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INTRODUCTION1. This chapter outlines the procedures for processing layaways and special orders for merchandise for CANEX customers. LAYAWAYS 2. When a customer requests an item for layaway, the Store Manager shall prepare a CANEX Layaway Contract (Annex A) in duplicate. 3. Payments on layaways shall be acknowledged on form CF 602. (A separate receipt book shall be maintained for this purpose). Copy 1 of the form CF 602 shall be given to the customer, copy 2 (clearly marked "layaway receipt") shall be attached to the original copy of the Layaway Contract and forward to the NPFAO in support of the store DSR and copy 3 shall remain in the receipt book. NOTE Deposits (initial-interim-final) on layaways shall not be treated as sales but as payments on account. 4. The duplicate copy of the Layaway Contract shall be held in a layaway file and the item on layaway shall be placed in a designated layaway section of the store. The item shall be clearly marked with the customer's name and address. 5. Layaway merchandise shall be included in stocktakings (see Chapter 6. The customer shall be given a receipt for interim deposits and the deposits shall be recorded on the duplicate copy of the Layaway Record held in the store. The NPFAO shall record interim deposits (as reported on DSRs) on the original copy of the Layaway Contract maintained in his section. 7. When the final payment is made, the customer shall be given a receipt as noted above. Copy 2 of the receipt and the duplicate copy of the Layaway Contract shall be delivered to the cashier and the full amount of the sale plus tax shall be rung into the cash register. (A layaway only becomes a sale when the final payment is made). The duplicate copy of the Layaway Contract shall then be placed in the cash register in support of sales and forwarded to the NPFAO attached to the DSR.
ACCOUNTING ACTION
8. On receipt of the form CF 602 indicating initial or interim
payment on layaways, the NPFAO shall record the transaction as a credit
to "Unearned Revenue - Deposits on Layaways".
9. The original copy of the Layaway Record shall form part of the
subsidiary ledger which provides the particulars of individual layaways
and, in total, balance with the account "Unearned Revenue - Deposits on
Layaways".
10. On receipt of the final payment, the NPFAO shall reduce the
"Unearned Revenue - Deposits on Layaways" account and increase "Sales"
for the full amount of the sale. For example (assuming a final payment
of $10 on a layaway of $100, and other sales of $500) the DSR would
reflect the following:
Sales as per cash register $600
Less Non-Cash items
(Layaways) 100
$500
Plus: Layaway Deposits 10
Cash to be accounted for $510
The CRJ (CASREG) would be posted to show cash of $510, Sales of $600 and
Deposits on Layaways ($ 100 - $ 10) $90.
NOTE
The original copy of the Layaway Record shall also be posted to
record the final payment and reflect the nil balance outstanding.
FORFEITURE OF DOWN PAYMENT
11. The outlet manager shall review the layaway file and shall make
every reasonable effort to encourage the customer to purchase the item.
If after 90 days, every reasonable effort has been made and the customer
has obviously broken the agreement, the outlet manager shall mark the
duplicate copy of the Layaway Contract "forfeited layaway" and forward
to the NPFAO.
12. When advised of a "forfeited layaway", the NPFAO shall prepare a
General Journal entry to:
DR Unearned Revenue - Deposits on Layaways (balance in account)
CR Miscellaneous Revenue
(administration fee for forfeiture)
CRA accounts Payable (refund of deposits in excess of
administration fee)
BALANCING OF LAYAWAY RECORDS TO THE GENERAL LEDGER
13. The NPFAO shall ensure that the General Ledger and the subsidiary
ledger (ie. the original copies of the layaway contracts) are in balance
at each month end. Additionally, these records are to be compared on a
regular basis to the duplicate copies of layaway contracts maintained by
the outlet manager.
CANEX SPECIAL ORDERS
14. A Special Order denotes an order for an item which is not normally
carried in a CANEX Retail Store or Combination Store. It does not apply
to a basic item which is out of stock.
DEPOSIT
15. A minimum 20 % non-refundable deposit is required on all special
orders. The 20 % deposit is to be calculated on the selling price of the
item(s) ordered excluding GST and PST. The deposit may be in the form of
cash, cheque, VISA or Mastercard.
16. The DSR will show "Special Order Deposit" in the other receipts
section (it is not a sale at this point). The pink copy of the special
order agreement will be attached to the DSR. The NPFAO shall:
a. Upon receipt of the deposit for a special order, credit
"Unearned Revenue - Special Orders"; and
b. Remove the pink copy of the agreement from the DSR and file
separately in a special order file.
SALE
17. When the merchandise arrives, the customer will pay the balance
owing, and the full amount (including the original deposit) will be rung
in as a sale. The amount of the deposit will be entered under the non-
cash and payouts section of the DSR, and the yellow copy of the special
order agreement will be attached to the DSR. The NPFAO shall:
a. Match the yellow copy of the special order agreement with
the pink copy on file. Any discrepancy shall be immediately
reported to the outlet manager;
b. when there is no discrepancy, attach the yellow and pink
copies and file with the DSR; and
c. debit "Unearned Revenue - Special Orders", for the amount of
the deposit.
EXAMPLE
18. If the special order is for an item costing $100 and the customer
pays $20 as the deposit, the bookkeeping entry is:
DR Cash/Bank $ 20
CR Unearned Revenue -
Special Orders $ 20
The item arrives and the customer pays the balance of $80. The
bookkeeping entry is:
DR Cash/Bank $ 80
DR Unearned Revenue -
Special Orders $ 20
CR Sales $100
PURCHASE DECLINED
19. When a customer declines the final purchase of merchandise, the
NPFAO shall be advised in writing by the outlet manager who will also
forward the yellow copy of the special order agreement. The bookkeeping
action is to debit "Unearned Revenue - Special Orders", for the amount
of the deposit and credit "Miscellaneous Revenue" for that outlet.
CANEX CREDIT PLAN
20. Should the customer wish to utilize the CANEX Credit Plan, the
promissory note shall be completed only after receipt of the
merchandise. The special order deposit of 20% will become the credit
plan downpayment.
21. The yellow copy of the special order agreement will be attached to
the promissory note. The accounting procedures for the CANEX credit plan
will still apply except that the NPFAO shall:
a. Match the yellow copy of the special order agreement with
the pink copy on file. Attach the yellow and pink copies to
the promissory note; and
b. Debit "Unearned Revenue - Special Order" instead of
"Cash/Bank" for the amount of the deposit (downpayment).