Wrong Gross Profit

Item NOKIA 105-BLACK TRA SINGLE has only one purchase and the price is 53 AED. TAX is 5%. Total is 55.65 AED.

When I make sales invoice the gross profit is calculating 55.65 as Buying Price. As the result the gross profit showing negative values.

But I crated another product named Test Item and purchased it at 100+tax (105) and sold at 110+tax showing margin of 10 AED correctly…

Note: I was using this company on 2017, and I cleared the company transactions and started using on 2018.
The previous Stock Settings was FIFO and now it is Moving Average

Please advice


Average buying rate field shows 55.65 AED for all the Sales Invoices. Buying Amount gets calculated based on the Item’s Qty.

Thanks Umair. The problem WAS we selected the wrong purchase tax template. It was adding all purchase price with tax (Valuation Rate = Cost + 5% Tax).

(see the first line - Consider Tax or Charge for It was “VALUATION AND TOTAL”

Now I set like below… and it the sold items showing correct profit. Please see the tax rule below and advice me if there is changes need.