Recording Departmental Sales and Cash Receipts [PDF]

Recording Departmental Sales and Cash Receipts

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning Dawson_David

Monday, November 2, 2009 1:58:16 PM ET

Departmental Sales on Account and Sales Returns and Allowances

Dawson_David

Monday, November 2, 2009 1:58:16 PM ET

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

  MasterSport records all departmental sales on account in a Sales Journal.   The Sales Journal has one debit column: Accounts Receivable and three credit columns: Sales Tax Payable, Sales Credit for Golf and Tennis.   The Sales Tax Payable Credit column is used to record all sales tax amount that MasterSport collects.   Sales invoice is the source document for journalizing this transaction.

Dawson_David

Monday, November 2, 2009 1:58:16 PM ET

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

LESSON 2-1

June 1. Sold audio equipment on account to Kim Electronics, $280.00, plus sales tax, $23.10; total, $303.10. Sales Invoice No. 101.

1. Write the date. 2. Write the customer name. 3. Write the sales invoice number. 4. Write the total invoice amount. 5. Write the sales tax payable amount. 6. Write the sales amount. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning Dawson_David

Monday, November 2, 2009 1:58:16 PM ET

LESSON 2-1

June 2. Sold video equipment on account to Eastern School District, $500.00. Sales Invoice No. 102.

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning Monday, November 2, 2009 1:58:16 PM ET

Dawson_David

LESSON 2-1

  MasterSport keeps customer accounts in an Accounts Receivable Ledger.   Individual amounts in the Accounts Receivable Debit column of the Sales Journal are posted to the customers accounts.   Sales Journal is abbreviated as a S in the Post. Ref. column.

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning Monday, November 2, 2009 1:58:16 PM ET

Dawson_David

LESSON 2-1

7

page 38

1. Write date. 2. Write sales journal page. 3. Enter amount in Debit column. 4. Enter account balance. 5. Write customer number in Post. Ref. column of sales journal. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning Dawson_David

Monday, November 2, 2009 1:58:16 PM ET

LESSON 2-1

  The Sales Journal is proved and ruled at the end of the month.   Each amount column total is posted to the general ledger account named in the column heading

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning Dawson_David

Monday, November 2, 2009 1:58:16 PM ET

LESSON 2-1

9

page 39

1. Write date. 2. Write sales journal page. 3. Enter debit amount.

4. Enter account balance. 5. Write general ledger account number in parentheses.

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning Dawson_David

Monday, November 2, 2009 1:58:16 PM ET

LESSON 2-1

  A customer may return merchandise for a credit on account or a cash refund.   An allowance differs from a sales return in that grant is granted without the merchandise being returned.   Credit Memorandum The form prepared by the vendor showing the amount deducted for returns or allowances.

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning Dawson_David

Monday, November 2, 2009 1:58:16 PM ET

  MasterSport records all sales returns and allowances in a Sales Returns and Allowances Journal.   Sales Tax must be decreased for the sale return.   Source document is a Credit Memorandum.

CENTURY 212, 2009 ACCOUNTING © 2009 South-Western, Cengage Learning Monday, November 1:58:16 PM ET

Dawson_David

12

page 40

June 5. Granted credit to Kim Electronics for audio equipment returned, $130, plus sales tax, $10.73, from Sales Invoice No. 101; total, $140.73. Credit Memo No. 43.

1. 2. 3. 4.

Write date. Enter accounts to be debited. Record credit memo number. Write debit amounts.

5. Enter accounts to be credited. 6. Draw diagonal line. 7. Write credit amount.

Monday, November 2, 2009 1:58:16 PM ET CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

Dawson_David

LESSON 2-1

1. Date 2. Journal page number 3. Debit amounts 4. Credit amount 5. Account numbers

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

Dawson_David

Monday, November 2, 2009 1:58:16 PM ET

LESSON 2-1

  P. 47 Audit Your Understanding #’s 1-2   P. 47 Work Together #’s 3-4   P. 47 On Your Own #’s 5-7   P. 56 Application Problem 2-1

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

Dawson_David

Monday, November 2, 2009 1:58:16 PM ET

Journalizing and Posting Cash Receipts

Monday, November 2, 2009 1:58:16 PM ET CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

Dawson_David

16

  MasterSport keeps a record of all cash receipts.   The sources of most cash receipts are: 1.  Cash Received from Customer payments on Account. 2.  Cash and Credit Cards Sales.

  Cash Discount A deduction that a vendor allows on the invoice amount to a encourage prompt payment.   Sales Discount A cash discount on sales.   2/10, n/30 Dawson_David

Monday, November 2, 2009 1:58:16 PM ET

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

LESSON 2-2

17

  When a sale is made on account, the amount debited to Account Receivable reflects the total amount of the sale.   Sales is credited for the selling price.   Sales Tax Payable is credited for the sales tax liability on the total sales invoice.   When payment is received with the discount period, the sales tax liability is reduced by the amount of the sales tax on the sales discount.

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning Dawson_David

Monday, November 2, 2009 1:58:16 PM ET

LESSON 2-2

18

  Three amounts must be calculated when cash is received on account within a discount period: 1.  Sales Discount 2.  Reduction in Sales Tax Payable 3.  Cash Received

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning Dawson_David

Monday, November 2, 2009 1:58:16 PM ET

LESSON 2-2

19

  MasterSport records all cash receipts in a cash receipts journal.

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning Dawson_David

Monday, November 2, 2009 1:58:16 PM ET

LESSON 2-2

20

  MasterSport records all cash receipts in a cash receipts journal.   The journal has five credit columns: 1.  General Credit 2.  Accounts Receivable Credit 3.  Sales Tax Payable Credit 4.  Sales Credit: Golf 5.  Sales Credit: Tennis   The journal has five debit columns: 1.  General Debit 2.  Sales Tax Payable Debit 3.  Sales Discount Debit: Golf 4.  Sales Discount Debit: Tennis 5.  Cash Debit CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning Dawson_David

Monday, November 2, 2009 1:58:16 PM ET

LESSON 2-2

June 1. Received cash on account from Olympic Productions, $1,749.30, covering Sales Invoice No. 96 for audio equipment for $1,785.00 ($1,700.00 plus sales tax, $85.00), less 2% discount, and less sales tax. Receipt No. 89. Item Amount

+

Invoice 5% Sales Tax

$1,700.00

+

$85.00

=

Total Invoice Amount

=

$1,785.00

Terms: 2/10, n/30, Invoice paid within 10 days: Sales Discount Items Amount

×

Discount Rate

=

Sales Discount

$1,700.00

×

2%

=

$34.00

Sales Discount Amount $34.00

Sales Tax Liability Reduction × Sales Tax Rate = ×

5%

=

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning Dawson_David

Monday, November 2, 2009 1:58:16 PM ET

Sales Tax Reduction $1.70

Cash Received Total Invoice Amount

$1,785.00

– 2% Sales Discount

$34.00

– Sales Tax Reduction =

Cash Received

$1.70 $1,749.30

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning Monday, November 2, 2009 1:58:16 PM ET

Dawson_David

1. 2. 3. 4.

Write the date. Write the customer name. Record the receipt number. Write the Accounts Receivable credit amount.

5. Write the Sales Tax Payable debit amount. 6. Write the Sales Discount debit amount. 7. Write the Cash debit amount.

June 1, 2009 Olympic Productions R89 1,785.00 1.70 34.00 1,749.30

June 1. Received cash on account from Olympic Productions, $1,749.30, covering Sales Invoice No. 96 for audio equipment for $1,785.00 ($1,700.00 plus sales tax, $85.00), less 2% discount, and less sales tax. Receipt No. 89.

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

Dawson_David

Monday, November 2, 2009 1:58:16 PM ET

LESSON 2-2

24

  Sales discounts are calculated on the amount owed at the time the invoice is paid.   When a customer takes a discount after being granted a return or an allowance, the amount of the return or allowance must be deducted from the amount of the original sale before the discount can be calculated.

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning Monday, November 2, 2009 1:58:16 PM ET

Dawson_David

LESSON 2-2

25

  To calculate the amount of cash received: 1.  Find the sales discount amount 2.  Calculate the reduction in sales tax liability 3.  Determine the amount of cash to be received

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning Dawson_David

Monday, November 2, 2009 1:58:16 PM ET

LESSON 2-2

June 8. Received cash on account from Kim Electronics, $159.12, covering Sales Invoice No. 101 for $303.10 ($280.00 plus sales tax 8.25%), less Credit Memorandum No. 43 for $140.73 ($130.00 plus sales tax, $10.73), less 2% discount, and less sales tax. Receipt No. 92. Amount of Sale Item

Sales Tax

Total Receivable

Original sale Invoice Amount

280.00

23.10

303.10

Less (-)

Sales Return

130.00

10.73

140.73

Equals (=)

Sales Invoice Amount After Return

150.00

12.37

162.37

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning Dawson_David

Monday, November 2, 2009 1:58:16 PM ET

June 8. Received cash on account from Kim Electronics, $159.12, covering Sales Invoice No. 101 for $303.10 ($280.00 plus sales tax 8.25%), less Credit Memorandum No. 43 for $140.73 ($130.00 plus sales tax, $10.73), less 2% discount, and less sales tax. Receipt No. 92. Invoice Item Amount + 8.25% Sales Tax = Total Invoice Amount $150.00

+

$12.37

=

$162.37

Terms: 2/10, n/30, Invoice paid within 10 days: Sales Discount Items Amount

×

Discount Rate

=

Sales Discount

$150.00

×

2%

=

$3.00

Sales Discount Amount $3.00

Sales Tax Liability Reduction × Sales Tax Rate = ×

8.25%

=

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning Monday, November 2, 2009 1:58:16 PM ET

Dawson_David

Sales Tax Reduction $.25

Cash Received Total Invoice Amount

$162.37

– 2% Sales Discount

$3.00

– Sales Tax Reduction =

Cash Received

$.25 $159.12

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

Dawson_David

Monday, November 2, 2009 1:58:16 PM ET

29

page 46

1. 2. 3. 4. 5. 6. 7.

Write date. Write the customer name. Record receipt number. Write the account receivable credit amount. Write the Sales Tax Payable debit amount. Write the Sales Discount debit amount. Write the Cash debit amount.

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

Dawson_David

Monday, November 2, 2009 1:58:16 PM ET

June 8, 2009 Kim Electronics R92 162.37 .25 3.00 159.12

LESSON 2-2

  Both cash and credit card sales are entered into a cash register.   The cash register prints a receipt for the customer and accumulates data about total sales.   At the end of the week the cash register prints a summary of sales for the week this is called a cash register tape.   The cash register tape serves as the source document.

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

Dawson_David

Monday, November 2, 2009 1:58:16 PM ET

31

page 47

June 11. Recorded cash and credit card sales, audio equipment, $4,370.00; video equipment, $6,280.00; plus sales tax, $878.63; total $11,528.63. Terminal Summary No. 53.

1. 2. 3. 4.

Date Check mark in Account Title column Cash register tape number Check mark in Post. Ref. column

5. Sales tax payable credit amount 6. Sales credit amounts 7. Cash debit amount

CENTURY 212, 2009 ACCOUNTING © 2009 South-Western, Cengage Learning Monday, November 1:58:16 PM ET

Dawson_David

LESSON 2-2

  At the end of each month the Cash Receipts Journal is proved and ruled.   General Debit and Credit total are posted to the General Ledger.   Totals of the special amount columns are posted to their respective accounts in the General Ledger.

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning Dawson_David

Monday, November 2, 2009 1:58:16 PM ET

33

page 48

1. Individual amounts are posted to the accounts receivable ledger. 2. Column totals are posted to the account named in the column heading. CENTURY 212, 2009 ACCOUNTING © 2009 South-Western, Cengage Learning Monday, November 1:58:16 PM ET

Dawson_David

LESSON 2-2

  Transactions affecting vendor and customer accounts are posted often so the balances of the subsidiary accounts are kept up to date.   Posting to General Ledger accounts may be done less frequently than posting to Subsidiary Ledgers because GL are only used for financial statements.

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning Dawson_David

Monday, November 2, 2009 1:58:16 PM ET

Recommended Order 1.  Sales Journal 2.  Sales Returns and Allowances Journal 3.  Purchase Journal 4.  Purchases Returns and Allowances Journal 5.  General Journal 6.  Cash Receipts Journal 7.  Cash Payment Journal

CENTURY 212, 2009 ACCOUNTING © 2009 South-Western, Cengage Learning Monday, November 1:58:16 PM ET

Dawson_David

  p. 54 Audit Your Understanding #’s 1-2   p. 54 Work Together #’s 3-4   p. 54 On Your Own #’s 5-7   p. 56 2-2 Application Problem   p. 58 2-3 Mastery Problem

Monday, November 2, 2009 1:58:16 PM ET CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

Dawson_David