Create Adjustment Note Overview
The introduction of the new tax system has resulted in the inclusion of a new source document known as an Adjustment Note within SapphireOne. An Adjustment Note is required if you have previously issued or been requested to issue a Tax Invoice for a supply. For example, the following situations would require the creation of an Adjustment Note:
- All or part of the invoice has been cancelled.
- The price of a line item needs altering.
- A line item becomes Taxable.
- A line item stops being Taxable.
An Adjustment Note can apply to the following transactions:
|Source Type:||Destination Type:|
|SCI (Sales Client Invoice)||SCA (Sales Client Adjustment)|
|SCA (Sales Client Adjustment)||SCA (Sales Client Adjustment)|
|PVI (Purchase Vendor Invoice)||PVA (Purchase Vendor Adjustment)|
|PVA (Purchase Vendor Adjustment)||PVA (Purchase Vendor Adjustment)|
|CI (Client Invoice)||CA (Client Adjustment)|
|CA (Client Adjustment)||CA (Client Adjustment)|
|VI (Vendor Invoice)||VA (Vendor Adjustment)|
|VA (Vendor Adjustment)||VA (Vendor Adjustment)|
Transactions are limited to local currency only.
- You may only create an Adjustment note one Invoice at a time so you will have to select the Invoice that you want to create the Adjustment note for first and show sub-set.
- You use the adjustment note to modify the tax amount.
An adjustment note should be used as a last option. It is recommended that if an Invoice is sent out with the wrong totals that it is reversed and resent.
An Adjustment Note may be a positive (Debit) or negative (Credit) adjustment. Adjustment notes may only be made against posted transactions
- Once the list of transactions is on screen highlight one and show sub-set and then proceed to Select the Sapphire Tools icon from the main toolbar.
- From the drop down menu select Create Adjustment Note.
Entering the details for an Adjustment note:
- The Adjustment Note during data entry displays the Linked Totals (SCI) and Adjusted Value (SCA). In the screen displayed above the Adjusted Value reflects the difference between the Linked Quantity line and the New Quantity line, above is a Debit Adjustment Note.
- The SCA, when posted will create a CA in Accounts and likewise a PVI will create a VA.
Examples of the Journals as SapphireOne creates them are documented below.
Sales Transactions SCI’s
The following journals outline the methods SapphireOne uses to record the transactions to the General Ledger accounts and the Clients or Vendors account, while updating Inventory (Stock on Hand).
For this example, the following details apply
|inventory Current cost||$5.00 each|
|Sale price||$10.00 each|
|Stock cost Type||Average|
|Tax Code S||10%|
Incorrect Quantity Invoiced for an SCI
5 Items are invoiced, 4 are delivered. Here is the Client Return and Cash Return transaction. SapphireOne will default to the general ledger accounts attached to the inventory item or if these are not completed the Control Accounts set in System Controls, Control Accounts. In this example, the Tax Code of S will apply.
|Debtors Control (via Client Account)||$55.00|
|Cost of Sales||$25.00|
Adjustment to Sale Price for an SCI
An incorrect Sell Price was applied to a client or perhaps a price volume. The Sell Price for 5 items should be $10 Tax Inclusive. In this example the Tax Code of S will apply.
|Debtors Control (via Client Account)||$5.00|
Apply Prompt Payment Discount
A Prompt Payment Discount of 1% applies provided the payment is received within 5 days. (Original invoice for $55 Tax Inclusive ($50 Sales Account, $5 Tax In).
This is a SapphireOne generated transaction; you must identify the appropriate Tax Code to apply for BAS reporting purposes.
|Debtors Control (via Client Account)||$0.55|
Incorrect Tax Code on Original SCI
An Inventory item was created with the Tax Code of F. The Tax Code of S should have applied. The original invoice (SCI) was for $50 but should have been for $55. In this example, the Tax Code of A will apply.
|Debtors Control (via Client Account)||$5.00|
Purchase Transactions PVI:
Vendor Purchase (PVI) – via Inventory
In this example, 5 items are purchased at $11 GST inclusive.
|Payable Control (via Vendor Account)||$55.00|
Vendor Return and Cash Return
In this example, a faulty item is returned at $11 GST inclusive.
|Payable Control (via Vendor Account)||$11.00|
Partial Vendor Order received OVI
A vendor order (OVI) has not been received in full, you may choose to cancel the balance of the order. The Ordered quantity in the More Details screen in the Inventory Inquiry screen, no further transaction would be required.
GST not charged on a PVI
A negative transaction may be entered with the incorrect Tax Code in a PVI, then re-entered with the correct Tax Code. Or, enter a Vendor/Cash Return for the incorrect transaction and re-key the correct entry with the correct Tax Code applied.
A CA or VA created from a posted SCA or PVA will not include any Linked Totals as the transaction has not actually been created from an Accounts Mode transaction.
Adjustment Note transactions generate a simple report which includes the Client or Vendor details, the source transaction details plus the following:
- Australian Business Number.
- Original/Source transaction total.
- Adjusted Total.
- Amount owing or refunded (i.e. the adjusted price)