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Accounting 3

Accounting 3. Chapter 19 Section 2. Cash Receipts Journal. This is a special journal used to record only cash receipt transactions .

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Accounting 3

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  1. Accounting 3 Chapter 19 Section 2

  2. Cash Receipts Journal • This is a special journal used to record onlycash receipt transactions. • It is the special journal with the most amount columns including: General debit and credit, Accounts Receivable credit, Sales credit, Sales Tax Payable debit and credit, Sales Discount debit and Cash debit. • Example on next slide.

  3. Cash Receipts Journal Page ___ Doc No. Post Ref. GENERAL Sales Tax Payable Date Account Title Accts Rec. Credit Sales Credit Sales Dis. Debit Cash Debit DEBIT CREDIT Debit Credit Cash Receipts Journal Example

  4. Journalizing Cash and Credit Card Sales • This type of transaction is done exactly the same as we have previously learned in the expanded journals, using the Sales credit, Sales Tax Payable credit, and Cash debit columns. • Example Transaction and visual steps on next slide.

  5. Cash Receipts Journal Page ___ Doc No. Post Ref. GENERAL Sales Tax Payable Date Account Title Accts Rec. Credit Sales Credit Sales Dis. Debit Cash Debit DEBIT CREDIT Debit Credit March 1. Recorded cash and credit card sales, $2,480.00, plus sales tax, $198.40; total, $2,678.40. Cash Register Tape No. 1. 7 Mar 1 T1 2480.00 198.40 2678.40

  6. Calculating Cash Receipts on Account with Sales Discount • To encourage early payment for a sale on account, a deduction on the invoice amount may be allowed. As we have learned on the buyer side, this is called a cash discount. • A cash discount on the seller side is called a sales discount. • At the time of sale, the seller does not know if the customer will pay within the discount period or not, so a full invoice is written.

  7. Calculating Cash Receipts on Account with Sales Discount • If the customer does pay within the discount period, then the sales discount is figured. • Three Steps: • Sales Invoice Amount x Sales Discount Rate =Sales Discount • Sales Discount x Sales Tax Rate = Sales Tax Reduction • Total Invoice Amount – Sales Discount – Sales Tax Reduction = Cash Received

  8. Calculating Cash Receipts on Account with Sales Discount • Example Transaction: • March 2. Sold merchandise on account to Tennis Castle, $1,800.00 plus 8% sales tax, $144.00, total invoice amount, $1,944.00. Sale Terms 1/10, n/30. • March 11, Received payment for this transaction within discount period. • Formula: (Refer to previous slide for abbreviation meanings if needed) • (SIA) $1800.00 x (SDR) 1% = (SD) $18.00 • (SD) $18.00 x (STR) 8% = (STR) $1.44 • (TIA) $1944.00 – (SD) $18.00 – (STR) $1.44 = (CR) $1924.56 • Full transaction and visual steps on next slide.

  9. Cash Receipts Journal Page ___ Doc No. Post Ref. GENERAL Sales Tax Payable Date Account Title Accts Rec. Credit Sales Credit Sales Dis. Debit Cash Debit DEBIT CREDIT Debit Credit Although a discount is given, the company should get full credit for the original invoice amount. This is why the total invoice amount is credited to accounts receivable. Because a discount is given, the seller no longer is required to pay this amount of sales tax to the government. This is why the sales tax deduction is entered into sales tax payable debit. The sales discount account is used to keep track of all the sales discounts given by the seller in a fiscal period. It has a normal debit balance. As we have learned before, cash debit is for the actual amount of cash received from the customer. March 11. Received cash on account from Tennis Castle, $1,924.56, covering Sales Invoice No. 176 for $1,944.00 ($1,800.00 + $144.00), less 1% discount, $18.00, and less sales tax, $1.44. Receipt No. 297. 8 Mar 11 Tennis Castle R297 1944.00 1.44 18.00 1924.56

  10. Posting from a Cash Receipts Journal to an Accounts Receivable Ledger. • Each entry in the Accounts Receivable Credit column affects the account of the customer named in the Account Title column. • So, each amount in this column should be posted individually to the proper customer account in the Accounts Receivable Ledger. • CR and the page number is used for the posting reference from this journal. • An example will be done in the Work Together problem.

  11. Posting Totals of the Special Amount Columns to the General Ledger. • At the end of the fiscal period, the cash receipts journal is ruled and proved. • At that time the totals of the special amount columns should be posted to their respective accounts in the General Ledger. • An example will be done in the work together problem.

  12. Cash Receipts Journal Page ___ Doc No. Post Ref. GENERAL Sales Tax Payable Date Account Title Accts Rec. Credit Sales Credit Sales Dis. Debit Cash Debit DEBIT CREDIT Debit Credit Work Together p. 498 5 May 3 T3 1243.00 99.44 1342.44 4 Nelson Co. R145 160 553.50 .82 10.25 542.43 7 Hawbecker Supply R146 140 157.00 157.00 31 Totals 710.50 1243.00 .82 99.44 10.25 2041.87 (1125) (4105) (2140) (2140) 4110) (1105) Assignment

  13. Accounts Receivable Ledger Customer Customer Cust No. Cust No. Post Ref Post Ref Debit Balance Debit Balance Date Date Item Item Debit Debit Credit Credit 140 Hawbecker Supply May 1 Balance 1 5 7 00 7 CR5 1 5 7 00 160 Nelson Company May 1 Balance 3 7 9 2 00 4 CR5 5 5 3 50 3 2 3 8 50

  14. General Ledger Account Account Acct No. Acct No. Post Ref Post Ref Date Date Item Item Debit Debit Credit Credit BALANCE BALANCE DEBIT DEBIT CREDIT CREDIT Cash 1105 May 1 Balance 2 7 9 8 60 31 CR5 2 0 4 1 87 4 8 4 0 47 Accounts Receivable 1125 May 1 Balance 4 9 7 5 00 31 CR5 7 1 0 50 4 2 6 4 50

  15. General Ledger Account Account Acct No. Acct No. Post Ref Post Ref Date Date Item Item Debit Debit Credit Credit BALANCE BALANCE DEBIT DEBIT CREDIT CREDIT Sales Tax Payable 2140 May 1 Balance 1 2 6 10 31 CR5 82 1 2 5 28 31 CR5 9 9 44 2 2 4 72 Sales 4105 May 1 Balance 10 7 6 0 90 31 CR5 1 2 4 3 00 12 0 0 3 90

  16. General Ledger Account Acct No. Post Ref Date Item Debit Credit BALANCE DEBIT CREDIT Sales Discount 4110 May 1 Balance 1 7 2 80 31 CR5 1 0 25 1 6 2 55

  17. Assignment • Do Application 19-2 by hand. • Turn it into Mrs. Middleton. • Move on to Section 3.

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