The following situations describe two cash payment situations and two cash receipt situations. In each pair, one
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Cash payments:
a. Mike Milford Construction policy calls for construction supervisors to request the equipment needed for their jobs. The home office then purchases the equipment and has it shipped to the construction site.
b. Superior Structures, Inc., policy calls for project supervisors to purchase the equipment needed for jobs. The supervisors then submit the paid receipts to the home office for reimbursement. This policy enables supervisors to get the equipment quickly and keep construction jobs moving.
Cash receipts:
a. At Cramer Auto Parts, cash received by mail goes straight to the accountant, who debits Cash and credits Accounts Receivable to record the collections from customers.
The Cramer accountant then deposits the cash in the bank.
b. Cash received by mail at Better Vision Eye Clinic goes to the mail room, where a mail clerk opens envelopes and totals the cash receipts for the day. The mail clerk forwards customer checks to the cashier for deposit in the bank and forwards the remittance slips to the accounting department for posting credits to customer accounts.
Accounts Receivable
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that...
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Related Book For
Financial accounting
ISBN: 978-0136108863
8th Edition
Authors: Walter T. Harrison, Charles T. Horngren, William Bill Thomas
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