1. Chapter 19 Recording Sales and Cash Receipts

2. Lets take a look If you would look at the three journals –Sales No Change from what we have done in the past.

3. Recording Sales on Account Using a Sales Journal Sales Journal DateAccount Debited Sales No Post Ref Account Rec. Debit Sales Credit Sales Tax Payable Credit March 2 Sold merchandise on account to Tennis Castle, $1800.00, plus sales tax, $144.00; total, $1944.00. Sales Invoice No. 176

4. Posting from a sales journal to an accounts receivable ledger. Sales Journal DateAccount Debited Sales No Post Ref Account Rec. Debit Sales Credit Sales Tax Payable Credit 2-MarTennis Castle17619019441800144 CustomerTennis Castle Account NO190 DateItemPost RefDebitCredit Balance DebitCredit Mar1Balance 762 Mar2 s71944 2706 General Ledger

5. Posting at the end of the month Sales Journal DateAccount Debited Sales No Post Ref Account Rec. Debit Sales Credit Sales Tax Payable Credit Mar 31Lincoln High School364150904 Mar 31Totals 71145678213324 AccountAccounts Receivable Account NO190 DateItemPost RefDebitCredit Balance DebitCredit Mar30 g3 24059816 Mar31 s971145 130961 (190) AccountSales Account NO4105 DateItemPost RefDebitCredit Balance DebitCredit Feb28 s6 86976 302781 Mar31 s9 67821 370602 (4105) CustomerSales Tax Payable Account NO2140 DateItemPost RefDebitCredit Balance DebitCredit Mar31 cp86792 31 s9 3324 (2140)

6. Section 2 Recording Cash Receipts Using a Cash Receipts Journal

7. Cash Receipts Journal –New Special Amount Columns Sales Tax Payable Debit and Credit Sales Discount –General Journal No Change from what we have done in the past.

8. Cash Receipt Journal Date Account Title Doc No. Post Ref General Acct Rec Credit Sales Credit Sales Tax Payable Sales Discount Debit Cash Debit DebitCreditDebitCredit

9. Using the Cash Receipts Journal with a Sales Discount A cash discount on sales is called a sales discount….. Remember that this is the discount that the store shows on their books, when we give a discount to a customer.

10. How do we determine a sales discount 1.Sales Inv. Amount X Disc Rate = Disc $1800 1% $18.00 2.Sales Disc. X Sales Tax Rate = Sales Tax Reduct $18.00 8% = $1.44 3.Total Inv amount – Sales Disc – Sales Red = Cash Received $1944.00 - $18.00 - $1.44 = $1924.56 March 11. Received cash on account from TennisCastle, $1924.56, covering Sales Invoice No. 176 for $1944 ($1800 plus sales tax, $144), less 1% discount, $18.00, and less sales tax, $1.44. Receipt No. 297

11. Lets look at this another way... Sales $100 Sales Tax $10 + = Sales $100 Sales Tax $10 $110 If we give a discount this is what happens (assuming 10% discount) Sales $100 $10.00 + Sales Tax $10 $1.00 = Sales $90 Sales Tax $9 $99 Assuming Sales Tax is 10%

12. Sales $100 $10.00 + Sales Tax $10 $1.00 = Sales $90 Sales Tax $9 $99 Lets record this transaction in the Journal to see what it looks like 1.When we first sell the item it goes into the sales journal 1.But on the invoice we have our terms Sales Journal DateAccount Debited Sales No Post Ref Account Rec. Debit Sales Credit Sales Tax Payable Credit March 12Name of Some Company 11010010

13. Sales $100 $10.00 + Sales Tax $10 $1.00 = Sales $90 Sales Tax $9 $99 Let Record this transaction in the Journal to see what it looks like 1.When we first sell the item it goes into the sales journal 1.But on the invoice we have our terms 2.10/10, N/30 1.So if they pay within the first 10 days they get a 10% discount 2.They decide to take the option Cash Receipt Journal Date Accou nt Title Doc No. Post Ref General Acct Rec Credit Sales Credit Sales Tax Payable Sales Discount Debit Cash Debit DebitCreditDebitCredit March 10 R543 110 1 1099

14. Please do “On your Own” on page 500

15. Section 3 Recording Transactions for Sales Returns and Allowances

16. Definitions Sales Return – Credit (money) given to the customer for the sales price of returned merchandise, resulting in a decrease in the vendor’s accounts receivable. Sales Allowance – Credit allowed to a customer for part of the sales price of merchandise that is not returned, resulting in a decrease in the vendor’s account receivable. Credit Memorandum is the document that is used when we have a return or allowance. Sales Return and Allowance is a Contra- Account to Sales.

17. Journalizing sales returns and allowances General Journal DateAccount TitleDoc No.Post RefDebitCredit 11-MarSales Return and AllowanceCM41 58.5 Sales Tax Payable 4.68 Accounts Receivable/Parson Co. 63.18 March 11. Granted credit to Parson Company for merchandise returned, $58.50, plus sales tax, $4.68, from S160,; total, $63.18. Credit Memorandum No. 41 Please remember that this is when someone returns a item to us.

18. Correcting Entry March 12. Discovered that a sale on account to York East High School on February 26, S133, was incorrectly charged to the account of York North High School, $412.300. Memorandum No. 40 General Journal DateAccount TitleDoc No.Post RefDebitCredit 12-MarYork East High SchoolM40 412 York North High School 412

19. Recording International Sales Section 4

20. Definitions for International Sales Contract of Sale – A document that details all the terms agreed to by seller and buyer for a sales transaction. Letter of Credit – A letter issued by the bank guaranteeing that a named individual or business will be paid a specified amount provided stated conditions are met.

21. Letter of Credit –Inside the letter of credit these forms must be issued Bill of lading –A receipt signed by the authorized agent of a transportation company for merchandise. Commercial Invoice –A statement prepared prepare by the seller of merchandise addressed to the buyer showing a detailed listing and description of merchandise sold, including prices and terms A draft –A written, signed and dated order from one party ordering another party, usually a bank to pay money to a third party is called a draft

22. Journalizing International Sales Cash Receipt Journal DateAccount Title Doc No. Post Ref General Acct Rec Credit Sales Credit Sales Tax Payable Cash Debit CreditDebitCredit April 1 st, Recorded international cash sale, $25,000. Memorandum 45 Cash Receipt Journal DateAccount TitleDoc No.Post Ref General Acct Rec Credit Sales Credit Sales Tax Payable Cash Debit CreditDebitCredit 1-Apr(check markl)M45 25000 It is very similar to recording Cash and Credit Card Sales when we worked with a Partnership

23. Journalizing more international transactions Time Draft –A draft that is payable at a fixed or determinable future time after it is accepted. –Used a lot when things are being shipped by boat overseas. –We agree to pay you in 60 days to make sure that our shipment has been received.

24. General JournalPage 1 Date Account TitleDoc NoPost RefDebitCredit May10Time Drafts ReceivableTD12 6000 Sales 6000 May 10. Received a 60-day, time draft from Simov Co. for an international sale, $6,000. Time Draft No. 12 This is when the sale first happens. Then when the shipment has been received the customer then pays us with this transaction July 9. Received cash for the value of Time Draft No. 12, $6000. Receipt No. 465. Cash Receipt Journal DateAccount Title Doc No. Post Ref General Acct Rec Credit Sales Credit Sales Tax Payable Credit Cash Debit DebitCredit 9-JulTime Draft ReceivableR465 6000

25. Problems 19-1,2,3,4,5 Computer Problem 19-6