| Example of posting tax amounts on advance payments |  |
| During the advance payments of purchase invoice procedure, ERP 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 | $ 100.00
Tax | 10%
Assumption | Transaction types with Negative Amounts Allowed = Yes
CMG Parameters (tfcmg0100s000) | Calculate Tax on Advance Payments/Receipts = Yes
The Purchase Order transactions Step 1. Create an advance payment with tax Note: Tax amounts on advance payments are only calculated 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 | $ 110.00
Credit | Cash | $ 110.00
Debit | Net Advance Payment | $ 100.00
Debit | Purchase Tax | $ 10.00
Credit | Gross Advance Payment | $ 110.00
. Step 2. Register the purchase invoice
Debit/ Credit | Ledger account | Amount
--- | --- | ---
Debit | Costs | $ 100.00
Debit | Purchase Tax | $ 10.00
Credit | Accounts Payable | $ 110.00
. Step 3. Assign the advance payment to the purchase invoice
Debit/ Credit | Ledger account | Amount
--- | --- | ---
Debit | Accounts Payable | $ 110.00
Credit | Advance Payment | $ 110.00
Debit | Net Advance Payment | - $ 100.00
Debit | Tax on Assigning the Advance Payment | - $ 10.00
Credit | Gross Advance Payment | - $ 110.00
. Related topics To set up tax registration |