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  13. (Accounting) Invoice items with...

(Accounting) Invoice items with cash discount

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The following describes the accounting transactions the system creates when you invoice items on a sales order with cash discount. The VAT amount is based on the order amount when the cash discount is deducted, i.e. the Cash discount deduct field in DIS control file is set to YES. The cash discount percentage is defined in the Terms of payment table and the VAT handling code for the order line is set to YES in the Cash discount field in the VAT handling code table. The VAT handling code for the freight fee is set to NO in the Cash discount field in the VAT handling code table.

Prerequisites

Quantity 1
Sales price 100.00 SEK
Cost price 25.00 SEK
VAT item 25%
Freight fee 50.00 SEK
VAT freight fee 25%
Cash discount 5%

Created transactions

Transaction type Description Amount
Debit		 Amount
Credit		 Calculation/Result/Additional info
820 Sales value Gross VAT   100.00
Sales price * Quantity

100.00 * 1 = 100.00
960 VAT output of order lines   23.75
(Sales value Gross VAT – (Sales value Gross VAT * Cash discount)) * VAT percentage of VAT handling code

(100.00 – (100 * 0.05)) * 0.25 = 23.75

This transaction is the VAT amount for the sales value of the item. Since the Cash discount deduct field in the DIS control file is set to YES, the VAT amount is based on the sales value after the cash discount has been withdrawn.

Net sales value, cash discount withdrawn: Sales value Gross – (Sales value Gross * Cash discount percentage)
800 Cost for goods sold 25.00  
Cost price * Quantity

25.00 * 1 = 25.00

If the cost type is:

  • Standard cost, the cost price is retrieved from the Standard cost field in the Item file.
  • Average purchase price, the cost price is retrieved from the Average cost field in the Item file.
  • FIFO, the cost price is retrieved from the oldest active FIFO transaction in the FIFO file.
901 Stock value   25.00
Cost price * Quantity

25.00 * 1 = 25.00

The cost price is retrieved as described in Cost of goods sold above.
826 Freight VAT   50.00 This is the freight amount.
961 VAT output of order   12.50
50.00 * 0.25 = 12.50

This is the VAT amount of the freight fee. Since the VAT handling code of the freight amount is set to NO in the Cash discount field (in the VAT handling code table), the cash discount is not withdrawn from the freight amount when the VAT amount is calculated.
802 Coin adjustment 0.25  
In this example the figures are:

Total net sales value in SEK: 100.00
Freight: 50.00
Total VAT amount: 23.75 + 12.50 = 36.25
Total in SEK: 100.00 + 50.00 + 36.25 = 186.25
Invoice total in SEK: 186.00
Coin adjustment in SEK: 186.25 – 186.00 = 0.25

In the Currency table for the SEK currency, the Adjust inv amount field is 1.00, which means that invoice amounts should always be rounded off to the nearest even Swedish krona.
A/R To be accounted on Account Receivable 186.00    

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