Acct 1 Chapter 16

 

Patchogue-Medford High School

Accounting I – Chapter 16 Notes

Mr. Butzke

 

 

Chapter 16 – Special Journals: Sales & Cash Receipts                                                                                                                                                                                                                                                                       Page 450

 

Objective: Students will be able to demonstrate their knowledge in how to use the Sales & Cash Receipts Journals by recording transactions into the appropriate journal and A/R Sub-Ledger. They will foot, prove, total, rule, and post to the journal, G/L, and Sub-ledger. They will also prepare supporting schedules to backup their journal entries.

 

 

Special Journals

  • Used to simplify the journalizing process by grouping like transactions into the same journal.
  • There are five Special Journals
  1. Sales - Used for the sale of merchandise on account or for credit
  2. Cash Receipts – Used for any time any cash at all is received
  3. Purchase – Used for the purchase of ALL items on account or for credit
  4. Cash Payments – Used for anytime that cash is paid out from any source
  5. General Journal – Used when the transaction does not fit into any other journal. Some examples are adjustments and closing entries.

 

Sales Journal  (page 454)

 

  • Used to record all sales made on account or for credit. When terms are given they are recorded here but not applied until payment is received. When using this journal you will always debit A/R and always credit Sales (you will also credit sales tax payable where applicable).
  • The steps used in posting to the Sales Journal are:
  1. Enter the date from the sales slip
  2. Enter the sales slip number (should be in consecutive order)
  3. Enter the customer’s name
  4. Enter the total merchandise sold in A/R column as a debit
  5. Enter sales tax payable into sales tax payable column as a credit
  6. Enter the total amount of the sale of merchandise into sales column

The total of each row would have debits = credits

  • When using this journal, all transaction will also be recorded daily into the A/R Subsidiary Ledger. This is where each person or company’s account who owes us money is kept. The balance of the ledger will always be a debit balance.
  • The A/R Subsidiary Ledger is posted daily as transactions occur.

 

A/R Subsidiary Ledger

 

  • The steps used in recording to the A/R Sub-ledger are: (page 456 & 457)(page 470 & 471) The ledger will have a page for each customer with the customer name, address, contact number and customer account number. The customers are listed in numeric order.
  1. Enter the date of the transaction from the sales journal
  2. In the PR (post reference) column enter the letter representing the journal, in this case, SJ, with the page number from the journal, SJ1.
  3. In the debit column place the amount from the A/R column in the sales journal
  4. Compute the new balance that the customer owes and place it in the balance column. All balances should be a debit balance.
  5. Go back to the Sales Journal and place a check mark in the journal’s PR column
  6. At the end of the month a schedule showing all of the customers individually and how much they owe is prepared.
  7. The total of all of the individual customer accounts in the sub-ledger must equal the total of the “Controlling Account”, A/R, in the G/L.

 

Posting Process (for all journals)

 

At the end of the month the sales journal is posted to the general ledger. There are eight steps to the posting process: (pages for S/J 456-459)

  1. Draw a single line across the bottom of the columns under the last lowest positioned number.
  2. Foot the columns (which is to add them down), and place the total under the line in a small pencil total.
  3.  Compare the total debits to the total credits to prove the equality of the journal. Once the debits = the credits then write the total larger in pen.
  4. Place a double ruled line under the final total.
  5. On the line following the last transaction enter the last day of the month in the date column.
  6. On the same line as the totals write the word total.
  7. Now take the total of the column and post it to the General Ledger account in the G/L. In the G/L in the PR column place the journal information, SJ1, and the last day of the month covered by the journal.
  8. Go back to the journal and place the G/L account number under the total with parentheses around the account number.                                                                                                                

Do problems 16-1, posting columns from the S/J, page 461, WB pg 432

                         16-2, analyzing & recording from a source document, page 461, WB pg 433

 

 

 

Cash Receipts Journal   (page 462)

 

  • Used whenever you receive cash for ANY reason at all. The cash account is always debited. Cash sales are recorded into this journal by debiting cash and crediting sales (and sales tax payable when needed). When customers pay the amount they owe us we would record the payment here. This is where you would also record the discount that you give customers. The transaction showing a payment with a discount would be recorded as a debit to Cash, a debit to Sales Discount, and a credit to Accounts Receivable for the total owed before discount. (pg 464)
  • The date of the transaction and the document identification information must be entered into the date and doc no. column on the journal.
  • Bank Card sales are treated the same as cash sales, the only difference is the description which would say bank card sales. (pg 465) 
  • Each line or row must balance as dr = cr.
  • Whenever you put an amount in the A/R column you must also enter it into the A/R Sub-Ledger at that time. (see above for the posting procedure to the A/R sub-ledger).
  • This journal has a “General Credit Column” that is used for all other items that we receive cash for that is not a regular sale or a payment on monies owed to use (A/R). (pg 465 & 66)

 

Posting the General Credit Column directly to the G/L (pg 467)

 

  1. Enter the transaction date in the G/L account date column.
  2. Enter the journal letters and page numbers in the Post Reference column of the G/L. Use CR for cash receipts journal.
  3. In the credit column of the G/L enter the amount from the General Credit column of the CR Journal.
  4. Compute and enter the new balance in the balance column of the G/L.
  5. Return to the Cash Receipts Journal and put the G/L account number in the post reference column.
  6. At the end of the month when the totals of the other accounts are posted to the G/L, you do not post this total. You only place a check mark under the total of the General Column.

 

- At the end of the month you would foot, prove, total, and post the journal to the G/L. The process is the same as the Sales Journal, (see above) (pages for posting CR/J 469-470).

 

 

 

Terms Page 474

Questions Page 475

 

                          

 

 

 

 

Problems

 

 

Prob.  16-3  Completing the C/R Journal      TB pg 472   WB pg 434

Prob.  16-4  Recording & posting Sales       TB pg 477   WB pg 435 – 438  PC 453       

Prob.  16-5  Recording & posting C/R                  TB pg 477   WB pg 439 - 442   PC 453        Q 455

Prob.  16-6  Rec & Post Sales & CR           TB pg 404   WB pg 443 - 451   PC 454        Q456