Is anybody here good with accounting? I'm stuck on a particular process that is critical to me completing this homework assignment that is worth 200 points. This particular process I only have to understand because it is used over and over again.
What's going on is we have these forms that are already filled out for us. Some are checks our company has made out, and some are checks that are written out to us. The ones that are written out to us is what I'm having trouble with.
A check has been written out to us for $8,232 and I'm going to file that in the CASH DR column of the Cash Receipts Journal. Then, on the check in the "For" section there is the following: 8/28 Inv. Less 2%.
The number that I gain from this informaiton will go into the Sales Discounts DR column of the Cash Receipts Journal. I will then subract this number from the Cash DR number to put the total in the Accounts Receivable CR column of the Cash Receipts Journal. They write me a check - I file it. They opt for the discount - I file it. The left over figure that gets put into our pockets at the end of the process - I file it.
Previous checks that had the same discount amount(the discount amount will always be the same - 8/28 Inv. Less 2%), but only different amounts in the check amount field, looked like the following in the Cash Receipts Journal.
Sales Discounts DR.
Accounts Receivable CR.
Now, the first number, lets take 6370 by 2%. We get: 127.4 - that's CLOSE to the listed entry in the Sales Discount field - 130, but not pin-point accurate. I don't know how I am to find an accurate process from the given numbers. I have previous examples(see above) which are 100% accurate, but I don't know what I am supposed to do with the information found in the "For" field on the checks. I can't extrapolate what to do with this information. If I could figure out what's going on in these previous examples, which are right, then I could go on to do the unfinished ones from the beginning.
I could use some help.
If any of you feel confident in Accounting and could be a real pal, I could get on a messenger and send you some high-quality scans of the previously completed, and correct examples so you may help me deduce what it is that I am supposed to do.
You calculate the discount on the amount owed - not the amount paid......
All that seems to be happening is that the amount of the invoice is being paid with a 2% discount, so they are settling 98% of each invoice with a cheque and the difference is being written off (as a Debit - DR) to the Sales Discounts account
6500 @ 2% = 130 (1)
3600 @ 2% = 72 (2)
8400 @ 2% = 168 (3)
So the check amount (for the first, 6370) goes as a debit to your Bank account (the corresponding credit goes to the Debtors Control Account - reduction of a debt to the company), the discount (130) goes as a debit to your Sales Discount account (the corresponding credit again goes to the Debtors Control Account - this then reduces the outstanding amount of the 6500 Customer's Debt to zero - 6500 minus 6370 minus 130 = 0)
Accounts Receivable CR.
are from my ledger. :rolleyes:
The next problem however confuses me and I'm not really with it right now. Maybe if I take a break/breather and get my thoughts sorted out I might make sense of it.
I'm going to have to sit down with my mom tomorrow and explain to her what I know, and see if she can pick up on the rest. Ultimately, I'll get help from my instructor on Monday. (This assignment isn't due until a few days before the end of the year, but I want to keep my head in the game and stay on top of it)
- edit -
Thanks for your help though Fordy. :)
Fordy comes to save the day.
He's an accountant so it's ok.
Fordy is an amazing man.
If you don't think so you'll get banned.
Oh yeah, I'm sure he is really great, and I would love his help and getting this work done further, but it has got to be difficult online. This message board would certainly not be the place to do it.
I'll figure it out(I hope..).