9 - 1 © 2004 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 9e by Slater Special Journals: Sales and Cash Receipts Chapter 9

9 - 2 © 2004 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 9e by Slater Learning Objective 1 Journalizing sales on account in a sales journal.

9 - 3 © 2004 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 9e by Slater Learning Unit 9-1 (Seller’s View of a Merchandise Company) Gross sales = Amount of units sold × Sales price per unit Gross sales = Amount of units sold × Sales price per unit Amount is credited to the Revenue account. Amount is credited to the Revenue account. Normal balance is a credit.

9 - 4 © 2004 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 9e by Slater Learning Unit 9-1 (Seller’s View of a Merchandise Company) Assume that Chou’s Toy Shop had $3,000 in sales. Assume that Chou’s Toy Shop had $3,000 in sales. $1,800 were cash sales and $1,200 were charges. $1,800 were cash sales and $1,200 were charges. A customer received a $10 price reduction for defective merchandise. A customer received a $10 price reduction for defective merchandise. How can these transactions be recorded?

9 - 5 © 2004 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 9e by Slater Learning Unit 9-1 (Seller’s View of a Merchandise Company) Accounts AffectedCategory Rules CashAsset Dr. 1,800 Accounts ReceivableAssetDr. 1,200 SalesRevenueCr. 3,000 Accounts AffectedCategory Rules CashAsset Dr. 1,800 Accounts ReceivableAssetDr. 1,200 SalesRevenueCr. 3,000 July 18 Cash1,800 Accounts Receivable1,200 Sales 3,000 To record sales for July 18 July 18 Cash1,800 Accounts Receivable1,200 Sales 3,000 To record sales for July 18

9 - 6 © 2004 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 9e by Slater Learning Unit 9-1 (Seller’s View of a Merchandise Company) Sales returns and allowances = Amount allowed for defective merchandise Sales returns and allowances = Amount allowed for defective merchandise Amount is debited in the journal entry. Normal balance is a debit.

9 - 7 © 2004 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 9e by Slater Learning Unit 9-1 (Seller’s View of a Merchandise Company) Accounts AffectedCategory Rules Sales Returns andContra- Dr. 10 Allowancesrevenue Accounts Receivable,Asset Cr. 10 Michelle Reese Accounts AffectedCategory Rules Sales Returns andContra- Dr. 10 Allowancesrevenue Accounts Receivable,Asset Cr. 10 Michelle Reese Accounts Receivable 1,20010

9 - 8 © 2004 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 9e by Slater 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. It is a percent decrease in the amount collected from a credit customer.

9 - 9 © 2004 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 9e by Slater 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. 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. Otherwise, the full amount (n = net) is to be paid in 30 days.

© 2004 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 9e by Slater July 24 Cash39.20 Sales Discount.80 Accounts Receivable, Michelle Reese40.00 July 24 Cash39.20 Sales Discount.80 Accounts Receivable, Michelle Reese40.00 Learning Unit 9-1 (Seller’s View of a Merchandise Company)

© 2004 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 9e by Slater Learning Unit 9-1 (Seller’s View of a Merchandise Company) What is sales tax payable? It is a percent multiplied times the gross amount of the sale collected from customers. 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. The business has a liability to the taxing authority for the amounts collected.

© 2004 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 9e by Slater 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.

© 2004 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 9e by Slater The sales journal records sales of merchandise on account. The sales journal records sales of merchandise on account. The cash receipts journal records receiving cash from any source. The cash receipts journal records receiving cash from any source. Learning Unit 9-2 (Special Journals) The purchases journal records buying merchandise or other items on account. The purchases journal records buying merchandise or other items on account. The cash payments journal records payments.

© 2004 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 9e by Slater Learning Unit 9-2 (Special Journals) Subsidiary Ledger A separate record for each credit customer must be set up. A separate record for each credit customer must be set up.

© 2004 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 9e by Slater Learning Unit 9-2 (Special Journals) Recorded sales are posted in total to the Sales account and the Accounts Receivable account. 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. They are also recorded as debits to individual customer accounts.

© 2004 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 9e by Slater Learning Unit 9-2 (Special Journals) Sales Returns and Allowances Sales Returns and Allowances Sales Discounts SalesSales InventoryInventory AccountsReceivableAccountsReceivable CashCash Partial General Ledger Roe Company Mel’s Dept. Store Hal’s Clothing BevansCompanyBevansCompany Accounts Receivable Subsidiary Ledger

© 2004 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 9e by Slater Learning Objective 4 Preparing, journalizing, recording, and posting a credit memorandum.

© 2004 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 9e by Slater Learning Unit 9-3 (The Credit Memorandum) What is a credit memorandum? It shows amounts that were deducted from the balance the customer owes. It shows amounts that were deducted from the balance the customer owes. They are contra-revenue accounts with a normal debit balance. They are contra-revenue accounts with a normal debit balance. These are recorded in the general journal and posted to a subsidiary ledger. These are recorded in the general journal and posted to a subsidiary ledger.

© 2004 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 9e by Slater Learning Unit 9-3 (The Credit Memorandum) Sales Returns and Sales Returns and Credit Account PRAllowances – Dr. Credit Account PRAllowances – Dr. Date Memo No. Credited Accts. Rec. – Cr. 200x April 12 1 Bevans  Sales Returns and Sales Returns and Credit Account PRAllowances – Dr. Credit Account PRAllowances – Dr. Date Memo No. Credited Accts. Rec. – Cr. 200x April 12 1 Bevans 

© 2004 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 9e by Slater Learning Objective 5 Journalizing and posting transactions using a cash receipts journal, as well as recording to the accounts receivable subsidiary ledger.

© 2004 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 9e by Slater Learning Unit 9-4 (Cash Receipts Journal) The cash receipts journal records the receipt of cash from any source. The cash receipts journal records the receipt of cash from any source. The number of columns varies with each business. The number of columns varies with each business. The cash receipt journal speeds up the posting process. The cash receipt journal speeds up the posting process.

© 2004 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 9e by Slater Learning Unit 9-4 (Cash Receipts Journal) Debit Column Debit ColumnCash Sales Discount Debit Column Debit ColumnCash Sales Discount Credit Column Accounts Receivable SalesSundry Credit Column Accounts Receivable SalesSundry

© 2004 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 9e by Slater End of Chapter 9