Chapter 14
Accounting for Sales and Cash Receipts
What You’ll Learn
 Explain the difference between a service business
and a merchandising business.
 Analyze transactions relating to the sale of
merchandise.
 Explain the difference between a retailer and a
wholesaler.
 Record a variety of sales and cash receipt
transactions in a general journal.
 Define the accounting terms introduced in this
chapter.
Glencoe Accounting Unit 4 Chapter 14 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
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Chapter 14, Section 1
Accounting for a Merchandising Business
What Do You Think?
Why do consumers buy from retailers rather
than wholesalers?
Glencoe Accounting Unit 4 Chapter 14 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
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SECTION 14.1
Accounting for a
Merchandising Business
Main Idea
A wholesaler sells to retailers, and a retailer sells to the
final users.
You Will Learn
 the operating cycle for a merchandising business.
 the accounts used in a merchandising business.
 issues relating to international sales.
Glencoe Accounting Unit 4 Chapter 14 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
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Accounting for a
Merchandising Business
SECTION 14.1
Key Terms





retailer
wholesaler
merchandise
inventory
Sales
Glencoe Accounting Unit 4 Chapter 14 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
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SECTION 14.1
Accounting for a
Merchandising Business
The Operating Cycle of a
Merchandising Business
The merchandising business operating cycle is a series
of transactions. Merchandisers buy goods and sell them
to customers for a profit. Most merchandising
businesses are both retailers and wholesalers.
Glencoe Accounting Unit 4 Chapter 14 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
4
SECTION 14.1
Accounting for a
Merchandising Business
The Operating Cycle of a
Merchandising Business
Glencoe Accounting Unit 4 Chapter 14 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
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SECTION 14.1
Accounting for a
Merchandising Business
Accounts Used by a
Merchandising Business
A merchandising business buys merchandise from a
wholesaler or manufacturer and sells the goods to its
customers. Merchandise in stock is called inventory.
Glencoe Accounting Unit 4 Chapter 14 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
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SECTION 14.1
Accounting for a
Merchandising Business
Merchandise Inventory Account
Inventory is represented in the general ledger by the
asset account Merchandise Inventory. The normal
balance of this account is a debit.
Merchandise is bought and sold during the operating
cycle; the purchase and sale of merchandise is recorded
in separate accounts.
Glencoe Accounting Unit 4 Chapter 14 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
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SECTION 14.1
Accounting for a
Merchandising Business
Sales Account
The amount of merchandise sold is recorded in the
Sales account, a revenue account. The normal balance
of the Sales account is a credit.
Glencoe Accounting Unit 4 Chapter 14 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
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SECTION 14.1
Accounting for a
Merchandising Business
International Sales
The United Nations Convention on Contracts for the
International Sales of Goods (CISG) provides guidelines
governing the international sale of goods. Businesses
involved in international sales must consider the
challenge of multiple currencies.
Glencoe Accounting Unit 4 Chapter 14 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
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SECTION 14.1
Accounting for a
Merchandising Business
Key Terms Review
 retailer
A business that sells to the final user, the
consumer.
 wholesaler
A business that sells to the retailers.
 merchandise
Goods bought to resell to customers.
 inventory
The items of merchandise a business has in
stock.
Glencoe Accounting Unit 4 Chapter 14 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
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SECTION 14.1
Accounting for a
Merchandising Business
Key Terms Review
 Sales
A revenue account to record the amount of the
merchandise sold.
Glencoe Accounting Unit 4 Chapter 14 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
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