1. Chapter 10
Accounting Theory

2. A special journal used to record only cash receipts transactions
Cash Receipts Journal
A special journal used to record only cash receipts transactions
Daily or weekly cash and credit card sales are recorded as a single cash transaction.
Cash is debited for the total amount and sales and sales tax payable are credited

3. Sales
When merchandise is sold, revenue is recorded at the time of the sale not when cash is received.
Purchases of merchandise on account are put in the sales journal
Cash purchases go in the cash payments journal
Buying supplies goes into the general journal
Sales returns and allowances
Contra revenue account to sales
Credit memorandum
A form used to show the amount deducted for sales returns and allowances
Sales discount
A cash discount taken by a customer
Sales allowance
Credit allowed to a customer which decreases accounts receivable

4. Sales Tax & Sales Discounts
Sales tax collected is recorded as a liability until paid to the state government
Sales tax is calculated by multiplying the sales amount by the sales tax percentage.
Even when a sales discount is offered, the customer is invoiced for the full amount of the sale and sales tax.
The discount is taken when the payment is made within the discount period
The discount amount is taken away from the amount cash paid with the total increases the accounts receivable account with a debit.
Sales discount is a contra account to sales and has a debit balance.

5. Other concepts
The ledger balance must equal the amount on the first unused check stub
Point-of-sale terminal
A computer used to collect, store, and report all of the information of a sales transaction.
Terminal summary
The report that summarizes all cash and credit card transactions of a point of sale terminal.
Batch report
A report of credit card sales produced by a point-of-sale terminals.
Batching out
The process of preparing a batch report of credit card sales

6. Accounting Concepts Realization of revenue Objective evidence
Recording revenue from transactions at the time the goods or services are sold
Objective evidence
Using source documents such as a terminal summary as a source document for transactions such as cash and credit card sales
Debit cash short and over
2/10 Net 30
2% discount if paid within 10 days, if not due within 30 days
If merchandise is purchased for $2,000 on October 1, with the terms 2/10 net 30, the amount due to the vendor on October 9th is $1,960.
$2,000 x .02 = $ $2,000-40= $1,960