PLEASE ANSWER ALL OF THESE ANSWERS Assignment: Accounting for Sales and Cash Rec

Question

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.

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Credit (+)

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Credit (+)

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?)

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Credit (+)

Debit (-)

Credit (+)

Debit (-)

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Explanation / Answer

I have solved first four questions.

Part 1

Answer the following questions:

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

When a sale is made by any business organization and cash is received in lieu of goods sold, the cash received is recorded in a document called as cash receipt which acts as proof of cash received by both the parties buyer and seller both.

Businesses first records the receipt of cash in cash receipt and then in the debit side of the cash book.

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

The store credit are cards which are issued by the store themselves .With their own offers and schemes relating to discounts scales, rate of interest in case of credit purchases by the customers. The bank credit card are the ones issued by the bank with their own policies regarding the credit period and rate of interest.

Hence, if a purchase is made by store credit it will have schemes and offers which suits their own customers lower rate of interest, discounts and offers for credit purchases as compared to bank credit who will make policies according own profit motives and policies.

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

Bank credit and debit card both are similar in regards whenever you make a purchase using your debit or credit card you don’t have to pay on spot. Which is big ease as one doesn’t need to carry physical cash.

They are different as in case of credit card you have pay the amount spent on card at the end of the certain period may be a month or a quarter. In case the payment is delayed then interest is delayed. But in case of debit card the payment is automatically deducted instantly from the bank account, whenever the purchase is made. So credit card gives you some times for payment whereas debit card the payment instantly from your account.

4. 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.

Debit (-)

Credit (+)

Cash      $1500

Sales Tax             

(1500x4/104)            $57.7

Sales                         $1442.3

(1500-57.7)   

Working Notes:

Calculations :

Total Cash received   $1500

This includes the sale tax @ 4%

Hence, the sales tax = 1500* (4/104)= $57.7

Amount purely for sales= (1500-(1500* (4/104))= $1442.3

Debit (-)

Credit (+)

Cash      $1500

Sales Tax             

(1500x4/104)            $57.7

Sales                         $1442.3

(1500-57.7)   

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