Purchases with Sales Taxes: Process Activity

The following activity will walk you through the process of creating and releasing an AP bill with a sales tax.

Story

Suppose that on February 13, 2023, the SweetLife Fruits & Jams company purchased office supplies and stationery from the Frontsource vendor in the amount of $280. The vendor is located in the New York state, and the NYSTATETAX sales tax has to be applied to this purchase.

Acting as a SweetLife accountant, you need to enter the AP bill, release it, and review how the system calculates the sales tax.

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 Vendors (AP303000) form, the FRONTSRC vendor account has been configured, and the NYSTATE tax zone has been added for this vendor on the Purchase Settings tab of this form. The NYTAXDEP vendor has been configured as a tax agency.

Process Overview

In this activity, you will create a bill on the Bills and Adjustments (AP301000) form, specifying the TAXABLE tax category for the document line. You will release the bill and review the GL transaction generated by the system on the Journal Transactions (GL301000) form.

System Preparation

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

  1. Launch the MYOB Advanced website, and sign in to a company with the U100 dataset preloaded. To sign in as an accountant, use the following credentials:
    • Username: johnson
    • Password: 123
  2. In the info area, in the upper-right corner of the top pane of the MYOB Advanced screen, click the Business Date menu button and select 2/13/2023. 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, also on the top pane of the MYOB Advanced 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 an AP Bill with a Sales Tax

To create and release a taxable AP bill, proceed as follows:

  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. Click Add New Record on the form toolbar, and specify the following settings in the Summary area:
    • Type: Bill
    • Vendor: FRONTSRC
    • Date: 2/13/2023 (the current business date, which is inserted by default)
    • Post Period: 02-2023 (inserted by default based on the selected date)
    • Description: Office supplies and stationery
  3. On the Details tab, click Add Row, and specify the following settings in the added row:
    • Branch: HEADOFFICE
    • Transaction Descr.: Office supplies and stationery
    • Ext. Cost: 280
    • Tax Category: TAXABLE
  4. On the form toolbar, click Save to save the document.
  5. On the Taxes tab, review the tax that was applied to the bill.

    For the bill line, you selected the TAXABLE category; it contains the NYSTATETAX tax, which has been applied to the bill. The taxable amount is $280.00, and the calculated total tax is $24.85.

  6. On the form toolbar, click Remove Hold, then click Release to release the bill.

Step 2: Reviewing the GL Transaction Generated on Bill Release

To review the GL transaction generated by the system, proceed as follows:

  1. While you are still viewing the AP bill on the Bills and Adjustments (AP301000) form, on the Financial tab, click the Batch Nbr. link.
  2. On the Journal Transactions (GL301000) form, which is opened, review the transaction that was generated on release of the bill.

    On release of the bill, the system has generated the following transaction:

    • The Accounts Payable account of the vendor (20000) is credited in the total amount of the bill (the total of the line plus the total of the calculated tax).
    • The Office Expense account (62400) is debited in the amount specified in the document line.
    • The Other Tax Expenses account specified for the tax (65100) is debited in the calculated tax amount.