Discount with included tax.

[Dale Harris]

I received this email today.....
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Hi Dale,

I have got the POS program up and running, it works fine except when I want to give a reduction.
Say I got an item which cost 199 and I want to sell it for 100 to my special friend. I ring in the item by the stock number and get the regular price which includes 25% tax, then I press F9 select 'Reduce line 1 only' and then 'Reduce by amount' enter the amount 99.
In the new line the reduction is shown with stock number = 77777 amount = -99 and a tax off 0%. Ending up with selling the item for 75.25 instead of 100 as intended.
It seam that the program subtract the tax from the regular price, then subtract the reduction without subtracting the tax of the reduction from the reduction first. Can you fix this problem.

Another bug that I found is when using 14 digit stock number in the stock table. When you export/import the table only the last 13 digit are exported/imported the first digit is cut off.

Regards
Henrik
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My reply...
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Henrik,

You are correct, the POS program was exporting only the last 13 characters of the stock table. This has been fixed and can be downloaded from the usual place http://keyhut.com/pos2.htm
When you unzip the files they will be version 6.15 except that the POSCONFG.EXE program will be 6.15a.

Actually there is nothing wrong with the reductions. In the U.S. the price of something has nothing to do with tax. You do all the calcualtions for your sale and when you are done you add tax to the total. If something sells for 200.00 and you take off 50.00 then it sells for 150.00, then you put the tax on it. If the tax is 10% then without the reduction you would have to pay 220.00 (with tax) for a 200.00 item. But if you reduce the price to 150.00 then you would pay 165.00. Notice that the difference in the price of the item is (200.00 - 150.00) 50.00 but the difference in what you pay is (220.00 - 165.00) 55.00. In the US if you received a 50.00 discount but only had to pay 50.00 less then you have been ripped off.

However with included tax everyone thinks the amount that is paid is the price. Actually it is the price plus tax. If the tax rate is 10% then a 200.00 gross price is actually a 181.81818 net price plus a tax of 18.18182. (And people think that included tax is easier?) If you give a 50.00 discount off the price then that comes to (181.81818 - 50.00) 131.81818. But this is included tax so the tax must be included back in (131.81818 + 13.18181) 144.999999 and round to the nearest penny for 144.00.

So the POS program does not cheat anyone and is accurate. A 50.00 discount is actually a 50.00 discount off the actual net price no matter if the tax is added or included.

However opinions may vary. So I am going to post this on the forum and see what others think.
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Ok, what do you think?

[bazza]

hi Heinrick,

i have noticed that i have the same problem too when testing.

say for example i have a broomstick which sells for $5.50.
The net price is $5.00, tax is $.50

and has tax of GST of 10%
but the marked is now $4.50 (reduction of $1.00)

the total price including tax is $5.50.
the customer it not interested on how much the store is getting
just the reduction of the item from $5.50 ---> $4.50.

In Australia, the reduction is made from the total price of the item which includes tax.

so its: gross price - reduction price ($5.50 - $1.00 = $4.50)

not: net price - reduction + tax ($5.00 - $1.00 = $4.00 + $0.40 = $4.40)

[bazza]

dear dale,

after further exploring this topic, i have also discovered that discount coupons are charged at the first tax rate (eg: tax1), and should be tax free. Possible fix please?

despite this, i changed the tax rate of the coupon to 0.000%.

But when I applied a 0.85 coupon discount on a 55.85 total, with some items with GST, the subtotal decrease, tax stayed the same, and thus increased the tax rate. (to a total of 55.00)

The rule is, here in Australia that the total tax should not be more than 10.00000% of the total sale, and also applies to rounding.

So if the total is 55.00 then tax should not be more than 5.00.

Reguards,

Barry.