Lesson Plan 7.3– Analyze and Journalizing Sales and
Cash Receipts
Course Title – Accounting I
Session Title – Analyze and Journalize Sales and Cash Receipts
Lesson Purpose – Demonstrate skill in analyzing and journalizing
transactions related to sales and cash receipts.
Behavioral Objectives




Identify terms related to sales discounts, sales returns and allowances
and correcting entries.
Analyze and journalize sales discounts.
Analyze and journalize sales returns and allowances.
Analyze and journalize correcting entries.
Preparation
OLD TEKS Correlations:
2010 TEKS Correlations:
This lesson, as published, correlates
to the following TEKS. Any
changes/alterations to the activities
may result in the elimination of any or
all of the TEKS listed.
120.42.C
7.a. follow oral and written
instructions;
7.b. develop time management skills
by setting priorities for completing
work as scheduled.
7.c. make decisions using
appropriate accounting concepts;
7.e. perform accounting procedures
using manual and automated
methods;
7.g. demonstrate use of the numeric
keypad by touch
This lesson, as published, correlates
to the following TEKS. Any
changes/alterations to the activities
may result in the elimination of any or
all of the TEKS listed.
130.166.C
7.e. – process sales orders, invoices,
returns, and allowances
TAKS Correlation:
WRITING
Objective 5: The student will produce a piece of writing that demonstrates a
command of the conventions of spelling, capitalization, punctuation, grammar,
usage, and sentence structure.
Lesson Plan 7.3 – Analyzing and Journalizing
Sales and Cash Receipts
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING 1
Objective 6: The student will demonstrate the ability to revise and proofread to
improve the clarity and effectiveness of a piece of writing.
MATH
Objective 10: The student will demonstrate an understanding of the
mathematical processes and tools used in problem solving.
Materials, Equipment and Resources:




Textbook
Accounting Software
Journal Input Forms
Spreadsheet Software
Teaching Strategies:



Observation
Demonstration
Verbal Drills
Lesson Content:
Instruction and demonstration of terms related to sales and cash receipts, and
analyzing and journalizing transactions in sales discounts, sales returns and
allowances, and correcting entries.
Assessment:


Observation
Graded Assignments
Lesson Plan 7.3 – Analyzing and Journalizing
Sales and Cash Receipts
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING 1
Additional Resources:
Textbooks:
Guerrieri, Donald J., Haber, Hoyt, Turner. Glencoe Accounting RealWorld Applications and Connections. Glencoe McGraw-Hill 2000.
ISBN/ISSN 0-02-815004-X.
Ross, Kenton, Gilbertson, Lehman, and Hanson. Century 21 Accounting
Multicolumn Journal Anniversary Edition, 1st Year Course. SouthWestern Educational and Professional Publishing, 2003.
ISBN/ISSN: 0-538-43524-0
Ross, Kenton, Gilbertson, Lehman, and Hanson. Century 21 General
Journal Accounting Anniversary Edition, 7th Edition. SouthWestern Educational and Professional Publishing, 2003.
ISBN/ISSN: 0-538-43529-1.
Websites:
U. S. Chamber of Commerce: Small Business Solutions. Chamber of
Commerce, 2003.
http://www.uschamber.com/sb/P06/P06_1414.asp.
Business Partners:
Local merchants
Lesson Plan 7.3 – Analyzing and Journalizing
Sales and Cash Receipts
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING 1
Activity 7.3.1 – Identifying Terms
Course Title – Accounting I
Session Title – Analyzing and Journalizing Sales and Cash Receipts
Activity Purpose – Demonstrate knowledge in terms relating to sales and cash
receipt transactions.
OLD TEKS Correlations:
2010 TEKS Correlations:
This lesson, as published, correlates to
the following TEKS. Any
changes/alterations to the activities may
result in the elimination of any or all of
the TEKS listed.
120.42.C
7.a. follow oral and written instructions;
7.b. develop time management skills by
setting priorities for completing work as
scheduled;
This lesson, as published, correlates to
the following TEKS. Any
changes/alterations to the activities may
result in the elimination of any or all of
the TEKS listed.
130.166.C
N/A
TAKS Correlation:
N/A
Materials, Equipment and Resources:






Textbook
Index cards
Scissors
Tape
Color Card Stock
Markers
Teaching Strategies:


Observation
Verbal Drill
Activity 7.3.1 – Identifying Terms
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING 1
Activity Outline:
1. Have your students work in teams of three or four to create a game to play.
Use the following terms in the game. The game should include all pieces as
well as an instruction sheet.
contra account
draft
letter of credit
sales discount
sales slip
trade acceptance
discount period
sales allowance
sight draft
bill of lading
sales returns
credit terms
wholesaler
correcting entry
contract of sale
time draft
commercial invoice
credit memorandum
controlling account
retailer
2. Ask the teams to trade their games with another team to learn the terms.
Activity 7.3.1 – Identifying Terms
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING 1
Assessment:


Observation
Graded Assignment:
Quality Feature
Team’s game well thought out
The game includes all pieces so it can be played
Game instructions clear and concise
All team members participate in the assignment
Team participates in the game they were traded
Team demonstrates knowledge of the terms in a verbal drill
Completes game preparation and playing in a timely manner
Activity 7.3.1 – Identifying Terms
Score
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING 1
QUIZ ON TERMS
1. A form prepared by the vendor showing the amount deducted for sales returns and
allowances.
a. debit memorandum
b. credit memorandum
c. purchase invoice
d. sales invoice
2. Credit allowed a customer for part of the sales price of merchandise that is not
returned, resulting in a decrease in the vendor’s accounts receivable.
a. sales return
b. sales allowance
c. purchases return
d. purchases allowance
3. A written, signed, and dated order from one party ordering another party, usually a
bank, to pay money to a third party.
a. check
b. dated order
c. draft
d. receipt
4. A draft payable at a fixed or determinable future time after it is accepted.
a. fixed draft
b. sight draft
c. future draft
d. time draft
5. An account with a balance that is a decrease to another account.
a. liability account
b. contra account
c. controlling account
d. decrease account
6. The period of time within which an invoice must be paid if a discount is to be taken.
a. time account
b. credit terms
c. terms of payment
d. discount period
7. An entry made to correct an error in a journal entry discovered after posting.
a. adjusting entry
b. closing entry
c. correcting entry
d. time entry
8. A form that lists the details of a sale.
a. packing slip
b. sales slip
c. invoice
d. register tape
9. A business that sells to retailers.
a. wholesaler
b. primary seller
c. secondary seller
d. subsidiary seller
Activity 7.3.1 – Quiz on Terms
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING 1
QUIZ ON TERMS - KEY
1. A form prepared by the vendor showing the amount deducted for sales returns and
allowances.
d. debit memorandum
*b. credit memorandum
c. purchase invoice
e. sales invoice
2. Credit allowed a customer for part of the sales price of merchandise that is not
returned, resulting in a decrease in the vendor’s accounts receivable.
e. sales return
*b. sales allowance
c. purchases return
d. purchases allowance
3. A written, signed, and dated order from one party ordering another party, usually a
bank, to pay money to a third party.
f. check
g. dated order
*c. draft
d. receipt
4. A draft payable at a fixed or determinable future time after it is accepted.
h. fixed draft
i. sight draft
j. future draft
*d. time draft
5. An account with a balance that is a decrease to another account.
k. liability account
*b. contra account
e. controlling account
f. decrease account
6. The period of time within which an invoice must be paid if a discount is to be taken.
l. time account
m. credit terms
n. terms of payment
*d. discount period
7. An entry made to correct an error in a journal entry discovered after posting.
a. adjusting entry
b. closing entry
*c. correcting entry
d. time entry
8. A form that lists the details of a sale.
a. packing slip
*b. sales slip
c. invoice
d. register tape
9. A business that sells to retailers.
*a. wholesaler
b. primary seller
c. secondary seller
d. subsidiary seller
Activity 7.3.1 – Quiz on Terms
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING 1
Lesson 7.3 Activity – Analyzing and Journalizing Sales
Discounts - 7.3.2
Course Title – Accounting I
Session Title – Analyzing and Journalizing Sales and Cash Receipts
Activity Purpose – Demonstrate knowledge in terms relating to sales and cash
receipt transactions.
Old TEKS Correlations:
2010 TEKS Correlations:
This lesson, as published, correlates to
the following TEKS. Any
changes/alterations to the activities may
result in the elimination of any or all of
the TEKS listed.
120.42.C
7.a. follow oral and written instructions;
7.b. develop time management skills by
setting priorities for completing work as
scheduled;
7.c. make decisions using appropriate
accounting concepts;
7.e. perform accounting procedures
using manual and automated methods;
7.g. demonstrate use of the numeric
keypad by touch
This lesson, as published, correlates to
the following TEKS. Any
changes/alterations to the activities may
result in the elimination of any or all of
the TEKS listed.
130.166.C
N/A
TAKS Correlation:
MATH
Objective 10: The student will demonstrate an understanding of the mathematical
processes and tools used in problem solving.
Materials, Equipment and Resources:


Textbook
Spreadsheet Software
Teaching Strategies:


Observation
Verbal Drills
Activity 7.3.2 – Analyzing and Journaling Sales Discounts
reserved.
Copyright © Texas Education Agency, 2011. All rights
ACCOUNTING 1
Activity Outline:
1. Have your students work in a team to determine which of these statements
are false. Have them rewrite each false statement to make it a true
statement.








Sales discounts are given to encourage early payment for a sale on
account.
A cash discount on sales is not called a sales discount.
The invoice is the same as it was previously when a sales discount is
taken.
The amount of a sales discount is deducted from sales.
Sales Discount is a contra account.
The normal balance side of Sales Discount is a debit.
Accounting practices allow for the amount of a Sales Discount to be
recorded as a debit to Sales.
Selling merchandise on account allows the customer to increase its
volume of sales due to convenience.
2. Demonstrate Sales, Sales Discount, Sales Tax Payable, Accounts
Receivable and Cash in “T” accounts.
3. Using the “T” accounts demonstrate the analysis of these transactions:



Received cash on account from ABC, Inc. $535.84, covering Sales
Invoice 4 for $541.25 ($500.00 Sale plus Sales Tax $41.25), less 1%
discount $5.00 and .41 Sales Tax. Receipt No. 1
Received cash on account from Joyles, Inc. $2,175.18, covering Sales
Invoice 5 for $2,208.30 ($2,040.00 plus Sales Tax $168.30), less 1.5%
discount $30.60 and 2.52 Sales Tax. Receipt No. 2
Received cash on account from JR, Inc. $466.77, covering Sales Invoice
6 for $476.30 ($440.00 Sale plus Sales Tax $36.30), less 2% discount
$8.80 and .73 Sales Tax. Receipt No. 3
4. Demonstrate calculations of sales discounts and sales tax by making and
using a Calculating Sales Discounts spreadsheet.
5. Journalize the transactions for both the sales on account and the receiving of
cash in the spreadsheet using a computerized accounting system. Use the
business number in the first column for the business name and for the
source document, use S1-S6 and R1-R6.
Activity 7.3.2 – Analyzing and Journaling Sales Discounts
reserved.
Copyright © Texas Education Agency, 2011. All rights
ACCOUNTING 1
Assessment:


Observation
Graded Assignment
Quality Feature
Spreadsheet entries accurate
Journal entries accurate
Completes in a timely manner
Activity 7.3.2 – Analyzing and Journaling Sales Discounts
reserved.
Score
Copyright © Texas Education Agency, 2011. All rights
ACCOUNTING 1
Lesson 7.3 Activity – Analyzing and Journalizing Sales
Returns and Allowances - 7.3.3
Course Title – Accounting I
Session Title – Analyzing and Journalizing Sales Returns and Allowances
Activity Purpose – Analyze and journalize Sales Returns and Allowances
transactions.
OLD TEKS Correlations:
2010 TEKS Correlations:
This lesson, as published, correlates to
the following TEKS. Any
changes/alterations to the activities may
result in the elimination of any or all of
the TEKS listed.
120.42.C
7.a. follow oral and written instructions;
7.b. develop time management skills by
setting priorities for completing work as
scheduled;
7.c. make decisions using appropriate
accounting concepts;
7.e. perform accounting procedures
using manual and automated methods;
7.g. demonstrate use of the numeric
keypad by touch
This lesson, as published, correlates to
the following TEKS. Any
changes/alterations to the activities may
result in the elimination of any or all of
the TEKS listed.
130.166.C
N/A
TAKS Correlation:
MATH
Objective 10: The student will demonstrate an understanding of the mathematical
processes and tools used in problem solving.
Materials, Equipment and Resources:


Textbook
Spreadsheet Software
Teaching Strategies:


Observation
Verbal Drills
Activity 7.3.3. – Analyzing and Journaling Sales Returns and Allowances
ACCOUNTING 1
Copyright © Texas Education Agency, 2011.
All rights reserved.
Activity Outline:
1. Discuss why a business might need to return merchandise or ask for an
allowance on merchandise. Emphasize the difference.
2. Demonstrate the accounts Sales and Sales Return and Allowances using “T”
accounts. Explain the normal balance side and the increase and decrease
side.
3. Demonstrate a transaction for a sale on account using a “T” account.
Accounts Rec.
DR
Sales
CR
$5,412.50
$5,00
0.00
Sales Tax
Payable
CR
$412.50
4. Demonstrate a transaction for sales returns and allowances.
Sales Ret. and
Allow.
DR
Sales Tax Payable
DR
Accounts
Receivable
CR
$500.00
$41.25
$541.25
5. Analyze and journalize these transactions:
 Granted credit to Sims, Inc. for merchandise returned, $52.00, plus sales
tax $4.13; total $56.13, Credit Memorandum No. 1
 Granted credit to Sams, Inc. for merchandise returned, $210,00, plus
sales tax $17.33; total $227.33, Credit Memorandum No. 2
 Granted credit to Sula, Inc. for merchandise returned, $17.00, plus sales
tax $1.40; total $18.40, Credit Memorandum No. 3
 Granted credit to Smith’s, Inc. for merchandise returned, $23.00, plus
sales tax $1.90; total $24.90, Credit Memorandum No. 4
 Granted credit to SAN, Inc. for merchandise returned, $2,000, plus sales
tax $165.00; total $2,165.00, Credit Memorandum No. 5
Activity 7.3.3. – Analyzing and Journaling Sales Returns and Allowances
ACCOUNTING 1
Copyright © Texas Education Agency, 2011.
All rights reserved.
Assessment:


Observation
Graded Assignment
Quality Feature
Journal entries accurate
Input form accurate
Completes in a timely manner
Activity 7.3.3. – Analyzing and Journaling Sales Returns and Allowances
ACCOUNTING 1
Score
Copyright © Texas Education Agency, 2011.
All rights reserved.
Lesson 7.3 Activity – Analyzing and Journalizing Correcting
Entries - 7.3.4
Course Title – Accounting I
Session Title – Analyzing and Journalizing Sales Returns and Allowances
Activity Purpose – Analyze and journalize correcting entries affecting customer
accounts.
OLD TEKS Correlations:
2010 TEKS Correlations:
This lesson, as published, correlates to
the following TEKS. Any
changes/alterations to the activities may
result in the elimination of any or all of
the TEKS listed.
120.42.C.
7.a. follow oral and written instructions;
7.b. develop time management skills by
setting priorities for completing work as
scheduled;
7.c. make decisions using appropriate
accounting concepts;
7.e. perform accounting procedures
using manual and automated methods;
This lesson, as published, correlates to
the following TEKS. Any
changes/alterations to the activities may
result in the elimination of any or all of
the TEKS listed.
130.166.C
N/A
TAKS Correlation:
N/A
Materials, Equipment and Resources:

Textbook
Teaching Strategies:


Observation
Verbal Drills
Activity 7.3.4 – Analyzing and Journaling
Correcting Entries
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING I
Activity Outline:
1. Discuss the difference in errors that only affect subsidiary ledgers and do not
affect the general ledger.
2. Have your students analyze these transactions and journalize them in a
journal input form.

Discovered that a sale on account to Johnston, Inc. was incorrectly
charged to Johnson, Inc., $415.00, Memorandum No. 1

Discovered that a sale on account to REB, Inc. was incorrectly charged
to RER, Inc., $2,100.00, Memorandum No. 2

Discovered that a sale on account to Laney, Inc. was incorrectly charged
to Lany, Inc., $27.00, Memorandum No. 3.
Assessment:


Observation
Graded Assignment
Quality Feature
Transactions analyzed accurately
Accurately enters transactions in a journal input form
Completes in a timely manner
Activity 7.3.4 – Analyzing and Journaling
Correcting Entries
Score
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING I