Example of posting tax amounts on advance payments
During the advance payments of purchase invoice procedure, LN creates the
financial postings described in the following example. Similar postings are
created during the processing of advance receipts for sales invoices.
Example transaction
| Example | Purchase invoice
data |
|---|
| Purchase invoice | $ 100.00 |
| Tax | 10% |
| Assumption | Transaction types with Negative Amounts Allowed = Yes |
| CMG Parameters (tfcmg0100s000) | Calculate Tax on Advance Payments/Receipts = Yes |
The Purchase Order transactions
Step 1. Create an advance payment with taxNote: Tax amounts on advance payments
are only calculated if you select the Calculate Tax on Advance Payments/Receipts check box
in the CMG Parameters (tfcmg0100s000) session.
| Debit/ Credit | Ledger account | Amount |
|---|
| Debit | Advance Payment | $ 110.00 |
| Credit | Cash | $ 110.00 |
| Debit | Net Advance Payment | $ 100.00 |
| Debit | Purchase Tax | $ 10.00 |
| Credit | Gross Advance Payment | $
110.00 |
.
Step 2. Register the purchase invoice| Debit/ Credit | Ledger account | Amount |
|---|
| Debit | Costs | $ 100.00 |
| Debit | Purchase Tax | $ 10.00 |
| Credit | Accounts Payable | $
110.00 |
.
Step 3. Assign the advance payment to the purchase
invoice| Debit/ Credit | Ledger account | Amount |
|---|
| Debit | Accounts Payable | $ 110.00 |
| Credit | Advance Payment | $
110.00 |
| Debit | Net Advance Payment | - $ 100.00 |
| Debit | Tax on Assigning the Advance
Payment | - $ 10.00 |
| Credit | Gross Advance Payment | - $ 110.00 |
.