Scenario 1: Credit amount exceeds the acceptable range

You want to give full credit to your customer from an invoice in tax inclusive mode . The following tables show the automatic calculation by tax engine. When you create the credit memo, the memo item is by default in tax exclusive mode and the credit amount is a system populated value of $20.33. According to the calculation, the invoice tax amount and the memo tax amount have a $0.01 difference due to the rounding . Now the credit amount (with tax) is $25.01, whereas the available to credit amount is $25. Because the system does not allow credit amount to exceed the available to credit amount, you are blocked from creating this credit memo.

Billing rule setting: Round net amount (default)

Calculations for invoice:

• Invoice amount (without tax) = 25/(1+0.23) = 20.3252

• Invoice amount (without tax) (rounded) = 20.33

• Invoice tax amount = 25-20.33 = 4.67

Calculations for credit memo:

• Credit amount (with tax) = 20.33*(1+0.23) = 25.0059

• Credit amount (with tax) (rounded) = 25.01

• Memo tax amount = 25.01-20.33 = 4.68

Scenario 2: Maintain standard credit amount across different tax rates

You want to give a standard $10 partial credit amount (with tax) to two customers in different states with different tax rates. Both invoices are in tax exclusive mode. The following tables show the automatic calculation by tax engine. When you create the credit memos, the memo items are by default in tax exclusive mode. According to the calculation, when you enter $10 as a credit amount for both memo items, the credit amounts (with tax) are higher than $10 and different, all because of tax calculation.