1. Learning Objectives © 2015 Cengage Learning. All Rights Reserved. LO4 Explain the impact of sales discounts on the collection of accounts receivable. LO5 Journalize and post departmental cash receipts using a cash receipts journal. LESSON2-2 Journalizing and Posting Cash Receipts

2. © 2015 Cengage Learning. All Rights Reserved. Cash Receipts on Account ●To encourage early payment, a business may grant a deduction on the invoice amount. ●A deduction that a vendor allows on the invoice amount to encourage prompt payment is known as a cash discount. ●A cash discount on a sale taken by the customer is called a sales discount. SLIDE 2 Lesson 2-2 © 2015 Cengage Learning. All Rights Reserved. LO4

3. © 2015 Cengage Learning. All Rights Reserved. Sales Discount SLIDE 3 If a company sells on account using 2/10, n/30 terms, the 2/10 means that a 2% sales discount may be deducted if sales on account are paid within 10 days of the invoice date. All sales on account must be paid within 30 days of the invoice date, or n/30. Lesson 2-2 © 2015 Cengage Learning. All Rights Reserved. LO4

4. © 2015 Cengage Learning. All Rights Reserved. Journalizing a Cash Receipt with a Sales Discount SLIDE 4 LO5 Lesson 2-2 August 1. Received cash on account from Wilson Properties, $1,454.32, covering Sales Invoice No. 812 for outdoor furniture for $1,484.00 ($1,400.00 plus sales tax, $84.00), less 2% discount, $29.68. Receipt No. 842. Receipt Number 3 3 Invoice amount 4 4 Date 1 1 Customer 2 2 © 2015 Cengage Learning. All Rights Reserved. Sales Discount 5 5 Cash Received 6 6

5. © 2015 Cengage Learning. All Rights Reserved. Journalizing Cash and Credit Card Sales SLIDE 5 LO5 Lesson 2-2 When a company accepts cash or credit cards from its customers, they are recorded together in the cash receipts journal. A specialized computer used to collect, store, and report all the information about a sales transaction is called a point-of-sale (POS) terminal. The report that summarizes the cash and credit card sales of a point-of-sale terminal is called a terminal summary. © 2015 Cengage Learning. All Rights Reserved.

6. Journalizing and Posting a Cash Receipt with a Sales Discount SLIDE 6 LO5 Lesson 2-2 August 5. Received cash on account from Taylor Apartments, $2,247.38, covering Sales Invoice No. 816 for $2,605.94 ($2,458.43 plus sales tax of 6.00%, $147.51), less Credit Memorandum No. 30 for $312.70 ($295.00 plus sales tax, $17.70), less 2% discount, $45.86. Receipt No. 844. © 2015 Cengage Learning. All Rights Reserved. To calculate the amount of cash received, (1) find the sales discount amount and (2) determine the amount of cash to be received.

7. © 2015 Cengage Learning. All Rights Reserved. Posting from a Cash Receipts Journal SLIDE 7 LO5 Lesson 2-2 © 2015 Cengage Learning. All Rights Reserved. Date Journal Page Number Column Total Account Number Account Balance

8. © 2015 Cengage Learning. All Rights Reserved. Lesson 2-2 Audit Your Understanding 1. Why does a business offer cash discounts? SLIDE 8 ANSWER To encourage early payment. Lesson 2-2 © 2015 Cengage Learning. All Rights Reserved.

9. Lesson 2-2 Audit Your Understanding 2.What does 2/10, n/30 mean? SLIDE 9 ANSWER A 2% sales discount may be deducted if sales on account are paid within 10 days of the invoice date. All sales on account must be paid within 30 days of the invoice date. Lesson 2-2 © 2015 Cengage Learning. All Rights Reserved.

10. Lesson 2-2 Audit Your Understanding 3.What impact does a sales discount have on sales? SLIDE 10 ANSWER None. A sales discount only reduces the amount due from the customer. Lesson 2-2 © 2015 Cengage Learning. All Rights Reserved.

11. Lesson 2-2 Audit Your Understanding 4.Why are credit card sales and cash sales recorded together in the sales journal? SLIDE 11 ANSWER Both cash sales and credit card sales result in an immediate increase in the bank account balance. Lesson 2-2 © 2015 Cengage Learning. All Rights Reserved.

12. Lesson 2-2 Audit Your Understanding 5.How and when are entries in the Accounts Receivable Credit column posted? SLIDE 12 ANSWER Individual amounts in the Accounts Receivable Credit column are posted in individual customer accounts on the same date that the transaction is recorded in the cash receipts journal. This procedure keeps the customer accounts up to date. The total of the Accounts Receivable column is posted to the controlling account in the general ledger at the end of the period. Lesson 2-2 © 2015 Cengage Learning. All Rights Reserved.