DAY 4 & 5
Source Document
Objectives:
1. Determine and understand both sales and purchases system
2. Identify source document used to make entries into the books of
original entry.
3. Prepare source document using a set of transactions.
THE
ACCOUNTING
CYCLE
The Sales System
Purchases System
DEFINITIONS
+SOURCE DOCUMENT
+A written document that provides information from
which accounting records can be prepared. It
provides evidence that a particular transaction took
place.
Source Documents
+Invoice – The supplier then send an ‘invoice to the buyers detailing the
goods or services supplied and the amount due for payment.
+Debit note – should any goods be faulty or unsatisfactory to the buyer
or the business, they will return goods along with a debit note
requesting allowance for the return.
+Credit note – upon receipt of the faulty goods and ‘debit note’ the
supplier issues a ‘credit note’ indicating the amount of refund/allowance
approved.
Source Documents
+Receipt – When goods are purchased and paid for immediately by cash
then a receipt is issued, usually via a cash-till-generated document.
+Paying-in slip – form used to pay and deposit money into the business
bank account.
+Cheque – is a document that orders a bank to pay a specific amount of
money from a person’s account to the person in whose name the cheque
is issued.
Sales Invoices
+Is a document prepared by the seller when they sell goods or provide
services on credit. They are numbered for easy identification and for filing.
+The following information can be found in this document:
+Seller’s name and address
+Purchaser’s name and address
+Purchaser’s order number and date
+Date of delivery
+Description of goods and services
+Quantity and price per item
+Total amount due
+Terms and conditions of sale
A seller’s records it as a sales invoice and the purchaser’s as purchase
CALCULATE TRADE DISCOUNT
+A trade discount is a percentage reduction given by a
business to ‘trade’ customer on the list price of goods. A
trade discount is only shown in the calculation on the
invoice. It is done to attract customers, so they are happy.
+Example: You sold the list of items stated in the invoice
below and will apply a 20% trade discount.
[Company Name] INVOICE
[Street Address]
[City, ST ZIP]
Phone: (000) 000-0000 INVOICE # DATE
[123456] 01/05/2014
BILL TO
[Name]
[Company Name]
[Street Address]
[City, ST ZIP]
[Phone]
[Email Address]
DESCRIPTION AMOUNT
Service Fee 200.00
Labor: 5 hours at $75/hr 375.00
New client discount (50.00)
Tax (4.25% after discount) 26.56
Thank you for your business! TOTAL $ 551.56
Notes
+ Debit note is raised by the purchaser and sent to the supplier giving details of the good
returned and the reasons for their return. The debit note shows that the purchaser expects
the seller to bear the charge.
+ Credit note is a document that is raised by the supplier when goods have been returned by
the purchaser due to damage, faulty or supplied with the wrong specification or when an
overcharge has been made on an invoice. Amount owed by the customer will be reduced by
the amount of the credit note.
The following information can be found in these documents:
+ Seller’s name and address
+ Purchaser’s name and address
+ Purchaser’s order number and date
+ Details of goods being returned or correction of order.
+ Quantity and price per items
Paying-in slip
+These are forms used for paying/depositing money into a bank account.
+The receipt of the money must record on the counterfoil of the paying-in
slip details of the amount paid and by who so that the details may be
recorded.
The following information can be found in these documents:
+ Date
+ Name of account holder
+ Account number
+ Listed amounts to be deposited
+ Signature of persons making the deposit.
Atlantic Bank
Saving Deposit
ACCOUNT NO.
____________________________________________________
FULL NAME
DATE: (Day/ Month/Year) _______________________________
$ Cents
X 100
X 50
X 20
X 10
X 5
X 2
X 1
CHEQUES QTY
All Atlantic Bank
Other Belize City
Other Out District
TOTAL CREDIT
___________________ _______________
Depositor’s Signature Depositor’s Name
Cheques
+Is a document that orders a bank to pay a specific amount of
money from a person’s account to the person in whose name
the cheque has been issued.
The following information can be found in these documents:
+ Date
+ Bank name and address (Drawee)
+ Cheque number
+ Name of business or person who the cheque will be paid (Payee)
+ Words and number of amount to be paid
+ Signature of the person issuing/writing the cheque. (Drawer)
This cheques: $________ Atlantic BANK
BAL: _________________ Date: ____________
DEPOSIT: _____________
TOTAL: _______________ Pay ____________________________________or Bearer
BAL: _________________
The sum of ________________________________________
PAY TO: ______________
FOR: ________________ _______________________________
DATE: _______________
____________________
Business Name
_726__
SERIAL NUMBER 40-5263-0089-5055 “0050
REMEMBER!
Receipts
+Is a document acknowledging the receipt
of money from a customer and is often
issued when a customer purchases good
for cash.
The following information can be found in these documents:
+ Date
+ Business name and address
+ Description and list of items bought
+ Total cash paid
PRACTICE
Transactions:
Use the following information to draft an invoice, debit note, credit note, and receipt for Elite Promo
ltd, 4Th Main Street, Belize City:
1. June 4, Sold $110 worth of goods on credit to Ace warehouse, Invoice no. 731.
2. June 10 Approved the requested return from Ace warehouse for $88, note no. 436.
3. June 21 Sold $200 worth of goods on credit to C. Burns, invoice no 790.
4. June 26 Sent a request for the return of goods to J. Jackson $56, note no. 65.
5. June 30 Sold $90 worth of goods to A. Espat, received a cash payment.
