ACC 287 Lecture Notes - Lecture 7: Accounts Receivable

Retail Store

Tony Zendejas is the owner of Housewares Galore, a housewaresstore that sells a wide variety of items for the kitchen, bathroom,and home. Housewares Galore offers a company credit card tocustomers.

The company has experienced an increase in sales since thecredit card was introduced. Tony is considering replacing hismanual system of recording sales with electronic point-of-sale cashregisters that are linked to a computer.

Cash sales are now rung up by the salesclerks on a cash registerthat generates a tape listing total cash sales at the end of theday. For credit sales, salesclerks prepare handwritten sales slipsthat are forwarded to the accountant for manual entry into thesales journal and accounts receivable ledger.

The electronic register system Tony is considering would use anoptical scanner to read coded labels attached to the merchandise.As the merchandise is passed over the scanner, the code is sent tothe computer. The computer is programmed to read the code andidentify the item being sold, record the amount of the sale,maintain a record of total sales, update the inventory record, andkeep a record of cash received.

If the sale is a credit transaction, the customer's companycredit card number is swiped through a card reader connected withthe register. The computer updates the customer's account in theaccounts receivable ledger stored in computer memory.

If this system is used, many of the accounting functions aredone automatically as sales are entered into the register. At theend of the day, the computer prints a complete sales journal, alongwith up-to-date balances for the general ledger and the accountsreceivable ledger accounts related to sales transactions.

Listed below are four situations that Tony is eager toeliminate. Would use of an electronic point-of-sale system asdescribed above reduce or prevent these problems? Why or whynot?

The accountant did not post a sale to the customer's subsidiaryledger account.

The salesclerk did not charge a customer for an item.

The customer purchased merchandise using a stolen creditcard.

The salesclerk was not aware that the item purchased was on saleand did not give the customer the sale price.

Retail Store

Tony Zendejas is the owner of Housewares Galore, a housewaresstore that sells a wide variety of items for the kitchen, bathroom,and home. Housewares Galore offers a company credit card tocustomers.

The company has experienced an increase in sales since thecredit card was introduced. Tony is considering replacing hismanual system of recording sales with electronic point-of-sale cashregisters that are linked to a computer.

Cash sales are now rung up by the salesclerks on a cash registerthat generates a tape listing total cash sales at the end of theday. For credit sales, salesclerks prepare handwritten sales slipsthat are forwarded to the accountant for manual entry into thesales journal and accounts receivable ledger.

The electronic register system Tony is considering would use anoptical scanner to read coded labels attached to the merchandise.As the merchandise is passed over the scanner, the code is sent tothe computer. The computer is programmed to read the code andidentify the item being sold, record the amount of the sale,maintain a record of total sales, update the inventory record, andkeep a record of cash received.

If the sale is a credit transaction, the customer's companycredit card number is swiped through a card reader connected withthe register. The computer updates the customer's account in theaccounts receivable ledger stored in computer memory.

If this system is used, many of the accounting functions aredone automatically as sales are entered into the register. At theend of the day, the computer prints a complete sales journal, alongwith up-to-date balances for the general ledger and the accountsreceivable ledger accounts related to sales transactions.

Listed below are four situations that Tony is eager toeliminate. Would use of an electronic point-of-sale system asdescribed above reduce or prevent these problems? Why or whynot?

The accountant did not post a sale to the customer's subsidiaryledger account.

The salesclerk did not charge a customer for an item.

The customer purchased merchandise using a stolen creditcard.

The salesclerk was not aware that the item purchased was on saleand did not give the customer the sale price.

PLEASE ANSWER ALL OF THESE ANSWERS↓

Assignment: Accounting for Sales and Cash Receipts

Part 1

Answer the following questions:

What is a cash receipt? How do businesses record the receipt of cash?

Explain how a purchase made with a store credit card is different from a purchase made with a bank credit card.

How are a bank credit card and a bank debit card similar? How are they different?

Part 2 (6 points)

A sales slip shows that $1,500 in merchandise has been sold and the sales tax rate is 4%. Generate the cash receipt's data.

Part 3 (6 points)

Your accounting supervisor has instructed you to verify the accuracy of the day s bank credit card sales, and then deposit that amount into the business checking account. Summarize the 4 steps that you need to perform.

Part 4 (6 points)
Evaluate the practice of using a contra account to record sales returns and allowances.

(What is a Contra account and how does it affect the Sales Account?)