Manual Project Ch 3

• 1. Sales
• 2. Cash Receipts
• 3. Sales returns and allowances
• 4. Estimate  bad debt expense
• 5. Write-off of uncollectible accounts

• 1. Record transactions
• 2. Correct amounts
• 3. Use chart of accounts classification
• 4. Proper period
• 5. Uncollectible receivables  written off
• 6. Reasonable allowance account valuation
• 7. Material disclosures in statements  foodnotes

• 1.Receive order/ customer purchase order
• 2. Ship goods/ bill of lading and^or perpetual inventory record
• 3. Bill Customer/ Sales invoice and price list
• 4. Record and post  sales / Sales journal and A/R sub. ledger
• 5. Summarize  journal and post to ledger/ General ledger

The order can be received by mail, sales person, phone, or in person

• Prepared to request goods or services from a customer.
• Includes: quantity, goods or services desired, and desired delivery or performance date
• Credit sales requires approval

GAAP requires the recognition of revenue when service is received or when goods were shipped.

• Document prepared at the time of shipment
• Includes: the description of the merchandise, quantity shipped, freight charges, freight carrier, and date of shipment
• Signed for shipping

Billing informs customer of amount owed

• Includes: quantity ordered, product #, item, quantity shipped, unit price, total price, total amount of sale, due date of payment, lading #, shipping info, purchase order #, customer account #
• reviewed for accuracy and initialed

• indicates product prices for billing
• Includes Item #, Desription, Cost, Selling Price

Approved and signed by management

Sales are recorded in sales journal (cash sales may be in the cash receipts journal) and posted to AR sub. ledger to customer's account

Colums Includes: Date, Customer #, Invoice or Credit Memo #, Sub. Account #, Acct. Receivable, Sales Return, Sales

A ledger for recording individual sales, cash receipts, and sales returns and allowances for each customer

sales journal accounts are totaled and posted to ledger.

• 1. Receive cash/ Remittance advice, cash receipts prelist
• 2. Deposit cash/ Bank deposit slip
• 3. Record in Journal & sub. ledger/ Cash receipt journal, A/R subsidiary ledger
• 4. Summarize journal & post to ledger/ gen. ledger

GAAP- cognition of cash at receipt date rather deposit or mailing date

• accompanies sales invoice mailed to customer and can be returned with payment.
• Indicates the customer name, sales invoice number, and the amount of the invoice when the payment is received.

• prepared when cash is received. Used to  verify amounts and timeliness of recording
• Includes: Date, description, purpose, Check #, Invoice #, Amount of invoice, amount received

deposit to bank  quickly (daily) to reduce loss or theft and make it available for company use

• accompanies deposits, list checks and currency 
• bank keeps original and returns  validated copy

cash receipts transactions are recorded in cash receipt journal and posted to Acct. Receivable sub. ledger to reduce amount owed

• Record cash receipts from collections, cash sales, and other cash receipts.
• It shows: Date, description, cash, sales discounts, account receivable, sales, other-Acct # amont 

The cash receipts journal is totaled then posted to the general ledger. The other cash receipt accounts are posted individually

• 1.Process Sales Return and Allow. request/Sales return or allow. request
• 2. Receive goods (returns only)/Receiving report
• 3. Credit the customer/Credit memo
• 4. Record in journal and Sub. ledger/Sales return and allow journal and AR sub. ledger
• 5.Summarize  journal and post to  ledger/ Gen. ledger

Typically approved by a salesperson or sales manager. Parties can negotiation the amount of credit

• Includes: Acct #, desired type of refund,quantity, description, reason for return, invoice # & date, signature of authorization
• once items are return the form is completed with quatity, price, and total of refund

GAAP- recognize returns in same period as sale. For convenience some companies do otherwise

• Prepared when goods are received
• Includes: Date, PO or Return #,  freight carrier & bill #, quantity, item #, description, remarks of condition, received by, delivered to

inform and agree with customer for the amount of credit

• Sent to customer showing amount and terms of the return or allowance
• Includes:  acct #, return req. #, invoice # & date, receiving report #, item #, description, quantiy, price, amount,total, type of refund, prepared by

Can be a separate journal or part of the sales journal. Shown in separate column if in the sales journal. Posted in account receiveble ledger

total journal or column in sales journal and post to general ledger

• 1.Determine provision for bad debts/bad debts memo
• 2. Record in journal/ general journal
• 3. Post to ledger/ post to ledger

GAAP-recognize bad debts in same period of sale. Often estimated as a percent of gross or net sales from past experience.

Not all companies use this document. A separate file is given to show the basis of estimate

Record in the general journal and post individually to general ledger

• 1 Identify uncollect. acct. receivable/ List of uncollectible Acct Recievable
• 2. Record in journal and sub. ledger/ general journal & Acct. Rec. Sub. ledger
• 3. Post to ledger / general ledger

Usually done by credit manager. Circumstances: bankruptcy, move with no forward address, turned over to collect agency

record in the general journal and post in the AR sub. ledger

Post items from general journal individually to general ledger

listing of ending balaces in the AR subsidiary ledger at specifice point in time

• 1.Customer name and acct number
• 2.total balance due
• 3. Aging- How much is current according to date of sale to how much is past due by period

• 1 reconcile control acct to sub ledger to check recording errors
• 2. Convenient to help managers see which accts need greater collection efforts
• 3. Provides justification of the estimate for bad debts

• 1. Credit before shipment
• 2. Ship goods
• 3. Price to charge
• 4. credits for returns and write-offs
• 5. Cash discounts for early payments

• 1.shippings docs
• 2.slaes invoices
• 3.prices on invoice vs price list
• 4.footing in journals
• 5.reconcile AR control to Sub ledger
• 6.bank reconciliation

Provides a check for accuracy in buyer's and seller's records