Purchases with Use Taxes: Process Activity

The following activity will walk you through the process of creating and releasing a purchase order with a use tax.

Story

Suppose that on February 21, 2024, SweetLife Fruits & Jams purchased two juicers from SQUEEZO, which is located in New Jersey. No sales tax was collected on this purchase because the vendor is located outside of the New York state, so SweetLife has to report the use tax and pay it to the NYTAXDEP tax agency.

Acting as a SweetLife accountant, you need to process the purchase and update the tax report for 02-2024.

Configuration Overview

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

  • On the Enable/Disable Features (CS100000) form, the Inventory feature, which provides the ability to create purchase orders with stock items, has been enabled
  • On the Tax Categories (TX205500) form, the TAXABLE tax category has been configured.
  • On the Vendors (AP303000) form, the SQUEEZO vendor account has been configured and the NYTAXDEP vendor has been configured as a tax agency.
  • On the Reporting Settings (TX205100) form, a tax report has been configured for the NYTAXDEP tax agency.

Process Overview

In this activity, on the Purchase Orders (PO301000) form, you will create a purchase order, and the system will generate a bill on the Bills and Adjustments (AP301000) form. You will review the use taxes in the bill and release it. You will then prepare a tax report on the Prepare Tax Report (TX501000) form, review the report revisions, and release the report on the Release Tax Report (TX502000) form. On the Bills and Adjustments (AP301000) form, you will review the AP bill to the tax agency generated by the system.

System Preparation

Before you begin to process a purchase with a use tax, 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, make sure that the business date in your system is set to 2/21/2024. If a different date is displayed, click the Business Date menu button and select 2/21/2024. 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.
  4. As a prerequisite activity, complete the Use Taxes: Implementation Activity to configure the use tax.

Step 1: Creating a Purchase Order

To create a purchase order, proceed as follows:

  1. Open the Purchase Orders (PO301000) 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, and specify the following settings in the Summary area:
    • Type: Normal
    • Vendor: SQUEEZO
    • Date: 2/21/2024 (inserted by default)
    • Description: Juicers
  3. On the Details tab, click Add Row on the table toolbar, and specify the following settings for the added row:
    • Branch: HEADOFFICE (selected by default)
    • Inventory ID: JUICER05
    • Order Qty.: 2
    • Unit Cost: 800
    • Tax Category: TAXABLE
  4. On the form toolbar, click Save to save the purchase order.
  5. Review the Taxes tab.

    The system has calculated a tax amount of $142.00 for the purchase order. However, this amount is not included in the document totals (the Tax Total box in the Summary area is empty), because the document sent by the vendor does not include the calculated use tax. The accountant of SweetLife has to calculate the use tax and pay it directly to the NYTAXDEP tax agency.

  6. On the form toolbar, click Remove Hold.
  7. On the More menu (under Processing), click Enter AP Bill.

Step 2: Releasing the AP Bill and Reviewing the Generated GL Transaction

To release the AP bill and review the GL transaction generated by the system, proceed as follows:

  1. On the Bills and Adjustments (AP301000) form, which is opened, review the bill automatically generated by the system.
  2. On the Taxes tab, make sure that the use tax has been applied.
  3. On the form toolbar, click Remove Hold, then click Release to release the AP bill.
  4. On the Financial tab, click the link in the Batch Nbr. box to open the generated transaction.
  5. On the Journal Transactions (GL301000) form, which is opened, review the transaction generated for the bill.

    The system has generated the following entries:

    • The Accounts Payable account of the vendor (20000) is credited in the total amount of the bill.
    • The Inventory Purchase Accrual account (20100) is debited in the amount of the purchase.
    • The Tax Expense account specified for the use tax (65200) is debited in the calculated use tax amount to record the tax expenses.
    • The Tax Payable account specified for the use tax (24100) is credited in the amount of calculated taxes to record the amount to be paid to the tax agency.

Step 3: Preparing a Tax Report

To prepare the tax report, proceed as follows:

  1. Open the Prepare Tax Report (TX501000) form.
  2. In the Summary area, specify the following settings:
    • Company: SWEETLIFE
    • Tax Agency: NYTAXDEP
    • Tax Period: 02-2024 (inserted by default)
  3. On the form toolbar, click Prepare Tax Report, and review the prepared tax report for 02-2024 on the Release Tax Report (TX502000) form, which opens.

Step 4: Reviewing Report Revisions and Releasing the Tax Report

To review the revisions of the tax report and release it, do the following:

  1. While you are still reviewing the tax report on the Release Tax Report (TX502000) form, in the Summary area, select the Show Difference check box right of the Revision box.

    The Revision box displays 2, which means that the tax report has two revisions. With this check box selected, the 2 - Tax Total line includes the use tax calculated on the purchase of two juicers ($142.00) and the 6 - Purchases Subject to Use Tax line includes the amount of the purchase order to which the use tax has been applied ($1600.00).

  2. In the Revision box, select 1. The system displays the first revision of the tax report that you released in Release of Sales Tax Report: Process Activity.
  3. In the Revision box, select 2 and clear the Show Difference check box.
  4. On form toolbar, click Release to release the tax report, close the 02-2024 tax period, and generate the tax bill to the agency.
  5. On the AP Documents tab, click the link in the Reference Nbr. column of the second AP bill generated for the HEADOFFICE branch. On the Bills and Adjustments (AP301000) form, which is opened, review the tax bill generated to the agency. The tax bill shows the use tax amount that has to be paid to the NYTAXDEP tax agency in 02-2024.