Cash Entries with Taxes: To Process a Cash Entry with VAT

The following activity will walk you through the process of creating a cash entry with a value-added tax applied to it.

Story

Suppose that on January 30, 2024, SweetLife Fruits & Jams purchased office supplies for $199 (VAT excluded) and paid for them with cash. Acting as a SweetLife accountant, you need to create a corresponding cash entry and apply taxes to it.

Configuration Overview

In the U100 dataset, the following tasks have been performed for the purposes of this activity:

  • On the Tax Categories (TX205500) form, the TAXABLE tax category has been configured.
  • On the Tax Zones (TX206000) form, the CANADA tax zone has been configured.
  • On the Entry Types (CA203000) form, the TAXPURCH entry type has been created.
  • On the Cash Accounts (CA202000) form, the 10200WH cash account has been configured and the TAXPURCH entry type has been added for this cash account on the Entry Types tab of this form.

Process Overview

In this activity, on the Cash Accounts (CA202000) form, you will specify a tax zone for the 10200WH cash account. On the Cash Transactions (CA304000) form, you will create a taxable cash transaction and, finally, on the Journal Transactions (GL301000) form, you will review the GL transaction generated by the system.

System Preparation

Before you begin to work with taxable cash entries, do the following:

  1. Launch the MYOB Acumatica website, and sign in to a company with the U100 dataset preloaded. To sign in as an accountant, use the johnson username and the 123 password.
  2. In the info area, in the upper-right corner of the top pane of the MYOB Acumatica screen, make sure that the business date in your system is set to 1/30/2024. If a different date is displayed, click the Business Date menu button, and select 1/30/2024 on the calendar. For simplicity, in this activity, you will create and process all documents in the system on this business date.
  3. On the Company and Branch Selection menu, also on the top pane of the MYOB Acumatica screen, make sure that the SweetLife Head Office and Wholesale Center branch is selected. If it is not selected, click the Company and Branch Selection menu button to view the list of branches that you have access to, and then click SweetLife Head Office and Wholesale Center.
  4. As a prerequisite activity, be sure you have configured the VATTAX vendor as a tax agency as described in Tax Agency: To Set Up a Tax Agency for VAT.
  5. As a prerequisite activity, in the company to which you are signed in, be sure you have configured a value added tax as described in Value-Added Taxes: To Create a General VAT and Exempt VAT.

Step 1: Updating the Settings of a Cash Account

To prepare the cash account for creation of a taxable cash entry, do the following:

  1. Open the Cash Accounts (CA202000) form.
  2. In the Cash Account box, select 10200WH - Wholesale Checking.
  3. On the Entry Types tab, for the TAXPURCH entry type, select CANADA in the Tax Zone column of the table.
  4. On the form toolbar, click Save.

Step 2: Creating a Cash Transaction

To create a cash transaction, to which a VAT will be applied automatically, do the following:

  1. Open the Cash Transactions (CA304000) form.
  2. On the form toolbar, click Add New Record and specify the following settings in the Summary area:
    • Cash Account: 10200WH
    • Tran. Date: 1/30/2024
    • Fin. Period: 01-2024
    • Entry Type: TAXPURCH
    • Description: Office supplies
  3. On the Details tab, click Add Row on the table toolbar and specify the following settings for the added row:
    • Branch: HEADOFFICE
    • Amount: 199

    By default, the system uses the tax category (TAXABLE) of the tax zone in the cash transaction line, because it is the default category for the specified tax zone.

  4. On the Financial tab, review the Tax Zone box. The CANADA tax zone is specified because the cash entry is of the TAXPURCH type and is created for the 10200WH account.
  5. On the form toolbar, click Save.
  6. Review the Taxes tab. The CANADA tax zone is applied to the document and the TAXABLE category is specified in the document line. Thus, the VAT tax was applied to the cash entry. The VAT Taxable Total in the Summary area is $199, and the Tax Total is $13.93. As a result, the checking account is credited in the amount of $212.93.
  7. On the form toolbar, click Remove Hold and click Release to release the cash transaction.
  8. On the Financial tab, click the Batch Number link to review the generated batch on the Journal Transactions (GL301000) form, which opens. On release of the cash entry, the system generated the following GL entries:
    • The checking account of the HEADOFFICE branch (10200WH) is credited in the total amount of the cash entry (the line amount plus the calculated VAT).
    • The Tax Claimable account (17000) is debited in the calculated tax amount to record the VAT to be claimed from the tax agency.
    • The offset account specified for the cash entry type (62400) is debited in the line amount to record the expenses.