section 3analyzing cash receipt transactions what you’ll learn how to record cash receipt...

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.)


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



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.



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.



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.



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.



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.



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





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.



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



Business Transaction (con’t.)

ANALYSIS Classify 2. Cash in Bank, Accounts Receivable (controlling) and Accounts Receivable—Casey Klein (subsidiary) are asset accounts.



Recording Cash Received from Charge Customers (con’t.)




ANALYSIS + / – 3. Cash in Bank is increased by $212. Accounts Receivable (controlling) and Accounts Receivable—Casey Klein (subsidiary) are decreased by $212.







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.






T ACCOUNTS 6.Cash in AccountsBank Receivable


Debit+

212

Credit–

212

Credit–

Accounts ReceivableSubsidiary Ledger

Casey Klein

Debit+

Credit–

212



Recording Cash Received from Charge Customers (con’t.)Recording Cash Received from Charge Customers (con’t.)


Debit+


JOURNAL ENTRY 7.






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



•P376 ALL•P376 ALL

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