The question came up recently how to properly account for sales tax on our Supplier Invoices entered by AP. These are mostly for new store construction costs across the country where we're building stores across the US and I would imagine others are trying to account for this as well across the multiple tax jurisdictions, etc.
Currently our AP team is entering the invoice totals by associated GL account including the tax.
As an example we get an invoice for the construction of our 500th store in Washington from a kitchen equipment company for an oven, walk in freezer and fridge and some coolers that would look like this on paper:
|Qty||Description||Item Price||Total Price|
|1||Walk in Freezer||$10,000||$10,000|
|1||Walk in Refrigerator||$10,000||$10,000|
|Sales Tax (10.6%)||
Entered into SAP right now AP is entering the lines like this, where you can see the sales tax is just rolled up into the GL account totals:
|Debit/Credit||GL Account||Amount||Cost Center|
|Debit||18005000 CIP - Oven||$19,355 USD||WA20500|
|Debit||18006000 CIP - Kitchen Equip||$26,544 USD||WA20500|
Our Tax Director and Controller want to keep better track of our sales (and use tax) to prove we're paying appropriately. Here is the current way we've proposed doing this in an invoice (based on the same example data above), is there a better way?
|Debit/Credit||GL Account||Amount||Cost Center||Item Text|
|Debit||18005000 CIP - Oven||$17,500 USD||WA20500|
|Debit||18005000 CIP - Oven||$1,855 USD||WA20500||Sales Tax|
|Debit||18006000 CIP - Kitchen Equip||$24,000 USD||WA20500|
|Debit||18006000 CIP - Kitchen Equip||$2,544 USD||WA20500||Sales Tax|
We do have Vertex connected to our S/4HC system because it was mandated at the time we went live but we don't actively use it and I also wonder how that plays into this discussion.