Hi again, Now I have an issue with the Average Cost and GST. When I entered 1 ink cartridge into my system under inventory and I only have one in inventory, the GST was calculated off the Average Cost, which I do not require and has miscalculated the 5% GST based on the Average Cost.
The ink cost $30.80 and gst for this is $1.54
The average cost for the ink is 29.33 and the GST calculated for this item is $1.46
Is there a way to not have the average cost column included.
Thanks,
I don’t know why you are calculating GST on average cost at all, regardless of whether the average cost is correct. If I remember Canadian taxes at all, GST is assessed at the time of sale, based on sale price, is it not? So for a sales invoice, you just select the GST 5% tax code and Manager calculates 5% of the line item amount. If you are using the tax code on a purchase invoice to calculate how much GST your supplier might have charged you (as in the case of a recoverable or offsetting tax), that tax would be calculated based on purchase price the same way.
What average cost column are you referring to, on what form?
Hi there, I am not calculating GST on Average Cost. Manager is. I do not even know if there is a way to override GST entries. I entered an expense claim for an ink cartridge with actual cost of $30.80. When I completed the entry Manager had added $1.47 rather than the actual GST of $1.54 as per screen shot 2. When I took a closer look at the inventory item, it shows average cost of $29.33 as per screen shot 1. I calculated the GST manually on that amount and that is where the $1.47 came from. The correct entry should have the GST calculating on the actual cost not the average cost to balance with my invoice for this purchase. This seems to be happening on Expense claims only.
Thanks,
@jazzy1 - you are completely confusing yourself by misunderstanding the GST calculation method and misreading Inventory terminology.
With regards to the GST calculation - Manager is absolutely correct to the cent.
When you first buy a single item - the actual cost and the average cost is the same cost.
When you process a purchase as GST “inclusive” for 30.80, then the price is = to item cost + GST.
Therefore in your example the item cost is 29.33 + 5% which is 1.47 and totals 30.80 - the price you paid.
In your calculation you were assuming that the item “cost” was 30.80 and then calculating GST of 5%, hence the 1.54.
As a rule GST added on is one fraction smaller then GST taken off.
To add GST of 5% = 1/20, so to add 1/20 on to an item cost of 1.00 ='s 0.05 becomes 1.05
To subtract GST of 5%, take the 1.05 and subtract 1/21 or 0.05 to return to 1.00
So in short 1/20 on = 1/21 off - or 1/21 of 30.80 = 1.47
Got it. I didn’t realize that the expense claim should be entered as GST inclusive (total on the invoice) as I entered the inventory item GST exclusive and I thought they would match up through the inventory. I still do not understand the average cost thing. Here we do not use it and use actual cost.
Got this item looked after. Thanks again for your help.
I also realize that the item does not have to go into inventory first as it will get entered to the Expense account selected when entering an Expense claim. Thanks again,
Average coat evolves over time as the cost price of inventory changes.
Your first purchase of an item is at cost price - 500 @ 1.00 = 500
Your next purchase of that item is at a higher price - 500 @ 1.10 = 550
So now your total inventory is 1000 for a cost of 1050.00, or average cost of 1.05
Now 300 items are sold, leaving 700 @ 1.05 = 735.00
You buy another 500 @ 1.20 = 600.00
So now your total inventory is 1200 at a cost of 1335.00, or average cost of 1.1125
I understand that concept, but I do not understand why the average cost is different than actual cost when I have only entered that item once and the price has yet to change on that item.
Thanks again
When you post a screenshot, just focus on a few specific examples, otherwise the whole screen detail is to hard to read
PS: On the LHS you only need to have the tabs listed that you are actually using.
The average cost is the Actual Cost from the processing of Purchase Invoices and is the only data field used by Manager. The cost price data field is from the manually entered data in the Inventory Item itself.
Inventory Item
Purchase Invoice
Inventory Listing
Why the Cost Price you entered on the Inventory Item is different from Actual Price that you paid for the item - only you can explain.
I think this happened before I changed the Custom GST Alberta rate from flat rate to not flat rate (see my GST topic). All my inventory items at that time had the cost price and actual cost price different. When I searched my inventory this morning I realized that in some cases the actual cost and the average cost matched. I deleted a couple of purchase invoices entered while I was still at flat rate GST and re entered them. The items now are entering correctly with both actual and average cost the same. Note that unchecking the flat rate box on the GST did correct the GST amount but did not correct the average cost amount of the items that had be entered in inventory that had been affected by the flat rate GST. Thanks
When a user changes a parameter such as you did with the tax code, that wont retrospectively change previously entered transactions as Manager doesn’t know that the change is correcting a previously user created situation such as your ticking of the flat tax tick box.
Manager has nothing to correct, but the user has - the data entered under their incorrect setup
Yes, I understand and I am in the processing of correcting them. I thought this might be of help to others who incorrectly set up their tax codes. Thanks,
