Accounting 1: Chapter 10

Posting sales to the general ledger account:

1. Enter the date of the transaction in the date column 2. Enter the amount of the debit or credit 3. Enter the new balance in the balance col. under deb or cred. 4. Enter the journal page number to the post ref in the ledger.

2/eom, n/60

2% discount if paid before the end of month, total amount due within 60 days.

2/10, n/30

2% discount off sales price if paid within 10 days, total amount due within 30 days.

3/10 eom, n/60

3% discount if paid within 10 days after end of month, total amount due within 60 days

If a cash sale for 100 plus 5% sales tax (5% x 100=5) occurs, then you would debit cash for 105, and you would credit sales for 100 and also credit sales tax payable for `

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sales ticket

A document created as evidence of a sale in a retail business

Credit memo

A document issued when credit is given for merchandise returned or for an allowance

sales invoice

A document that is generated to bill the customer to whom the sale was made.

accounts receivable ledger

A separate ledger containing an individual account receivable for each customer, kept in either alphabetical or numerical order.

subsidiary ledger

A separate ledger made up of individual accounts that contain the detail for a controlling account

Sale

A transfer of merchandise form one business or individual to another in exchange for cash or a promise to pay cash.

If #24 was made on account:

Accounts receivable/customer is debited for 105 and Sales is credited for 100 and sales tax payable for 5.

If #21 was made on account instead, then your would debit _________ and credit sales.

Accounts receivable/customer name

Contra-revenue account

An account with a debit balance that is deducted from the related revenue account

Sales on account > collection w/ cash discount ( #41):

Credit sale - 2% cash discount = cash collection 100 -2 = 98

Wholesale transaction process:

Customer purchase order > Interpretation, credit approval and verification > customer( 1)-sales invoice, Accounting (2), shipping (3).

Cash discounts

Discounts to encourage prompt payment by customers who buy merchandise on account

This summary can be sent to accounting and used to ______________ sales in the accounting records.

Journalize

Sales tax payable is a _____________ account that is credited for the taxes imposed on sales.

Liability

Normal sales transaction process:

Manufacturer > Wholesaler > Retailer > Consumer

Only ______ balance column is needed in a three column account form because the normal balance is a debit. If a credit balance occurs, the amount may be ____________.

One, bracketed

Sales allowances

Reductions in the price of merchandise granted by the seller because of defects or other problems with the merchandise.

To account for merchandise sales transactions, four new accounts are used:

Sales Sales tax payable Sales Returns and Allowances Sales discounts

1/10, n/30

Same as 2/10, n/30, except a 1% discount.

Sales discounts

To the seller, cash discounts are considered sales discounts

Controlling account

a summary account maintained in the general ledger with a subsidiary ledger

After posting sales to the general ledger, in the journal, enter the ledger _______ number in the post ref col. of the journal for each transaction.

account

One copy of a sales ticket is given to the customer, and they other is sent to _____________.

accounting

A common approach to keeping a record of each customers account receivable is to use

accounts receivable ledger

An example entry of a returns and allowances would have sales returns and allowances debited for ________________, sales tax payable is debited for the tax on the original sale amount, and Accounts receivable/customer is credited for the total amount billed to the customer.

amount of the sale

If there are many customer accounts, it is good practice to

assign each customer an account number

If merchandise is sold for 100 with credit terms of 2/10, n/30, and cash is recieved within the discount period, two entries are made:

at the time of sale, you would debit Accounts receivable for 100 and then credit sales for the same. At the time of collection, cash is debited for 98, and sales discounts for 2. Accounts receivable is credited for 100.

If 100 sale is made for cash, you would debit _______ and credit sales.

cash

When credit is tight and businesses are short of cash, it is particularly important to convert accounts receivable into ________ as soon as possible.

cash

Sales discounts is a conra-revenue account to which

cash discounts allowed are debited.

Sales returns and allowances is a _________-revenue account.

contra

A credit memo is so called it's name because the customers account receivable is ___________ to reduce the amount the customer owes.

credited

A three column account form is commonly used for

customer accounts

Customers commonly mail, fax or send ____________ orders to buy merchandise from wholesalers.

electronic

Sales returns and sales allowances are debited to this account. This account is reported as a deduction from sales on the

income statement

sales return

merchandise returned to the seller for refund.

Returns and allowances are debited to a separate account rather than directly to sales so that the business can

more readily keep track of activity.

When the customer purchase order arrives, the customer __________ being ordered are determined.

name and items

Retailers usually sell to final consumers, whereas wholesalers tend to sell to ____________. This causes the wholesale sales transaction process to differ.

retailers

The sales account is a ___________ account used to record sales of merchandise.

revenue

Since wholesalers typically make sales on account, credit approval is needed. Three copies of a _____________ are then generated.

sales invoice

Sales discounts, like sales returns and allowances, is reported as a deduction from

sales on the income statement

To record returns and allowances debit sales returns and all. for the amount of the sale excluding the

sales tax

The sales account is credited for the ______________ of merchandise sold during the period.

selling price

in addition to being sent with the customer and to accounting, a copy of the sales invoice is also

shipped with the merchandise

The accounts receivable ledger also can be posted from the ____________ used to make the general journal entry.

source document

A copy of the receipt is retained in the register. most registers can print a ___________ of the day's sales activities.

summary