1. Chapter 11 - Introduction n Objectives –Define accounting terms related to sales and cash receipts for a merchandising business. –Identify accounting concepts and practices related to sales and cash receipts for a merchandising business. –Journalize sales on account using a sales journal. –Journalize cash receipts using a cash receipts journal.

2. SALES TAX – Omni collects 6% Lesson 11-1, page 252 Most states and some cities require that sales tax be collected from customers for each sale made…sales tax Businesses must file reports with the proper government unit and pay the amount of sales tax that was collected The amount of sales tax collected is a liability until it is paid to the government…Sales Tax Payable Credit Normal Balance  Sales Tax Payable

3. SALES OF MERCHANDISE ON ACCOUNT Lesson 11-1, page 254 (GAAP) – Realization of Revenue – applied when revenue is recorded at the time goods or services are sold Regardless of when payment is made, the revenue should be recorded at the time of a sale, not on the date cash is received Sale for which cash will be received later = Sale on account aka…charge sale

4. ACCOUNTS RECEIVABLE LEDGER AND GENERAL LEDGER CONTROLLING ACCOUNT Lesson 12-3, page 283

5. SALES JOURNAL Lesson 11-1, page 255 -Used to record only sales of merchandise on account -One line for each entry The TOTAL – what the customer owes altogether The value of the goods that were sold The tax collected

6. SALES INVOICE (aka sales ticket, sales slip) -the form describing the goods or services sold, the quantity, and the price -Seller calls it a sales invoice -Customer calls it a purchase invoice 3 copies prepared: 1 - to customer 2 - Omni’s shipping department 3 - Source document Our number Lesson 11-1, page 255

7. SALES ON ACCOUNT November 3. Sold merchandise on account to Children’s Paradise, $816.00, plus sales tax, $48.96; total, $864.96. Sales Invoice No. 76. Lesson 11-1, page 257 Accounts Affected Accounts Receivable Sales Sales Tax Payable Entered Debit side Credit side Change Increased Classification Asset Revenue Liability normal balance 816.00 normal balance 864.96  SalesAccounts Receivable Sales Tax Payable normal balance 48.96  + - - +

8. SALES ON ACCOUNT Lesson 11-1, page 256 4.Write the total amount owed. 4 3.Write the sales invoice number. 3 2.Write the customer name. 2 1. Write the date. 1 5.Write the sales amount. 5 6.Write the sales tax amount. 6 normal balance 816.00 normal balance 864.96  SalesAccounts Receivable Sales Tax Payable normal balance 48.96 

9. TOTALING, PROVING, AND RULING A SALES JOURNAL Lesson 11-1, page 257 PROOF: 11066.40 = 10440 + 626.40 Debit = Credits

10. Work Together 11-1 (p.258 wb223) & On Your Own 11-1 (p.258 wb224) WT OYO

11. Sales of Merchandise for Cash n Omni sells most of its merchandise for cash. –A sale in which cash is received for the total amount of the sale at the time of the transaction is called a cash sale. n Omni also sells merchandise to customers who have credit cards. –A sale in which a credit card is used for the total amount of the sale at the time of the transaction is called a credit card sale. n Click the link to view the steps for processing credit card transactions: n http://www.creditcards.com/credit-card-news/how- a-credit-card-is-processed-1275.php http://www.creditcards.com/credit-card-news/how- a-credit-card-is-processed-1275.php

12. CASH RECEIPTS JOURNAL Lesson 11-2, page 259 -journal used for any and all cash receipts always Did we get the cash for any of these reasons? If not, …

13. CASH AND CREDIT CARD SALES November 4. Recorded cash and credit card sales, $5,460.00, plus sales tax, $327.60; total, $5,787.60. Cash Register Tape No 4. Lesson 11-2, page 260 Accounts Affected Cash Sales Sales Tax Payable Entered Debit side Credit side Change Increased Classification Asset Revenue Liability normal balance 5,460.60 normal balance 5,787.60  SalesCash Sales Tax Payable normal balance 327.60 

14. CASH AND CREDIT CARD SALES – the check mark one 2.Place a check mark in the Account Title column to show that no account title needs to be written. 23 3.Write the cash register tape number. 1 1. Write the date. 4 4.Place a check mark in the Post. Ref. column to show that amounts on this line are not to be posted individually. 5 5.Write the sales amount. 6.Write the sales tax amount. 6 7.Write the cash amount. 7 Lesson 11-2, page 260

15. CASH RECEIPTS ON ACCOUNT 3 3.Write the receipt number. 1 1. Write the date. 4 4.Write the credit amount. 2 2.Write the customer’s name. 5 5.Write the debit amount. Lesson 11-2, page 261

16. Totaling and Ruling a Cash Receipts Journal 30 Totals 9 5 4 0 00 274 8 0 00 1 6 4 8 80 38 6 6 8 80 Total each column – draw a single line above and a double line below

17. PROVING A CASH RECEIPTS JOURNAL Lesson 11-2, page 262 “Proving cash” means that you check to make sure that the cash balance is equal to the checkbook balance…the books and the bank agree **always at the end of the month Cash on hand at the beginning of the month3,500 (Balance in Cash Account) +Total Cash received during the month2,000 (Cash Debit column of Cash Receipts) 5,500 -Cash paid during the month1,000 (Cash Credit column of Cash Payments) = What you should have in the bank4,500

18. Work Together 11-2 (p.264 wb225) & On Your Own (p.264 wb226) Otherwise, you will likely extend errors Before drawing double lines, prove the journal WT