Accounting for Merchandising Businesses
LO 3a – Recording Sales
Transactions
@ 2012, Cengage Learning
LO 3
Chart of Accounts
LO 3
Cash Sales
On January 3, NetSolutions sold $1,800 of
merchandise for cash.
LO 3
Cash Sales
Using the perpetual inventory system, the cost of
merchandise sold and the decrease in merchandise
inventory are also recorded. The cost of merchandise
sold on January 3 is $1,200.
LO 3
Cash Sales
Sales made to customers using credit cards are
recorded as cash sales. Assume that NetSolutions
paid credit card processing fees of $48 on January 31.
LO 3
Sales on Account
On January 12, NetSolutions sold merchandise on
account for $510. The cost of merchandise sold was
$280.
LO 3
Sales Discounts
 The terms for when payments for merchandise are
to be made are called credit terms. If payment is
required on delivery, the terms are cash or net cash.
Otherwise, the buyer is allowed an amount of time,
known as the credit period, in which to pay.
LO 3
Credit Terms
To encourage the buyer to pay before the end
of the credit period, the seller may offer a
discount. Credit terms of 2/10, n/30 are
summarized in the next slide (Exhibit 7).
LO 3
LO 3
Receipts on Account
On January 17, NetSolutions receives the amount due
within ten days, so the buyer deducted $30 ($1,500 x
2%) from the invoice amount.
LO 3
Credit Memo
A credit memorandum, often called a credit
memo, authorizes a credit to (decreases) the
buyer’s account receivable. An example of a
credit memo issued by NetSolutions is shown
in Exhibit 8.
LO 3
Credit Memo
LO 3
Credit Memo
On January 13, issued Credit Memo No. 32 to Krier
Company for merchandise returned to NetSolutions.
Selling price, $225; cost to NetSolutions, $140.