Unit 4Unit 4Accounts Payable Accounts Payable

and Receivableand Receivable

OverviewOverview

Every business in Pettisville is involved in buying and selling of goods and/or services.

All businesses except Pettisville Post Office prepare invoices – either item invoices or service invoices.

Businesses that sell merchandise must also prepare goods for shipment through Pettisville Post Office or 18 Wheeler Truck Lines

TimingTiming

It is very important that you understand the process of buying and selling before the simulation begins.

You will learn how to prepare a purchase order (Lesson 4.1) and how to prepare an item invoice (Lesson 4.2) before the simulation begins.

The service invoices is similar to the item invoice except that there are no shipping charges.

Business FormsBusiness Forms

Item invoicesOffice supplies requisitionsPurchase ordersService invoices

Managing TipsManaging Tips

Be sure you understand the difference between wholesalers and retailers.

The Denim Maker and Mean Jeans Manufacturing Co. are wholesalers and, therefore, do not charge sales tax on goods for resale.

Business EthicsBusiness Ethics

One ethical problem that occurs in some businesses has to do with employees who make purchases for their companies.

Suppliers sometimes offer “kick-backs” or free gifts to entice employees to buy from them.

Many businesses have written policies stating that employees may not receive gifts or money for any purchases made for the company.

Business EthicsBusiness Ethics

One of the biggest ethical dilemmas employers have is pilferage, the shrinkage of inventory due to employee theft. ◦This is sometimes a bigger problem that shoplifting.◦Managers can quickly spot pilferage by taking

inventory.◦For example, a fast food restaurant that sells 1,000

hamburgers on a given day but used 1,200 patties in the process probably lost the remaining 200 hamburger patties to pilferage.

◦The same manager will control employee theft from the cash register by counting the money in the cash drawer every hour.

Managing TipsManaging Tips

In this simulation, the term supplier is always used to describe businesses that sell goods to together businesses.

The term vendor is another name for supplier

Managing TipsManaging Tips

Purchase orders should not be mailed for cash and carry purchases of supplies from Taylor Office Supplies.

Managers should go to the Taylor Office Supplies and carry the purchase order and their checkbooks with them to make the transaction in person.

Managing TipsManaging Tips

Cash flow is extremely important in business.

Some companies offer a discount to customers who pay invoices quickly.

For example, 2/10 n/30 listed on an invoice means that the customer gets a 2% discount for paying the invoice within 10 days of the invoice date.

Payments made after the discounted period (day 11 through day 30) must be the net amount.

4.3 Service Invoices4.3 Service Invoices

As a manager, if you are caught up you will plan an exotic trip at Passports-2-Go. Passports to go will get travel rates online. Managers may browse the following sites◦www.cheaptickets.com◦www.expedia.com◦www.jetvacations.com◦www.lodging.com◦www.orbitz.com◦www.priceline.com◦www.travel.com◦www.travelocity.com◦www.uniglobe.com

4.3 Service Invoices4.3 Service Invoices

As a manager, if you are caught up you will request services at Creative Advertising Agency or Popular Designs.

Two Pettisville businesses charge commissions on service invoices. Creative Advertising charges a rate of 15% and Noveau Investment Company charges a rate of ½%

4.3 Service Invoices4.3 Service Invoices

The following businesses prepare service invoices◦Buckeye Equipment◦Creative Advertising Agency◦Lee Community Center◦Noveau Investment Company◦Passports-2-Go◦Pettisville bank◦Popular Designs◦Taylor Office Supplies

4.3 Service Invoices4.3 Service Invoices

When you are referred to a page in the student Reference Book, be sure to follow the correct automatic or manual procedures followed by the correct numerical steps.

4.3 Service Invoices4.3 Service Invoices

Understand the importance of a remittance slip. It is prepared by the customer and returned with the customer’s payment.

◦When paying an electronic invoice, the only part of the remittance slip that must be completed is the AMOUNT ENCLOSED box.

◦When paying a manual invoice, the entire remittance slip must be completed by the customer