Credit Memos with Sales Taxes: Process Activity

The following activity will walk you through the process of creating and releasing a credit memo with a sales tax.

Story

Suppose that on February 15, 2024, the SweetLife Fruits & Jams company issued a credit memo to Morning Cafe for five hours of online training that were not provided to the customer.

Acting as a SweetLife accountant, you need to create and release the credit memo and review how it is processed.

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 NYSTATE tax zone has been configured.
  • On the Taxes (TX205000) form, the NY State Tax has been configured and assigned to the TAXABLE category and the NYSTATE tax zone.
  • On the Customers (AR303000) form, the MORNINGCAF customer account has been configured, and the NYSTATE tax zone has been specified for the customer on the Shipping tab of this form.
  • On the Vendors (AP303000) form, the NYTAXDEP vendor has been configured as a tax agency.

Process Overview

In this activity, on the Invoices and Memos (AR301000) form, you will create a credit memo for the needed customer, and specify the TAXABLE tax category for the credit memo line. You will then release the credit memo. 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 credit memos, do the following:

  1. Launch the MYOB Acumatica website with the U100 dataset preloaded, and sign in as an accountant Anna Johnson 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, click the Business Date menu button and select 2/15/2024. For simplicity, in this process 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, 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.

Step 1: Creating and Releasing a Credit Memo

To create and release a taxable credit memo, proceed as follows:

  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: Credit Memo
    • Customer: MORNINGCAF
    • Date: 2/15/2024 (the current business date, which is inserted by default)
    • Post Period: 02-2024 (inserted by default based on the selected date)
    • Description: 5 hours of training
  3. On the Details tab, click Add Row, and specify the following settings in the added row:
    • Branch: HEADOFFICE
    • Transaction Descr.: Video training
    • Quantity: 5
    • Unit Price: 30
    • Ext. Price: 150 (calculated automatically)
    • Tax Category: TAXABLE
  4. On the form toolbar, click Save to save the credit memo.
  5. On the Taxes tab, review the sales tax applied to the credit memo.

    The system will subtract the calculated tax amount from the accumulated taxes, because credit memos are included in the tax report with the negative sign.

  6. On the form toolbar, click Remove Hold, and then click Release to release the credit memo.

Step 2: Reviewing the GL Transaction Generated by the System

To review the GL transaction that was generated by the system on release of the credit memo, proceed as follows:

  1. On the Financial tab of the Invoices and Memos (AR301000) form, while you are still viewing the credit memo, click the link in the Batch Nbr. box.
  2. On the Journal Transactions (GL301000) form, which is opened, review the transactions generated for the credit memo.

    On release of the credit memo, the system has generated the following transaction:

    • The Accounts Receivable account of the customer (11000) is credited in the total amount of the credit memo (the total of all lines plus the total of calculated taxes) to decrease the customer balance.
    • The Sales Revenue account (40000) is debited in the amount specified in the credit memo lines to decrease the sales revenue.
    • The Tax Payable account specified for the tax (24100) is debited in the amount of calculated taxes to decrease the accumulated tax.