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.

Debit (-)

Credit (+)

Debit (-)

Credit (+)

Debit (-)

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?)

Debit (-)

Credit (+)

Debit (-)

Credit (+)

Debit (-)

Credit (+)

Explanation / Answer

Part 1

A cash receipt is receipt of cash by a business entity for sale of goods or services rendered or advance received if any

Receipt of cash is recorded by business by debiting the cash account and crediting the sales account.

Purchase made with a store credit card results in increase in outstanding towards store whereas purchase with a bank credit card results in increase in outstanding payable to the bank.

Bank credit card and bank debit card are similar in the sense that both are issued by bank whereas both are different in the sense that with debit card payments can be made only if there is an adequate amount in the account and does not result in any payable to the bank whereas with a credit card payment, the same results in liability towards bank for the payment made or amount expended.

Part 2:-

Cash will be increased by 1560

(1500+4%)

And sales will be credited with 1500

Taxes payable credited will be 60

Part 3:-

The following steps need to be performed :-

1. Cross check the sales with the vouchers to ensure that aggregate amount is correct

2. Cross check the aggregate of the individual amounts to ensure that the same is correctly carried forward to business checking account.

3. Cross check the totals of credit card sales amount in business checking account.

Part 4:-

Contra accounts are used to record sales returns and allowances. The practice helps in recording sales returns and any kind of allowances given on sales to the Contra accounts and then net balance is ascertained by deducting the Contra entries which is carried to the respective ledgers.

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