Learning Objectives LO 4 Record cash and credit

Learning Objectives LO 4 Record cash and credit card sales using a cash receipts journal. LO 5 Journalize cash receipts on account using a cash receipts journal. © 2014 Cengage Learning. All Rights Reserved.

Lesson 10 -3 Processing Sales Transactions LO 4 ● A sale in which the customer pays for the total amount of the sale at the time of the transaction is called a cash sale. ● Credit card and debit card sales are treated as cash sales because the business receives its cash in a very short time. ● A specialized computer used to collect, store, and report all the information about a sales transaction is called a point-ofsale (POS) terminal. ● A UPC (universal product code) on an item is scanned and the information is processed by the POS terminal. © 2014 Cengage Learning. All Rights Reserved. SLIDE 2

Lesson 10 -3 Processing Sales Transactions LO 4 ● The POS terminal processes the information and displays the price of the merchandise. ● Once all merchandise has been scanned, the form of payment is entered by the clerk. ● The POS terminal determines if a card is a debit card or credit card ● If cash is used, the POS terminal computes the amount of change ● The POS system produces a receipt that contains detailed information about the sale. ● The report that summarizes the cash and credit card sales of a point-of-sale terminal is called a terminal summary. ● Also known as Z tape © 2014 Cengage Learning. All Rights Reserved. SLIDE 3

Lesson 10 -3 Terminal Summary © 2014 Cengage Learning. All Rights Reserved. LO 4 SLIDE 4

Lesson 10 -3 Processing Credit Cards LO 4 ● Sales information for credit card sales is stored in the POS terminals. ● A report of credit card sales produced by a pointof-sale terminal is called a batch report. ● A batch report can be detailed, showing every credit card sale. ● Or, the batch report can be a summary, showing only the number and total of sales by credit card type. ● The process of preparing a batch report from a point-of-sale terminal is called batching out. © 2014 Cengage Learning. All Rights Reserved. SLIDE 5

Lesson 10 -3 Batch Report LO 4 © 2014 Cengage Learning. All Rights Reserved. SLIDE 6

Lesson 10 -3 Cash Receipts Journal LO 4 ● A cash receipts journal is a special journal used to record only cash receipt transactions. . ● The cash receipts journal has many special amounts columns for frequently occurring transactions ● Businesses can offer a discount to customers who purchase on credit to encourage early payment ● A cash discount on a sale taken by the customer is called a sales discount. ● Cash discounts lower the amount received by the business © 2014 Cengage Learning. All Rights Reserved. SLIDE 7

Lesson 10 -3 Cash and Credit Card Sales LO 4 ● A business decides when it will batch out, deposit cash and record sales in the sales journal – typically this is done daily ● Cash sales is deposited to the bank ● Credit card sales is received two or three days later ● The two deposits equal the sales reported on the terminal summary © 2014 Cengage Learning. All Rights Reserved. SLIDE 8

Lesson 10 -3 Cash and Credit Card Sales LO 4 Cash November 4. Recorded cash and credit card sales, $6, 280. 00, plus sales tax, $376. 80; total, $6, 656. 80. Terminal Summary 35. Date Terminal Summary Number 1 3 6, 656. 80 Sales 6, 280. 00 Sales Tax Payable 376. 80 2 4 5 6 7 Check Mark Sales Tax Payable Cash © 2014 Cengage Learning. All Rights Reserved. SLIDE 9

Lesson 10 -3 Cash Receipts on Account LO 5 ● A transaction in which cash is received on account will increase the balance in Cash and decrease the future amount to be collected from the customer (Accounts Receivable) © 2014 Cengage Learning. All Rights Reserved. SLIDE 10

Lesson 10 -3 Cash Receipts on Account November 4. Received cash on account from Edmonds Hospital, $2, 516. 80, covering S 448. Receipt No. 610. LO 5 Cash 2, 516. 80 Accounts Payable 2, 516. 80 2 Customer’s Name 1 Date 3 Receipt Number 4 Sales Invoice Amount © 2014 Cengage Learning. All Rights Reserved. Cash Received 5 SLIDE 11

Lesson 10 -3 Calculating Cash Receipts on Account with Sales Discount LO 5 ● If a sales discount is offered and the customer takes the discount and pays within the discount terms, the merchandising business needs to account for the discount. ● Multiply the invoice amount by the discount amount to determine the amount of the discount. Sales Invoice Amount $1, 450. 00 × Sales Discount Rate = Sales Discount × 2% = $29. 00 © 2014 Cengage Learning. All Rights Reserved. SLIDE 12

Lesson 10 -3 Journalizing Cash Receipts on Account with Sales Discounts LO 5 Cash November 5. Received cash on account from Palmer Dentistry, $1, 421. 00, covering Sales Invoice No. 462 for $1, 450. 00, less 2% discount, $29. 00. Receipt No. 611. 1, 421. 80 Accounts Receivable 1, 450. 00 Sales Discount 29. 00 2 Customer’s Name 1 Date 3 4 Original Sales Amount Receipt Number Sales Discount 5 © 2014 Cengage Learning. All Rights Reserved. 6 Cash Received SLIDE 13

Lesson 10 -3 Work Together 10 -3: Journalize transactions in the Cash Receipts Journal Sept. 3. Received cash on account from Lenny Stafford covering S 216, $2, 189. 36, less 2% discount. R 264. *discount: 2189. 36 x. 02 = 43. 79 © 2014 Cengage Learning. All Rights Reserved. SLIDE 14

Lesson 10 -3 Work Together 10 -3: Journalize transactions in the Cash Receipts Journal Sept. 6. Recorded cash and credit card sales, $5, 326. 30, plus sales tax, $298. 15; total, $5, 624. 45. TS 38. © 2014 Cengage Learning. All Rights Reserved. SLIDE 15

Lesson 10 -3 Work Together 10 -3: Journalize transactions in the Cash Receipts Journal Sept. 8. Received cash on account from Venice Café covering S 218 for $390. 34, less 2% discount. R 265. *discount: 390. 34 x. 02 = 7. 81 © 2014 Cengage Learning. All Rights Reserved. SLIDE 16

Lesson 10 -3 Work Together 10 -3: Journalize transactions in the Cash Receipts Journal Sept. 20. Recorded cash and credit card sales, $5, 624. 45, plus sales tax, $320. 59; total, $5, 945. 04. TS 39. © 2014 Cengage Learning. All Rights Reserved. SLIDE 17

Lesson 10 -3 Work Together 10 -3: Journalize transactions in the Cash Receipts Journal Sept. 28. Received cash on account from Washington City Schools covering S 199 for $1, 509. 45. R 266. © 2014 Cengage Learning. All Rights Reserved. SLIDE 18

Lesson 10 -3 Audit Your Understanding 1. How does a POS terminal determine the price of an item? ANSWER Before any sale is entered, the number, description, price, and quantity on hand of each item of merchandise are stored in the POS terminal. © 2014 Cengage Learning. All Rights Reserved. SLIDE 19

Lesson 10 -3 Audit Your Understanding 2. What are the two types of batch reports? ANSWER A batch report can be detailed, showing each credit card sale, or a summary of the number and total of sales by credit card type. © 2014 Cengage Learning. All Rights Reserved. SLIDE 20

Lesson 10 -3 Audit Your Understanding 3. What is meant by 2/10, n/30 credit terms? ANSWER If a customer pays the amount owed within 10 days, the sales invoice amount is reduced 2%. Otherwise, the net amount is due in 30 days. © 2014 Cengage Learning. All Rights Reserved. SLIDE 21