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Section 2: Cash Receipts Journal

Section 2: Cash Receipts Journal. Accounting II Ms. Alltucker. Learning Objectives . What you will learn: How to record transactions in the cash receipts journal How to post from the cash receipts journal to accounts receivable subsidiary ledger accounts

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Section 2: Cash Receipts Journal

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  1. Section 2: Cash Receipts Journal Accounting II Ms. Alltucker

  2. Learning Objectives • What you will learn: • How to record transactions in the cash receipts journal • How to post from the cash receipts journal to accounts receivable subsidiary ledger accounts • How to post amounts in the general credit columns of cash receipts journal to general ledger accounts • How to post column totals • How to prepare a schedule of accounts receivable • Why it’s important: • Use of cash receipts journal will save time and reduce errors

  3. Cash Receipts Journal • Cash receipts • Payments made from charge customers • Cash sales • Bank card sales • Sale of other business assets

  4. Cash Receipts Journal • Special journal used to record all cash receipt transactions • Every transaction recorded in cash receipts journal REQUIRES a debit to cash in bank • Cash in bank debit column • Contains six amount columns

  5. Cash Receipts Journal

  6. Recording Cash from Charge Customers Business Transaction On December 5, On Your Mark received $212 from Casey Klein to apply on account, Receipt 301. JOURNAL ENTRY

  7. Recording Cash Received on Account, Less a Cash Discount Business Transaction On December 12, On Your Mark received $1,470 from South Branch High School Athletics in pay- ment of Sales Slip 51 for $1,500 less the discount of $30, Receipt 302. JOURNAL ENTRY

  8. Recording Cash Sales Business Transaction On December 15, On Your Mark records the cash sales for the first two weeks of December, $3,000, and $180 in related sales taxes, Tape 55. JOURNAL ENTRY

  9. Posting to the Accounts Receivable Subsidiary Ledger Daily postings are made from the Accounts Receivable Credit column to the accounts receivable subsidiary ledger Ensures that customer accounts are always present

  10. Posting to the Accounts Receivable Subsidiary Ledger • 1. Enter the date of the transaction in the ledger account • 2. Enter the post reference CR—cash receipts • Example: CR12 • 3. enter the amount shown in the acct/rec credit column of the cash receipts journal • 4. Compute new balance • 5. Enter a check mark in the post reference column in cash receipts journal

  11. Posting to the Accounts Receivable Subsidiary Ledger

  12. Posting the General Credit Column 1. Enter the date of the transaction 2. Enter the journal letter and page number 3. Enter amount from general column 4. compute new balance 5. Return to cash receipts journal and enter the general ledger account number in post reference

  13. Posting the General Credit Column

  14. Footing, Totaling, Proving and Ruling the CR Journal 1. Draw a single line across the six columns, below the last transaction 2. foot the columns 3. Test for the equality of debits and credits 4. Enter date of last transaction 5. Write “Totals” 6. Enter the column totals in pen 7. Double rule the amount columns ** column totals are then posted to the general ledger

  15. Posting Column totals to the General Ledger • There are six amount columns in a CR journal • ONLY 5 COLUMN TOTALS ARE POSTED • Total of the general credit column is NOT posted • Entries have already been posted, individually, to the general ledger accounts

  16. Posting Column totals to the General Ledger 1. Place a check mark in parenthesis under the General column total—this total is not posted 2. Post the sales total to the sales account credit column 3. post the sales tax payable 4. Post the accounts receivable total 5. post the Sales discount total 6. Post the cash in bank total 7. Compute new balances for each 8. Write the account number of each account below the double line LOOK ON PAGE 437 FOR AN EXAMPLE

  17. Proving the Acct/Rec. Subsidiary Ledger At the end of the month you have to prove that the Accounts Receivable (controlling account) total EQUALS the total of all subsidiary account Schedule of Accounts Receivable report listing each charge customer, the balance in the customer’s account, and the total amount due from all customers May be prepared on plain paper

  18. Schedule of Accounts Receivable

  19. Errors in the Subsidiary Ledger • Proving accounts receivable • Internal control procedure that often uncovers certain types of errors • Detects a failure to post a transaction • Detects a failure in computing new balances • DOES NOT provide assurance that transactions were posted to the correct customer account within the subsidiary ledger • These types of errors are often detected when a customer finds an error in their monthly billing

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