Many stores take a 15% cash deposit (or whatever your tax amount is) so that
their tax payments to uncle sam are covered.
Layaways should be used when deposits are made but the goods do not leave
the store until paid in full. Accounts Receivable should be used when
credit terms are given and the goods will leave the store before the item is
paid in full. This is a basic accounting principle. I've never heard of a
situation where this is handled differently. If you stray away from this
method, your inventory will be inaccurate and it can be a nightmare to try
and resolve discrepencies.
If I come to you on Monday and want to buy a TV, but I won't pay for it
until Friday, then you have to decide if I'm going to be able to take the TV
out of your store today or on Friday. If I can't take the TV until you've
received all the money for it, then that's a Layaway; meaning I'm going to
give you a deposit so you hold that TV for me and I'll come back on Friday
to pay the balance and take the TV with me.
However if you're going to let me take the TV today, but I won't have to pay
for it until Friday, then that is an Accounts Receivable which should be
tendered as a Sales Transaction and paid for On Account. It's up to you
have I must make an initial cash payment or not. Generally, if you deal
with consumers then you will take a cash payment up front, but if you deal
with contrators, wholesalers and other businesses, then you do not take a
cash deposit unless they have defaulted on their credit terms in the past
(of course this just a general practice, but everybody has their own
I'm not an accountant, so I'm not sure what the tax implications are on
Layaways vs Accounts Receivable. I believe that you pay tax when the goods
are delivered, but having A/Rs might balance this out.
Advanced Computer Systems
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