Reference no: EM133068274
Question - During August, the following invoices were issued by "One Company" to its customer, "Another Company":
|
Date
|
Invoice #
|
Amount
|
|
8/03
|
9508
|
$350
|
|
8/10
|
9583
|
1,750
|
|
8/13
|
9665
|
800
|
|
8/21
|
9697
|
1,230
|
Invoice #9267, dated 7/13 for $500, was outstanding as of August 1. On August 28, another sent a check for $2,250, in payment of invoices #9267 and #9583. Invoice #9508 had been returned earlier because of a dispute regarding the items listed. The invoices dated 8/13 and 8/21 were not due until sometime in September.
Required -
A. Show the records that will be maintained by One Company as of August 31 and as of September 1 if Another Company's accounts were maintained using (1) balance forward and (2) open item methods.
B. Late in September (before any further sales or payments were made involving Another), the controller of Another Company telephoned to report that part of his company's payables records had been deleted by an inexperienced computer operator. To help him reconstruct Another's records, he needed to know which invoices had been paid during the period from August 1 onward and which remained open. What information could be provided to the controller, assuming that One's receivables systems was of each type mentioned in Part a?
C. Given the facts provided above, which method would you recommend that One Company use to account for the Another Company account? Why?
D. If no payment was received during August from Another Company and a payment for $4,280 is received on September 10 that did not identify what was being paid, would this affect your answer to Part c?