Using VAT in Purchasing—Exercises

IMPORTANT
It is extremely important that you set up and work within your own site to maintain your data integrity. If you work within any other site, you will compromise your own exercise data as well as the data of other students. Predictable exercise results require that your data be isolated in your own site.

Basic Data Setup

Site

Purpose: The purpose of this exercise is to customize your site to be used in the following exercises. The site must be connected to a company that uses the VAT tax type, as specified below.

Windows:
Site
Sites per User

  1. Verify that your site is connected to company 15 (IFS Racing Sweden AB). Use one of the delivery addresses specified for company 15.
  2. Connect your site to your user as the default site.

General exercise for Entering Site

Note: Remember to connect your site to company 10 after finishing these exercises, unless you continue with other VAT exercises.

Coordinator

Purpose: The purpose of this exercise is to enter yourself as a coordinator. If the coordinator is connected to the user information, it is filled in automatically when a new purchase order is entered. If you do not connect a coordinator to your user, you must manually define a coordinator for the purchase order.

Windows:
Coordinators
Sites per User

  1. Enter yourself as a coordinator at your site.
  2. Connect your coordinator ID to your user.

General exercise for Entering a Coordinator

Buyer

Purpose: The purpose of this exercise is to enter yourself as a buyer. If the buyer is connected to the user information, it is filled in automatically when a new purchase order is entered. Otherwise, it is retrieved from the supplier information.

Windows:
Procurement Basic Data/Buyers
Sites per User

  1. Enter yourself as a buyer at your site.
  2. Connect your buyer ID to your user.

General exercise for Entering Buyer

Purchase Part, Inventory–Registered

Purpose: The purpose of this exercise is to create purchase parts by entering them as inventory parts. The purchase part is automatically created when the inventory part is entered.

Windows:
Inventory Part

  1. Enter an inventory part with the part number XX-62-301 and the description Winter Tire. Use PCS (piece) as the unit of measure and enter an estimated material cost.
  2. Enter an inventory part with the part number XX-62-302 and the description High Performance Tire. Use PCS (piece) as the unit of measure and enter an estimated material cost.
  3. Enter an inventory part with the part number XX-62-303 and the description Wet Tire. Use PCS (pieces) as the unit of measure and enter an estimated material cost.

General exercise for Enter Purchased Inventory Part

Supplier

Purpose: The purpose of this exercise is to create suppliers to be connected to the purchase parts.

Windows:
Supplier

Note: The Payment tab is only available if IFS Financials is installed.

  1. Enter the Swedish tire supplier XX-301. In the Name field, enter Swedish Tires. On the General tab, use English as the default language.
    Add a new address identity on the Address tab and an address on the Address/General Address Info tab. On the Address/Purchase Address Info  tab, right-click and then click Supply Chain Matrix for Supplier. Enter CIF (Cost Insurance Freight) as the delivery terms and 30 (Road Transport) as the ship via code.
    On the Invoice/General tab for company 15 (IFS Racing Sweden AB), enter SEK (Swedish Krona) as the currency and enter an authorizer.
    On the Purchase/General tab, enter yourself as buyer and SEK (Swedish Krona) as the currency.
    On the Invoice/Tax Information tab, Select VAT in the Tax Regime field, enter a tax liability of type Taxable in the Tax Liability field and a VAT tax code 1, 2 or 3 in the Tax Code field.
    On the Payment tab, set up how to pay the supplier from company 15 (IFS Racing Sweden AB).
  2. Enter the US tire supplier XX-302. In the Name field, enter U.S. Tires.
    On the General tab, use English as the default language.
    Add a new address identity on the Address tab and an address on the Address/General Address Info tab. On the Address/Purchase Address Info tab, right-click and then click Supply Chain Matrix for Supplier. Enter CIF (Cost Insurance Freight) as the delivery terms and 10 (Air Freight) as the ship via code.
    On the Invoice/General tab for company 15 (IFS Racing Sweden AB), enter USD (U.S. Dollar) as the currency and enter an authorizer.
    On the Invoice/Tax Information tab, Select VAT in the Tax Regime field, enter a tax liability of type Exempt in the Tax Liability field and a VAT tax code with 0% tax in the Tax Code field.
    On the Purchase/General tab, enter yourself as buyer and USD (U.S. Dollar) as the currency.
    On the Payment tab, set up how to pay the supplier from company 15 (IFS Racing Sweden AB).
  3. Enter the British tire supplier XX-303. In the Name field, enter British Tires.
    On the General tab, use English as the default language.
    Add a new address identity on the Address tab and an address on the Address/General Address Info tab. On the Address/Purchase Address Info tab, right-click and then click Supply Chain Matrix for Supplier. Enter CIF (Cost Insurance Freight) as the delivery terms and 40 (Sea Transport) as the ship via code.
    On the Invoice/General tab for company 15 (IFS Racing Sweden AB), enter GBP (Pound Sterling) as the currency and enter an authorizer.
    On the Invoice/Tax Information tab, Select VAT in the Tax Regime field, enter a tax liability of type Exempt in the Tax Liability field and a VAT tax code of type Calculated VAT, tax code E1, E2, E3 or E4, in the Tax Code field.
    On the Purchase/General tab, enter yourself as buyer and GBP (Pound Sterling) as the currency.
    On the Payment tab, set up how to pay the supplier from company 15 (IFS Racing Sweden AB).

General exercise for Supplier
General exercise for Setting Up Supplier-to-Site Supply Chain Parameters for Trading

Supplier for Purchase Part

Purpose: The purpose of this exercise is to connect your purchase parts to the suppliers.

Windows:
Supplier for Purchase Part

  1. Connect purchase part XX-62-301 (Winter Tire) to supplier XX-301 (Swedish Tires). On the Inspection Info tab, choose the receive case Receive into Inventory.
  2. Connect purchase part XX-62-302 (High Performance Tire) to supplier XX-302 (U.S. Tires). On the Inspection Info tab, choose the receive case Receive into Inventory.
  3. Connect purchase part XX-62-303 (Wet Tire) to supplier XX-303 (British Tires). On the Inspection Info tab, choose the receive case Receive into Inventory.

General exercise for Connecting a Supplier for Purchase Part

Inventory Location

Purpose: The purpose of this exercise is to enter an inventory location.

Windows:
Inventory Locations

  1. Enter at least one inventory location of location type Picking.

General exercise for Entering Inventory Locations

Required Data

Entering, Handling, and Reporting Arrival of Purchase Order

Purpose: The purpose of this exercise is to show you the required data that is used in the exercises below.

  1. Enter three purchase orders on your site for 10 PCS of each of the purchase parts XX-62-301 (Winter Tire), XX-62-302 (High-Performance Tire), and XX-62-303 (Wet Tire) from their respective suppliers. Release the purchase orders. Make a note of the purchase order numbers and their total amounts. Calculate the gross amount for the purchase order from the domestic supplier, using the supplier's tax code.
  2. Register the arrival of the three purchase orders and receive them into inventory.

General exercise for Entering Purchase Order for Standard Parts
General exercise for Handling Purchase Orders
General exercise for Reporting Arrival

Main Exercises

Purpose: The purpose of these exercises is to show you how VAT is used for domestic, international, and EU suppliers. You will also learn how to create a tax report for purchases.

Windows:
Manual Supplier Invoice
Order Report

Using VAT for a Domestic Supplier

  1. Open the Manual Supplier Invoice window.
  2. Right-click in the upper part of the window and then click Change Company... Select company 15.
  3. Create a new record (F5).
  4. Indicate the purchase order number in the PO Reference field, enter an invoice identity, and fill in the gross amount in the field with the same name. What happened to the Net Amount and Tax Amount fields?
  5. Right-click and then click Purchasing/Match PO Receipts. The Post from Purchase Order window appears. Connect the invoice to the received purchase order line by selecting the check box in the Matched column and clicking OK.
  6. View the data displayed on the Postings tab. What amount is posted?
  7. Save the entered invoice.
  8. Review the Lines tab. What data is stated in the Gross Amount, Net Amount, and Tax Amount fields? Why?

Note: Remember to connect your site to company 10, unless you continue with other VAT exercises.

Using VAT for an International Supplier

  1. Open the Manual Supplier Invoice window.
  2. If not already done above: Right-click in the upper part of the window and then click Change Company... Select company 15.
  3. Create a new record (F5).
  4. Indicate the purchase order number in the PO Reference field, enter an invoice identity, and fill in the gross amount in the field with the same name. What happened to the Net Amount and Tax Amount fields?
  5. Right-click and then click Purchasing/Match PO Receipts. The Post from Purchase Order window appears. Connect the invoice to the received purchase order line by selecting the check box in the Matched column and clicking OK.
  6. View the data displayed on the Postings tab. What amount is posted?
  7. Save the entered invoice.
  8. Review the Lines tab. What data is stated in the Gross Amount, Net Amount, and Tax Amount fields? Why?

Note: Remember to connect your site to company 10, unless you continue with other VAT exercises.

Using VAT for an EU Supplier

  1. Open the Manual Supplier Invoice window.
  2. If not already done above: Right-click in the upper part of the window and then click Change Company... Select company 15.
  3. Create a new record (F5).
  4. Indicate the purchase order number in the PO Reference field, enter an invoice identity, and fill in the gross amount in the field with the same name. What happened to the Net Amount and Tax Amount fields?
  5. Right-click and then click Purchasing/Match PO Receipts. The Post from Purchase Order window appears. Connect the invoice to the received purchase order line by selecting the check box in the Matched column and clicking OK.
  6. View the data displayed on the Postings tab. What amount is posted?
  7. Save the entered invoice.
  8. Review the Lines tab. What data is stated in the Gross Amount, Net Amount, and Tax Amount fields? Why?

Note: Remember to connect your site to company 10, unless you continue with other VAT exercises.

Creating a Tax Report for Purchases

  1. Open the Order Report window. In the Report list, click Tax Report – Purchases.
  2. In the Details list, click Supplier. Then click OK.
  3. Click Preview or print out the report.
  4. View the report. What is defined on the report and how is the data organized?
  5. How do the data for the domestic, international, and EU suppliers differ? Why?

Note: Remember to connect your site to company 10, unless you continue with other VAT exercises.