Today, paying by credit card and other electronic methods is commonplace. However, the Cash Register Back In The Day operated solely on cash. Managing this cash flow required meticulous attention to detail and accuracy. One common challenge was handling cashback for customers. How was this cashback accurately recorded in the accounting books?
One effective method was to separate cashback from sales revenue. This way, cashback wouldn’t be counted as income. Instead, it would be recorded as a transfer from petty cash to the merchant account.
For example, let’s say a store had daily sales revenue of 252 million VND (including VAT), and the total cashback requested was 5.6 million VND. The initial petty cash fund was 14 million VND, but 5.6 million VND was spent on cashback.
After the sales transaction was completed, the next step was to process the cashback. In the merchant account, the sales revenue was already recorded. Now, the cashback needed to be added.
A new entry would be created in the merchant account for the total cashback amount.
This entry was then tagged as a transfer from petty cash.
This would increase the balance in the merchant account by 5.6 million VND and decrease the petty cash balance by the same amount. The petty cash balance would then be 8.4 million VND.
The payment processor’s transaction fees and the payment to the store owner were handled like any other transaction in the merchant account.
Let’s say the transaction fee was 1.4 million VND, and the remaining 254 million VND was transferred to the store’s bank account. The transaction fee would be recorded as a purchase. The final transfer would be tagged as a transfer to the store’s bank account, and this amount should match the bank statement.
Managing cash at the old-fashioned cash register required carefulness and accuracy in every step.
