1 / 61

CHAPTER ELEVEN

CHAPTER ELEVEN. ACCOUNTING FOR SALES AND CASH RECEIPTS. MERCHANDISING BUSINESS. Purchases merchandise from vendors/suppliers and sells that merchandise to customers Revenue is now from Sales. Rather than the performance of services. MERCHANDISING BUSINESSES. Retailer

zelda-page
Télécharger la présentation

CHAPTER ELEVEN

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. CHAPTER ELEVEN ACCOUNTING FOR SALES AND CASH RECEIPTS

  2. MERCHANDISING BUSINESS • Purchases merchandise from vendors/suppliers and sells that merchandise to customers • Revenue is now from Sales. • Rather than the performance of services

  3. MERCHANDISING BUSINESSES • Retailer • Sells to final consumers • Evidenced by: • Cash Register tape • Sales Ticket • One copy given to the customer and the other to the Accounting Department

  4. MERCHANDISING BUSINESSES • Wholesaler • Purchases merchandise from manufacturer • Sells to retailers • Usually “on account” • Sales Invoice generated for each sale • One to customer • One to the Accounting Department • One shipped with merchandise

  5. CREDIT MEMORANDUM • Issued by seller indicating the customer’s Accounts Receivable account has been credited for the amount of a: • Return - Merchandise returned for a refund • Allowance - Customer is granted a price reduction because of defect or other problems with the merchandise. • One copy of memo to the customer • One copy sent to Accounting Department

  6. MERCHANDISE REVENUE ACCOUNTS SALES SALES TAX PAYABLE SALES RETURNS & ALLOWANCES SALES DISCOUNTS

  7. SALES ACCOUNT REVENUE account used to record sales of merchandise. Similar to the Fees account used by a service business SALES DR. CR.  The account is credited for the selling price of merchandise sold.

  8. GENERAL JOURNAL DATE DESCRIPTION DEBIT PR CREDIT Cash 100 00 1 Sales 2 100 00 3 Made cash sale 4 5 Example: Made $100 cash sale 6 7 8 9 10 11

  9. GENERAL JOURNAL DATE DESCRIPTION DEBIT PR CREDIT Cash 100 00 1 Sales 2 100 00 3 Made cash sale 4 5 6 What if this sale had been made on account? 7 8 9 10 11

  10. GENERAL JOURNAL DATE DESCRIPTION DEBIT PR CREDIT Accts. Rec./Customer 100 00 1 2 3 4 5 We would debit the Accounts Receivable account instead of cash. 6 7 8 9 10 11

  11. GENERAL JOURNAL DATE DESCRIPTION DEBIT PR CREDIT Accts. Rec./Customer 100 00 1 2 3 4 5 Customers name is entered after Accounts Receivable in the journal. 6 7 8 9 10 11

  12. GENERAL JOURNAL DATE DESCRIPTION DEBIT PR CREDIT Accts. Rec./Customer 100 00 1 Sales 2 100 00 3 Made credit sale 4 The Sales account is credited because a sale has been made (even though the business has not yet been paid for the merchandise). 5 6 7 8 9 10 11

  13. SALES TAX PAYABLE LIABILITY account used to record the taxes imposed on sales and owed to the taxing authority. SALES TAX PAYABLE DR. CR.  The account is credited for the amount of tax imposed on the sales.

  14. SALES TAX PAYABLE LIABILITY account used to record the taxes imposed on sales and owed to the taxing authority. SALES TAX PAYABLE DR. CR.  The account is debited when the tax is paid to the proper taxing authority.

  15. GENERAL JOURNAL DATE DESCRIPTION DEBIT PR CREDIT 1 2 3 4 Example: A cash sale for $100 plus 5% sales tax. 5 6 7 8 9 10 11

  16. GENERAL JOURNAL DATE DESCRIPTION DEBIT PR CREDIT Cash 105 00 1 2 3 Sales Tax would be $5 ($100 x 5%) Therefore, cash received would be $105. ($100 selling price + $5 tax) 4 5 6 7 8 9 10 11

  17. GENERAL JOURNAL DATE DESCRIPTION DEBIT PR CREDIT Cash 105 00 1 100 00 Sales 2 3 Sales is credited for the selling price, not the amount of cash received. 4 5 6 7 8 9 10 11

  18. GENERAL JOURNAL DATE DESCRIPTION DEBIT PR CREDIT Cash 105 00 1 100 00 Sales 2 3 5 00 Sales Tax Payable 4 Made cash sale $5 sales tax is credited to Sales Tax Payable. 5 6 7 8 9 10 11

  19. SALES RETURNS & ALLOWANCES CONTRA-REVENUE account used to record sales returns and sales allowances. Shown as a deduction from Sales on the Income Statement SALES RETURNS & ALLOWANCES DR. CR.  The account is debited when customer returns merchandise or an allowance is granted.

  20. GENERAL JOURNAL DATE DESCRIPTION DEBIT PR CREDIT 1 2 3 4 Example: Credit customer, Susan Chang, returns printer cartridges (selling price $40 plus $2 sales tax). 5 6 7 8 9 10 11

  21. GENERAL JOURNAL DATE DESCRIPTION DEBIT PR CREDIT Sales Returns &Allowances 40 00 1 2 3 Sales Returns & Allowances is debited for the selling price. 4 5 6 7 8 9 10 11

  22. GENERAL JOURNAL DATE DESCRIPTION DEBIT PR CREDIT Sales Returns &Allowances 40 00 1 2 00 Sales Tax Payable 2 3 Sales Tax Payable is debited for the tax of $2. 4 5 6 7 8 9 10 11

  23. GENERAL JOURNAL DATE DESCRIPTION DEBIT PR CREDIT Sales Returns &Allowances 40 00 1 2 00 Sales Tax Payable 2 3 Accts. Receivable/Chang 42 00 4 Issued credit memo for 5 returned merchandise 6 Accounts Receivable is credited for $42. 7 8 9 10 11

  24. SALES DISCOUNTS CONTRA-REVENUE account used to record discounts given to customers who buy merchandise on account to encourage prompt payment. SALES DISCOUNTS DR. CR.  The account is debited for the amount of the Cash Discount at the time of payment.

  25. CREDIT TERMS 2/10, n/30 2% discount off sales price

  26. CREDIT TERMS 2/10, n/30 If paid within 10 days

  27. CREDIT TERMS 2/10, n/30 Or the total amount is due

  28. CREDIT TERMS 2/10, n/30 In 30 days

  29. CREDIT TERMS 1/10, n/30 1% off if paid in 10 days or Total amount due in 30 days.

  30. CREDIT TERMS 2/eom, n/60 2% off if paid before the end of the month or Total amount due in 60 days.

  31. CREDIT TERMS 3/10 eom, n/60 3% off if paid within 10 days after the end of month or Total amount due in 60 days.

  32. GENERAL JOURNAL DATE DESCRIPTION DEBIT PR CREDIT 1 2 3 Example: Merchandise was sold for $100 with credit terms of 2/10, n/30, and cash is received within the discount period. 4 5 6 7 8 9 10 11

  33. GENERAL JOURNAL DATE DESCRIPTION DEBIT PR CREDIT Cash 98 00 1 2 00 Sales Discounts 2 3 4 5 $100 sale x 2% discount 6 7 8 9 10 11

  34. GENERAL JOURNAL DATE DESCRIPTION DEBIT PR CREDIT Cash 98 00 1 2 00 Sales Discounts 2 3 100 00 Accts. Receivable/Cust. 4 Received cash on account 5 6 7 8 9 10 11

  35. Income Statement Sales $38,500 $200 Less: Sales returns and allowances 340 Sales discounts 140 Sales Returns & Allowances and Sales Discounts are deducted from Sales in the Revenue section of the Income Statement.

  36. Income Statement Sales $38,500 $200 Less: Sales returns and allowances 340 Sales discounts 140 $38,160 Net Sales

  37. POSTING SALES TRANSACTIONS IN THE GENERAL LEDGER • In the ledger account: • Step 1: Enter the date. • Step 2: Enter the amount of the transaction. • Step 3: Update the balance. • Step 4: Enter the journal page number. • In the journal: • Step 5: Enter the ledger account number.

  38. ACCOUNTS RECEIVABLE LEDGER • A separate “subsidiary” ledger • Individual accounts receivable accounts for each customer • Often numbered • Filed either alphabetically or numerically • Accounts Receivable account in the general ledger is the “controlling account.”

  39. POSTING TO THE ACCOUNTS RECEIVABLE LEDGER • In the Accounts Receivable ledger: • Step 1: Enter the date. • Step 2: Enter the amount. • Step 3: Enter the new balance. • Step 4: Enter the journal page number. • In the journal: • Step 5: Enter a slash (/) followed by a check mark () in the PR column.

  40. GENERAL JOURNAL DATE DESCRIPTION PR DEBIT CREDIT Accts. Receivable/Lorenzo 1,596 00 April 4 1 1,520 00 Sales 2 3 76 00 Sales Tax Payable 4 Sale No. 133c 5 Let’s review the posting for this transaction. 6 7 8 9 10 11

  41. GENERAL JOURNAL DATE DESCRIPTION PR DEBIT CREDIT Accts. Rec./Lorenzo 1,596 00 April 4 1 1,520 00 Sales 2 3 76 00 Sales Tax Payable 4 Sale No. 133c 5 A $1,596 debit is posted to the General Ledger Accounts Receivable account. 6 7 8 9 10 11

  42. FOUR-COLUMN ACCOUNT 122 ACCOUNTS RECEIVABLE Account: Account No. BALANCE DATE ITEM PR DR. CR. DR. CR. 20-- 1 Balance 12,000 Apr. J8 4 1,596 13,596 This entry is posted in the same manner as all other general ledger postings.

  43. GENERAL JOURNAL DATE DESCRIPTION DEBIT PR CREDIT Accts. Rec./Lorenzo 1,596 00 April 4 1 122 1,520 00 Sales 2 3 76 00 Sales Tax Payable 4 Sale No. 133c 5 Accts. Receivable account number is entered into the PR column. 6 7 8 9 10 11

  44. GENERAL JOURNAL DATE DESCRIPTION DEBIT PR CREDIT Accts. Rec./Lorenzo 1,596 00 April 4 1 122 1,520 00 Sales 2 3 76 00 Sales Tax Payable 4 Sale No. 133c 5 6 Now we need to post to the individual customer account. 7 8 9 10 11

  45. ACCOUNTS RECEIVABLE LEDGER Enrico Lorenzo Name: Address: 5240 Tousley Court, Indianapolis, IN 46224-5678 BALANCE DATE ITEM PR DEBIT CREDIT 20-- 4 J8 1,596 1,596 Apr. Date is entered, Amount is recorded, Balance is updated, and Journal page number is referenced.

  46. GENERAL JOURNAL DATE DESCRIPTION PR DEBIT CREDIT 1,596 00 Accts. Rec./Lorenzo April 4 1 122 / 1,520 00 Sales 2 3 76 00 Sales Tax Payable 4 Sale No. 133c 5 A slash (/) is entered along with a check mark () which indicates the entry has been posted to the subsidiary ledger. 6 7 8 9 10 11

  47. GENERAL JOURNAL DATE DESCRIPTION PR DEBIT CREDIT 1,596 00 Accts. Rec./Lorenzo April 4 1 122 / 1,520 00 Sales 2 401 3 76 00 Sales Tax Payable 231 4 Sale No. 133c 5 The Sales and Sales Tax Payable entries are posted to their general ledger accounts. 6 7 8 9 10 11

  48. GENERAL JOURNAL DATE DESCRIPTION PR DEBIT CREDIT Sales Returns &Allow. 40 00 May 5 1 2 00 Sales Tax Payable 2 3 42 00 Accts. Rec./S. Chang 4 Returned Merchandise - 5 Credit Memo #72 6 Now let’s look at the posting for a Sales Return entry. 7 8 9 10 11

  49. GENERAL JOURNAL DATE DESCRIPTION PR DEBIT CREDIT Sales Returns &Allow. 40 00 May 5 1 401.1 2 00 Sales Tax Payable 2 3 42 00 Accts. Rec./S. Chang 4 Returned Merchandise - 5 Credit Memo #72 6 Sales Returns and Allowances is posted in the normal manner. Its account number is recorded in the PR column. 7 8 9 10 11

  50. GENERAL JOURNAL DATE DESCRIPTION PR DEBIT CREDIT Sales Returns &Allow. 40 00 May 5 1 401.1 2 00 Sales Tax Payable 2 231 3 42 00 Accts. Rec./S. Chang 4 Returned Merchandise - 5 Credit Memo #72 6 Sales Tax Payable is also posted in the normal manner. Its account number is recorded in the PR column. 7 8 9 10 11

More Related