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Sales & Use Tax ledger postings issue

Nov 23, 2017 at 12:36 PM

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Hi Community

I am testing the sales and use tax postings in ByDesign and have come across an issue. When posting the Goods Receipt the postings are:

DR Trade Goods 900

CR Unbilled Payables 954

DR Diff. from Purchasing 54 (Tax amount)

I can't figure out why the tax amount is posting to the Difference from Purchasing account. Any ideas?

Kind Regards

Grace

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1 Answer

Harshal Vakil Nov 27, 2017 at 10:54 AM
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Hi Grace,

Posting mentioned by you during the goods receipt is correct.

The reason is the perpetual cost method of the material. I am assuming that the material used has the perpetual cost method assigned as standard cost method.

Example : Material : Abc has the inventory cost : 100 USD / Each with Standard cost method.

When you create the purchase order for 9 ea of material Abc with purchase price 110 USD/Each, Purchase order value would be 990 + 50 USD Tax = 1040 USD.

Now goods receipt is posted in the system.

At this time, since material is having the standard cost method, system will add 9 quantity to the current inventory quantity and value for this 9 quantity (9 * 100 USD Inventory cost = 900 USD). The difference then is treated as the difference between purchase order price and the material valuation i.e Purchase valuation difference.

In business configuration activity : Charts of Accounts, Financial Reporting Structures, Account Determination Inventory ledger -> Difference tab -> Loss from Purchase Valuation Differences / Gain from Purchase Valuation Differences This GL account is used to post the difference amount. In this case 1040 - 900 = 140 USD ( In your case this to be the same as tax amount, as purchase price/Gross value and inventory cost are the same. As you notice in this example, Difference is not just due to tax amount but also due to difference in purchase price and inventory cost)

I hope this will answer to your questions.

Regards,

Harshal Vakil

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