CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 10-1 Journalizing Sales on Account Using a Sales Journal

CENTURY 21 ACCOUNTING © Thomson/South-Western Moving on up! In chapter 9 we learned how to journalize transactions for when a business needs to purchase merchandise from vendors and how to pay for those purchases. In chapter 10 we will learn how to journalize transactions for when a business collects revenue for sales made to customers. 2 LESSON 10-1

CENTURY 21 ACCOUNTING © Thomson/South-Western When to charge sales tax In the state of Ohio, sales tax is charged on all merchandise and services that are bought by a customer Exemptions include: Groceries (food items only) carry-out prescription drugs newspapers Churches and public schools are exempt from sales tax charges. 3 LESSON 10-1

CENTURY 21 ACCOUNTING © Thomson/South-Western What do business do with tax collected? Every business must keep record of: Total sales made Total sales tax collected The amount of sales tax collected is a business liability until finally paid to the government. New Account title: Sales Tax Payable 4 LESSON 10-1

CENTURY 21 ACCOUNTING © Thomson/South-Western 5 LESSON 10-1 SALES TAX page 270

CENTURY 21 ACCOUNTING © Thomson/South-Western Types of Sales Sale of merchandise may be made On account (Sales Journal) For cash (Cash Receipts Journal) Revenue must be recorded at the time of sale, regardless of when the payment is received. Today we will be learning how to record sales made on-account. Which is when a customer receives merchandise today, but will pay in cash later. 6 LESSON 10-1

CENTURY 21 ACCOUNTING © Thomson/South-Western 7 LESSON 10-1 SALES OF MERCHANDISE ON ACCOUNT page 271

CENTURY 21 ACCOUNTING © Thomson/South-Western 8 LESSON 10-1 SALES JOURNAL page 272 A sales journal is used ONLY to record sales made ON-ACCOUNT. Not when receiving CASH for a sale. Revenue earned from merchandise sold Tax collected from the sale made Total amount charged to customer for merchandise & tax

CENTURY 21 ACCOUNTING © Thomson/South-Western 9 LESSON 10-1 SALE ON ACCOUNT page 273 November 3. Sold merchandise on account to Village Crafts, $540.00, plus sales tax, $32.40; total, $ Sales Invoice No Write the date. 6. Write the sales tax amount. 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 Revenue earned from merchandise sold Tax collected from the sale made Total amount charged to customer for merchandise & tax

CENTURY 21 ACCOUNTING © Thomson/South-Western 10 LESSON 10-1 TOTALING, PROVING, AND RULING A SALES JOURNAL page 274

CENTURY 21 ACCOUNTING © Thomson/South-Western 10-1 Work-Together - Text p LESSON 10-1