to be very accurate in recording the transactions. (You may alter the Number of decimal places to 3 as per the requirement).

1) Trading of Raw Salt:-

The first step being purchasing of Raw salt from an interstate supplier, to minimise the complexity we have not considered the statutory in the case. the item is created as:-

 once the item ledger is created the purchase voucher is passed as:-

 Once this purchase is done, we have a stock of 1,00,000 Kgs in our godown. Now we get a sales order of  500 kgs, being charged at Rs. 2.4/Kg. However the delivery is to be done in three different installments or to be done in parts.

Let us see the Sales Order that is issued , please note the SO number that we have given SO/L S B/001

 once this SO is issued we need to make the entries as per the delivery notes, Here we tag the same SO number so that we can tag this SO with the delivery note

The Delivery note is entered as :-

 The Item allocations for Raw salt is entered as :-

 Similarly the other 2  Del Notes are entered, in this the Tracking number is the numberof the delivery note. We have intentionally kept in like SO number so that we can know to which order does this delivery belong.

The remaining two del notes can be shown as :-

 Finally the sales voucher is prepared as:-

 Now at the gateway of Tally, click on stock summary,till 3rd of April we have dealt only with the raw salt and now we want to know whether we have made profit on that transaction or not and if profit has been made, how much profit is it. Go to Stock Summary and press F7(Show Profit)

 This shows a profit % of 16.67% as this profit of Rs. 200 is on the sales value ( 1200) and not the cost price (Rs. 1000)

2) Selling of Iodized salt ( manufactured in-house)

Firstly create a manufacturing  journal ( Accounting Vouchers ->Voucher Types–>Create  Manufacturing Journal ( under Stock Journal and put use as manufacturing  journal as YES)

Now the case is, when in house the raw salt is converted to iodised salt which is in more demand and more expensive( as it is processed).Now we need to account for the profit in the iodized salt, taking into account the costs incurred during the conversion.We have a manufacturing journal prepared as, this says that out of 100% only 80% is actually converted to iodised salt remaining 20% is scrap for us. and we have also added a labor cost at 5%. thus getting an effective rate of the iodised salt. we have created the godowns  for better viewing , however this is not compulsory.

This automatically re-calculates the value of the stock item as 2.63 including the 20% wastage as scrap and also a 5% labor cost.

 The rate of selling is higher for iodized salt ( Rs. 3) where as the cost of manufacturing comes to be Rs. 2.63. Here also we need to maintain and find out the profit earned on iodized salt.

First the sales order is issued as :-

 In this case we have not considered the Del notes. Just the sales order,Let us tag the actual sales with the sales order, here the sales order number is ( SO/I S B/02)

The Sales voucher in detailed format is shown as :-

Note that we have taken the del. note as “End of List” and in the item allocation screen we have taken it as Not applicable. Here the tagging is done only with sales order.Now go to stock summary and view the profit earned overall including the quantity at different godowns.

 So this shows that the total 80Kgs of iodised salt produced, only 20 kgs have been sold and the profit is shown as 12.5% on the sales value. and the profit of raw salt is still higher at 14.29%

Inference:-  the value of raw salt has decreased due to the transfer during manufacturing journal. where as the value of iodised salt is Rs. 3 per Kg.

Also a waste is shown as 20 Kgs. this is kept at Zero value. However when these are sold, we can note the sales of this as well.

 Finally we view the report when scrap is sold at 0.5/ Kg

 We get reports based on the transactions we made, for the scrap we see a 100% profit as the value was zilch. for others the profit % is shown alongside.