Project CommitmentsLesson 6

Processing Purchases with a Sales Tax

Back to V300: Project Accounting for Construction

Lesson 6: Processing Purchases with a Sales Tax

Part 1: Project Commitments

This lesson describes how to create a sales tax for purchases and how to process a project-related purchase with a sales tax.

Purchases with a Sales Tax: General Information

A sales tax is a tax paid by a company to its vendors as a part of the amount of an AP bill. When the company pays the accumulated tax amounts to the responsible tax agency, the tax amounts are reduced by the amount of sales tax paid to the vendors. In Acumatica ERP, the system calculates the sales tax in vendor documents automatically.

Learning Objectives

In this lesson, you will learn how to do the following:

  • Learn how to configure a sales tax
  • Learn how to create an AP bill with a sales tax applied
  • Release an AP bill and review the GL batch generated by the system

Applicable Scenarios

You create an AP bill with any number of sales taxes to record a purchase that is subject to sales taxes.

Tax Calculation in Purchase Orders

The system calculates taxes based on the following details specified in the AP document created on the Bills and Adjustments (AP301000) form:

  • The vendor
  • The inventory IDs
  • The total price of the inventory items
  • The document date The system calculates the tax and taxable amounts of the AP document by using the settings of each tax that corresponds to both of the following:
  • The tax category of the specified inventory ID in each line of the bill
  • The tax zone of the selected vendor The system calculates the tax and taxable amounts for each line of the document or for the total document amount, depending on the settings of the applied tax. The system inserts the sales tax amount in the Tax Total box in the Summary area of the Bills and Adjustments form. When you release the AP document, the system creates the corresponding GL transaction and records these amounts to the appropriate GL accounts. Purchases with a Sales Tax: To Configure a Sales Tax for Project Purchases
    This activity will walk you through the process of creating a sales tax in the system.

Story

Suppose that the ToadGreen company buys goods from its suppliers and pays sales tax on these purchases. The rate of the sales tax is 8.875%; the tax amount must be calculated on the sum of the line amounts to which this tax is applied. You need to configure a sales tax to be calculated for AP documents; the calculated tax amounts can then be claimed from a tax agency.

Configuration Overview

In the U100 dataset, the following tasks have been performed to support this activity:

  • On the Tax Zones (TX206000) form, the NYZONE tax zone has been created.
  • On the Tax Categories (TX205500) form, the TAXABLE category has been created.
  • On the Chart of Accounts (GL202500) form, the 24100 - Tax Payable and 69000 - Tax Expenses accounts have been created. The 69000 - Tax Expenses account is included in the MATERIAL account group.

System Preparation

To prepare to perform the instructions of the activity, sign in as a system administrator by using the gibbs username and the 123 password.

Step: Creating a Sales Tax To create a sales tax, proceed as follows:

  1. On the Taxes (TX205000) form, add a new record.
  2. On the Tax Settings tab, specify the following settings:
  • Tax ID: NYSALESTAX
  • Description: New York sales tax
  • Tax Type: Sales
  • Calculation Rule: Exclusive Document-Level This setting means that the tax amount is calculated on the sum of the line amounts to which this tax is applied.
  • Cash Discount: Does Not Affect Taxable Amount
  1. On the Tax Schedule tab, click Add Row on the table toolbar, and specify the following settings:
  • Start Date: 1/1/2025
  • Tax Rate: 8.875
  • Reporting Group: Default Input Group
  • Group Type: Input (specified automatically) An Input group is specified for a tax that can be claimed from a tax agency.
  1. On the Categories tab, click Add Row on the table toolbar, and select TAXABLE in the Tax Category column.
  2. On the Zones tab, click Add Row on the table toolbar, and select NYZONE in the Tax Zone ID column.
  3. On the GL Accounts tab, specify the following settings:
  • Tax Payable Account: 24100 - Tax Payable The Tax Payable account is the liability account that accumulates the tax amounts to be paid to the tax agency. The account is credited in the tax amount when taxable invoices are released.
  • Use Tax Expense Account: Selected
  • Tax Expense Account: 69000 - Tax Expenses The Tax Expenses account (69000) is included in the MATERIAL account group so that tax expenses will be posted to the project specified for the AP document lines.
  1. On the form toolbar, click Save to save your changes.
    You have configured a sales tax.

Purchases with a Sales Tax: To Process a Project-Related Bill with a Tax

This activity will walk you through the process of creating and releasing an AP bill with a sales tax.

Story

Suppose that on 1/30/2025, the ToadGreen company purchases 500 packages of a concrete mix from the Concrete Supply Co. vendor. The vendor is located in the state of New York, and the New York sales tax has to be applied to this purchase. Acting as the project manager, you need to enter the AP bill, release it, and review how the system calculates the sales tax.

Configuration Overview

In the U100 dataset, the following tasks have been performed to support this activity:

  • On the Enable/Disable Features (CS100000) form, the Projects, Cost Codes, and Construction features have been enabled.
  • On the Vendors (AP303000) form, the CONCRESUP vendor account for the Concrete Supply Co. has been created. On the Purchase Settings tab (Default Location Settings section), in the Tax Zone box, the NYZONE tax zone is selected for this vendor.
  • On the Non-Stock Items (IN202000) form, the CONCRMX non-stock item has been created.
  • On the Projects (PM301000) form, the HOTEL project has been created with multiple project tasks, including the 02 - SITEWORK project task. The 02-000 cost code has been created on the Cost Codes (PM209500) form.

Process Overview

You will create and release a bill with a taxable item on the Bills and Adjustments (AP301000) form. You will then review the transaction generated on release of the bill on the Journal Transactions (GL301000) form, and the related project transaction on the Project Transactions (PM304000) form.

System Preparation

To prepare to perform the instructions of this activity, do the following:

  1. Sign in to the system as a project manager by using the ewatson username and the 123 password.
  2. In the info area, in the upper-right corner of the top pane of the Acumatica ERP screen, make sure that the business date in your system is set to 1/30/2025. If a different date is displayed, click the Business Date menu button and select 1/30/2025 on the calendar. For simplicity, in this activity, you will create and process all documents in the system on this business date. Step 1: Creating and Releasing an AP Bill with a Sales Tax Create a bill by doing the following:
  3. On the Bills and Adjustments (AP301000) form, add a new record.
  4. In the Summary area, specify the following settings:
  • Type: Bill
  • Vendor: CONCRESUP
  • Description: Concrete mix for HOTEL project
  1. On the Details tab, add a line with the following settings:
  • Inventory ID: CONCRMX
  • Quantity: 500
  • UOM: EA
  • Unit Cost: 85
  • Project: HOTEL
  • Project Task: 02 - SITEWORK
  • Cost Code: 02-000
  • Tax Category: TAXABLE
  1. Save the bill, and on the Taxes tab, review the details of the calculated sales tax. The system applied the NYSALESTAX to the bill based on the tax zone settings and the tax category of the item. The taxable amount is $42,500.00, and the calculated total tax is $3,771.88.
  2. On the form toolbar, click Remove Hold, and then click Release to release the bill.

Step 2: Reviewing the GL Batch and Related Project Transaction Perform the following steps:

  1. While you are still on the Bills and Adjustments (AP301000) form, on the Financial tab, click the Batch Nbr. link. The system opens the batch of general ledger transactions on the Journal Transactions (GL301000) form.
  2. Review the batch that was generated on release of the bill, and make sure the amounts have been recorded to general ledger as follows:
  • The Accounts Payable account of the vendor (20000) is credited in the total amount of the bill (the total of the line plus the total of the calculated tax). The non-project code (X) is specified in this line.
  • The Project Material Expense account (54700) is debited in the amount specified in the document line. The material expenses have been recorded to the HOTEL project and the 02 project task.
  • The Tax Expenses account specified for the tax (69000) is debited in the calculated tax amount. The tax expenses have been recorded to the HOTEL project and the 02 project task.
  1. On the Project Transactions (PM304000) form, open the project transaction with AP specified as the Module and with the Concrete mix for HOTEL project description that was generated from the general ledger transaction. Make sure that the project transaction includes two lines: a line related to the materials bought for the project, and a line for the related tax expenses, as shown in the screenshot below. Figure: Project transaction generated for the batch
    You have finished processing a taxable bill for a project and have recorded the expenses to the project budget.