Taxable Sales with Freight Charges: Process Activity

The following activity will walk you through the process of processing a sales order and a sales invoice with taxable freight charges.

Story

Suppose that on January 30, 2024, SweetLife Fruits & Jams sold eight juicers to the MINSTORE customer and delivered them to the customer's warehouse by using the company's own vehicle. Because the sold goods are taxable, the freight is taxable as well. Acting as a SweetLife accountant, you need to process a sales order, the shipment, and the sales invoice.

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 following features have been enabled: Standard Inventory, Inventory, and VAT Reporting.
  • On the Order Types (SO201000) form, the SO order type has been configured and activated.
  • On the Customers (AR303000) form, the MINTSTORE (Mint Store Inc.) customer has been configured.
  • On the Stock Items (IN202500) form, the JUICER10 stock item has been configured. For this stock item, on the Warehouses tab, EQUIPHOUSE has been specified, and the sufficient quantity of these items has been specified in the Qty. On Hand column.

Process Overview

In this activity, you will first create a shipping zone on the Shipping Zones (CS207510) form. On the Ship via Codes (CS207500) form, you will create a ship via code and specify the base rate for it. On the Customers (AR303000) form, for the MINTSTORE customer, you will specify a tax zone, the ship via code, and the shipping zone, which you have created. On the Sales Orders (SO301000) form, you will create a taxable sales order for the customer and review the freight charge automatically applied to this order. You will create a shipment for the sales order and confirm it on the Shipments (SO302000) form. You will then prepare a sales invoice for the order and release it on the Invoices (SO303000) form. 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 VAT as described in Value-Added Taxes: To Create a General VAT and Exempt VAT.

Step 1: Updating the Customer's Shipping Settings

To create a shipping zone, a ship via code, and specify these settings for the customer, do the following:

  1. Open the Shipping Zones (CS207510) 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 Row and specify the following settings for the added row:
    • Zone ID: BC
    • Description: British Columbia

      This shipping zone will be used for calculating the freight charges associated with shipping goods to Canadian customers located in British Columbia.

  3. On the form toolbar, click Save.
  4. Open the Ship via Codes (CS207500) form.
  5. On the form toolbar, click Add New Record and specify the following settings in the Summary area:
    • Ship Via: DEFAULT
    • Description: By company vehicle
  6. On the Details tab, specify the following settings:
    • Calendar: MAIN
    • Calculation Method: Net

      This setting means that flat rates are used for calculating freight charges.

    • Base Rate: 425.00

      This setting specifies the flat-rate freight charge to be applied to the documents.

    • Common Carrier: Cleared
    • Freight Sales Account: 40010 - Sales - Freight
    • Freight Expense Account: 61500 - Freight Expense
  7. On the form toolbar, click Save.
  8. Open the Customers (AR303000) form.
  9. In the Customer ID box, select MINTSTORE.
  10. On the Shipping tab, specify the following settings:
    • Tax Zone: CANADA
    • Ship Via: DEFAULT
    • Shipping Zone: BC
  11. On the form toolbar, click Save.

Step 2: Creating a Sales Order

To create a sales order, do the following:

  1. Open the Sales Orders (SO301000) form.
  2. On the form toolbar, click Add New Record and specify the following settings in the Summary area:
    • Order Type: SO
    • Customer: MINTSTORE
    • Date: 1/30/2024 (inserted by default)
    • Requested On: 1/30/2024 (inserted by default)
    • Description: 8 juicers + delivery
  3. On the Details tab, click Add Row and specify the following settings for the added row:
    • Branch: HEADOFFICE
    • Inventory ID: JUICER10
    • Quantity: 8
    • Unit Price: 1350
    • Ext. Price: 10,800.00 (calculated automatically)
    • Tax Category: TAXABLE
  4. On the form toolbar, click Save.
  5. On the Totals tab, in the Freight Tax Category box, select TAXABLE.
  6. Click Save to save the changes.
  7. On the Taxes tab, review the taxes calculated for the order.

    The taxes were calculated for both the sold items and the freight charges. The rules of applying the taxes to the sales order are the same as they are for AR invoices: The VAT tax, which is assigned to both the TAXABLE tax category and the CANADA tax zone, is applied to the sales order line, and the same tax is applied to the freight charges, which also belong to the TAXABLE category. The taxable amount is $11,225 ($10,800 (Detail Total in the Summary area) + $425 (Freight Total in the Summary area). The total tax calculated for the document (Tax Total in the Summary area) is $785.75.

Step 3: Creating a Shipment

To create a shipment for the sales order, do the following:

  1. While you are still viewing the sales order on the Sales Orders (SO301000) form, on the form toolbar, click Create Shipment.
  2. In the Specify Shipment Parameters dialog box, leave the default values in the Shipment Date and Warehouse ID boxes, and click OK.

    The system prepares the shipment and displays it on the Shipments (SO302000) form.

  3. On the form toolbar, click Confirm Shipment.

Step 4: Preparing a Sales Invoice

To prepare a sales invoice that corresponds to the sale, do the following:

  1. While you are still reviewing the shipment on the Shipments (SO302000) form, on the form toolbar, click Prepare Invoice.

    The system prepares an invoice and displays it on the Invoices (SO303000) form.

  2. On the form toolbar, click Release to release the invoice.
  3. On the Financial tab, click the Batch Nbr. link and on the Journal Transactions (GL301000) form, review the GL transaction. On release of the sales 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 freight charges plus the total of the calculated taxes).
    • The Sales account of the stock item (40000) is credited in the amount specified in the document line.
    • The Sales - Freight account (40010) is credited in the amount of the calculated freight charges.
    • The Tax Payable account (24100) is credited in the calculated tax amount.