Unit 4
The Accounting Cycle for a
Merchandising Corporation
Chapter 14 Accounting for Sales and Cash Receipts
Chapter 15 Accounting for Purchases and Cash Payments
Chapter 16 Special Journals: Sales and Cash Receipts
Chapter 17 Special Journals: Purchases and Cash Payments
Chapter 18 Adjustments and the Ten-Column Work Sheet
Chapter 19 Financial Statements for a Corporation
Chapter 20 Completing the Accounting Cycle for a Merchandising Corporation
Chapter 21 Accounting for Publicly Held Corporations
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Chapter 16
Special Journals: Sales and
Cash Receipts
What You’ll Learn
 Identify the special journals and explain how they
are used in a merchandising business.
 Record transactions in sales and cash receipts
journals.
 Post from the sales and cash receipts journals to
customer accounts in the accounts receivable
subsidiary ledger.
 Foot, prove, total, and rule the sales and cash
receipts journals.
 Post column totals from the sales and cash receipts
journals to general ledger accounts.
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1
Chapter 16
Special Journals: Sales and
Cash Receipts
What You’ll Learn
 Prepare a schedule of accounts receivable.
 Define the accounting terms introduced in this
chapter.
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Chapter 16, Section 1
The Sales Journal
What Do You Think?
What other terms mean the same as credit sales?
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SECTION 16.1
The Sales Journal
Main Idea
The sales journal is used to record credit sales of
merchandise.
You Will Learn
 the purpose of special journals.
 how to use the sales journal.
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SECTION 16.1
The Sales Journal
Key Terms
 special journals
 sales journal
 footing
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SECTION 16.1
The Sales Journal
Using Special Journals
Each transaction in a general journal requires at least
three journal lines. To improve efficiency merchandising
businesses can use special journals. Special journals
have amount columns used to record debits and credits
to general ledger accounts. The four most commonly
used special journals are:
 sales journal,
 cash receipts journal,
 purchases journal, and
 cash payments journal.
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SECTION 16.1
The Sales Journal
Journalizing and Posting to the Sales
Journal
The sales journal is used to record sales of
merchandise on account.
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SECTION 16.1
The Sales Journal
Recording Sales of Merchandise on Account
To record transactions in the sales journal, move from
left to right following these steps:
 Enter the sales slip date in the Date column.
 Enter the sales slip number is the Sales Slip No.
column.
 Enter the customer’s name in the Customers
Account Debited column.
 Enter the merchandise sold total in the Sales
Credit column.
 Enter the sales tax in the Sales Tax Payable
Credit column.
 Enter the total amount to be received in the
Accounts Receivable Debit column.
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SECTION 16.1
The Sales Journal
Posting a Sale Journal Entry to the
Accounts Receivable Subsidiary Ledger
To post transactions to the accounts receivable
subsidiary ledger, follow these steps:
1. Enter the transaction date in the Date column.
2. Enter the journal letter and page number in the
Posting Reference column.
3. Enter the total amount to be received in the
Debit column.
4. Compute the new balance and enter it in the
Balance column.
5. Place a check mark in the Posting Reference
column in the sales journal.
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SECTION 16.1
The Sales Journal
Posting a Sale Journal Entry to the
Accounts Receivable Subsidiary Ledger
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SECTION 16.1
The Sales Journal
Completing the Sales Journal
Only the amount column totals from the special journals
are posted to the general ledger accounts. For the sales
journal, the column totals posted are
 the Sales Credit,
 the Sales Tax Payable Credit, and
 the Accounts Receivable Debit.
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SECTION 16.1
The Sales Journal
Footing, Proving, Totaling, and Ruling the Sales
Journal
Verify the column totals before posting them to the
general ledger by following these steps:
1. Draw a single rule across the three amount
columns, below the last transaction.
2. Foot the amount columns. Footing is a column
total written in small penciled figures.
3. On separate paper, verify the debit column total
equals the total of the two credit columns.
4. Enter the date in the Date column below the
single rule.
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SECTION 16.1
The Sales Journal
Footing, Proving, Totaling, and Ruling the Sales
Journal
5.
6.
7.
Enter the word Totals on the same line in the
Customer’s Account Debited Column.
Enter the column totals below the footings.
Double-rule the three amount columns.
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SECTION 16.1
The Sales Journal
Footing, Proving, Totaling, and Ruling the Sales
Journal
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SECTION 16.1
The Sales Journal
Posting the Total of the Sales Credit Column
Follow this procedure for posting the Sales Credit
column to the general ledger Sales account:
1. In the Date column, enter the date from the Totals
line of the sales journal.
2. Enter the sales journal letter and page number in
the Posting Reference column.
3. Enter the total from the Sales Credit column of the
sales journal in the Credit column.
4. Compute the new balance and enter it in the
Credit Balance column.
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SECTION 16.1
The Sales Journal
Posting the Total of the Sales Credit Column
5. In the sales journal, enter the Sales account
number, in parentheses, below the double rule in
the Sales Credit column.
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SECTION 16.1
The Sales Journal
Posting the Total of the Sales Tax Payable
Credit Column
Follow this procedure for posting the total of the Sales
Tax Payable Credit column:
1. In the Date column of the Sales Tax Payable
account, enter the date from the Totals line of the
sales journal.
2. Enter the sales journal letter and page number in
the Posting Reference column.
3. Enter the total from the Sales Tax Payable Credit
column of the sales journal in the Credit column.
4. Compute the new balance and enter it in the
Credit Balance column.
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SECTION 16.1
The Sales Journal
Posting the Total of the Sales Tax Payable Credit
Column
5. In the sales journal, enter the Sales Tax Payable
account number, in parentheses, below the double
rule in the Sales Tax Payable Credit column.
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SECTION 16.1
The Sales Journal
Posting the Total of the Accounts Receivable
Debit Column
Follow this procedure for posting the total of the
Accounts Receivable Debit column:
1. In the Date column of the Accounts
Receivable account, enter the date from the
Totals line of the sales journal.
2. Enter the sales journal letter and page number
in the Posting Reference column.
3. Enter the total from the Accounts Receivable
Debit column of the sales journal in the Debit
column.
4. Compute the new balance and enter it in the
Debit Balance column.
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SECTION 16.1
The Sales Journal
Posting the Total of the Accounts Receivable
Debit Column
5.
In the sales journal, enter the Accounts
Receivable account number, in parentheses,
below the double rule in the Accounts
Receivable Debit column.
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SECTION 16.1
The Sales Journal
Proving the Sales Journal at the End of a Page
Sometimes the transactions will not fit on a single page.
When this occurs, the journal page must be totaled and
ruled before a new page is started.
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SECTION 16.1
The Sales Journal
Key Terms Review
 special journals
Journals that have amount columns for recording
debits and credits to specific general ledger
accounts.
 sales journal
A special journal used to record only the sale of
merchandise on account.
 footing
A column total written in small pencil figures.
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Chapter 16, Section 2
Special Journals: Sales and
Cash Receipts
What Do You Think?
What column headings do you think will be listed in the
cash receipts journal?
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SECTION 16.2
The Cash Receipts Journal
Main Idea
Cash receipts journal is used to record the cash a
business receives.
You Will Learn
 how to use the cash receipts journal.
 the purpose of the schedule of accounts
receivable.
 about Internet sales.
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SECTION 16.2
The Cash Receipts Journal
Key Terms
 cash receipts journal
 schedule of accounts receivable
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SECTION 16.2
The Cash Receipts Journal
Journalizing and Posting to the Cash
Receipts Journal
The cash receipts journal is a special journal used to
record all cash receipt transactions. Every entry debits
the Cash in Bank account.
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SECTION 16.2
The Cash Receipts Journal
Recording Cash from Charge Customers
Follow these steps when journaling cash receipts from
charge customers:
 Enter the transaction date in the Date column.
 Enter the receipt number in the Document
Number column.
 Enter the customer’s name in the Account Name
column.
 Enter the decrease in the amount owed in the
Accounts Receivable Credit column.
 Enter the amount of cash received in the Cash in
Bank Debit column.
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SECTION 16.2
The Cash Receipts Journal
Recording Cash Received on Account,
Less a Cash Discount
Follow these steps to record a cash receipt transaction
with a cash discount:
 Enter the receipt date in the Date column.
 Enter the receipt number in the Document
Number column.
 Enter the customer’s name in the Account Name
column.
 Enter the original sales transaction amount in the
Accounts Receivable Credit column.
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SECTION 16.2
The Cash Receipts Journal
Recording Cash Received on Account,
Less a Cash Discount
 Enter the cash discount amount in the Sales
Discounts Debit column.
 Enter the amount of cash received in the Cash in
Bank Debit column.
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SECTION 16.2
The Cash Receipts Journal
Recording Cash Sales
Follow these steps to enter cash sales in the cash
receipts journal:
 Enter the cash register tape date in the Date
column.
 Enter the tape number in the Document Number
column.
 Enter Cash Sales in the Account Name column.
 Enter a dash in the Posting Reference column.
 Enter the amount of merchandise sold in the
Sales Credit column.
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SECTION 16.2
The Cash Receipts Journal
Recording Cash Sales
 Enter the sales taxes collected in the Sales Tax
Payable Credit column.
 Enter the total cash received in the Cash in Bank
Debit column.
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SECTION 16.2
The Cash Receipts Journal
Recording Bankcard Sales
Follow these steps to enter bankcard sales in the cash
receipts journal:
 Enter the cash register tape date in the Date
column.
 Enter the tape number in the Document Number
column.
 Enter Bankcard Sales in the Account Name
column.
 Enter a dash in the Posting Reference column.
 Enter the amount of merchandise sold in the
Sales Credit column.
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SECTION 16.2
The Cash Receipts Journal
Recording Bankcard Sales
 Enter the sales taxes collected in the Sales Tax
Payable Credit column.
 Enter the total cash received in the Cash in Bank
Debit column.
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SECTION 16.2
The Cash Receipts Journal
Recording Other Cash Receipts
Follow these steps to record in the cash receipts journal
a transaction that does not involve the sale of
merchandise:
 Enter the receipt date in the Date column.
 Enter an R and the receipt number in the
Document Number column.
 Enter the general ledger account name in the
Account Name column.
 Enter the credit amount in the General Credit
column.
 Enter the total cash received in the Cash in Bank
Debit column.
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SECTION 16.2
The Cash Receipts Journal
Posting to the Accounts Receivable
Subsidiary Ledger
Follow these steps to post a cash receipt transaction to
an account in the accounts receivable subsidiary ledger:
 Enter the transaction date in the Date column of
the subsidiary ledger account.
 Enter the journal letters and page number in the
Posting Reference column.
 Enter the amount from the Accounts Receivable
Credit column of the cash receipts journal in the
subsidiary ledger Credit column.
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SECTION 16.2
The Cash Receipts Journal
Posting to the Accounts Receivable
Subsidiary Ledger
 Enter the new balance in the Balance column. If it
is zero, draw a line through it.
 Enter a check mark in the Posting Reference
column of the cash receipts journal.
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SECTION 16.2
The Cash Receipts Journal
Posting the General Credit Column
Follow these steps to post from the General Credit
column of the cash receipts journal:
1. Enter the transaction date in the Date column of
the general ledger.
2. Enter the journal letters and page number in the
Posting Reference column.
3. Enter the amount from the General Credit
column of the cash receipts journal.
4. Enter the new balance in the proper Balance
column. If it is zero, draw a line through it.
5. Enter the general ledger account number in the
Posting Reference column of the cash receipts
journal.
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SECTION 16.2
The Cash Receipts Journal
Posting the General Credit Column
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SECTION 16.2
The Cash Receipts Journal
Footing, Proving, Totaling, and Ruling the Cash
Receipts Journal
Follow these steps to complete the cash receipts journal:
1. Draw a single rule across the six amount columns
below the last transaction.
2. Foot the columns.
3. Verify the debits and credits are equal.
4. Enter the date the journal is being totaled in the
Date column.
5. Enter Totals in the Account Name column.
6. Enter the column totals, in ink, below the footings.
7. Double-rule the amount columns.
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SECTION 16.2
The Cash Receipts Journal
Footing, Proving, Totaling, and Ruling the Cash
Receipts Journal
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SECTION 16.2
The Cash Receipts Journal
Posting Column Totals to the General Ledger
Follow these steps to post totals to the general ledger:
 Place a check mark in parentheses under the
General Credit column total.
 Post the Sales total to the Sales account Credit
column.
 Post the Sales Tax Payable total to the Sales
Tax Payable account Credit column.
 Post the Accounts Receivable total to the
Accounts Receivable controlling account Credit
column.
 Post the Sales Discounts total to the Sales
Discounts account Debit column.
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SECTION 16.2
The Cash Receipts Journal
Posting Column Totals to the General Ledger
 Post the Cash in Bank total to the Cash in Bank
account debit column.
 Compute new balances for each general ledger
account.
 Write each account number in parentheses below
the double rule in the cash receipts journal.
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42
SECTION 16.2
The Cash Receipts Journal
Using the Schedule of Accounts Receivable
A schedule is prepared for each subsidiary ledger to
determine whether the subsidiary ledger’s sum equals
the controlling account’s ending balance.
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43
SECTION 16.2
The Cash Receipts Journal
Proving the Accounts Receivable
Subsidiary Ledger
The schedule of accounts receivable is used to prove
the receivable subsidiary ledger. The balance of
Accounts Receivable in the general ledger should
equal the individual accounts receivable subsidiary
ledger totals.
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44
SECTION 16.2
The Cash Receipts Journal
Detecting Errors in the Subsidiary Ledger
Some errors that could exist in the subsidiary ledger are
 failing to post a transaction, or
 miscalculating an account balance.
Proving the accounts receivable subsidiary ledger does
not ensure that transactions were posted to the correct
customer account.
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SECTION 16.2
The Cash Receipts Journal
Internet Sales
Companies can sell products with little expense and
effort over the Internet. An Internet merchant account for
credit and debit card payments or an online payment
service can be used for these sales transactions.
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46
SECTION 16.2
The Cash Receipts Journal
Key Terms Review
 cash receipts journal
A special journal used to record all transactions in
which cash is received.
 schedule of accounts receivable
A list of each charge customer, the balance in the
customer’s account, and the total amount due
from all customers.
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47
CHAPTER 16
Chapter 16 Review
Question 1
Look at the cash receipts journal. Several columns
contain information on business transactions.
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CHAPTER 16
Chapter 16 Review
Question 1
Use (T) to indicate whether you would post only the
column total, (E) to post each individual transaction, or
(B) to post each to the subsidiary ledger and the column
total to the controlling account in the general ledger.
General Credit
__________
Sales Credit
__________
Sales Tax Payable Credit
__________
Accounts Receivable Credit
__________
Sales Discounts Debit
__________
Cash in Bank Debit
__________
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CHAPTER 16
Chapter 16 Review
Answer 1
1. General Credit: E
2. Sales Credit : T
3. Sales Tax Payable Credit: T
4. Accounts Receivable Credit: B
5. Sales Discounts Debit: T
6. Cash in Bank Debit: T
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CHAPTER 16
Chapter 16 Review
Question 2
A company has the following journals and ledgers: sales,
cash receipts, purchases, cash payments, general, and an
accounts receivable subsidiary ledger. For each of the
following transactions, indicate (a) the correct journal and
(b) whether the subsidiary ledger is used.
1. sale for cash
2. sale on credit
3. payment of accounts payable
4. purchase of equipment on credit
5. cash receipt on account from customer
6. sales for customers using bankcards
7. cash received for sale of unneeded equipment
8. cash discount taken on account by customer
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CHAPTER 16
Chapter 16 Review
Answer 2
1. Sale for cash:
(a) cash receipts
2. Sale on credit:
(a) sales
(b) A/R subsidiary ledger
3. Payment of accounts payable:
(a) cash payments
4. Purchase of equipment on credit:
(a) purchases
5. Cash receipt on account from customer:
(a) cash receipts
(b) A/R subsidiary ledger
6. Sales for customers using bankcards:
(a) cash receipts
7. Cash received for sale of unneeded equipment:
(a) cash receipts
8. Cash discount taken on account by customer:
(a) cash receipts
(b) A/R subsidiary ledger
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CHAPTER 16
Chapter 16 Review
Question 3
In the cash receipts journal, why must you post every
payment on account to the customer’s subsidiary account
immediately?
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CHAPTER 16
Chapter 16 Review
Answer 3
Most of the information in the cash receipts journal can
be posted when you total the journal. However, the
subsidiary ledger must be kept current and show the
accurate amount owed by each customer in the event a
customer inquires about his or her account status or that
the current total is needed for some other reason. This
also means that until the column total is posted to the
controlling account, the total of the subsidiary ledger
accounts and the controlling account in the general
ledger will not agree.
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54
Resources
Glencoe Accounting Online Learning Center
English Glossary
Spanish Glossary
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