Chapter 11
Journalizing Sales and
Cash Receipts Using
Special Journals
Chapter 11 – Objectives:
 Define accounting terms related to cash and
sales receipts for a merchandising business.
 Identify accounting concepts related to cash
and sales receipts for a merchandising
business.
 Journalize sales on account using a sales
journal.
 Journalize cash receipts using a cash
receipts journal.
REVIEW:
Special Journals:
 Cash payments
 Purchases
 Cash Receipts
 Sales
 General
 What types of transactions go in each journal????
Two major activities of a Merchandising Business:
1.
2.
Purchase of merchandise – Transaction with a Vendor
Sale of merchandise – Transaction with a Customer
 Sales Tax
–
–
–
–
–
–
A tax instituted by state law.
Stated as a percentage of sales
Records must be accurate and report: (1) TOTAL SALES and
(2) TOTAL SALES TAX to be paid to state government.
MUST be collected
Amount is a LIABILITY until it is paid to the proper government
agency
Account is called: SALES TAX PAYABLE
 Omni operates in a state with 6% sales tax
Sales Taxes Payable

Classification Liability
Sales Taxes Payable
Debit
-
Credit
Normal Balance
+

Price ($300) X Sales Tax rate (6%) = Sales Tax ($18)
 Price ($300) + Sale Tax ($18) = Total Amount received
($318)
 When is sales tax NOT charged???
CH 11-1:
JOURNALIZING SALES
ON ACCOUNT USING A
SALES JOURNAL
Four ways to pay for merchandise
1. Currency
2. Major Credit Card -
– Called bank-approved
– Visa, Master Card
– Amex, Discover
3. Check
ALL
Recorded as
CASH
4. On Account  ie: Store credit card / Tab
Realization of Revenue:
 An accounting principle that is applied when
revenue is recorded at the time goods or services
are sold (not necessarily when money is received).
Sale of Merchandise on Account

Sale on account: sale for which cash will be received
at a later date
– AKA: Charge sale
 Omni summarizes total due from ALL charge
customers with general ledger account  Accounts
Receivable
– normal DR balance
Sales Journals
Records ONLY sales of merchandise ON
ACCOUNT
 Sales invoice: source doc for sale on
account
– AKA: sales ticket or sales slip
– 3 copies: customer, shipping, source doc
SALES JOURNAL
SALES INVOICE
SALES ON ACCOUNT
November 3. Sold merchandise on account to Children’s Paradise,
$816.00, plus sales tax, $48.96; total, $864.96. Sales Invoice No. 76.
Accounts Affected
Accounts Receivable
Sales
Sales Tax Payable
Accounts Receivable
normal balance

864.96
Classification
Asset
Revenue
Liability
Change
Increased
Increased
Increased
Sales
normal balance

816.00
Sales Tax Payable
normal balance

48.96
Entered
Debit side
Credit side
Credit side
SALES ON ACCOUNT
November 3. Sold merchandise on account to Children’s Paradise,
$816.00, plus sales tax, $48.96; total, $864.96. Sales Invoice No. 76.
1
2
3
4
5
4. Write the total amount owed.
1. Write the date.
2. Write the customer name. 5. Write the sales amount.
3. Write the sales invoice
6. Write the sales tax
number.
amount.
6
TOTALING, PROVING, AND RULING A SALES
JOURNAL
Add credit columns - Sales & Sales Tax
Sales CR + Sales Tax CR MUST = Account Receivable DR
TO DO:
Work Together, pg 258
On your own
Chapter 11-2: Journalizing Cash Receipts Using a Cash
Receipts Journal
 Do you know of any stores that
do not accept credit cards????
 Why might they have that policy?
Sale of Merchandise for Cash

Cash sale: sale for which cash is received for the
total amount at time of transaction
 Credit card sale: sale in which a credit card is
used for the total amount of sale at time of
transaction
– Recorded same as cash sales
 Omni sells merchandise to customers who have a
bank-approved credit card




Must prepare credit card slip for each credit card sale
End of each week slips are included with bank
deposit
Bank accepts credit card slips the same way it
accepts cash
Merchants are paying a percentage of sale as a fee for
credit card processing usually passed on to
customer
Cash Receipts Journal
 Record all cash receipt transactions Debits to Cash
–
–
–
–
Cash received from customers on account
Cash and credit card sales
Interest from bank
Investment of cash by the partners
Cash and Credit Card Sales
 Omni uses a cash register to list all cash and
credit card sales
– Internally calculates accumulated data for total
cash and credit card sales
– Receipt given to customer
– End of each week (usually done daily) print
register tape showing total sales
– Marked with T and the Date source
document
 ONLY journalize TOTAL Cash and Credit Card
sales
CASH AND CREDIT CARD SALES
November 4. Recorded cash and credit card sales, $5,460.00, plus
sales tax, $327.60; total, $5,787.60. Cash Register Tape No 4.
Accounts Affected
Cash
Sales
Sales Tax Payable
Cash
normal balance
 5,787.60
Classification
Asset
Revenue
Liability
Change
Increased
Increased
Increased
Sales
normal balance

5,460.60
Sales Tax Payable
normal balance

327.60
Entered
Debit side
Credit side
Credit side
CASH AND CREDIT CARD SALES
November 4. Recorded cash and credit card sales, $5,460.00, plus
sales tax, $327.60; total, $5,787.60. Cash Register Tape No 4.
1
2
3
4
5
6
1. Write the date.
2. Place a check mark in the Account Title column to show
that no account title needs to be written.
3. Write the cash register tape number.
4. Place a check mark in the Post. Ref. column to show that
amounts on this line are not to be posted individually.
5. Write the sales amount.
6. Write the sales tax amount.
7. Write the cash amount.
7
CASH RECEIPTS ON ACCOUNT
1
2
3
4
5
1. Write the date.
2. Write the customer’s name.
3. Write the receipt number. (source doc prepared in duplicate)
4. Write the credit amount.
5. Write the debit amount.
Nov. 6. Received cash on account from
Fiesta Costumes, $2,162.40, covering S69.
Receipt No. 90.
Lesson 11-2, page 261
TOTALING, PROVING, AND RULING A CASH RECEIPTS
JOURNAL
End of Page End of Month Debits = Credits
Lesson 11-2, page 262
Proving Cash at the End of the Month
Three Places Cash Must Prove:
 1. Cash Account in Ledger
 2. Checkbook/Bank Statement
 3. Journals
TO PROVE CASH:
*Cash on Hand Beginning of Month (Cash Account)
+ PLUS Total Cash Received (Cash DR Receipts Journal)
- LESS Cash Paid Out (Cash CR Payments Journal)
= EQUALS Cash Balance on Hand End of Month
TO DO:
 Work Together, pg 264
 On your own, pg 264
 Application Problems 11-1, 11-2
Summary Problems:
 Ch 11 Quiz
 Mastery 11-3
 Challenge 11-4
 Extra Problem 10/11
 Ch 10/11 Study Guide
 TEST – TOMORROW!