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 | INR 100.00 |
| Tax | 10% |
| Assumption | Transaction types with Negative Amounts Allowed = Yes |
| CMG Parameters (tfcmg0100s000) | Calculate Tax on Advance Payments/Receipts = Yes |
Step 1. Create an advance payment with taxNote: Tax amounts on advance payments
are calculated only 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 | INR 110.00 |
| Credit | Cash | INR 110.00 |
| Debit | Net Advance Payment | INR 100.00 |
| Debit | Purchase Tax | INR 10.00 |
| Credit | Gross Advance Payment | INR
110.00 |
.
Step 2. Register the purchase invoice| Debit/ Credit | Ledger account | Amount |
|---|
| Debit | Costs | INR 100.00 |
| Debit | Purchase Tax | INR 10.00 |
| Credit | Accounts Payable | INR
110.00 |
.
Step 3. Assign the advance payment to the purchase
invoice| Debit/ Credit | Ledger account | Amount |
|---|
| Debit | Accounts Payable | INR 110.00 |
| Credit | Advance Payment | INR
110.00 |
| Debit | Net Advance Payment | - INR 100.00 |
| Debit | Tax on Assigning the Advance
Payment | - INR 10.00 |
| Credit | Gross Advance Payment | - INR 110.00 |
.