Special Journals: Sales and Cash Receipts Chapter 9 2

account in a sales journal. Learning Objective 1 Journalizing sales on account in a sales journal.

Learning Unit 9-1 (Seller’s View of a Merchandise Company) Gross sales = Amount of units sold × Sales price per unit Amount is credited to the Revenue account. Normal balance is a credit.

Learning Unit 9-1 (Seller’s View of a Merchandise Company) 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 recorded?

Learning Unit 9-1 (Seller’s View of a Merchandise Company) Accounts Affected Category Rules Cash Asset Dr. 1,800 Accounts Receivable Asset Dr. 1,200 Sales Revenue Cr. 3,000 July 18 Cash 1,800 Accounts Receivable 1,200 Sales 3,000 To record sales for July 18

Learning Unit 9-1 (Seller’s View of a Merchandise Company) Sales returns and allowances = Amount allowed for defective merchandise Amount is debited in the journal entry. Normal balance is a debit.

Learning Unit 9-1 (Seller’s View of a Merchandise Company) Accounts Affected Category Rules Sales Returns and Contra- Dr. 10 Allowances revenue Accounts Receivable, Asset Cr. 10 Michelle Reese Accounts Receivable 1,200 10

Learning Unit 9-1 (Seller’s View of a Merchandise Company) What is a sales discount? It is a percent decrease in the amount collected from a credit customer.

Learning Unit 9-1 (Seller’s View of a Merchandise Company) 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.

Learning Unit 9-1 (Seller’s View of a Merchandise Company) Sales Discounts July 24 Cash 39.20 Sales Discount .80 Accounts Receivable, Michelle Reese 40.00

Learning Unit 9-1 (Seller’s View of a Merchandise Company) Sales Tax Payable What is sales tax payable? It is a percent multiplied times the gross amount of the sale collected from customers. The business has a liability to the taxing authority for the amounts collected.

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.

Learning Unit 9-2 (Special Journals) The sales journal records sales of merchandise on account. The cash receipts journal records receiving cash from any source. The purchases journal records buying merchandise or other items on account. The cash payments journal records payments.

Learning Unit 9-2 (Special Journals) A separate record for each credit customer must be set up. Subsidiary Ledger

Learning Unit 9-2 (Special Journals) 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.

Learning Unit 9-2 (Special Journals) Roe Company Mel’s Dept. Store Hal’s Clothing Bevans Company Accounts Receivable Subsidiary Ledger Sales Returns and Allowances Sales Discounts Sales Inventory Accounts Receivable Cash Partial General Ledger

Preparing, journalizing, Learning Objective 4 Preparing, journalizing, recording, and posting a credit memorandum.

Learning Unit 9-3 (The Credit Memorandum) 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.

Learning Unit 9-3 (The Credit Memorandum) Sales Returns and Allowances Sales Returns and Credit Account PR Allowances – Dr. Date Memo No. Credited Accts. Rec. – Cr. 200x April 12 1 Bevans  600.00

Journalizing and posting transactions using a cash Learning Objective 5 Journalizing and posting transactions using a cash receipts journal, as well as recording to the accounts receivable subsidiary ledger.

Learning Unit 9-4 (Cash Receipts Journal) The cash receipts journal records the receipt of cash from any source. The number of columns varies with each business. The cash receipt journal speeds up the posting process.

Learning Unit 9-4 (Cash Receipts Journal) Debit Column Cash Sales Discount Credit Column Accounts Receivable Sales Sundry

End of Chapter 9