Deciphering the Tax by Group/Dept Report

Most of the reports in Manager are pretty straight forward, representing totals posted in the Journal file. As with everything else, there is one exception. In this case it is the Tax by Group report, and its cousin, the Tax by Department report. These reports have two characteristics that make them more complicated. First, some of the numbers are calculated when the report is run, not when the check was posted. Second, the numbers in the ‘Totals’ section at the bottom do not actually show totals of the columns, but instead are generated using a different computing method such that they will be only approximations of the columns above them. If you’re doing battle with an accountant having heartburn with this, take a scissors, cut the report in two at the dotted line, and tell him it is actually two reports but isn’t printing the header on the second report.

To see where the numbers come from, lets take a look at a report:

                          ** Tax by Group Report **

                  Report Printed on: Jan 1, 1997    1:01pm

                            Report For: Jan 1, 1997

                      Non      Tax    **Tax**    Tax      Tax

                      Taxed    Rate 1    Rate 2    Rate 3    Rate 4

        Groups      Sales    8.70%    8.70%    0.00%    0.00%    Total

 

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  Entrees              0.00    456.00      0.00      0.00      0.00    456.00

                      —-    39.90                                  39.90

  Liquor              0.00      0.00    443.61      0.00      0.00    443.61

                      —-              38.69                        38.69

  Sides                0.00    590.20      0.00      0.00      0.00    590.20

                      —-    51.48                                  51.48

  Sundry              12.00      0.00      0.00      0.00      0.00    12.00

                      —-

 

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      Net Sales:    12.00  1046.20    443.69      0.00      0.00  1501.81

    Tax Charged:      —-    91.02    38.61                        129.63

                                                     

---

                                                      Gross Sales:    1631.44

Explanation

In the body of the report we see that Tax Rate 1 items are taxable at 8.7%.  Manager can get the price and group of an item from the Journal. Therefore the 456.00 and 590.20 are actual totals that will match with other group reports. Manager also knows which tax rates were enabled when the item was rung but doesn’t have an exact tax dollar figure, so it computes it based on the current tax rates programmed in at the moment the report is rung. Manager rounds the tax off to the nearest penny for each item. Needless to say, if there are a lot of items the rounding errors can add up to a several cent difference between the computed tax and the actual tax.

Tax Rate 2 is for tax included items (note the ** on both sides of the word Tax). In this case the Journal holds only the combined total of price and tax for each item. That means that Manager has to calculate both the net price and the tax for that item. Again it uses the tax rate settings current when the report is run. Rounding to the nearest penny still occurs for each item, therefore a discrepancy of several cents can occur with the totals at the bottom.

The Total column at the right of the individual groups is indeed the dollar figures printed to their left but the section at the bottom is totally different. The 1046.20 is an actual total and balances with the 456.00 and 590.20 listed above. The tax of 91.02 is the actual tax collected, however. Tax on a check is actually calculated using the total of the check, not on each item. Therefore the differences in rounding have created an error of 36 cents between it and the section above. Note that neither this section, nor the section above it calculates tax on the final total, so don’t expect to be able to multiply the Net Sales in the report by the tax rate and be assured of getting the Tax Charged.

For the total section of Tax Rate 2, an even different method is used. Since tax is included, there was no tax calculation and rounding occuring when the check was being rung. In this case, Manager simply adds up the price charged for the Tax Rate 2 items in the Journal and then calculates how much of it is Net Sales and how much is Tax Charged based on the currently programmed tax rates for when the report is run. In this case, you can multiply the Net Sales in the report by the tax rate to get the Tax Charged.

Hang on tight, we’re almost done. The Total Net Sales, 1501.81 is the sum of the sales from the column above it, not the Net Sales row to the left. As for the Total Tax Charged, 129.63 (pay attention here), it is the sum the the row to the left of it, not the column above it. What all this means is that the Gross Sales figure of 1631.44 won’t necessarily correspond to anything else in that report or any other report, except to be the sum of 1501.81, and 129.63.

Just in case this isn’t complicated enough, there is one more potential twist. Manager doesn’t actually know what the tax rates were at the time the items were rung, only the tax rates as of the moment the report was rung. This means that because the report is a mix of actual and calculated totals, if someone changes a tax rate, the report will not appear to add up correctly.
Good News!

Aren’t taxes wonderful? For those of you who are still awake, I have good news. Most people only run this report because they want to know how much money to turn over to the government. In this case, the amount is 129.63 and it is an accurate and reliable figure. To summarize everything above, it is the actual tax collected, plus the calculated amount for tax included items, with no rounding errors to worry about. Everything else on that report is just to give you some idea on where it came from, and therefore doesn’t really matter how Manager calculated it. Just cross out the parts you don’t like and everybody will be happy!