Example of Reporting Prepayments in the Tax Register

The following scenario illustrates the reporting of prepayments in the Tax Register.

Payables Prepayment Invoice

The following table shows the accounting entries to create a prepayment invoice in Oracle Fusion Payables. The example invoice number is AP-Inv-Test10.

Account	Debit Amount	Credit Amount	Description
Prepaid Asset or Expense	500.00		Asset or expense is half paid
Tax	50.00		Tax at 10% on asset or expense fully paid
Liability		550.00	Prepaid with tax

Upon payment of the prepayment invoice, the following accounting entries are created:

Account	Debit Amount	Credit Amount
Liability	550.00
Cash		550.00

Tax Register for Prepayment Invoice

For the 10 percent tax, the Tax Register shows:

Transaction Number	Transaction Class	Taxable Amount	Recoverable Tax Amount	Nonrecoverable Tax Amount
AP-Inv-Test10	Invoice (prepayment)	500.00	50.00	0.00

Payables Invoice

Assume invoice number AP-Inv-Test20 is created, and the prepayment is applied to this invoice. The following table shows the resulting accounting entries:

Account	Debit Amount	Credit Amount	Description
Asset or Expense	1000.00		Invoice amount
Tax	50.00		Tax at 10% on balance of invoiced amount
Liability		550.00	Liability for balance of invoiced amount
Prepaid Asset or Expense		500.00	Reverse prepaid asset or expense

Tax Register

Using the accounting entries created in this example, the Tax Register with the tax at 10 percent appears as:

Transaction Number	Transaction Class	Taxable Amount	Recoverable Tax Amount	Nonrecoverable Tax Amount
AP-Inv-Test20	Invoice	500.00	50.00	0.00