AP Documents with VAT: To Process a Debit Adjustment

The following activity will walk you through the processing of a debit adjustment with VAT.

Story

Suppose that on January 30, 2024, SweetLife Fruits & Jams received a $75 credit memo from Big Green Trucks Ltd, to which a VAT was applied. Acting as a SweetLife accountant, you need to create and process a $75 taxable debit adjustment.

Configuration Overview

In the U100 dataset, the following configuration tasks have been performed to prepare the system for this activity to be performed:

  • On the Enable/Disable Features (CS100000) form, the VAT Reporting feature has been enabled.
  • 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 Taxes (TX205000) form, the VAT tax has been configured and assigned to the TAXABLE category and the CANADA tax zone.
  • On the Vendors (AP303000) form, the GREENTRUCK vendor account has been configured.

Process Overview

In this activity, on the Bills and Adjustments (AP301000) form, you will create a debit adjustment, selecting the Vendor Tax Zone for the document. You will review the tax applied to the document and release the debit adjustment. Finally, on the Journal Transactions (GL301000) form, you will review the GL transaction generated by the system.

System Preparation

To prepare the system, do the following:

  1. Launch the MYOB Acumatica website, and sign in to a company with the U100 dataset preloaded. You should sign in as an accountant by using 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, on the top pane of the MYOB Acumatica screen, select the SweetLife Head Office and Wholesale Center branch.
  4. 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: Creating and Releasing a Debit Adjustment

To create and release a debit adjustment, do the following:

  1. Open the Bills and Adjustments (AP301000) form.
    Tip:
    To open the form for creating a new record, type the form ID in the Search box, and on the Search form, point at the form title and click New right of the title.
  2. On the form toolbar, click Add New Record.
  3. In the Summary area, specify the following settings:
    • Type: Debit Adj.
    • Vendor: GREENTRUCK
    • Date: 1/30/2024 (inserted by default)
    • Post Period: 01-2024
    • Description: $75 credit memo from the vendor
  4. On the Financial tab, in the Vendor Tax Zone box, select CANADA.
  5. On table toolbar of the Details tab, click Add Row and specify the following settings for the added row:
    • Branch: HEADOFFICE
    • Ext. Cost: 75

      Notice that the TAXABLE tax category, which is the default tax category for the CANADA tax zone, was automatically specified in the document line, because the CANADA tax zone is specified for the document and no item is selected in the document line.

  6. On the form toolbar, click Save.
  7. On the Taxes tab, review the tax applied to the document.

    The vendor is assigned to the CANADA tax zone, and the TAXABLE category is specified in the document line, so the system has applied the VAT tax to the debit adjustment. The calculated tax amount (Tax Total in the Summary area) is $5.25. On release of the debit adjustment, the system will subtract the calculated tax amount from the accumulated input taxes, because debit adjustment amounts are included in the tax report with the negative sign.

  8. On the form toolbar, click Remove Hold and click Release to release the debit adjustment.
  9. Go to the Financial tab.
  10. Click the Batch Nbr. link and review the GL transaction that opens on the Journal Transactions (GL301000) form.

    On release of the debit adjustment, the system generated the following entries:

    • The Accounts Payable account of the vendor (20000) is debited in the total amount of the debit adjustment to decrease the vendor's balance.
    • The Expense account specified in the document line (81000) is credited in the line amount to decrease expenses.
    • The Tax Claimable account of the tax (17000) is credited in the amount of the calculated taxes to decrease the tax amount to be claimed from the tax agency.