Ok, I have rebuilt your data and get the correct results
The Purchase Invoice
The Inventory Item Avg Cost
So why don’t you delete the Purchase Invoice, check the Inventory Item Avg Cost which should be zero and then re-enter the Purchase Invoice.
Q: is there any particular reason why you are entering it as Tax Inclusive instead of Tax Exclusive ?
Also, at the top of your Inventory Items screen you are getting a message about duplicates - that shouldn’t be occurring
I do enter tax inclusive or exclusive based on my supplier invoice just to avoid calculation… does it make any difference?
It shouldn’t, but if re-entering as Tax Inclusive doesn’t fix the Avg Cost then try entering as Tax Exclusive and check the results.
Also your rounding amount of .36, doesn’t have an Account - you can’t leave it as Suspense.
On the Summary tab - Equity Section you probably have an account called Suspense showing - it shouldn’t be - it indicates transactions with processing errors.
Hi Brucanna , I tried by deleting purchase invoice , Avg cost is NIL for IZU09 , if I re enter same purchase invoice avg cost comes 14.42 instead of 15.56 …not able to understand what is wrong?
Are you using the In-built IGST 28% tax code or did you create a custom tax code ?
I think there is some issue in custom tax code, when I use inbuit tax code …calculation is coming correct
What is an error in above tax code creation?
Ok, so there is your problem - the flat rate tick box is ticked and it shouldn’t be.
Anyhow, all the required Indian tax rates have been in-built so there is no need for you to use custom codes.
Thanks indeed
Now you may have a greater problem so can I suggest that you immediately do a backup.
If you are using other custom tax codes with the flat rate ticked then all your tax calculations since their introduction are going to be possibly wrong. You need to untick and fully review the tax side of things.
Going forward, use the inbuilt tax codes, rename your custom codes as Old 28% etc, and then progressively go through your Purchase Invoices & Sales Invoices (if applicable) and convert the tax codes used. Once this is complete you can then delete your “old” codes from the system.
Thanks …luckily I had less transactions and hence I have already updated all transactions to inbuilt tax code
Flat rate tax schemes are explained in the last topic of this Guide: https://www.manager.io/guides/8901. Flat rate taxes are meant be applied only on sales. They already incorporate an assumed percentage of offsetting tax on purchases. When a flat rate tax is used, no tax code should be applied to purchases. The unit price should be entered as the tax-inclusive price. In that case, the average cost of the inventory item would include taxes, as you originally thought. But this is not your situation.
Basically, what happened when you designated your custom tax as a flat rate tax and applied it to a tax-inclusive purchase is that Manager backed out the effective purchase price: 20.03 / 1.28 = 15.65. So the VAT it posted to Tax payable was: 20.03 - 15.65 = 4.38. But the flat rate adjustment, which would reduce the tax amount on a sales invoice, increased the tax amount on a purchase invoice: 4.38 x 1.28 = 5.61. The result was that average cost was too low: 20.03 - 5.61 = 14.42. None of this shows on the completed transaction because the flat rate scheme is meant to be invisible to customers.