Adjust the sales tax on a purchase invoice
Occasionally, there may be a rounding difference between the sales tax total that was calculated on the purchase invoice from your vendor, and the sales tax amount that was automatically calculated in Sparkrock 365. If this situation occurs, the sales tax can be adjusted so you can reconcile the difference. The sales tax can be adjusted via the adjust penny rounding feature or via the Purchase Invoice Statistics page.
Also, you can specify the maximum tax correction amount that is allowed for the local currency.
Adjust penny rounding
For sales tax rounding differences of $0.01, you can specify that the sales tax amount be automatically adjusted. To have Sparkrock 365 automatically adjust the sales tax amount, you must enable adjust penny rounding.
Penny rounding enabled
When adjust penny rounding is enabled, and you try to change the status of a purchase invoice that has a $0.01 cent difference to released, Sparkrock 365 automatically reconciles the difference. Sparkrock 365 automatically updates the purchase invoice line totals to match the amounts that were entered on the Purchase Invoice page, on the General FastTab, in the Total Incl. Tax Input and Sales Tax fields.
During posting of the invoice, if penny rounding is on, and the invoice total including tax does not match the entered total including tax by $-0.01, to reconcile, you must increase the value of Direct Unit Cost Excl. Tax on a recoverable tax line by $0.01.
Penny rounding disabled
When adjust penny rounding is disabled, to reconcile sales tax differences, you must use the Purchase Invoice Statistics page.
To enable adjust penny rounding
Choose
, enter purchases & payables setup, and then choose the related link.The Purchases & Payables Setup page opens.
On the General FastTab, turn on Adjust Penny Rounding.
You must set up at least one tax jurisdiction. To set up a tax jurisdiction, on the Purchase Invoice Tax Captions FastTab, perform the following steps:
- In P1 Tax1 Rep. to Jrsd. Code, specify the first tax jurisdiction for which the tax on a purchase invoice is to be manually input to match the tax on the original document.
Sparkrock 365 uses the manual amount to reconcile taxes against the taxes that are calculated on the lines of the document.
- In P1 Tax1 Caption, specify the caption that Sparkrock 365 is to use for the first tax jurisdiction for which the tax on the purchase invoice is to be manually input.
- In P1 Tax1 Rep. to Jrsd. Code, specify the first tax jurisdiction for which the tax on a purchase invoice is to be manually input to match the tax on the original document.
Example
The following example demonstrates how the adjust penny rounding feature works when enabled and there is a $0.01 difference between the amounts that Sparkrock 365 automatically calculated and the invoice that was received from the vendor:
A purchase invoice is created and Sparkrock 365 automatically updates the Lines of the invoice with the following totals:
Total Excl. Tax (CAD) = $100.00
Total Tax (CAD) = $13.00
Total Incl. Tax (CAD) = $113.00
On the General FastTab, the amounts that appear on the vendor invoice are manually specified in the following fields:
Total Incl. Tax Input = $113.01
Sales Tax = $13.01
On the action bar, when Home > Release are chosen, the Status of the invoice changes to Released and no message is displayed regarding the rounding difference. Also, Sparkrock 365 overrides the sales tax totals that appear in the Release Document Information FactBox and on the Lines to be the same as the sales tax totals that were specified on the General FastTab. The totals are overridden because the difference was within the penny threshold.
On the action bar, if Posting > Preview Posting are chosen, and then you preview the general ledger entries, the Amount of $113.01 is displayed.
On the action bar, if Invoice > Statistics are chosen, on the Purchase Invoice Statistics page, you can view the actual breakdown. Sparkrock 365 automatically allocated the $0.01 difference to PST recoverable.
Reconcile sales tax differences with the Purchase Invoice Statistics page
On the Purchase Invoice Statistics page, you can reconcile differences between the sales tax total that was calculated on the purchase invoice from your vendor, and the sales tax amount that was automatically calculated in Sparkrock 365. There are two ways to reconcile the tax difference. One method involves the Reconcile action and the other method involves manually updating one or more entries.
Reconcile a sales tax difference with the Reconcile action
When the Reconcile action is chosen, Sparkrock 365 automatically reconciles the difference. The difference is reconciled among the various tax jurisdictions that compose the tax area breakdown on the purchase invoice lines.
To reconcile a sales tax difference with the Reconcile action
Choose
, enter purchase invoices, and then choose the related link.The Purchase Invoices page opens.
Select the purchase invoice that you want to place on hold, and then on the action bar, choose Manage > View.
The Purchase Invoice page opens.
If you try to change the Status of a purchase invoice to Released when there is a sales tax difference between the sales tax total that was calculated on the purchase invoice from your vendor, and the sales tax amount that was automatically calculated in Sparkrock 365, a warning message that is similar to the following message is displayed:
Invoice total including tax does not match entered total including tax by -0.01.
Do you want to proceed?
To reconcile the difference before releasing, choose No.
On the action bar, choose Invoice > Statistics.
The Purchase Invoice Statistics page opens.
On the action bar, choose Reconcile.
On the General FastTab, the Tax Amount and Total Incl. Tax fields are updated.
On the Sales Tax Lines, the Tax Amount, Tax Difference, and Amount Including Tax columns are updated.
On the Purchase Invoice page, you can see that the sales tax total that was calculated on the purchase invoice from your vendor, and the sales tax amount that was automatically calculated in Sparkrock 365 now match.
You can now proceed with releasing the invoice.
Reconcile a sales tax difference manually
When you reconcile a sales tax difference manually, you can choose where to place the difference.
To reconcile a sales tax difference manually
Choose
, enter purchase invoices, and then choose the related link.The Purchase Invoices page opens.
Select the purchase invoice that you want to place on hold, and then on the action bar, choose Manage > View.
The Purchase Invoice page opens.
If you try to change the Status of a purchase invoice to Released when there is a sales tax difference between the sales tax total that was calculated on the purchase invoice from your vendor, and the sales tax amount that was automatically calculated in Sparkrock 365, a warning message that is similar to the following message is displayed:
Invoice total including tax does not match entered total including tax by -0.01.
Do you want to proceed?
To reconcile the difference before releasing, choose No.
On the action bar, choose Invoice > Statistics.
The Purchase Invoice Statistics page opens.
In the Tax Amount column, place the difference in the cell that you want.
For differences that are greater than $0.01, you can break up the difference into multiple amounts as required, and then place the amounts into more than one cell.
The Tax Difference and Amount Including Tax columns update automatically.
To update the Tax Amount and Total Incl. Tax amounts on the General FastTab, on the action bar, choose Update Header.
In the Difference field, you can see that the value is now 0.00.
On the Purchase Invoice page, you can see that the sales tax total that was calculated on the purchase invoice from your vendor, and the sales tax amount that was automatically calculated in Sparkrock 365 now match.
You can now proceed with releasing the invoice.
Clearing all tax differences within the Purchase Invoice Statistics page
If required, you can revert any sales tax differences that were reconciled via manually entry or the Reconcile action within the Purchase Invoice Statistics page.
To revert any sales tax differences that were reconciled
Choose
, enter purchase invoices, and then choose the related link.The Purchase Invoices page opens.
Select the purchase invoice for which you want to revert any sales tax differences that were reconciled, and then on the action bar, choose Manage > View.
The Purchase Invoice page opens.
On the action bar, choose Invoice > Statistics.
The Purchase Invoice Statistics page opens.
On the action bar, choose Clear All Tax Differences.
Specifying the maximum tax difference that is allowed
You can specify the maximum tax correction amount that is allowed for the local currency. Typically, the value is set to $1.00.
When an attempt to reconcile a purchase receipt is performed and the amount of the sales tax difference is greater than the maximum tax difference that is allowed, Sparkrock 365 displays an error that is similar to the following error:
The total Tax Difference for a document must not exceed Max. Tax Difference Allowed = 1.00.
If this error is received, you can contact the vendor to confirm that the vendor’s purchase invoice calculations are correct. Alternatively, the maximum tax difference that is allowed can be temporarily raised until the purchase invoice is released. After the purchase invoice is released, the maximum tax difference allowed can be reset to the original value.
To specify the maximum tax difference that is allowed
Choose
, enter General Ledger Setup, and then choose the related link.The General Ledger Setup page opens.
On the General FastTab, in Max. Tax Difference Allowed, specify the maximum tax correction amount that is to be allowed.
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