Enter sales tax credits and debits

This method is optimal for issuing a tax credit and receiving payment in the same Cash Receipts screen. A separate negative invoice will be created in the amount of the tax charged on the selected invoice. You can then immediately apply the tax credit to the invoice and receive your customer's payment.

Note
These instructions only apply if you are crediting the customer for the entire amount of tax on the invoice. If you are issuing a credit for a portion of the tax amount, you need to issue the credit using the Sales Order screen. See instructions below in Sales Order Entry Method.

1. Go to Accounting > Accounts Receivable > Cash Receipts.
2. In the Customer box, type the customer's name, reference number, city, or A/R phone number, and then press the Tab key to search for the correct customer.



Optionally, you may also click Find and search by Invoice Amount, Invoice Number, or Customer P/O.

3. Right-click the invoice for which you want to issue a tax credit, and then click Issue Tax Credit. On the confirmation message that appears, click Yes.

   

   The resulting tax credit will post through the Sales Journal and create a numbered sales invoice using a generic “SP” item. Note that the accounting effect of the tax credit posts to the Accounts Receivable period the system is operating in at the time of the credit, not the time of the original sale.

4. Enter the customer check as usual. Select both the invoice and the credit as well as any other invoices the check is paying, then click Save to post. You can also click the Print Receipt button to print a receipt for the customer.
5. Once you have entered all of your payments for the batch, print the Cash Receipts Audit Trail and post and update your Cash Receipts in Accounts Receivable: click Print & Post To A/R.
6. As a result of entering the Sales Tax Credit, the current period Sales Tax Journal will reduce the Taxable-Amount sales and reduce the Tax-Amount. The General Ledger Sales Tax Payable Account will be updated by the amount of the Sales Tax Credit.

1. Go to Sales > Order > Sales Order.
2. In the Customer box, type the customer's name, reference number, city, or A/R phone number, and the press the Tab key to search for the correct customer.
3. If required, type the Customer P/O.
4. Select a Ship Via that will not place the order on a truck. (Use a Pick-Up or Do Not Ship method to avoid confusion in Truck Scheduling.)
5. Click the Header tab, and verify that the Tax Code is the same as the one that was used on the invoice for which you are issuing credit. This tax code will be used to calculate the amount of the credit.



6. Click the Detail tab. Right-click the empty Product Number column, and select Issue Tax Credit or Debit.



7. On the Tax Credit or Debit pop-up that appears, select the Credit option, and then in the Taxable Amount box, type the merchandise amount on which the customer was charged tax. (You may need to find the original invoice to look up this amount. ) Click OK.



8. Review the two entries that appear in the Line Items grid on the Detail tab. To avoid affecting actual product quantities and metrics, the intangible SP designation is used to decrease taxable sales and increase non-taxable sales for a net credit of tax. No deletions or addtiions should be made to the line items detail of the invoice, otherwise incorrect sales, tax and reporting can occur.



9. To see the actual amount of the tax credit, click the Final tab. Verify that this matches the tax amount on the invoice. Then click Save. At a tax rate of 6.00% on the merchandise amount of 100, the credited tax is $6.00.



10. The tax credit will not post to the customer's account until it is invoiced. To place the credit in billing to be invoiced, click Create Invoice to the right of the order totals on the Final tab. This action places the order in the current billing batch to be invoiced.



Once it is invoiced, you can apply it to the original invoice in the Cash Receipts screen by checking off both the invoice and the credit.

The G/L distribution will reflects that there was no change in net sales.

Note
The accounting effect of the tax credit posts to the Accounts Receivable period the system is operating in at the time of the credit, not the time of the original sale. The Sales Tax Journal will reflect the tax credit by increasing non-taxable sales and reducing taxable sales accordingly.

1. Follow step 1-4 from the issue tax credit procedure, above.
2. Click the Header tab, and choose the correct Tax Code for the taxes that need to be collected on the invoice. This tax code will be used to calculate the amount of the credit.



3. Click the Detail tab. Right-click the empty Product Number column, and select Issue Tax Credit or Debit.



4. On the Tax Credit or Debit pop-up that appears, select the Debit option, and then in the Taxable Amount box, type the merchandise amount on which tax is owed. Click OK.



5. Review the two entries that appear in the Line Items grid on the Detail tab. To avoid affecting actual product quantities and metrics, the intangible SP designation is used to increase taxable sales, and decrease non-taxable sales for a net debit of tax. No deletions or additions should be made to the line items detail of the invoice, otherwise incorrect sales, tax and reporting can occur.



6. To see the actual amount of the tax debit, click the Final tab. Then click Save. At a tax rate of 6.00% on the merchandise amount of 100, the tax charged is $6.00.



7. To place the debit invoice into billing to be invoiced, click Create Invoice to the right of the order totals on the Final tab. This action places the order in the current billing batch to be invoiced.

The G/L distribution will reflect no change in net sales.