Slide 1
Accounting for SalesService Businessprovides service for a
feeMerchandising Businessbuys goods, then resells for profitTwo
Types of MerchandisersRetailer sells to the final userWholesaler
sells to retailersOperating Cycle of a MerchandiserPurchase of
Goods for ResaleSale of Goodsfor cash on Account Receive
Cashprofitpay expensesMerchandise Inventory Account Merchandise
goods bought for resaleInventory merchandise that is in
stockMerchandise Inventory asset account that is adjusted only at
the end of the period
Salesrevenue account that is credited when merchandise is soldif
cash sale Dr. Cash in Bank and Cr. Salesif sale on accountDr. A/R
and Cr. SalesProblem 14-1Apr. 4:Sold cameras on account for $3,000,
Sales Slip 224Apr. 10: Sold photo albums for $150 cash, Sales Slip
225Apr. 20: Sold rolls of film for $24 cash, Sales Slip 226Apr. 25:
Sold camera for $380 cash, Sales Slip 227Analyzing Sales
TransactionsThe most frequent transactions in a merchandising
businesscash sale of merchandiseretailerssale of merchandise on
accountwholesalers and manufacturersSale on Accountsale of
merchandise that will be paid for later (aka: charge sale, credit
sale)Charge Customer the person to whom a charge sale is madeCredit
Cards issued by business to charge customers for making purchases
on accountSears, Macys, Mobil
Bank Cards issued by a bank to individuals to make purchases
treat like cashbank pays business right awayVisa, MasterCardThe
Sales Slipform that lists details of credit salesource document for
transactionpre-numbered slips help businesses stay organizedSales
Tax Payable Accountmost states and some cities tax retail salestax
paid by customer, collected by business, & forwarded to
governmentcollected sales taxes are liabilitiessome entities (like
schools) are exempt from sales taxCredit Termsstate time allowed
for payment (and the discount period)2/10 n/30if paid within 10
days, receive a 2% discount, otherwise due within 30 daysAccounts
ReceivableFew Customers individual A/R account for each
customerMany Customer one controlling A/R account with details in a
subsidiary ledgerSubsidiary Ledgerbook that contains details of a
controlling accountControlling Accountits balance equals the total
of all the balances in the subsidiary ledgerAccounts Receivable
Subsidiary Ledgerlists all customers and what they oweAccounts
Receivable Controlling Accountshows the total of what is owed (no
details)Sold merchandise on account to C. Klein for $200 plus 6%
sales tax.Sales Returns and AllowancesSome customers are
dissatisfied.Sales Returnmerchandise returned for credit or
cashSales Allowanceprice reduction for damaged goods kept by
customerCredit Memolists details of sales return or allowance
andthe charge customers A/R is creditedSales Returns and Allowances
Account contra account balance offsets the balance of the Sales
accountused to help identify any issuesCash TransactionsCash
SaleDebit CashCredit Sales and Sales Tax Payablesource
documentreceiptregister tapeCash TransactionBankcard SaleDebit
CashCredit Sales and Sales Tax PayableSource DocumentBankcard
SlipRegister TapeCash TransactionCharge Customer PaymentsDebit
CashCredit Accounts ReceivableSource DocumentReceiptCash
TransactionsLoan ProceedsDebit CashLoan PayableAsset SaleDebit
CashCredit AssetCash Discountaka Sales Discountsencourage prompt
paymentbased on credit termsDebit CashDebit Sales DiscountsDebit
Sales Tax PayableCredit Accounts Receivable
