Question

REQUIRED: Refer to Problems 17.3 and 17.4 for information about the revenue and expenditure cycle activities of Sue’s Gallery in order to draw an integrated REA diagram of both cycles.

17.3: Sue’s Gallery sells original paintings by local artists. All sales occur in the store. Sometimes customers purchase more than one painting. Individual customers must pay for purchases in full at the time of sale. Corporate customers, such as hotels, however, may pay in installments if they purchase more than 10 paintings. Although Sue’s Gallery has several bank accounts, all sales monies are deposited intact into the main checking account. Expenditure Cycle

17.4: Sue’s Gallery only purchases finished paintings (it never commissions artists). It pays each artist 50% of the agreed price at the time of purchase, and the remainder after the painting is sold. All purchases are paid by check from Sue’s main checking account. Revenue Cycle

Answer 1