1. Chapter 11 Journalizing Sales and Cash Receipts

2. Customer n A person or business to whom merchandise or services are sold.

3. Sales Tax n A tax on a sale of merchandise or services. –Sales tax rates are usually stated as a percentage of sales.

4. Sales Tax n Every business collecting a sales tax needs accurate records of the amount of tax collected. –Records need to show: Total Sales Total Sales Tax n The amount of sales tax collected is a liability until paid to the state government.

5. Sales Tax Sales Tax Payable Debit Side Decrease Credit Side Normal Balance Increase Formula for calculating sales tax: Price of Goods x Sales Tax Rate = Sales Tax $200 x 6% = $12.00 Price of Goods + Sales Tax = Total Amount Recd $200 + $12.00 = $212.00

6. Journalizing Sales and Cash Receipts for Sales n A sale of merchandise may be for: –Cash –On Account n Regardless of when payment is made, the revenue should be recorded at the time of a sale, not on the date cash is received.

7. Cash Sale n A sale in which cash is received for the total amount of the sale at the time of the transaction.

8. Credit Card Sale n A sale in which a credit card is used for the total amount of the sale at the time of the transaction.

9. Sale on Account n A sale for which cash will be received at a later date. (Accounts Receivable) Accounts Receivable Debit Side Credit Side Normal Balance Increase Decrease

10. Sales Invoice n An invoice used as a source document for recording a sale on account. n Prepared in duplicate - Original given to customer, copy keep as source document. n Also referred to as a sales ticket or a sales slip.

11. Proving and Ruling An Expanded Journal n A journal is proved and ruled whenever a journal page is filled and always at the end of a month. n Five steps to rule a journal: –Rule single line across all amount columns. –Write the date. –Write Carried Forward in the Acct. Title - Place a in Post. Ref. –Write the totals. –Double Rule.

12. Forwarding Totals n Write page number at top. n Write date. n Write Brought Forward in Acct Title; Place in Post. Ref. n Record column totals brought forward from previous page.

13. Formula for Proving Cash at the end of the month: n Cash on hand at the beginning of the month n Plus total cash recd during the month (Cash Debit column total) n Equals Total n Less total cash paid during the month (Cash Credit column total) n Equal Cash on hand at end of month n Verify with checkbook balance on next unused check stub

14. Ruling an Expanded Journal at the end of a month n Rule a single line across all Amt. Columns. n Write the date on next line. n Write the column totals. n Double Rule.