CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 2-1 Departmental Sales on Account and Sales Returns and Allowances Modified by D. Burns, West Johnston High School

CENTURY 21 ACCOUNTING © Thomson/South-Western DEPARTMENTAL SALES ON ACCOUNT For a business to have complete departmental data, the will record both purchases and sales transactions by department Departmental businesses will record all departmental sales on account in a sales journal. The sales journal contains 1 debit column: Accounts Receivable Debit It contains multiple credit columns: Sales Tax payable One column for sales for each department Modified by D. Burns, West Johnston High School

CENTURY 21 ACCOUNTING © Thomson/South-Western SALES INVOICES Sales invoices are prepared for customers in duplicate The customer receives the original and the duplicate is the source document for journalizing the transaction A sales invoice shows the amount of merchandise sold by the department All departmental sales are recorded at the time of the sale, regardless of when payment is made Modified by D. Burns, West Johnston High School

CENTURY 21 ACCOUNTING © Thomson/South-WesternModified by D. Burns, West Johnston High School June 1. Sold audio equipment on account to Kim Electronics, $280.00, plus sales tax, $23.10; total, $ Sales Invoice No Write the date. 5.Write the sales tax payable amount. 4.Write the total invoice amount. 3.Write the sales invoice number. 2.Write the customer name. 6.Write the sales amount. JOURNALIZING SALES ON ACCOUNT page

CENTURY 21 ACCOUNTING © Thomson/South-WesternModified by D. Burns, West Johnston High School 4.Enter account balance. 3.Enter amount in Debit column. 2.Write sales journal page. 1.Write date. 5.Write customer number in Post. Ref. column of sales journal. POSTING FROM A SALES JOURNAL TO THE ACCOUNTS RECEIVABLE LEDGER page

CENTURY 21 ACCOUNTING © Thomson/South-WesternModified by D. Burns, West Johnston High School 3.Enter debit amount. 2.Write sales journal page. 4.Enter account balance.1.Write date. 5.Write general ledger account number in parentheses. POSTING FROM A SALES JOURNAL TO A GENERAL LEDGER ACCOUNT page

CENTURY 21 ACCOUNTING © Thomson/South-Western SALES RETURNS & ALLOWANCES Modified by D. Burns, West Johnston High School  On occasion a customer will return merchandise to the business  The source document prepared by the vendor showing the amount deducted for returns & allowances is called a credit memorandum  A return of a previous sale will affect the sales tax payable and the sales returns and allowances accounts  Sales returns & allowances are kept in a separate account from the sales account  Sales return & allowances is a contra account to the Sales account  Its normal balance is a debit

CENTURY 21 ACCOUNTING © Thomson/South-WesternModified by D. Burns, West Johnston High School June 5. Granted credit to Kim Electronics for audio equipment returned, $130, plus sales tax, $10.73, from Sales Invoice No. 101; total, $ Credit Memo No. 43. JOURNALIZING SALES RETURNS AND ALLOWANCES page 40 3.Record credit memo number. 4.Write debit amounts. 1.Write date. 2.Enter accounts to be debited. 5.Enter accounts to be credited. 6.Draw diagonal line Write credit amount. 1 7

CENTURY 21 ACCOUNTING © Thomson/South-WesternModified by D. Burns, West Johnston High School POSTING FROM GENERAL JOURNAL page 41 2.Journal page number 1.Date 5.Account numbers 3.Debit amounts 4.Credit amount

CENTURY 21 ACCOUNTING © Thomson/South-WesternModified by D. Burns, West Johnston High School TERM REVIEW credit memorandum page 43