Microcomputer Accounting Applications
Lesson 4
Customers and Sales
Note: These comments do not replace the material in the chapter. They are intended
to reinforce and highlight important data from the text as well as to review relevant
accounting principles. You should always thoroughly read your text while completing
the tutorial steps.
Lesson 4 Comments
Chapter 4 deals with customer transactions (sales and accounts receivable). The
Customers section in the QB Home Page has tools that allow you to prepare customer
invoices or sales receipts, receive customer payments, apply refunds and credits, and
prepare customer statements.
Sales
A customer may pay immediately upon purchasing an item from a business or may
promise to pay later (creating an Account Receivable). In QuickBooks you will use the
on-screen forms to record sales to customers. Review the following accounts that are
affected when QuickBooks processes customer and sales transactions.
Review of Accounts
Account Name
Sales
Accounts Receivable
Cash
Account Type
Revenue
Asset
Asset
Normal Balance
Credit
Debit
Debit
Which to Use: Invoice or Sales Receipt
An Invoice is used when a sale on account is made. A Sales Receipt is used when a
cash sale is made. (Cash sales include sales for which payment is made with hard
cash, checks and credit cards.)
A Sales Receipt serves as both a record of a sale and a payment receipt. Once a sales
receipt is posted, the receipt of cash should be deposited using the Deposits Icon from
the Banking section of the Home Page.
When an Invoice is issued, it indicates a sale on account. At a later date the customer
will send in a cash payment (hopefully). When this occurs, receive the payment by
clicking the Receive Payments Icon in the Customers Section of the Home Page. Then
record the deposit in the Banking section.
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You will note that the Sales Receipts and Invoices windows are very similar with only a
few minor differences.
An additional option is to accept a credit card for a customer payment. If your company
accepts credit cards, you can use the Accept Credit Cards icon in the Customers
Section of the Home Page. To use this option, you must apply to additional online
services with QuickBooks. Since this is not possible for our tutorial company, you will
not practice any credit card transactions.
Journal Entries
While you will use the on-screen forms to record sales transactions, QuickBooks
records “behind-the-scenes” journal entries.
When a sale on account is recorded using the invoice form, a journal entry debiting
(increasing) Accounts Receivable and crediting (increasing) Sales is created.
When a cash sale is recorded using the sales receipts form, a journal entry debiting
(increasing) Cash and crediting (increasing) Sales is created.
If sales tax is applicable in either of the above situations, QuickBooks will also credit
(increase) the Sales Tax Payable account.
Also note that credit card sales are treated as cash sales. A debit to Cash and a credit
to Sales would be recorded at the time of the sale. The only difference in a credit card
sale and a cash sale is that a fee is generally charged by the credit card company. This
fee would be recorded as a business expense by the company selling the merchandise.
Customer List
The Customer List contains important customer information that is automatically entered
in the appropriate fields when a customer is chosen on an invoice or sales receipt. The
more information you can enter when setting up a customer, the more efficiently QB can
process customer transactions.
Customer billing can be to a general customer account, or you can set up jobs as “subaccounts” for each customer. The option to set up jobs will depend on the type of
business you operate. Rock Castle Construction uses the jobs option because it works
with customers on individual, distinct projects. On the other hand, a small retail
business selling candles would not want to set up a separate job for each type of candle
a customer purchased!
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Schedule of Accounts Receivable
Recall from Principles of Accounting that a Schedule of Accounts Receivable is a listing
of each customer with a balance due and the amount owed to the company. The
Schedule of Accounts Receivable differs from the Accounts Receivable Aging
(discussed below) in that the schedule lists only the customer name and amount owed
without regard to the length of time the account has been outstanding. QuickBooks
does not use the report title Schedule of Accounts Receivable, but this data can be
generated by running a Customer Balance Summary. It is recommended that you set
the date to ALL when running a Customer Balance Summary.
Internal Control
When issuing credit to customers, it is very important to carefully monitor accounts
receivable. The Customer Reports in QuickBooks provide information that helps you
track customer activity and receivables. One of the most important tools in monitoring
accounts receivable is the aging (called the Accounts Receivable Aging Summary
Report in QB). Recall from your principles course that an accounts receivable aging is
a listing of all credit customers with their outstanding balances broken down by aging
categories such as current, 30-day past-due, etc. The general rule is, the longer an
account is outstanding, the less likely it is to be collected.
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