Embed Size (px)
DESCRIPTION
Chapter 11. Merchandise Sales and Accounts Receivable. LO1. Learning Objective 1 Analyze and record transactions for merchandise sales. Merchandising companies sell products , also called goods. They can be either wholesalers or retailers. Manufacturer. Wholesaler. Retailer. - PowerPoint PPT Presentation
Citation preview
Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin
Chapter 11
Merchandise
Sales and Accounts
Receivable
11-11-22
Manufacturer Wholesaler Retailer Customer
Learning Objective 1Analyze and record transactions for merchandise sales.
Merchandising companies sell Merchandising companies sell productsproducts,, also called also called goods. They can be either wholesalers or retailers.goods. They can be either wholesalers or retailers.
Merchandising companies sell Merchandising companies sell productsproducts,, also called also called goods. They can be either wholesalers or retailers.goods. They can be either wholesalers or retailers.
Sales Revenue– Cost of Goods SoldGross Profit– Selling and Administrative ExpensesIncome
Sales Revenue– Cost of Goods SoldGross Profit– Selling and Administrative ExpensesIncome
LO1
11-11-33
Merchandising Sales
On November 3, Z-Mart sold $5,400 On November 3, Z-Mart sold $5,400 of merchandise on account.of merchandise on account.
We record the sale entry as follows:We record the sale entry as follows:
On November 3, Z-Mart sold $5,400 On November 3, Z-Mart sold $5,400 of merchandise on account.of merchandise on account.
We record the sale entry as follows:We record the sale entry as follows:
LO1
11-11-44
2/10,n/302/10,n/30Discount Percent
Discount Percent
Number of Days
Discount Is Available
Number of Days
Discount Is Available
Otherwise, Net (or All) Is Due in 30
Days
Otherwise, Net (or All) Is Due in 30
Days
CreditPeriod
CreditPeriod
Learning Objective 2Describe how to compute and record sales discounts.
This is what a typical sales discount will look like.
LO2
11-11-55
Nov. 12 Accounts Receivable 1,000 Sales 1,000
Sales of merchandise on credit
Sales DiscountsOn November 12, Z-Mart On November 12, Z-Mart
sold $1,000 sold $1,000 of merchandise on account of merchandise on account
with termswith termsof 2/10,n/60.of 2/10,n/60.
We record the sale entry We record the sale entry as follows:as follows:
On November 12, Z-Mart On November 12, Z-Mart sold $1,000 sold $1,000
of merchandise on account of merchandise on account with termswith terms
of 2/10,n/60.of 2/10,n/60.
We record the sale entry We record the sale entry as follows:as follows:
On January 11, Z-Mart On January 11, Z-Mart received a check from the received a check from the
customer for $1,000, the full customer for $1,000, the full amount of the sale made on amount of the sale made on
November 12.November 12.
We record the cash receipt We record the cash receipt as follows:as follows:
On January 11, Z-Mart On January 11, Z-Mart received a check from the received a check from the
customer for $1,000, the full customer for $1,000, the full amount of the sale made on amount of the sale made on
November 12.November 12.
We record the cash receipt We record the cash receipt as follows:as follows:
Jan. 11 Cash 1,000 Accounts Receivable 1,000
Received payment in full for Nov. 12 sale
LO2
11-11-66
Nov. 22 Cash 980 Sales Discount 20
Accounts Receivable 1,000 Received payment less discount for Nov. 12 sale
Instead of waiting 60 days, if the customer Instead of waiting 60 days, if the customer had paid within the 10-day discount period had paid within the 10-day discount period
(on or before November 22), we would record (on or before November 22), we would record the cash receipt as follows:the cash receipt as follows:
Instead of waiting 60 days, if the customer Instead of waiting 60 days, if the customer had paid within the 10-day discount period had paid within the 10-day discount period
(on or before November 22), we would record (on or before November 22), we would record the cash receipt as follows:the cash receipt as follows:
Sales DiscountsLO2
11-11-77
Learning Objective 3Explain how to record sales returns and allowances.
On November 3, Z-Mart sold On November 3, Z-Mart sold $2,400 $2,400
of merchandise on account. of merchandise on account. On November 6, the customer On November 6, the customer
returned $800 of this returned $800 of this merchandise.merchandise.
We record the return as We record the return as follows:follows:
On November 3, Z-Mart sold On November 3, Z-Mart sold $2,400 $2,400
of merchandise on account. of merchandise on account. On November 6, the customer On November 6, the customer
returned $800 of this returned $800 of this merchandise.merchandise.
We record the return as We record the return as follows:follows:
Nov. 6 Sales Returns and Allowances 800 Accounts Receivable 800
Customer returned merchandise
Now assume that the Now assume that the customer agreed to keep the customer agreed to keep the
$800 of defective merchandise $800 of defective merchandise because Z-Mart offers a $100 because Z-Mart offers a $100
price reduction.price reduction.
This is a sales allowance and This is a sales allowance and is recorded as follows:is recorded as follows:
Now assume that the Now assume that the customer agreed to keep the customer agreed to keep the
$800 of defective merchandise $800 of defective merchandise because Z-Mart offers a $100 because Z-Mart offers a $100
price reduction.price reduction.
This is a sales allowance and This is a sales allowance and is recorded as follows:is recorded as follows:
Nov. 6 Sales Returns and Allowances 100 Accounts Receivable 100
Customer returned merchandise
LO3
11-11-88
Recording and PostingMerchandise Sales
Nov. 3 Sold merchandise on credit to Bradford Inc.: Sales Invoice No. 145 for $2,400 plus $144 sales tax
5 Sold merchandise on credit to Smith Inc.:Sales Invoice No. 146 for $1,050 plus $63 sales tax
8 Sold merchandise on credit to Cluff Inc.: Sales Invoice No. 147 for $250 plus $15 sales tax
11 Sold merchandise on credit to Dobson Inc.: Sales Invoice No. 148 for $550 plus $33 sales tax
Nov. 3 Sold merchandise on credit to Bradford Inc.: Sales Invoice No. 145 for $2,400 plus $144 sales tax
5 Sold merchandise on credit to Smith Inc.:Sales Invoice No. 146 for $1,050 plus $63 sales tax
8 Sold merchandise on credit to Cluff Inc.: Sales Invoice No. 147 for $250 plus $15 sales tax
11 Sold merchandise on credit to Dobson Inc.: Sales Invoice No. 148 for $550 plus $33 sales tax
Z-Mart had the following transactions in early November:
Z-Mart had the following transactions in early November:
Nov. 3 Accounts Receivable 2,544 Sales Tax Payable 144 Sales 2,400
Nov. 5 Accounts Receivable 1,113 Sales Tax Payable 63 Sales 1,050
Nov. 8 Accounts Receivable 265 Sales Tax Payable 15 Sales 250
Nov. 11 Accounts Receivable 583 Sales Tax Payable 33 Sales 550
LO3
11-11-99
Learning Objective 4Describe the use of special journals and subsidiary ledgers.
GeneralGeneralJournalJournalGeneralGeneralJournalJournal
For transactionsFor transactionsnot in specialnot in special
journalsjournals
For transactionsFor transactionsnot in specialnot in special
journalsjournals
CashCashDisbursementsDisbursements
JournalJournal
CashCashDisbursementsDisbursements
JournalJournal
For recordingFor recordingcash paymentscash paymentsFor recordingFor recording
cash paymentscash payments
PurchasesPurchasesJournalJournal
PurchasesPurchasesJournalJournal
For recordingFor recordingcredit purchasescredit purchases
For recordingFor recordingcredit purchasescredit purchases
Cash ReceiptsCash ReceiptsJournalJournal
Cash ReceiptsCash ReceiptsJournalJournal
For recordingFor recordingcash receiptscash receiptsFor recordingFor recordingcash receiptscash receipts
Sales JournalSales JournalSales JournalSales Journal
For recordingFor recordingcredit salescredit sales
For recordingFor recordingcredit salescredit sales
LO4
11-11-1010
Page 3
Date Account DebitedInvoice Number PR
Accounts Receivable
Debit
Sales Tax Payable Credit
Sales Credit
Nov 3 Bradford Inc. 145 2,544 144 2,400
5 Smith Inc. 146 1,113 63 1,050
8 Cluff Inc. 147 265 15 250
11 Dobson Inc. 148 583 33 550
12 Taylor Inc. 149 1,431 81 1,350
15 Burns Inc. 150 636 36 600
17 Smith Inc. 151 1,484 84 1,400
23 Dobson Inc. 152 1,272 72 1,200
27 Taylor Inc. 153 318 18 300
SALES JOURNAL
Notice only sales on credit are recorded in the Sales Journal. Notice only sales on credit are recorded in the Sales Journal.
Learning Objective 5Journalize and post transactions using a sales journal.
LO5
11-11-1111
Accounts Receivable Subsidiary
Cluff Inc.
Date PR Debit Credit Balance
Nov. 8 S3 265 265
Accounts Receivable Subsidiary
Bradford Inc.
Date PR Debit Credit Balance
Nov. 3 S3 2,544 2,544
Accounts Receivable Subsidiary
Smith Inc.
Date PR Debit Credit Balance
Nov. 5 S3 1,113 1,113
17 S3 1,484 2,597
Learning Objective 6Prepare and prove the accuracy of the accounts receivable subsidiary ledger.
Page 3
Date Account DebitedInvoice Number PR
Accounts Receivable
Debit
Sales Tax Payable Credit
Sales Credit
Nov 3 Bradford Inc. 145 2,544 144 2,400
5 Smith Inc. 146 1,113 63 1,050
8 Cluff Inc. 147 265 15 250
11 Dobson Inc. 148 583 33 550
12 Taylor Inc. 149 1,431 81 1,350
15 Burns Inc. 150 636 36 600
17 Smith Inc. 151 1,484 84 1,400
23 Dobson Inc. 152 1,272 72 1,200
27 Taylor Inc. 153 318 18 300
30 Totals 9,646 546 9,100
SALES JOURNAL
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.
LO6
11-11-1212
Page 3
Date Account DebitedInvoice Number PR
Accounts Receivable
Debit
Sales Tax Payable Credit
Sales Credit
Nov 3 Bradford Inc. 145 2,544 144 2,400
5 Smith Inc. 146 1,113 63 1,050
8 Cluff Inc. 147 265 15 250
11 Dobson Inc. 148 583 33 550
12 Taylor Inc. 149 1,431 81 1,350
15 Burns Inc. 150 636 36 600
17 Smith Inc. 151 1,484 84 1,400
23 Dobson Inc. 152 1,272 72 1,200
27 Taylor Inc. 153 318 18 300
30 Totals 9,646 546 9,100
(106) (232) (401)
SALES JOURNAL
Posting to General Ledger
The sales journal’s account columns are totaled at the end of each period and posted to the appropriate ledgers.
LO6
11-11-1313
Proving the LedgersSchedule of Accounts Receivable
November 30Bradford Inc. 2,544$ Smith Inc. 2,597 Cluff Inc. 265 Dobson Inc. 1,855 Taylor Inc. 1,749 Burns Inc. 636 Rytting Co. (pre November sales) 3,152 Total accounts receivable 12,798$
Schedule of Accounts ReceivableNovember 30
Bradford Inc. 2,544$ Smith Inc. 2,597 Cluff Inc. 265 Dobson Inc. 1,855 Taylor Inc. 1,749 Burns Inc. 636 Rytting Co. (pre November sales) 3,152 Total accounts receivable 12,798$
The Accounts Receivable controlling
account and the subsidiary ledger are in
balance.
LO6
11-11-1414
Cash Receipts Journal
Page 2
Date Account Credited Explanation PRCash Debit
Sales Discount
Debit
Accounts Receivable
CreditSales Credit
Other Accounts
CreditFeb 7 Sales Cash sales x 4,450 4,450
12 Jason Henry Invoice 307, 2/2 441 9 450 14 Sales Cash sales x 3,925 3,925 17 Albert Co. Invoice 308, 2/7 490 10 500 20 Notes Payable Note to bank 245 750 750 21 Sales Cash sales x 4,700 4,700 22 Interest Revenue Bank account 409 250 250 23 Kam Moore Invoice 309, 2/13 343 7 350 25 Paul Roth Invoice 310, 2/157 196 4 200 28 Sales Cash sales x 4,225 4,225 28 Totals 19,770 30 1,500 17,300 1,000
(101) (415) (106) (413) (X )
CASH RECEIPTS JOURNAL
Column totals postedCheck mark indicates immediateposting to accounts receivable
subsidiary ledger.
LO6
11-11-1515
A cash receipts journal is typically used to record all receipts of cash.
A cash receipts journal is typically used to record all receipts of cash.
Learning Objective 7Journalize and post transactions using a cash receipts journal.
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.
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.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.
To be sure that total debits and credits are equal we often crossfoot column totals before posting them.
Debit Columns Credit ColumnsCash Dr. 19,770.00$ Accounts Receivable Cr. 1,500.00$ Sales Discounts Dr. 30.00$ Sales Cr. 17,300.00$
Other Accounts Cr. 1,000.00$ Total 19,800.00$ Total 19,800.00$
LO7
11-11-1616
End of Chapter 11
