Ramesh & Company allows customers to use debit and bank credit cards and cash for purchases of
Question:
Ramesh & Company allows customers to use debit and bank credit cards and cash for purchases of merchandise. The company does not accept personal cheques from customers. Ramesh’s bank charges $1.25 for every debit card transaction and 2.5% for credit card transactions. On May 1, the company established a petty cash fund. Before it created the petty cash fund, cash was taken from the cash register whenever someone needed cash to pay for a small expense. The following transactions happened in the first two weeks of May:
Instructions
a. Record the transactions. Round to the nearest dollar.
b. What are the advantages and disadvantages of accepting debit and bank credit card transactions as opposed to accepting only cash and personal cheques from customers? Consider both the internal control and business reasons.
Taking It Further
What are the benefits of having a petty cash fund instead of paying small expenses from the cash register receipts? What policies and procedures should Ramesh & Company follow to ensure there is good internal control over its petty cash fund?
Step by Step Answer:
Accounting Principles Volume 1
ISBN: 9781119786818
9th Canadian Edition
Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel, Barbara Trenholm, Valerie Warren, Lori Novak