3.

02 Key Terms

Term Definition
Merchandise Sales Terms
A person or business to which merchandise or
Customer
services are sold
A special journal used only to record sales of
Sales journal
merchandise on account
Sales on account A sale for which cash will be received at a later date

Sales tax A tax on a sale of merchandise or service.

Wholesale Selling merchandise to retailers

Retail Selling merchandise to the final use

Cash Receipts Terms

A sale in which cash is received for the total amount of
Cash sales
the sale at the time of the transaction
Sales discounts A cash discount on sales taken by a customer
A special journal used only to record cash receipt
Cash receipts journal
transactions
A sale in which a credit card is used for the total
Credit card sale
amount of the sale at the time of the transaction
Point-of-sale (POS) A computer used to collect, store and report all the
terminal information about a sales transaction
Batch report A report of credit card sales produced by a point-of
sale terminal
The process of preparing a batch report of credit card
Batching out
sales from a point-of sale terminal
The report that summarizes the cash and credit card
Terminal summary
sales of a point-of-sale terminal
Sales Returns and Allowances Terms
Credit allowed a customer to return the sales price of
Sales return
returned merchandise
Credit allowed a customer for part of the sales price of
Sales allowance
merchandise that is not returned
Source document listing the details of a sales return
Credit memorandum
or allowance
3.02 PowerPoint Notes 1 – GLENCOE
Journalizing Sales on Account Using a Sales Journal

The sales journal is used to record _________ ____________ of _________________.

The four most commonly used special journals are:

1. ________ journal,

2. _________ ____________ journal,

3. ________________ journal and

4. _________ ________________ journal.

The sales journal is used to record _______ of ______________ on ______________.

To record transactions in the sales journal:

 Enter the ___________ ________ __________ in the Date column.

 Enter the __________ __________ number is the Sales Slip No. column.

 Enter the ___________ ____________ in the Customer’s Account

Debited column.
 Enter the ______________ _________ total in the Sales Credit column.

 Enter the ___________ _______ in the Sales Tax Payable Credit column.
  Enter the ___________ ___________ to be received in the Accounts
Receivable Debit column.

3.02 PowerPoint Notes 1

Journalizing Sales on Account Using a Sales Journal

The sales journal is used to record credit sales of merchandise.

The four most commonly used special journals are:

1. sales journal,
2. cash receipts journal,
3. purchases journal and
4. cash payments journal.

The sales journal is used to record sales of merchandise on account.

To record transactions in the sales journal:

 Enter the sales slip date in the Date column.
 Enter the sales slip number in the Sales Slip No. column.
 Enter the customer’s name in the Customers Account Debited column.
 Enter the merchandise sold total in the Sales Credit column.
 Enter the sales tax in the Sales Tax Payable Credit column.
 Enter the total amount to be received in the Accounts Receivable Debit
column.
3.02 PowerPoint Notes 1 – SW
Journalizing Sales on Account Using a Sales Journal

Record notes below as you view the PowerPoint presentation.

Sales Tax Sales of Merchandise on Account

Sales Tax Payable Accounts Receivable

Debit Credit Debit Credit

Which journal is used to record sales of merchandise on account? ______________

What source document is used to record a sale? _______________________

Procedure to Journalize Sales on Account

1. Write the _________________

2. Write the ___________________ name in the __________________

_________________ column.

3. Write the ___________________ _________________ number.

4. Write the ___________ _________ owed by the ________________ in the

____________ _____________ Debit column.

5. Write the ___________ _____________ in the __________ Credit column.

6. Write the __________ ________ amount in the _________ ___________

______ Credit column.

Dr. ____________________________

Cr. ____________________________

Cr. ____________________________
3.02 PowerPoint Notes 1
Journalizing Sales Using a Sales Journal

Record notes below as you view the PowerPoint presentation.

Sales Tax Sales of Merchandise on Account

Sales Tax Payable Accounts Receivable

Debit Credit Debit Credit

Which journal is used to record sales of merchandise on account? Sales Journal

What source document is used to record a sale? Sales Invoice

Procedure to Journalize Sales on Account

1. Write the date

2. Write the customer name in the account debited column.

3. Write the sales invoice number.

4. Write the total amount owed by the customer in the Accounts Receivable

Debit column.

5. Write the sales amount in the Sales Credit column.

6. Write the sales tax amount in the Sales Tax Payable Credit column.

Dr. Account Receivable

Cr. Sales

Cr. Sales Tax Payable

 3.02 PowerPoint Notes 2 – GLENCOE
Journalizing Cash Receipts Using a Cash Receipts Journal

Cash receipts journal is used to record the _____________ a business receives.

The _________ _____________ _______________ is a special journal used to record

all cash receipt transactions. Every entry debits the Cash in Bank account.

Recording Cash from Charge Customers

Follow these steps when journaling cash receipts from charge customers:

 Enter the ________________ ________ in the Date column.

 Enter the _______________ ____________ in the Document Number

column.

 Enter the ______________ ____________ in the Account Name column.

 Enter the decrease in the amount owed in the ______________

_____________ __________ ____________.

 Enter the amount of ___________ _____________ in the Cash in Bank

Debit column.
3.02 PowerPoint Notes 2 – Page 2 – GLENCOE
Journalizing Cash Receipts Using a Cash Receipts Journal
Recording Cash Received on Account,
Less a Cash Discount
Follow these steps to record a cash receipt transaction with a cash discount:

 Enter the ________________ ________ in the Date column.

 Enter the _______________ ____________ in the Document Number

column.

 Enter the ______________ ____________ in the Account Name column.

 Enter the ______________ ________ ______________ __________ in

the Accounts Receivable Credit column.

 Enter the ________ ______________ ____________ in the Sales

Discounts Debit column.

 Enter the amount of ___________ _____________ in the Cash in Bank

Debit column.

Recording Cash Sales

Follow these steps to enter cash sales in the cash receipts journal:

 Enter the _______ ___________ _______ ________ in the Date column.

 Enter the ________ _______________ in the Document Number column.

 Enter ________ ___________ in the Account Name column.

 Enter a _________ in the Posting Reference column.

 Enter the amount of _________________ __________ in the Sales Credit

column.

 Enter the ________ _________ _____________ in the Sales Tax Payable

Credit column.

 Enter the _________ ________ _____________ in the Cash in Bank

Debit column.
3.02 PowerPoint Notes 2 – Page 3 – GLENCOE
Journalizing Cash Receipts Using a Cash Receipts Journal

Recording Bankcard Sales

Follow these steps to enter bankcard sales in the cash receipts journal:

 Enter the _______ ___________ _______ ________ in the Date column.

 Enter the ________ _______________ in the Document Number column.

 Enter ________ ___________ in the Account Name column.

 Enter a _________ in the Posting Reference column.

 Enter the amount of _________________ __________in the Sales Credit

column.

 Enter the ________ _________ _____________ in the Sales Tax

Payable Credit column.

 Enter the _________ ________ _____________ in the Cash in Bank

Debit column.

Recording Other Cash Receipts

Follow these steps to record in the cash receipts journal a transaction that does
not involve the sale of merchandise:

 Enter the ____________ ________ in the Date column.

 Enter an ___ and the __________ _____________ in the Document

Number column.

 Enter the ___________ _________ _____________ __________ in the

Account Name column.

 Enter the __________ ____________ in the General Credit column.

 Enter the ___________ _________ _______________ in the Cash in

Bank Debit column.
3.02 PowerPoint Notes 2
Journalizing Cash Receipts Using a Cash Receipts Journal

Cash receipts journal is used to record the cash a business receives.

The cash receipts journal is a special journal used to record all cash receipt
transactions. Every entry debits the Cash in Bank account.

Recording Cash from Charge Customers

Follow these steps when journalizing cash receipts from charge customers:
 Enter the transaction date in the Date column.
 Enter the receipt number in the Document Number column.
 Enter the customer’s name in the Account Name column.
 Enter the decrease in the amount owed in the Accounts Receivable Credit
column.
 Enter the amount of cash received in the Cash in Bank Debit column.
3.02 PowerPoint Notes 2 – Page 2
Journalizing Cash Receipts Using a Cash Receipts Journal

Recording Cash Received on Account,

Less a Cash Discount
Follow these steps to record a cash receipt transaction with a cash discount:
 Enter the receipt date in the Date column.
 Enter the receipt number in the Document Number column.
 Enter the customer’s name in the Account Name column.
 Enter the original sales transaction amount in the Accounts Receivable
Credit column.
 Enter the cash discount amount in the Sales Discounts Debit column.
 Enter the amount of cash received in the Cash in Bank Debit column.

Recording Cash Sales

Follow these steps to enter cash sales in the cash receipts journal:
 Enter the cash register tape date in the Date column.
 Enter the tape number in the Document Number column.
 Enter Cash Sales in the Account Name column.
 Enter a dash in the Posting Reference column.
 Enter the amount of merchandise sold in the Sales Credit column.
 Enter the sales taxes collected in the Sales Tax Payable Credit column.
 Enter the total cash received in the Cash in Bank Debit column.
3.02 PowerPoint Notes 2 – Page 3
Journalizing Cash Receipts Using a Cash Receipts Journal

Recording Bankcard Sales

Follow these steps to enter bankcard sales in the cash receipts journal:
 Enter the cash register tape date in the Date column.
 Enter the tape number in the Document Number column.
 Enter Bankcard Sales in the Account Name column.
 Enter a dash in the Posting Reference column.
 Enter the amount of merchandise sold in the Sales Credit column.
 Enter the sales taxes collected in the Sales Tax Payable Credit column.
 Enter the total cash received in the Cash in Bank Debit column.

Recording Other Cash Receipts

Follow these steps to record in the cash receipts journal a transaction that does
not involve the sale of merchandise:

 Enter the receipt date in the Date column.

 Enter an R and the receipt number in the Document Number column.
 Enter the general ledger account name in the Account Name column.
 Enter the credit amount in the General Credit column.
 Enter the total cash received in the Cash in Bank Debit column.
3.02 PowerPoint Notes 2 – SW
Journalizing Cash Receipts Using a Cash Receipts Journal
Which journal is used to record cash and credit card sales? _____________________

What source document is used to record cash and credit card sales? ______________

Procedure to Journalize Cash and Credit Card Sales

1. Write the _________________.

2. Put a ___________________ in the Account Title column.

3. Write the ___________________ _________________ document number.

4. Put a ___________________ in the Post Ref. column.

3.02 PowerPoint Notes 2 – Page 2 – SW
Journalizing Cash Receipts Using a Cash Receipts Journal

5. Write the ___________ _____________ in the Sales Credit column.

6. Write the __________ ________ amount in the ________ _______

______________ Credit column.

7. Record the ____________ ____________ in the Cash Debit column.

Procedure to Journalize Cash Receipts on Account

1. Write the __________________.

2. Write the _________________ _________________ in the account title

column.

3. Write the _______________ _________________ in the Doc. No. column.

4. Write the _____________ _______________ in the Account Receivable

Credit column.

5. Write the _________ _______________ in the Cash Debit column.

Procedure to Journalize Cash Receipts on Account with Sales Discounts

1. Write the __________________.

2. Write the _________________ _________________ in the account title

column.

3. Write the _______________ _________________ in the Doc. No. column.

4. Write the _____________ _______________ amount in the Account

Receivable Credit column.

5. Write the amount of _________ _______________ in the Sales Discount

Debit column.

6. Write the ________________ to cash in the Cash Debit column.

3.02 PowerPoint Notes 2
Journalizing Cash Receipts Using a Cash Receipts Journal

Record notes below as you view the PowerPoint presentation.

Which journal is used to record cash and credit card sales? cash receipts journal

What source document is used to record cash and credit card sales? terminal summary

Procedure to Journalize Cash and Credit Card Sales

1. Write the date.

2. Put a check mark in the Account Title column.
3. Write the terminal summary document number.

4. Put a check mark in the Post Ref. column.

3.02 PowerPoint Notes 2 – Page 2

Journalizing Cash Receipts Using a Cash Receipts Journal
 5. Write the sales amount in the Sales Credit column.

6. Write the sales tax amount in the Sales Tax Payable Credit column.

7. Record the cash amount in the Cash Debit column.

Procedure to Journalize Cash Receipts on Account

1. Write the date.

2. Write the customer’s name in the Account Title column.

3. Write the receipt number in the Doc. No. column.

4. Write the credit amount in the Account Receivable Credit column.

5. Write the debit amount in the Cash Debit column.

Procedure to Journalize Cash Receipts on Account with Sales Discounts

1. Write the date.

2. Write the customer’s name in the Account Title column.

3. Write the receipt number in the Doc. No. column.

4. Write the original invoice amount in the Account Receivable Credit column.

5. Write the amount of sales discount in the Sales Discount Debit column.

6. Write the debit to cash in the Cash Debit column.

3.02 PowerPoint Notes 3 – GLENCOE
Accounting for Sales and Cash Receipts

A ______________ sells to retailers and a _______________ resells to the final users.

A merchandising business buys ___________________ from a wholesaler or

manufacturer and resells the goods to its customers. Merchandise in stock is called
_________________.

Inventory is represented in the general ledger by the asset account _______________

_________________, recorded as a ____________(debit or credit).

The amount of merchandise sold is recorded in the ____________ account, a revenue

account, recorded as a ___________(debit or credit).

 _________________
A business that resells to the final user, the consumer

 __________________
A business that sells to the retailers

 __________________
Goods bought to resell to customers

 __________________
The items of merchandise a business has in stock

Merchandise can be bought and paid for at a later date. This is called a __________
___ ______________ and is made to a ___________ ______________.

A charge sale involves:

 a ___________ __________,
 the ___________ ________, and
 the _____________ ____________

A sales slip lists

 the _____________of the sale;
 the _______________ ______________ _______________; and
 the _______________, _____________, and __________ of items sold.
3.02 PowerPoint Notes 3 – Page 2 – GLENCOE
Accounting for Sales and Cash Receipts

______________ ___________ define the time allowed for payment.

A business with many charge customers will set up a separate ledger, called the
______________ _____________ _____________ __________, with an account for
each customer.

Revenue for a ___________ is recorded at the time of sale. Revenue must be

_________________, or expected to be converted to cash.

The journal entry to record sales on account is:

Dr. ____________________ __________________
Cr. ________________
Cr. ________________ ___________ ___________________

A customer who is unhappy with a purchase and returns it to the merchant performs a
____________ __________________.

If merchandise is damaged prior to the purchase, a __________ ______________, or

price reduction, may be issued.

If the return or allowance occurs on a charge sale, a ___________ ________________

might be prepared and the customer’s account credited for the amount.

_________ ______________ _____ ______________ decrease the total revenue but

are not recorded in the ___________ account. A separate account, ____________
_____________ ______ _____________, is used. This account is a contra account.
Its balance decreases the balance of its related account.

Sometimes a cash refund is given and the __________ ____ __________ account is
credited instead of Accounts Receivable.

A _________ ____________ is a transaction in which money is received by a business.

Sales paid by ________________ are recorded in a manner similar to cash sales. The
source document for bankcard sales is the _________ ______________ ________.
3.02 PowerPoint Notes 3 – Page 3 – GLENCOE
Accounting for Sales and Cash Receipts

A ________ _______________, or __________ ______________, is sometimes

offered to charge customers to encourage prompt payment.
The journal entry accounts used for charge customer payments are:
Debit ________________
Credit_________________

The journal entry accounts used for cash discount payments are:

Debit ________________
Debit_________________
Credit_________________
3.02 PowerPoint Notes 3
Accounting for Sales and Cash Receipts

A wholesaler sells to retailers and a retailer resells to the final users.

A merchandising business buys merchandise from a wholesaler or manufacturer and

resells the goods to its customers. Merchandise in stock is called inventory.

Inventory is represented in the general ledger by the asset account Merchandise

Inventory, recorded as a debit (debit or credit).

The amount of merchandise sold is recorded in the Sales account, a revenue account,
recorded as a credit (debit or credit).

 retailer
A business that resells to the final user, the consumer
 wholesaler
A business that sells to the retailers
 merchandise
Goods bought to resell to customers
 inventory
The items of merchandise a business has in stock

Merchandise can be bought and paid for at a later date. This is called a sale on account
and is made to a charge customer.

A charge sale involves:

 a sales slip,
 the sales tax, and
 the credit terms.

A sales slip lists

 the date of the sale;
 the customer account identification; and
 the description, quantity, and price of items sold.
3.02 PowerPoint Notes 3 – Page 2
Accounting for Sales and Cash Receipts

Credit terms define the time allowed for payment.

A business with many charge customers will set up a separate ledger, called the
accounts receivable subsidiary ledger, with an account for each customer.

Revenue for a sale is recorded at the time of sale. Revenue must be realizable, or
expected to be converted to cash.

The journal entry to record sales on account is:

Dr. Accounts Receivable
Cr. Sales
Cr. Sales Tax Payable

A customer who is unhappy with a purchase and returns it to the merchant performs a
sales return.

If merchandise is damaged prior to the purchase, a sales allowance, or price reduction,

may be issued.

If the return or allowance occurs on a charge sale, a credit memorandum might be

prepared and the customer’s account credited for the amount.

Sales returns and allowances decrease the total revenue but are not recorded in the
Sales account. A separate account, Sales Returns and Allowances, is used. This
account is a contra account. Its balance decreases the balance of its related account.

Sometimes a cash refund is given and the Cash in Bank account is credited instead of
Accounts Receivable.

A cash receipt is a transaction in which money is received by a business.

Sales paid by bankcard are recorded in a manner similar to cash sales. The source
document for bankcard sales is the cash register tape.
3.02 PowerPoint Notes 3 – Page 3
Accounting for Sales and Cash Receipts

A cash discount, or sales discount, is sometimes offered to charge customers to

encourage prompt payment.

The journal entry accounts used for charge customer payments are:
Debit Cash
Credit Accounts Receivable

The journal entry accounts used for cash discount payments are:
Debit Cash
Debit Sales Discounts
Credit Accounts Receivable
3.02 PowerPoint Notes 3 – SW
Recording Transactions Using a General Journal

Which document is used to record sales returns and allowances?_________________

Which journal is used to record sales returns and allowances? ___________________

Procedure to Journalize Sales Returns and Allowances

1. Write the _________________.

2. Write _________ _____________ _____ ________________ in the Account

Title column.

3. Write ___ ___ and the ____________ ________________ __________ in the

Document Number column.

4. Write the ________________ of the sales return in the Debit column.

5. Write __________ _______ _____________ in the Account Title column.

6. Write the __________ ________ amount in the Debit column.

7. Write the ________________ to be credited in the Account Title column.

8. Draw a ____________ _________ in the Post Ref. column.

9. Record the _______ _________ ___________ amount in the Credit column.

3.02 PowerPoint Notes 3
Recording Transactions Using a General Journal

Which document is used to record sales returns and allowances? credit memorandum

Which journal is used to record sales returns and allowances? general journal

Procedure to Journalize Sales Returns and Allowances

1. Write the date.

2. Write Sales Returns and Allowances in the Account Title column.

3. Write C M and the Credit Memorandum Number in the Document Number

column.

4. Write the amount of the sales return in the Debit column.

5. Write Sales Tax Payable in the Account Title column.

6. Write the sales tax amount in the Debit column.

7. Write the accounts to be credited in the Account Title column.

8. Draw a diagonal line in the Post Ref. column.

9. Record the total accounts receivable amount in the Credit column.