accounting 3 chapter 19 section 3. credit memorandum for sales returns and allowances as in 18-4,...
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Accounting 3Accounting 3
Chapter 19Chapter 19
Section 3Section 3
Credit Memorandum for Sales Credit Memorandum for Sales Returns and AllowancesReturns and Allowances• As in 18-4, Debit Memorandums are used when a As in 18-4, Debit Memorandums are used when a
customer wants to return or get credit for customer wants to return or get credit for merchandise from the selling company.merchandise from the selling company.
• When a selling company grants the request of the When a selling company grants the request of the Debit Memorandum, the document issued to the Debit Memorandum, the document issued to the customer is called a customer is called a Credit MemorandumCredit Memorandum..
• When the return of the merchandise is allowed, When the return of the merchandise is allowed, the selling company considers this a the selling company considers this a Sales Sales ReturnReturn. .
• When the selling company allows a credit to the When the selling company allows a credit to the customer’s accounts receivable account but does customer’s accounts receivable account but does not actually receive the merchandise back, it is not actually receive the merchandise back, it is called a called a Sales AllowanceSales Allowance..
Journalizing Sales Returns and Journalizing Sales Returns and AllowancesAllowances• The General Journal is used for this type of The General Journal is used for this type of
transaction since it is not used as frequently transaction since it is not used as frequently as other transactions.as other transactions.
• Sales Returns and Allowances is on the first Sales Returns and Allowances is on the first line of the entry as a debit.line of the entry as a debit.
• Sales Tax Payable is on the second line of Sales Tax Payable is on the second line of the entry also as a debit (sales tax owed the entry also as a debit (sales tax owed must be decreased). *If sales tax was not must be decreased). *If sales tax was not charged, this will not be included in the charged, this will not be included in the entry.entry.
• Accounts Receivable/Customer Account is Accounts Receivable/Customer Account is indented on the third line as a credit.indented on the third line as a credit.
March 11. Granted credit to Parson Company for merchandise March 11. Granted credit to Parson Company for merchandise returned, $58.50, plus sales tax, $4.68; total, $63.18. Credit returned, $58.50, plus sales tax, $4.68; total, $63.18. Credit Memorandum No. 41.Memorandum No. 41.
General Journal Page ___
Date Account TitlePost
Ref.
Doc.
No.Debit Credit
3
Mar
11 Sales Returns and Allowances CM41
5 8 50
Sales Tax Payable 4 68
Accounts Receivable/Parsons Company
6 3 18
Journalizing Correcting Entries Journalizing Correcting Entries Affecting Customer AccountsAffecting Customer Accounts
• This transaction basically reverses This transaction basically reverses errors.errors.
• To do this, use the General Journal and To do this, use the General Journal and debit the account that was supposed debit the account that was supposed to be affected and credit the account to be affected and credit the account that was not supposed to be affected.that was not supposed to be affected.
• Example transaction and visual steps Example transaction and visual steps on next slide.on next slide.
March 12. Discovered that a sale on account to York East High March 12. Discovered that a sale on account to York East High School on February 26, S133, was incorrectly charged to the School on February 26, S133, was incorrectly charged to the account of York North High School, $412.00. Memorandum account of York North High School, $412.00. Memorandum No. 40.No. 40.
General Journal Page ___
Date Account TitlePost
Ref.
Doc.
No.Debit Credit
3
Mar
12 York East High School M40 4 1 2 00
4 1 2 00
York North High School
*Do not forget to indent the credit portion of the entry.
Posting to a General and Posting to a General and Accounts Receivable LedgerAccounts Receivable Ledger
• Each of the entries discussed in this Each of the entries discussed in this section should be posted individually to section should be posted individually to their respective accounts/ledgers.their respective accounts/ledgers.
• This is done the same way as in chapter This is done the same way as in chapter 18.18.
• As usual, do not forget to go back to your As usual, do not forget to go back to your journal and list the account numbers for journal and list the account numbers for posting references; especially if there are posting references; especially if there are two accounts in one line.two accounts in one line.
Schedule of Accounts Schedule of Accounts Receivable and Accounts Receivable and Accounts PayablePayable• These are used to prove that what is in the These are used to prove that what is in the
accounts receivable/payable account in the accounts receivable/payable account in the general ledger matches the totals of all the general ledger matches the totals of all the accounts in the accounts receivable/payable accounts in the accounts receivable/payable ledgers.ledgers.
• To do this, use the form provided, fill out the title To do this, use the form provided, fill out the title as usual, then list all of the accounts still open in as usual, then list all of the accounts still open in either the accounts receivable/payable ledger either the accounts receivable/payable ledger (whichever applies in that situation).(whichever applies in that situation).
• Total up all of the accounts and make sure it Total up all of the accounts and make sure it matches the accounts receivable/payable account matches the accounts receivable/payable account total in the general ledger. If it does not match, total in the general ledger. If it does not match, something is incorrect.something is incorrect.
One more note on PostingOne more note on Posting
• If you are working with all five journals at once If you are working with all five journals at once and need to post, there is a specific order it and need to post, there is a specific order it must be done.must be done.
1.1. Sales JournalSales Journal2.2. Purchases JournalPurchases Journal3.3. General JournalGeneral Journal4.4. Cash Receipts JournalCash Receipts Journal5.5. Cash Payment JournalCash Payment Journal• This is done because it This is done because it usuallyusually puts the debits puts the debits
and credits in the accounts in the order the and credits in the accounts in the order the transactions occurred.transactions occurred.
Work Together p. 503Work Together p. 503General Journal Page ___
Date Account TitlePost
Ref.
Doc.
No.Debit Credit
6
Jun 3 Sales Returns and Allowances CM41
4115 4 5 7 00
Sales Tax Payable 2140 3 6 56
Accts Rec/Wilbanks & Assoc. 4 9 3 561125190
6 Sales Returns and Allowances CM42 4115 6 7 00
Accts Rec/Westfall High School
112
5180 6 7 00
9 Howsley Dance Studio M17 150 4 1 4 99
D Howell, MD 140 4 1 4 99
Look at postings by clicking on posting reference numbers which are hyperlinked.Schedule of Accounts Receivable
Assignment
Customer Cust No.
Date ItemPost
RefDebit Credit
Debit
Balance
Customer Cust No.
Date ItemPost
RefDebit Credit
Debit
Balance
Accounts Receivable LedgerD. Howell, MD 140
Jun 9 G6 4 1 4 99 4 1 4 99
Jun 1 Balance 4 1 4 99
Howsley Dance Studio
150
9 G6 4 1 4 99
Customer Cust No.
Date ItemPost
RefDebit Credit
Debit
Balance
Customer Cust No.
Date ItemPost
RefDebit Credit
Debit
Balance
Accounts Receivable LedgerWestfall High
School180
Jun 1 Balance 3 9 2 50
6 G6 6 7 00 3 2 5 50
Wilbanks & Associates
190
Jun 1 Balance 2 7 9 2 60
3 G6 4 9 3 56 2 2 9 9 04
Account Acct No.
Date ItemPost
RefDebit Credit BALANCE
DEBIT CREDIT
Account Acct No.
Date ItemPost
RefDebit Credit BALANCE
DEBIT CREDIT
General Ledger
Accounts Receivable 1125
Jun 1 Balance 3 6 0 0 09
3 G6 4 9 3 56 3 1 0 6 53
6 G6 6 7 00 3 0 3 9 53
Sales Tax Payable 2140
Jun 1 Balance 4 7 2 60
3 G6 3 6 56 4 3 6 04
Account Acct No.
Date ItemPost
RefDebit Credit BALANCE
DEBIT CREDIT
General Ledger
Sales Returns and Allowances
4115
Jun 1 Balance 3 9 7 6 80
3 G6 4 5 7 00 4 4 3 3 80
6 G6 6 7 00 4 5 0 0 80
Cline Interiors
Schedule of Accounts ReceivableJune 30, 2007
D Howell, MD 4 1 4 99Westfall High School 3 2 5 50Wilbanks and Associates 2 2 9 9 04Total Accounts Receivable 3 0 3 9 53
*If the total here matches the total Accounts Receivable in the General Ledger, then everything is correct.
AssignmentAssignment
• Do Application 19-3 by hand.Do Application 19-3 by hand.
• Turn it into Mrs. Middleton.Turn it into Mrs. Middleton.
• Read Section 19-4; Do Application 19-4 by Read Section 19-4; Do Application 19-4 by hand. (Ask questions if needed)hand. (Ask questions if needed)
• Do Mastery Problem on Automated Do Mastery Problem on Automated Accounting 8 Software. Print all pages in Accounting 8 Software. Print all pages in instructions.instructions.
• Turn it into Mrs. Middleton.Turn it into Mrs. Middleton.
• Move on to Chapter 20.Move on to Chapter 20.