ACCT 3340 SUA Test (2023/2024) Already Graded A

ACCT 3340 SUA Test (2023/2024) Already Graded A Basic Steps in the Sales/Collection Process 1. Take the customer's order 2. Approve the customer's credit 3. Fill the approved order 4. Ship the product 5. Bill the customer 6. Receive payment 7. Sales returns 8. Identify and write off uncollectible accounts 1. Take the customer's order a. Can be written, electronic, or verbal b. Not a recordable transaction (no entry is made until the order is shipped) 2. Approve the customer's credit a. Approval based on amount of order, customer's credit status, and overall exposure to customer (other sales) b. Credit Approval is separated from the Sales process 3. Fill the approved order Use a picking ticket to document items pulled 4. Ship the product a. Use a packing list to document items shipped b. Bill of lading is the contract between the carrier and the shipper 5. Bill the customer a. Sales invoice prepared from the packing list. b. For credit sales, an entry is made to the Sales Journal and Accounts Receivable Subsidiary Ledger. c. For cash sales, entry is made to the Cash Receipts Journal (debit cash and credit sales revenue). d. Terms of sale (e.g. 2% 10 net 30) 6. Receive Payment a. Can be cash, check, or electronic receipt. b. Can be applied against specific invoices or total balance owed. 7. Sales Returns Upon satisfactory receipt of goods, an entry is made to the Sales Journal and the accounts receivable Subsidiary Ledger. 8. Identify and write off uncollectible accounts An entry is made to the Accounts Receivable Subsidiary Ledger and the General Ledger. Key Documents in the Sales/Collection Process -Customer Order -Picking Ticket -Packing List -Bill of Lading -Sales Invoice -Customer Check -Remittance Advice -Deposit Slip Customer Order From: Sales Dept. To: Warehouse Purpose: To document items ordered and prices quoted Picking Ticket From: Warehouse To: Shipping Dept. Purpose: To document items that should be shipped Packing List From: Shipping Dept. To: Customer Purpose: To document what was shipped Bill of Lading From: Shipping Dept. To: Common Carrier Purpose: To document freight terms and destination Customer Check From: Customer To: Cash Receipts Dept. Purpose: To make payment for goods received Remittance Advice From: Customer To: Accounting Department Purpose: To document that payment was made - both for what