Special Journals:
Sales and Cash Receipts
Chapter 9
9- 1
Special Journals
Specialized journals
speed up the process
of recording
sales and cash
receipts in a manual
accounting system.
9- 2
Classifying
Business Organizations
Service businesses provide services.
Merchandise businesses sell products.
Manufacturing businesses make products.
9- 3
Tracking Sales and Cash
Collections for Credit Customers
The cash receipts journal reduces the
amount of daily posting required. It
provides a check and balance system.
 The sales journal provides an efficient way
to track credit sales.
 Using both journals provides a better
internal control system for sales and cash
receipts.

9- 4
Merchandising Company

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What does a merchandising company do?
buys merchandise from wholesalers
resells the goods at a higher price called the
retail price
must keep track of merchandise inventories
has to present a longer income statement than
a service company does
usually has credit customers
9- 5
Learning Objective 1
Journalizing sales on
account in a sales journal.
9- 6
Learning Unit 9-1
Gross sales = Amount of units sold ×
Sales price per unit
Amount is credited to the Revenue account.
Normal balance is a credit.
9- 7
Learning Unit 9-1
Assume that Chou’s Toy Shop had $3,000
in sales.
 $1,800 were cash sales and $1,200 were
charges.
 A customer received a $10 price reduction
for defective merchandise.
 How can these transactions be explained?

9- 8
Learning Unit 9-1
Accounts Affected
Category
Cash
Asset
Accounts Receivable Asset
Sales
Revenue
Rules
Dr. 1,800
Dr. 1,200
Cr. 3,000
9- 9
Gross Sales
Debits
Date Cash Accts. Rec.
July 19 1,800 1,200
Credits
Account Title
Sales Gross 3,000
9- 10
Learning Unit 9-1
Sales returns and allowances =
Amount allowed for defective merchandise
Amount is debited in the journal entry.
Normal balance is a debit.
9- 11
Learning Unit 9-1
Accounts Affected
Category
Sales Returns and
ContraAllowances
revenue
Accounts Receivable Asset
Rules
Dr. 10
Cr. 10
9- 12
Learning Unit 9-1
What is a sales discount?
 It is a percent decrease in the amount
collected from credit customer.
 This deduction is given as an incentive to
the accounts receivable (credit) customer
to pay bills early.
9- 13
Learning Unit 9-1
What is the meaning of the term 2/10, n/30?
It means a customer will be granted a 2%
discount if the account is paid in 10 days.
 Otherwise, the full amount (n = net) is to
be paid in 30 days.

9- 14
Cash Receipts Journal – Page 90
Debits
Credits
Date
Cash Disc. Accts. Rec.
July 19 39.20 .80
40.00
Account Title
Michelle
Reese
9- 15
Learning Unit 9-1
What is sales tax payable?
 It is a percent multiplied by the gross
amount of the sale collected from
customers.
 The business has a liability to the taxing
authority for the amounts collected.
9- 16
Learning Unit 9-1
Usually, the full amount is submitted to the
state even if there is also a city sales tax.
 States collect the tax, divide it, and remit
the amounts to the city or county.

9- 17
Learning Objectives 2 and 3
Posting from a sales journal
to the general ledger.
Recording to the accounts
receivable subsidiary ledger from a
sales journal.
9- 18
Learning Unit 9-2
Sales journal records sales of merchandise
on account.
Cash receipts journal records receiving
cash from any source.
9- 19
Learning Unit 9-2
Credit sales make record keeping more
complicated.
 A separate record for each customer must be
set up.
 These records are called a subsidiary ledger.

9- 20
Learning Unit 9-2
Recorded sales are posted in total to the
Sales account and the Accounts Receivable
account.
 They are also recorded as debits to
individual customer accounts.

9- 21
Learning Unit 9-2
Sales journal records sale of merchandise
on account.
 Cash receipts journal records cash received.
 Purchases journal records buying
merchandise or other items on account.
 Cash disbursements journal records
payments.

9- 22
Learning Unit 9-2
Sales transaction amounts are posted to
each credit customer in the subsidiary
ledger.
 This process allows up-to-date records of
credit customer balances.
 The amount and age of the account balance
is shown.

9- 23
Learning Unit 9-2
The sales journal records all sales on
account (credit sales only).
 Each credit sale transaction is posted to
each credit customer as a debit.
 The totals of the Accounts Receivable, Sales
Tax Payable, and Sales columns are posted
to each of these general ledger accounts.

9- 24
Learning Objective 4
Preparing, journalizing,
recording, and posting
a credit memorandum.
9- 25
Learning Unit 9-3
What is a credit memorandum?
 It shows amounts that were deducted from
the balance the customer owes.
 They are contra-revenue accounts with a
normal debit balance.
 These are recorded in the general journal
and posted to a subsidiary ledger.
9- 26
Sales Returns and
Allowances Journal
Date
200x
April 12
Credit
Account
Memo No. Credited
1
BW Co.
PR

Sales Ret. and
Allow. – Dr.
Accts. Rec. – Cr.
600.00
9- 27
Learning Objective 5
Journalizing and posting
transactions using a cash
receipts journal, as well
as recording to the accounts
receivable subsidiary ledger.
9- 28
Learning Unit 9-4
The cash receipts journal records the receipt
of cash from any source.
 The number of columns varies with each
business, depending upon the frequency of
certain types of transactions.
 The cash receipt journal speeds up the
posting process because a total is debited to
cash.

9- 29
Learning Unit 9-4
Debit Column
Cash
Sales Discount
Credit Column
Accounts Receivable
Sales
Sundry
9- 30
End of Chapter 9
9- 31