Recording sales and cash receipts
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Recording Sales and Cash Receipts . Advanced Accounting Audrey Marshall, Director. Chapter Overview. Recording Sales on Account Using a Sales Journal Recording Cash Receipts Using a Cash Receipts Journal Recording Transactions Using a General Journal Recording International Sales.

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Recording sales and cash receipts

Recording Sales and Cash Receipts

Advanced Accounting

Audrey Marshall, Director


Chapter overview

Chapter Overview

  • Recording Sales on Account Using a Sales Journal

  • Recording Cash Receipts Using a Cash Receipts Journal

  • Recording Transactions Using a General Journal

  • Recording International Sales


Special journals

Special Journals

  • Use Special Journals:

    • When a business has a large number of transactions

    • Need for efficiency of operation

    • Need Accuracy and Timeliness


Summary of special journals

Businesses with a small number of daily transactions can record all entries in one journal.

Summary of Special Journals

General

Journal

Purchases

Journal

Sales

Journal

Purchaseson Account

Sales on Account

CashPayments

Journal

Cash Receipts

Journal

Paid with Cash

Received Cash


Journalizing sales on account

Journalizing Sales on Account

  • Accounts Receivable – used to record sales to customers on account

  • Sales Journal (abbreviate with an “S”)

    • Used to record only sales on account

  • Invoice-a form prepared in duplicate to document a sale on account.

    • Original is provided to customer

    • Copy is kept by the business as a source document to journalize the sale on account transaction.

  • Sales Tax-amount owed to the government

    • Record sales tax as a liability

Realization of Revenue: Recording revenue when merchandise is sold.

Winning Edge, Inc.


Calculating cash receipts on account with sales discoun t

Calculating Cash Receipts on Account with Sales Discount

Sales Invoice Amount x Sales Discount Rate = Sales Discount

Sales Invoice Amount x Sales Tax Rate = Sales Tax Deduction

Total Invoice Amount - Sales Discount - Sales Tax Reduction = Cash Received


Recording cash receipts using a cash receipts journal

Recording Cash Receipts Using a Cash Receipts Journal

  • Journalizing Cash Receipts on Account with Sales Discounts-pg 497

  • Posting from a Cash Receipts Journal to an A/R Leger-pg 498

  • Posting Totals of the Special Amount Columns of a Cash Receipts Journal to a General Ledger-pg 499


Recording transactions using a general journal

Recording Transactions Using a General Journal

  • Transactions Affecting A/R Accounts should be listed in the General Journal when:

    • Journalizing Sales Returns and Allowances

    • Journalizing Correcting Entries Affecting Customer Accounts


Credit memorandums for sales returns and allowances

Credit Memorandums for Sales Returns and Allowances

  • Sales Return –credit allowed a customer for the sales price of returned merchandise, resulting in a decrease in the vendor’s a counts receivable

  • Sales Allowance -Credit allowed a customer for part of the sales price of merchandise that is not returned resulting in a decrease in the vendor’s accounts receivable.

  • Credit Memorandum -a form prepared by the vendor showing the amount deducted for returns and allowances


Summary of posting

Summary of Posting

  • Posting from a General Journal

  • Preparing a Schedule of Accounts Receivable

  • Order of Posting from Special Journals

    • Sales Journal

    • Purchases Journal

    • General Journal

    • Cash Receipts Journal

    • Cash Payments Journal


Recording international sales

Recording International Sales

  • Exports-goods or services shipped out of a seller’s home country to a foreign country.

  • Imports-goods or services brought from a foreign country and brought into a buyer’s home country.


Processing an international sale

Processing an International Sale

  • 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 a bank guaranteeing that a named individual or business will be paid a specified amount provided stated conditions are met.

  • Bill of lading-a receipt signed the authorized agent of a transportation company for merchandise received that also serves as a contract for the deliver of the merchandise

  • Commercial invoice-astatement prepared by the seller of merchandise addressed to the buyer showing a detailed listing and description of merchandise sold.

  • Sight draft-a draft payable on site when the holder presents it for payment.

  • Time draft-a draft that is payable at a fixed or determinable future time after it is accepted.

  • Trade acceptance-aform signed by a buyer at the time of a sale of merchandise in which the buyer promises to pay the seller a specified sum of money usually at a stated time in the future.


Journalizing international sales and time drafts

Journalizing International Sales and Time Drafts

  • Journalizing International Sales-pg 508

  • Journalizing Time Drafts –pg 509


Summary

Summary

  • Sales on account are entered in the Sales Journal and Cash Receipts in the Cash Receipts Journal

  • Two kinds of Cash Receipts are entered in the cash receipts journal

    • Cash receipts on account, with and without sales discounts

    • Cash receipts for other transactions that do not affect Accounts Receivable.


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