Why do the costs on a journal entry show in the net sales column?

Isn’t this because you are applying a 0% tax code to the debit leg of the journal entry?

You have not answered my question about reporting periods. Are the amounts correct if you look at all of Quarters 1 and 2 together? You said the error was made during Quarter 1, but has been corrected during Quarter 2. So you can only expect things to be correct if you include both quarters in the report.

Tax isn’t ever affecting the P&L. It’s only changes the Tax amount on the Balance Sheet. So 17,50 euro Credit and Debit is a change of 0 euro on the expenses in the P&L. That is what I ment by not touched.

No. To simplify the problem and stick to the journal entry that causes the problem: in Q1 no revenue is reported because it concerns an expense of 17,50 euro, nor in the P&L, nor in the Tax Summary report. In Q2 still no revenue is reported in the P&L because the balance of the journal entry is 0 and it concerns expenses. But in Q2 a revenue of 17,50 incl. tax is reported in the Tax Summary report under Net Sales column. See screenshot. That should have been reported in the Net Purchases column instead of the Net Sales column, because it is an expense!

Now my reported Net Sales/Revenue to the Tax authority is 14,46 (17,50 ex. tax) too high.

If the tax on the original purchase invoice was wrong, surely the correct way to correct the error was to enter a debit note to cancel the purchase invoice and a new purchase invoice with the correct tax code

Hi Joe,

I don’t think so. The new PI has the wrong date if it would be a date in Q2. The PI date needs to be the date of the invoice of the supplier. Already the Tax has been reported, so I need a new document date in the new period. That’s why I’m using a journal entry.

A journal entry is THE transaction type for making corrections. Using a debit note is not what really happened. The supplier didn’t send a credit note and a new invoice. If that happened I agree with your suggested way. I know it’s the practical route for a solution (in Q1 in my case), but Manager should be able to let us make use of the journal entry! If we keep working around mistakes in the software, Manager will not be adjusted to function as it should be.

Does your tax authority not allow submission of corrected filings?

Yes, but it is extra work and filing corrections increases the change that the Tax authorities will inspect my entire administration. So I only want to file a single correction once a year after year end closing.

But that is beside the point. My point is that the Net Sales column in the Tax Summary report is selecting the wrong data. If the report is correct I don’t need to submit a correction. I can solve it within my administration itself and pay the correct tax in Q2.

And I discovered two more errors (negative revenue on sales invoices with tax and receipts on bank statements with tax) in the Tax Summary report (see Reconcile Revenue P&L with Revenue Tax report caused by the same error in the selection/filtering of the columns. The combination of credit amounts and account type (revenue or expense account) instead of only credit amounts should be used to place the amount in the correct column of the report.

Why don’t you acknowledge that the Tax Summary report is flawed?

Because based on what I think you are saying, I don’t see a problem. And you are the only user making such a complaint.

Please understand: you have not shown your tax worksheet or the Tax Summary, only claimed that there are problems for which you have given somewhat confusing explanations. And you have insisted the program should support a correction process that does not make sense to me. That is why illustrations of the exact problem are so important.

I don’t want to share my administration with the rest of world. I can’t make selections to isolate the problem in the mentioned reports. Blurring out the figures is not helping to deliver the proof. I can create the scenarios with screenshots to proof the Tax Summary report is flawed, but I don’t want to post them online. Is PM-ing you a solution?

I’am amazed that I am the only user complaining. At least every Dutch user must encounter similar problems with reconciliation Revenue of the P&L with the Net Sales on the Tax Summary report/Concept BTW aangifte. @Hennie, do you recognize the problem?

No, thank you. I don’t want to be responsible for any personal or proprietary information you won’t share publicly. Can you illustrate this in a test company?

Great idea! I’ve recreated it in a test company.

Step 1. the Purchase invoice in Q1

Step 2. Reporting Tax over Q1 via Tax Summary

Step 3. Reporting P&L over Q1 to reconcile revenue Tax Summary and P&L

Step 4. Discovering Tax mistake. Posting Journal entry.

Step 5. Reporting Tax over Q2

Details of the 14,46 euro in the Tax Summary report

Two errors:

  1. The expenses are in the net sales column
  2. This one I discovered now, doing the recreation in TEST: the journal entry is INCLUDING tax. Whoops. So the net expenses on the journal entry is not 17,50 as I expected, but 14,46. And now I have a difference of 3,04 as well…

That leaves me with the question: how can I reverse the original expenses? I can’t follow the way Joe suggested because of the date (Managers doesn’t have reporting periodes, that would be a way out). And why is the including tax option not available on the Journal entry input screen?

You entered in your test company an invoice which was tax-exclusive. If the intention was that it was tax-inclusive, you should have ticked the box “amounts are tax-inclusive”. So it is correct that Manager reports a net purchase of € 17,50. When you entered your correction via a journal entry, Manager treats this as a tax-inclusive transaction that’s why it is booked as net € 14,46. That creates your difference of € 3,04. Whether you enter your correction as a credit-amount or as a negative debit amount, Manager sees this as effectively as a credit-posting on a VAT-account and reports it in the VAT-tax-return as a sale.
This is in my opinion incorrect.

I agree with IntoThe Mirror when he writes:
“A journal entry is THE transaction type for making corrections. Using a debit note is not what really happened. The supplier didn’t send a credit note and a new invoice. If that happened I agree with your suggested way. I know it’s the practical route for a solution (in Q1 in my case), but Manager should be able to let us make use of the journal entry! If we keep working around mistakes in the software, Manager will not be adjusted to function as it should be.”

Postings on a VAT-account should be depending on the kind of transaction “sales or expenses” and not on whether it is a debit or credit transaction.

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Thank you Hennie. You proved my point.

I still think this should be corrected by posting a debit note and an purchase invoice or two purchase invoices, one with negative values to cancel the first one

But I understand that you want to correct via je

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I’ve got a second one that goes wrong in the test company:

Step 1. create refund on the bank statement, straight on the sales account, e.g. a refund on a previous payment, where no sales invoice has been made in Manager (via a separate web event registration system).

Step 2. Reporting Tax over Q2

Details of the Net Purchases amount

This is also an error in my opinion. This should have been in the Net Sales column, because it’s negative revenue, not a purchase.

AS IntoTheMirror wrote. He made a mistake and wants to correct his mistake in the proper way by making a journal-entry. He didn’t receive a debit-note and a new purchase-invoice. It should not be necessary to create unnecessary documents that don’t even exist. Manager should work the correct way and we should not have to invent all kind of unnecessary work-arounds.

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To be more exact: depending on the kind of account being uses: sales or expenses. Not only the transaction (document) type, because Journal Entries can be mixed when making corrections.

Here the same mechanism applies.When you make a payment, Manager treats the VAT as "purchase-VAT regardless the fact that you book it on a sales GL-account.

I think @ Lubos has to dive into the mechanism because I think it is basically wrong.

Thanx again. It took me 6 hours during my first real year end closing to find the differences between the P&L and the reported revenue via the tax. I thought I went crazy, but you confirmed I not :wink:

@lubos, can you please look into this?

@IntoTheMirror, thanks for the complete illustration. I will put this into bugs for @lubos to examine.

@Hennie, thanks for your analysis, too.

I’m left with one final question: How do I post the journal entry correctly? The original amount was 17,50 excluding VAT of 21% that should have been 17,50 excluding 0% VAT.

Like this?

Nope. The details of my Tax payable on the balance sheet show me that it isn’t correct. I expected a balance of 0, not 3,68.

So which journal entry should I have made?