Chapter 10
JOURNALIZE SALE SAND CASH RECEIPTS USING SPECIAL JOURNALS
Chapter Objectives
• Accounting terms related to sales and cash
receipts for a merchandising business
• Journalize sales on account using a sales
journal
• Journalize cash receipts using a sales journal
• Journalize cash receipts using a cash receipts
journal
• Records sales returns and allowances using a
general journal
LESSON 10-1
JOURNALIZING SALES ON ACCOUNT USING A SALES JOURNAL
Objectives 10.1
• Understand Accounting Concepts related to
sales for a merchandise business
• Journalize sales on account using a sales
journal
Terms
• Customer
– A person or business to whom merchandise or
services are sold
• Sales Tax
– A tax on a sale of merchandise or service
• Sales Journal
– A special journal used to record only sales of
merchandise on account
SALES TAX
SALES OF MERCHANDISE
ON ACCOUNT
SALES JOURNAL
SALES INVOICE
SALE ON ACCOUNT
November 3. Sold merchandise on account to Village Crafts, $540.00,
plus sales tax, $32.40; total, $572.40. Sales Invoice No. 76.
1
2
3
4
1. Write the date.
2. Write the customer name.
3. Write the sales invoice number.
4. Write the total amount owed by the customer.
5. Write the sales amount.
6. Write the sales tax amount.
5
6
TOTALING, PROVING, AND RULING
A SALES JOURNAL
Audit Your Understanding
• How does a merchandising business differ from
a service business?
– A merchandising business sells merchandise, a
service business sells services
• How are sales tax rates usually stated?
– As percentage of sales
Audit Your Understanding
• Why is sales tax collected considered a
liability?
– The amount of sales tax collected is a business
liability until paid to the government.
• What is the title of the general ledger account
used to summarize the total amount due from
all charge customers?
– Accounts Receivable
LESSON 10-2
JOURNALIZING CASH RECEIPTS USING A CASH RECEIPTS JOURNAL
10.2 Objectives
• Define accounting terms related to cash
receipts for a merchandising business
• Journalize cash receipts using a cash receipts
journal.
Terms
• Cash Sales
– A sale in which cash is received for the total amount
of the sale at the time of the transaction
• Credit card sales
– A sale in which a credit card is used for the total
amount of the sale at the time of the transaction
• Point-of-Sale (POS)Terminal
– A computer used to collect, store and report all the
information of a sales transaction.
Terms
• Terminal Summary
– The reports that summarizes the cash and credit
card sales of a point-of-sale terminal
• Creates a Report of:
– Sales by sales clerk – efficiency
– Sales by time of day – scheduling
– Merchandise having a quantity on hand below a
predetermined order point alerts management to
purchase additional merchandise
PROCESSING SALES RRANSACTIONS
UPC (Universal
Product Code)
Cash Register
Receipt
Point-of-Sale (POS)
Terminal Receipt
(continued on next slide)
PROCESSING SALES TRANSACTIONS
Terminal Summary
Batch Report
(continued from previous slide)
Processing Credit Cards
• Batch report
– A report of credit card sales produced by a point of
sale terminal.
• Batching Out
– The process of preparing a batch report of credit
card sales from a point-of-sale terminal
• Most banks deposit credit card sales in their
business customer bank accounts in 2/3 days
CASH RECEIPTS JOURNAL
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. Terminal Summary 34.
2
1
1.
2.
3.
4.
5.
6.
7.
4
3
5
Write the date.
Place a check mark in the Account Title column.
Write the terminal summary document number.
Place a check mark in the Post. Ref. column.
Write the sales amount.
Write the sales tax amount.
Write the cash amount.
6
7
CASH RECEIPTS ON ACCOUNT
November 6. Received cash on account from Country Crafters,
$2,162.40, covering S69. Receipt No. 90.
1
1.
2.
3.
4.
5.
2
3
Write the date.
Write the customer’s name.
Write the receipt number.
Write the credit amount.
Write the debit amount.
4
5
Calculating Cash Receipts on
Account with Sales Discount
• Cash Discount
– Encourage early cash receipts/payments
– Reduces the amount received from the customer
• 2/10
– When a customer pays the amount owed within 10 days the
sales invoice amount is reduced 2%. Otherwise the net
amount is due in 20 days
• n/30
– Payment is due in 30 days
• 1/10
– 1% discount if received in 10 days
• n/60
– Payment is due in 60 days
JOURNALIZING CASH RECEIPTS ON
ACCOUNT WITH SALES DISCOUNTS
November 7. Received cash on account from Cumberland Center,
$1,176.00, covering Sales Invoice No. 74 for $1,200.00, less 2%
discount, $24.00. Receipt No. 91.
1
2
3
1. Write the date.
2. Write the customer’s name.
3. Write the receipt number.
4
5
6
4. Write the original invoice amount.
5. Write the amount of sales discount.
6. Write the debit to cash.
TOTALING, PROVING, AND RULING A
CASH RECEIPTS JOURNAL
Totaling, Proving, and Ruling a
Cash Receipts Journal
Col . Column Title
No
Debit
Totals
Credit
Totals
1
General Debit
-----
2
General Credit
----
3
Accounts Receivable
Credit
$9,540.00
4
Sales Credit
27,532.50
5
Sales Tax Payable Credit
1,648.80
6
Sales Discount Debit
$52.50
7
Cash Debit
38,668.80
_________
_
Totals
$38,721.30
$38,721.30
Proving Cash
Cash on hand at the beginning of the month
$17,647.44
(Nov. 1 balance of general ledger cash account)
Plus total cash received during the month
38,668.80
(Cash Debit column total, cash receipts journal)
Equals Total
$56,316.24
Less total cash paid during the month
32,2901.40
(Cash Credit column total, cash payments journal,
Chpt 9)
Equals cash balance on hand at end of the month
$23,414.84
Checkbook balance on the next unused check stub
$23,414.84
Audit Your Understanding
• What is the difference in the receipt received by a
customer from a cash register versus a point-of-sale
terminal?
– The POS systems produces a receipt that contains detailed
information about the sale, including the merchandise’s
description and price. The cash register receipt does not
include such detailed information
• What are the two types of batch reports?
– Detailed – showing each credit cared sale
– Summary – of the number and total of sales by credit card type
• Who transfers funds between banks involved in the
credit card sales?
– The funds are transferred among the banks issuing the credit
cards
LESSON 10-3
RECORDING TRANSACTIONS USING A GENERAL JOURNAL
Terms
• Sales Return
– A customer may return merchandise for a credit on
account or a cash returned. Credit allowed a
customer for the sales price of returned
merchandise, resulting in a decrease in the vendors
accounts receivable
• Sales Allowance
– Credit allowed a customer returned, resulting in a
decrease in the vendor’s accounts receivable
• Shortage in a shipment
• Without requiring the return of merchandise
Terms
• Credit memorandum
– A form showing the amount deducted for returns and
allowances.
• Original goes to vendor
• Copy is used as the source document for recording sales
returns and allowances
– Concept: Objective evidence
Account: Sales Returns and
Allowances
• Sales returns and sales allowanced
DECREASE the amount of sales
– The Account Sales Returns and Allowances is a
contra account to the Revenue account
– Normal balance is a debit, since Sales is a Credit
– Allows management to quickly identify if the amount
of sales returns and allowances.
CREDIT MEMORANDUM FOR SALES page 285
RETURNS AND ALLOWANCES
LESSON 10-3
34
JOURNALIZING SALES RETURNS
AND ALLOWANCES
March 11. Granted credit to Village Crafts for merchandise returned, $58.50,
plus sales tax, $3.51, from S160; total, $62.01. Credit Memorandum No. 41.
2
4
1
3
5
7
1. Write the date.
2. Write Sales Returns and Allowances.
3. Write CM and the credit memorandum
number.
4. Write the amount of the sales return.
5. Write Sales Tax Payable.
8
6
9
6. Write the sales tax amount.
7. Write the accounts to be credited.
8. Draw a diagonal line in the Post.
Ref. column.
9. Write the total accounts receivable
amount.
Audit Your Understanding
• What is the difference between a sales return
and sales allowance?
– Sales Return – credit allowed a customer for the
sales price of returned merchandise
– Sales Allowance – credit allowed for part of the sales
price of merchandise that is not returned.
• What is the source document for journalizing
sales returns and allowances?
– Credit Memorandum
Audit Your Understanding
• What general ledger accounts are affected, and
how, by a sales returns and allowances
transaction?
– Sales Returns and Allowances and Sales Tax
Payable are debited
– Accounts Receivable is credited
• Why are sales returns and allowances not
debited to the Sales account.
– Provide information to quickly identify if the amount
of sales returns and allowances is greater than
expected.