Ch. 16: Special Journals: Sales and Cash Receipts

1. Accounting II Ms. Alltucker Ch. 16: Special Journals: Sales and Cash Receipts

2. Special Journals: Sales and Cash Receipts • Learning objectives • Identify the special journals and explain how they are used in a merchandising business • Record transactions in sales and cash receipts journals • Post from the sales and cash receipts journals to customer accounts in the Acc/Rec subsidiary ledger • Foot, prove, total, and rule the sales and cash receipts journals • Post column totals from the sales and cash receipts journals to general ledger accounts • Prepare a schedule for the accounts receivable subsidiary ledger • Define the accounting terms in this chapter

3. Section 1: The Sales Journal • What you will learn: • To identify the special journals and how they are used • How to record sales of merchandise on account in a sales journal • How to post from the sales journal to the acc/rec. subsidiary ledger accounts • How to foot, prove, total, and rule the sales journal • How to post column totals from the sales journal to general ledger • Why it’s important: • The use of the sales journal provides a systematic method of keeping track of sales on account.

4. The Sales Journal • In Accounting I: • Each transaction required at least 3 lines in the journal • Debit account • Credit account • Source document • In Accounting II: • To improve efficiency many merchandising businesses use special journals

5. Special Journals • Amount columns used to record debits and credits to specific general ledger accounts • Most transactions are recorded on one line • Simplify the journalizing and posting process • The four most commonly used special journals are: • Sales sales of merchandise on account • Cash Receipts Journal receipt of cash • Purchases journal purchase of any asset on account • Cash payments journal payment of cash, including check

6. Sales Journal • Special journal used to record sales of merchandise on account • Record the amount of the merchandise sold on account • Record the amount of sales tax on the sale • Record the total amount to be received from the customer on account

7. Recording Sales of Merchandise on Account Business Transaction On December 1, On Your Mark sold merchandise on account to Casey Klein for $200 plus $12 sales tax, Sales Slip 50. JOURNAL ENTRY

8. Sales of Merchandise on Account • 1. enter date • 2. enter sales slip number • 3. enter the name of customer in customer in the “Customer’s Account Debited” column • 4. Enter the total of the merchandise sold in sales credit column • 5. enter amount of sales tax in sales tax payable credit • 6. enter the total amount to be received in Acct/Rec debit column

9. Posting a Sales Journal Entry to Subsidiary ledger • 1. enter date of transaction • 2. in Post Ref enter “S” and page number “S1” • 3. Debit column of subsidiary ledger account enter total amount to be received • 4. Compute new balance and enter it in the balance column • 5. enter the check mark in the post reference column in journal

10. Completing the Sales Journal • All special journals have amount columns used to record debit and credits to specific general ledger accounts • Simplify posting • Instead of posting each transaction separately to general ledger, only amount column totals are posted • Column totals to be posted: • Sales credit • Sales tax payable credit • Accounts receivable debit • **only three postings are made to the general ledger from the sales journal

11. Footing, Totaling, Proving, and Ruling the Sales Journal • 1. Draw a single line across the three columns • 2. Foot the amount columns—column totals written small • 3. On a separate piece of paper—test equality of debits and credits • 4. Enter the current date and write “Totals” • 5. Enter column totals in ink, just below the footing • 6. Double rule the three column amounts • 7. After footing, totaling, proving, ruling—post totals to the general ledger • Refer to page 423-424 for an example

12. Footing, Totaling, Proving, and Ruling the Sales Journal

13. Posting the Totals of the Sales Credit Column • 1.In “Sales” ledger—enter the date of the totals • 2. enter the sales journal letter and page number “S2” • 3. In credit column, enter the total from sales credit column from sales journal • 4. Compute new balance in ledger • 5. Return to sales journal and enter the Sales account number below the double rule in the Sales credit column—in parentheses • See page 424-425 for an example in your book

14. Posting the Totals of the Sales Credit Column

15. Posting the Total of the Sales Tax Payable Credit Column • 1. Enter the date in the ledger • 2. enter the sales journal page number “S2” • 3. In the credit column, enter the total from Sales Tax Payable Credit column from Sales journal • 4. Compute new balance • 5. Return to sales journal and enter the account number below the column total • 6. Refer to page 425-426 for an example

16. Posting the Totals of the Sales Tax Payable Credit Column

17. Posting the Totals of the Accounts Receivable Debit Column • The last amount to be posted is the Accounts Receivable Debit Column

18. Proving the Sales Journal at the End of a Page • All special journals are totaled and proved and the end of every month • If a business has more transactions than one page in one month—the page needs to be totaled and proved before continuing • Refer to page 427 for an example

19. Proving the Sales Journal at the End of a Page • 1. Draw a single line across the three columns • 2. enter date of last transaction • 3. write “Carried Forward” in customer column • 4. Place a check mark in the post reference column—indicates that these totals are not to be posted • 5. enter the column totals in ink—DO NOT DOUBLE RULE THE COLUMN TOTALS • 6. On the next page, enter the new page number • 7. On lines 1 and 2 enter the complete date • 8. Write “Brought Forward” in account column • 9. Place a check mark in the post reference column • 10. Enter the column totals from the previous page

20. Proving the Sales Journal at the End of a Page