Chapter 11

1. Chapter 11 Merchandise Sales and Accounts Receivable

2. LO1 Learning Objective 1Analyze and record transactions for merchandise sales. Merchandising companies sell products,also called goods. They can be either wholesalers or retailers. Manufacturer Wholesaler Retailer Customer

3. LO1 Merchandising Sales On November 3, Z-Mart sold $5,400 of merchandise on account. We record the sale entry as follows:

4. LO2 Number of Days Discount Is Available Otherwise, Net (or All) Is Due in 30 Days Discount Percent CreditPeriod Learning Objective 2Describe how to compute and record sales discounts. This is what a typical sales discount will look like. 2/10,n/30

5. LO2 Sales Discounts On November 12, Z-Mart sold $1,000 of merchandise on account with termsof 2/10,n/60. We record the sale entry as follows: On January 11, Z-Mart received a check from the customer for $1,000, the full amount of the sale made on November 12. We record the cash receipt as follows:

6. LO2 Sales Discounts Instead of waiting 60 days, if the customer had paid within the 10-day discount period (on or before November 22), we would record the cash receipt as follows:

7. LO3 Learning Objective 3Explain how to record sales returns and allowances. On November 3, Z-Mart sold $2,400 of merchandise on account. On November 6, the customer returned $800 of this merchandise. We record the return as follows: Now assume that the customer agreed to keep the $800 of defective merchandise because Z-Mart offers a $100 price reduction. This is a sales allowance and is recorded as follows:

8. LO3 Recording and PostingMerchandise Sales Z-Mart had the following transactions in early November:

9. LO4 PurchasesJournal Cash ReceiptsJournal For recordingcredit purchases CashDisbursementsJournal For recordingcash receipts For recordingcash payments Sales Journal GeneralJournal For recordingcredit sales For transactionsnot in specialjournals Learning Objective 4Describe the use of special journals and subsidiary ledgers.

10. LO5 Learning Objective 5Journalize and post transactions using a sales journal. Notice only sales on credit are recorded in the Sales Journal.

11. LO6 Learning Objective 6Prepare and prove the accuracy of the accounts receivable subsidiary ledger. After all items are posted, the balance in the Accounts Receivable general ledger must equal the sum of the balances of its customers’ accounts from the subsidiary ledgers.

12. LO6 Posting to General Ledger The sales journal’s account columns are totaled at the end of each period and posted to the appropriate ledgers.

13. LO6 Proving the Ledgers The Accounts Receivable controlling account and the subsidiary ledger are in balance.

14. LO6 Cash Receipts Journal Check mark indicates immediateposting to accounts receivablesubsidiary ledger. Column totals posted

15. LO7 Learning Objective 7Journalize and post transactions using a cash receipts journal. A cash receipts journal is typically used to record all receipts of cash. Journalizing: To record cash received in payment of a customer’s account, the customer’s name is entered in the Account Credited column. Then the amounts debited to both Cash and the Sales Discount (if any) are entered in their respective columns, and the amount credited to the customer’s account is entered in the Accounts Receivable Cr. Column. Posting: Individual amounts in the Accounts Receivable Cr. Column are posted immediately to customer accounts in the subsidiary accounts receivable ledger. To be sure that total debits and credits are equal we often crossfoot column totals before posting them.

16. End of Chapter 11