Case Chapter 7 Cash and Receivables 1. Petty Cash (10 min.) The petty cash fund of $200 for Walsh Company appeared as follows on December 31‚ 2008: Cash $93.60 Petty cash vouchers Freight in $21.40 Postage 40.00 Balloons for a special occasion 18.00 Meals 25.00 Instructions 1. Prepare the journal entries required to establish the petty cash fund. 2. Prepare in general journal form the entry to replenish the fund. 3. On December 31‚ the office manager gives instructions
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The ability to sell inventory and collect receivables is critical. In this topic‚ we discuss three ratios that measure this ability. Inventory Turnover. Companies generally strive to sell their inventory as quickly as possible. The faster inventory sells‚ the sooner cash comes in. Inventory turnover‚ measures the number of times a company sells its average level of inventory during a year. A fast turnover indicates ease in selling inventory; a low turnover indicates difficulty. A value of 6 means
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Introductory Financial Accounting Lecture Week 5 Receivables Summer Semester 2014 Greg Cusack www.fbe.unimelb.edu.au Learning Objectives At the end of the lecture‚ students should Be able to apply the revenue recognition principle to determine the accepted time to record sales revenue for typical retailers‚ wholesalers‚ manufacturers and service companies. To understand the recording and management implications of credit sales‚ including the offering of sales discounts and the
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be recorded in the purchase journal‚ once it has been certified as a valid invoice. After the journal entries‚ the next step is to post the journal entries into account. Ledger Account also known as “T” Account and Account. Ledger accounts categorize these changes or debits and credits into specific accounts‚ so management can have useful information for budgeting and
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Kudler Fine Foods initial business plan was to hire a consulting firm to assist in the selection and installation of a comprehensive Retail Management System (REMS). A consulting firm named Smith Consulting Firm was selected for the contract and after an in-depth analysis of the RMS; a modular and scalable RMS was selected. The REMS was installed in the first and subsequent Kudlers retail stores. An accounting system is very important to a business because the company needs to know how
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Receivables Turnover Ratio interpretation Receivables Turnover Ratio is one of the efficiency ratios and measures the number of times receivables are collected‚ on average‚ during the fiscal year. Receivables Turnover Ratio formula is: Receivables Turnover Ratio formula Receivables turnover ratio measures company’s efficiency in collecting its sales on credit and collection policies. This ratio takes in consideration ONLY the credit sales. If the cash sales are included‚ the ratio will be
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Team B will provide a proposal for appropriate controls to cover cash‚ sales‚ accounts receivable‚ inventory‚ and production. The team will discuss some prevention techniques to reduce these risks and make recommendations in areas that will help controls within the organization. Cash Controls Internal controls for cash is essential to ensure that transactions are properly recorded‚ fraud risk is managed‚ and management have given the proper authorization for the cash transactions. Internal control
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Goods/Stock purchased or sold being returned is quite a common practice in business. This may be on account of a number of reasons like defects in goods‚ quality not matching the requirement for which the buyer purchased it‚ the buyer not needing the stock‚ etc. This happens both in case of goods purchased as well as goods sold by the organisation. Where the goods sold are being returned we call it "Sales Returns" and where goods purchased are being returned we call it "Purchase Returns"
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Goals of Receivable Management The basic goal of credit management is to maximize the value of the firm by achieving a trade off between the liquidity (risk and profitability). The purpose of credit management is not to maximize sales‚ nor to minimize the risk of bad debt. If the objective were to maximize sales‚ then the firm would sell on credit to all. On the contrary‚ if minimization of bad debt risk were the aim‚ then the firm would not sell on credit to anyone. In fact‚ the firm should manage
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EXAM SAMPLE EXAM 1. The accounting process does not include: a. b. c. 2. d. e. labor unions all of the above statement of owner’s equity income statement balance sheet d. e. both b and c all of the above This account does not appear on the income statement: a. b. c. 6. lenders prospective owners customers Expenses can be found in the: a. b. c. 5. balance sheet balance sheet and journals balance sheet and income statement income statement
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