AR Documents with VAT: To Process an AR Invoice

The following activity will walk you through the processing of an AR invoice with VAT.

Story

Suppose that in January 2024, SweetLife Fruits & Jams provided 25 hours of video training courses and 10 hours of maintenance services to EasyDiner Co. The video training course is subject to VAT and the maintenance services are VAT-exempt. The needed VAT and VAT exempt taxes have been already created in the system. Acting as a SweetLife accountant, you need to process an AR invoice in the system.

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 defined.
  • On the Tax Zones (TX206000) form, the CANADA tax zone has been defined.
  • On the Taxes (TX205000) form, the VAT tax has been created and assigned to the TAXABLE category and the CANADA tax zone.
  • On the Customers (AR303000) form, the EASYDINER customer account has been defined.
  • On the Non-Stock Items (IN202000) form, the VIDEOGUIDE item has been created with TAXABLE selected in the Tax Category box on the General tab. The MAINTSERV item has been created with EXEMPT selected in the Tax Category box.

Process Overview

In this activity, you will first update the settings of the customer on the Customers (AR303000) form by specifying a tax zone for the customer. On the Invoices and Memos (AR301000) form, you will create an AR invoice with two lines—with the TAXABLE and EXEMPT categories. After the release of the invoice, you will review the GL transaction on the Journal Transactions (GL301000) form.

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 1: Updating the Customer's Settings

To update the settings of the EASYDINER customer, do the following:

  1. Open the Customers (AR303000) form.
  2. In the Customer ID box, select EASYDINER.
  3. On the Shipping tab, select CANADA in the Tax Zone box.
  4. On the form toolbar, click Save.

Step 2: Creating and Releasing an AR Invoice

To create and release an AR invoice, do the following:

  1. Open the Invoices and Memos (AR301000) 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. Click Add New Record on the form toolbar, and specify the following settings in the Summary area:
    • Type: Invoice
    • Customer: EASYDINER
    • Terms: 30D (inserted by default based on the selected customer)
    • Date: 1/30/2024 (the current business date, which is inserted by default)
    • Post Period: 01-2024 (inserted by default based on the selected date)
    • Description: Video training 25 hours and maintenance 10 hours
  3. On the Details tab, click Add Row on the table toolbar, and specify the following settings in the added row:
    • Branch: HEADOFFICE
    • Inventory ID: VIDEOGUIDE
    • Transaction Descr.: Video Training Course
    • Quantity: 25
    • Unit Price: 150
    • Tax Category: TAXABLE (inserted by default)
  4. Click Add Row on the table toolbar, and specify the following settings in the added row:
    • Branch: HEADOFFICE
    • Inventory ID: MAINTSERV
    • Transaction Descr.: Juicer maintenance service
    • Quantity: 10
    • Unit Price: 100
    • Tax Category: EXEMPT (inserted by default)
  5. On the form toolbar, click Save.
  6. On the Taxes tab, review the taxes that have been applied to the invoice.

    The taxes have been applied to the invoice according to the following rules: The VAT tax, which is assigned to both the TAXABLE tax category and the CANADA tax zone, is applied to the VIDEOGUIDE invoice line, and the VATEXEMPT tax, which is assigned to both the EXEMPT tax category and the CANADA tax zone, is applied to the MAINTSERV invoice line. The taxable amount is $3,750 (also shown in the VAT Taxable box on the Financial tab), and the tax-exempt amount is $1,000 (also shown in the VAT Exempt box on the Financial tab). The total tax calculated for the invoice is $262.50 (Tax Total in the Summary area).

  7. On the form toolbar, click Remove Hold and click Release to release the invoice.

Step 3: Reviewing a GL Transaction

To review the GL transaction generated by the system, do the following:

  1. While you are still reviewing the invoice on the Invoices and Memos (AR301000) form, open the Financial tab.
  2. Click the Batch Nbr. link and review the GL transaction that opens on the Journal Transactions (GL301000) form.

    On release of the invoice, the system generated the following entries:

    • The Accounts Receivable account of the customer (11000) is debited in the total amount of the invoice (the total of all lines plus the total of the calculated taxes).
    • The Sales account of the non-stock items (40000) is credited in the amount specified in the document lines.
    • The Tax Payable account specified for the tax (24100) is credited in the calculated tax amount to record the amount to be paid to the tax agency.