section 3analyzing cash receipt transactions what you’ll learn how to record cash receipt...
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Section 3Analyzing Cash Receipt Transactions
Section 3Analyzing Cash Receipt TransactionsWhat You’ll Learn
How to record cash receipt
transactions.
The use of the Sales Discounts
account, and its rules of debit and
credit.
What You’ll Learn
How to record cash receipt
transactions.
The use of the Sales Discounts
account, and its rules of debit and
credit.
Why It’s Important
It is essential to understand the
various ways that businesses receive
cash and how to record the receipt of
cash.
Why It’s Important
It is essential to understand the
various ways that businesses receive
cash and how to record the receipt of
cash.
Key Terms cash receipt
cash sale
bankcard
Key Terms cash receipt
cash sale
bankcard
Section 3 Analyzing Cash Receipt Transactions (con’t.)
Section 3 Analyzing Cash Receipt Transactions (con’t.)
cash discount
sales discount
cash discount
sales discount
3 most common kinds of Cash Receipts for a merchandising business.
3 most common kinds of Cash Receipts for a merchandising business.
payments from charge customers
cash sales
bankcard sales
payments from charge customers
cash sales
bankcard sales
Section 3 Analyzing Cash Receipt Transactions (con’t.)
Section 3 Analyzing Cash Receipt Transactions (con’t.)
Cash SalesCash Sales
The business
receives full
payment for
merchandise sold
at the time of the
sale.
Most retailers use
a cash register to
record cash sales.
The business
receives full
payment for
merchandise sold
at the time of the
sale.
Most retailers use
a cash register to
record cash sales.
Section 3 Analyzing Cash Receipt Transactions (con’t.)
Section 3 Analyzing Cash Receipt Transactions (con’t.)
Cash Sales
Sales Tax
Cash from Charge CustomersCash from Charge Customers
Businesses record cash received
on account from charge customers
by preparing receipts.
Receipts are pre-numbered and
may be prepared in multiple
copies.
The receipt is a source document
for the journal entry.
Businesses record cash received
on account from charge customers
by preparing receipts.
Receipts are pre-numbered and
may be prepared in multiple
copies.
The receipt is a source document
for the journal entry.
Section 3 Analyzing Cash Receipt Transactions (con’t.)
Section 3 Analyzing Cash Receipt Transactions (con’t.)
Bankcard SalesBankcard Sales
A bankcard is issued by a bank and honored by many businesses.
Bankcard sales are recorded as though they are cash sales.
The store receives cash from the bank soon after it is deposited.
A bankcard is issued by a bank and honored by many businesses.
Bankcard sales are recorded as though they are cash sales.
The store receives cash from the bank soon after it is deposited.
Section 3 Analyzing Cash Receipt Transactions (con’t.)
Section 3 Analyzing Cash Receipt Transactions (con’t.)
Bankcard Sales
Sales Tax
Most common are VISA, MasterCard, and Discover.
Cash DiscountsCash Discounts
A cash discount, or sales discount, is
the amount a customer can deduct
from the amount owed for purchased
merchandise if payment is made
within a certain time.
Terms 2/10, n/30 means that the
customer can deduct 2% of the cost
of merchandise if payment is made
within 10 days of the sale date.
A cash discount, or sales discount, is
the amount a customer can deduct
from the amount owed for purchased
merchandise if payment is made
within a certain time.
Terms 2/10, n/30 means that the
customer can deduct 2% of the cost
of merchandise if payment is made
within 10 days of the sale date.
Section 3 Analyzing Cash Receipt Transactions (con’t.)
Section 3 Analyzing Cash Receipt Transactions (con’t.)
Cash Discount TransactionsCash Discount TransactionsOn December 3 On Your Mark
sold $1,500 worth of merchandise on account to South Branch High School Athletics (no tax because school).
The sale will be recorded in accounts receivable and sales for the full $1,500.
On December 3 On Your Mark sold $1,500 worth of merchandise on account to South Branch High School Athletics (no tax because school).
The sale will be recorded in accounts receivable and sales for the full $1,500.
Section 3 Analyzing Cash Receipt Transactions (con’t.)
Section 3 Analyzing Cash Receipt Transactions (con’t.)
Cash Discount Transactions (con’t.)Cash Discount Transactions (con’t.)
1. Merchandise DiscountSold X Rate = Discount
$1,500 X .02 = $30
2. Amount PaidWithin
Sales Slip Discount DiscountAmount – Amount = Period
$1,500 – $30 = $1,470
1. Merchandise DiscountSold X Rate = Discount
$1,500 X .02 = $30
2. Amount PaidWithin
Sales Slip Discount DiscountAmount – Amount = Period
$1,500 – $30 = $1,470
Section 3 Analyzing Cash Receipt Transactions (con’t.)
Section 3 Analyzing Cash Receipt Transactions (con’t.)
Section 3 Analyzing Cash Receipt Transactions (con’t.)
Section 3 Analyzing Cash Receipt Transactions (con’t.)
Cash Discount Transactions con’t.Cash Discount Transactions con’t.
If South Branch pays within 10 days (by December 13), On Your Mark will receive $1,470, or the original price less the cash discount of $30.
The actual payment will be recorded as follows:Cash in bank will be DR for $1,470Accounts Receivable is credited for the full $1,500 because the customer paid for the merchandise and doesn’t owe any more on the purchase.Sales Discounts (contra account to sales) will be DR for the $30 discount.
If South Branch pays within 10 days (by December 13), On Your Mark will receive $1,470, or the original price less the cash discount of $30.
The actual payment will be recorded as follows:Cash in bank will be DR for $1,470Accounts Receivable is credited for the full $1,500 because the customer paid for the merchandise and doesn’t owe any more on the purchase.Sales Discounts (contra account to sales) will be DR for the $30 discount.
Section 3 Analyzing Cash Receipt Transactions (con’t.)
Section 3 Analyzing Cash Receipt Transactions (con’t.)
Cash Discount Transactions con’t.Cash Discount Transactions con’t.
20--Nov 2 1470 --
30 --Accounts Receivable/Liz Perry
Cash in Bank
Sales Discount
1500 --
3
Source Document
Business Transaction
ANALYSIS Identify 1. The accounts affected are Cash in Bank, Accounts Receivable (controlling), Accounts Receivable—Casey Klein (subsidiary).
On December 5 On Your Mark received $212 from Casey Klein to apply to her account, Receipt 301.
Recording Cash Received from Charge CustomersRecording Cash Received from Charge Customers
Section 3 Analyzing Cash Receipt Transactions (con’t.)
Section 3 Analyzing Cash Receipt Transactions (con’t.)
Business Transaction (con’t.)
ANALYSIS Classify 2. Cash in Bank, Accounts Receivable (controlling) and Accounts Receivable—Casey Klein (subsidiary) are asset accounts.
Section 3 Analyzing Cash Receipt Transactions (con’t.)
Section 3 Analyzing Cash Receipt Transactions (con’t.)
Recording Cash Received from Charge Customers (con’t.)
Recording Cash Received from Charge Customers (con’t.)
On December 5 On Your Mark received $212 from Casey Klein to apply to her account, Receipt 301.
Business Transaction (con’t.)
ANALYSIS + / – 3. Cash in Bank is increased by $212. Accounts Receivable (controlling) and Accounts Receivable—Casey Klein (subsidiary) are decreased by $212.
Section 3 Analyzing Cash Receipt Transactions (con’t.)
Section 3 Analyzing Cash Receipt Transactions (con’t.)
Recording Cash Received from Charge Customers (con’t.)
Recording Cash Received from Charge Customers (con’t.)
On December 5 On Your Mark received $212 from Casey Klein to apply to her account, Receipt 301.
Business Transaction (con’t.)
DEBIT-CREDIT RULE 4.Increases to asset accounts are recorded as debits. Debit Cash in Bank for $212.
5.Decreases to asset accounts are recorded as credits. Credit Accounts Receivable (controlling) for $212. Also credit Accounts Receivable—Casey Klein (subsidiary) for $212.
Section 3 Analyzing Cash Receipt Transactions (con’t.)
Section 3 Analyzing Cash Receipt Transactions (con’t.)
Recording Cash Received from Charge Customers (con’t.)
Recording Cash Received from Charge Customers (con’t.)
On December 5 On Your Mark received $212 from Casey Klein to apply to her account, Receipt 301.
T ACCOUNTS 6.Cash in AccountsBank Receivable
Business Transaction (con’t.)
Debit+
212
Credit–
212
Credit–
Accounts ReceivableSubsidiary Ledger
Casey Klein
Debit+
Credit–
212
Section 3 Analyzing Cash Receipt Transactions (con’t.)
Section 3 Analyzing Cash Receipt Transactions (con’t.)
Recording Cash Received from Charge Customers (con’t.)Recording Cash Received from Charge Customers (con’t.)
On December 5 On Your Mark received $212 from Casey Klein to apply to her account, Receipt 301.
Debit+
Business Transaction (con’t.)
JOURNAL ENTRY 7.
Section 3 Analyzing Cash Receipt Transactions (con’t.)
Section 3 Analyzing Cash Receipt Transactions (con’t.)
Recording Cash Received from Charge Customers (con’t.)
Recording Cash Received from Charge Customers (con’t.)
On December 5 On Your Mark received $212 from Casey Klein to apply to her account, Receipt 301.
Demonstration Problems Ch14-3
Discount is off of the price of the merchandise before the sale.
60.--4.5049.70--.--25.20
20--Jan 12
Sales Discount3626 --
74.--Cash In Bank
Receipt 1112Accounts Receivable/Lincoln H.S. 3700.--
9
Check Your UnderstandingCheck Your Understanding
Section 3 Analyzing Cash Receipt Transactions (con’t.)
Section 3 Analyzing Cash Receipt Transactions (con’t.)
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