Chapter 7, Problem 2CTP

Tony Zendejas is the owner of Housewares Galore, a housewares store that sells a wide variety of items for the kitchen, bathroom, and home. Housewares Galore offers a company credit card to its customers.

The company has experienced an increase in sales since the credit card was introduced. Tony is considering replacing his manual system of recording sales with electronic point-of-sale cash registers that are linked to a computer.

Cash sales are now rung up by the salesclerks on a cash register that generates a tape listing total cash sales at the end of the day. For credit sales, salesclerks prepare handwritten sales slips that are forwarded to the accountant for manual entry into the general journal and accounts receivable ledger.

The electronic register system Tony is considering would use an optical scanner to read coded labels attached to the merchandise. As the merchandise is passed over the scanner, the code is sent to the computer. The computer is programmed to read the code and identify the item being sold, record the amount of the sale, maintain a record of total sales, update the inventory record, and keep a record of cash received.

If the sale is a credit transaction, the customer’s company credit card number is swiped through a card reader connected with the register. The computer updates the customer’s account in the accounts receivable ledger stored in computer memory.

If this system is used, many of the accounting functions are done automatically as sales are entered into the register. At the end of the day, the computer prints a complete listing of sales made, along with up-to-date balances for the general ledger and the accounts receivable ledger accounts related to sales transactions.

Listed below are four situations that Tony is eager to eliminate. Would use of an electronic point-of-sale system as described above reduce or prevent these problems? Why or why not?

1. 1. The accountant did not post a sale to the customer’s subsidiary ledger account.
2. 2. The salesclerk did not charge a customer for an item.
3. 3. The customer purchased merchandise using a stolen credit card.
4. 4. The salesclerk was not aware that the item purchased was on sale and did not give the customer the sale price.