Purchases with Inclusive Sales Taxes: Process Activity

The following activity will walk you through the processing of a purchase that is subject to a sales tax of the Input group; this tax is applied at the document level.

Story

Suppose that on February 13, 2024, SweetLife Fruits & Jams company purchased stationery for its office needs (printing paper and pens) from the Frontsource Ltd. vendor. The vendor is located in the state of New York—that is, the New York inclusive sales tax has to be applied at the document level.

Acting as a SweetLife accountant, you have to enter the purchase order and process it to completion by creating the related purchase receipt and AP bill. Then you need to review the GL transaction generated by the system on release of the AP bill.

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 and Order Management feature, which provides the ability to create purchase orders, has been enabled
  • On the Tax Preferences (TX103000) form, the tax rounding gain and loss accounts have been defined.
  • On the Tax Zones (TX206000) form, the NYINCTAX has been added to the NYSTATE tax zone. You need to remove all other taxes from the tax zone to avoid the application of multiple taxes to the same document line.
  • On the Stock Items (IN202500) form, the PAPER and PEN stock items have been configured.

Process Overview

In this activity, you will create a purchase order on the Purchase Orders (PO301000) form, and add lines with taxable stock items to it. Then you will process the related purchase receipt on the Purchase Receipts (PO302000) form, and create the related bill on the Bills and Adjustments (AP301000) form. You will release the bill and, on the Journal Transactions (GL301000) form, you will review the GL transaction generated by the system.

System Preparation

Before you begin performing the steps of this activity, 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 2/13/2024. If a different date is displayed, click the Business Date menu button, and select 2/13/2024 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, 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 Purchases with Inclusive Sales Taxes: Implementation Activity to change the settings of the New York inclusive sales tax (NYINCTAX).

Step 1: Creating a Purchase Order

To create a purchase order, do the following:

  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: FRONTSRC
    • Date: 2/13/2024 (inserted by default)
    • Promised On: 2/13/2024 (inserted by default)
    • Description: Purchase of stationery
  3. On the Details tab, click Add Row, and specify the following settings for two rows:
    Branch Inventory ID Warehouse Order Qty. Unit Cost Tax Category
    HEADOFFICE PAPER WHOLESALE 5 6.20 TAXABLE
    HEADOFFICE PEN WHOLESALE 10 9.60 TAXABLE
  4. On the form toolbar, click Save to save your changes.
  5. On the Taxes tab, review the tax calculated for the purchase order.

    For both purchase order lines, you selected the TAXABLE category; it contains the NYINCTAX tax with the 8.875% tax rate, which has been applied to the purchase order. The taxable amount is $116.65, and the calculated total tax is $10.35.

  6. On the form toolbar, click Remove Hold so you can continue processing the purchase order. Now it has the Open status.

Step 2: Processing the Purchase Receipt and AP Bill

To create the purchase receipt and AP bill for the purchase order, do the following:

  1. On the form toolbar of the Purchase Orders (PO301000) form while you are still viewing the purchase order, click Enter PO Receipt.

    The system prepares the purchase receipt for the selected purchase order and opens it on the Purchase Receipts (PO302000) form.

  2. In the Summary area of this form, select the Create Bill check box and save your changes.
  3. On the form toolbar, click Release.
  4. On the Billing tab, click the Reference Nbr. link to open the bill the system has created on the Bills and Adjustments (AP301000) form.
  5. On the Taxes tab, review the tax that was applied to the bill and make sure it is the same tax as was applied to the purchase order.
  6. On the Financial tab, click the Batch Nbr. link and review the generated GL transaction on the Journal Transactions (GL301000) form, which is opened. Notice that for each item, the system has generated the following transactions:
    • The Accounts Payable account of the vendor (20000) is credited in the total amount of the bill (the total of all lines plus the calculated tax).
    • The inventory account for each item (20100) is debited in the amount specified in the document lines minus the tax.
    • The tax expense account specified for the tax (65100) is debited in the calculated tax amount.
    • The Tax Rounding Gain/Loss account (83110) is debited in the tax rounding loss amount.