Journal entry for Raw item processor(manufacturer)

[Rashed Bin Hares]

hi ! my business process is --
1. i purchase raw item from supplier.
2 . i give this raw item to manufacturer for make finished goods for me.
3. i sale this finished item to customer.

i have understood the 1,3 point(supplier and customer journal) but how i can journal (3) manufacturer.

 

[smallbushelp]

When you give the raw material to the manufacturer, do they pay you any money for it? If they do, then here in the United States, we would probably consider that a sale and we would generally record a credit to an inventory account, a credit to an income account and a debit to a cash or receivables account. If they don't pay you any money, but you will be paying them money for making the finished goods, then I see the transaction as being a credit to an inventory account, a credit to accounts payable for the amount you will be paying them and a debit to a receivables account like maybe "finished goods inventory receivable." Then when the finished goods are received, I would credit the receivables account and debit my finished goods inventory account.