5. Cash Receipts Journal

What is a cash receipts journal?

Used to record all receipts of cash (all transactions that include a debit to cash)

What 3 types are cash receipts separated into?

1. Cash from credit customers in payment of their accounts.

2. Cash from cash sales.

3. Cash from other sources.

What column names does the Cash Receipts Journal have?

Date, Account Credited, Explanation, PR, Cash Dr., Sales Discount Dr., Accounts Receivable Cr., Sales Cr., Other Accounts Cr., Cost of Goods Sold Dr. Inventory Cr.

Which column int he Cash Receipts Journal is posted to the Accounts Receivable subsidiary ledgers?

Accounts Receivable Cr. column.

Review

In the last section the sales made up the debit column, now we have received the payment which is recorded in the Cash receipts journal so we credit the individual accounts in the Accounts Receivable ledger.

What is posted to the general ledger?

The totals of the individual Cash, Accounts Receivable, Sales, Sales Discounts, and Cost of Goods Sold & Inventory columns.

If the Other Accounts Cr. column includes amounts for accounts such as Notes Payable and Interest Revenue, where are these balances posted?

Posted immediately (not at end of period) to the general ledger in their specific accounts such as a credit to Notes Payable and a credit to Interest Revenue.

The $650 total balance of the five customer accounts (from the Accounts Receivable Subsidiary Ledger) equals…

the balance in the Accounts Receivable control account (in General Ledger).

What does Accounts Receivable Cr. represent?

How much we credit the customer's accounts receivable after they have paid off the invoice.

If the customer pays with cash right away what would we debit and credit in the journal?

Debit cash and credit sales. Debit Cost of Goods Sold and credit Inventory since we sold merchandise.

If the customer pays within the discount period what would we debit and credit in the journal?

Debit cash for full amount - discount, debit Sales discount for discount amount, and credit Accounts Receivable for full amount.

When we receive cash from credit customers how would we journalize this?

The amounts debited to both Cash and Sales Discounts (if any) are entered in their columns, and the amount credited to the customer's account is entered in Accounts Receivable Cr. column.

When we receive cash from credit customers how would we post this?

Individual amounts in the Accounts Receivable Cr. column are posted immediately to customer accounts in the subsidiary accounts receivable ledger. The $1,500 column total is posted at the end of the period (month in this case) as a credit to the Accounts Receivable controlling account in the ledger.

When we have a cash sale how would we journalize this?

Each cash sale is entered in the Cash Dr. column and the Sales Cr. column. Each cash sale also yields an entry to Cost of Goods Sold Dr. and Inventory Cr. for the cost of merchandise.

When we have a cash sale how would we post this?

Cash sales are not individually posted (x in PR column). We do post the Sales Cr. total and the total from the cost of goods sold and inventory column (both are in same column) to their respective accounts in the general ledger at the end of the period.

How would we record in the cash receipts journal a $700 cash sale of land when the land carries a $700 original cost?

Debit the cash column for $700, and credit the Other Accounts column for $700 (the account credit is Land)

What are examples of cash from other sources?

Money borrowed from a bank, cash interest received, cash sale of noninventory assets, and cash invested by owners.

How would we journalize cash from other sources?

debit cash, credit Other Accounts

How would we post cash from other sources?

The transactions are immediately posted to their respective general ledger accounts. For example if the transaction was Notes payable, it would be posted to the Notes payable account.

What needs to be done to be sure that debits and credits in a journal are equal?

We crossfoot column totals before posting them

What does crossfooting mean?

Add the Debit column totals, then add the Credit column totals, and verify that the Debit and Credit column totals are equal.

What does it mean to foot a column of numbers?

To add it.

Review figure under Footing, Crossfooting, and Posting

What happens at the end of the period?

The total amounts from the column of the cash receipts journal are posted to their general ledger accounts. (besides the Other Accounts column since that is immediately posted when the transaction is recorded)

At the end of the period why is the Other Accounts Cr. column total not posted?

Because the individual amounts are immediately posted to their general ledger accounts

What does an x below the Other Accounts Cr. column indicate?

The column total is not posted

What is entered in parentheses below each column?

The account numbers for the column totals that are posted.

As a special events concert organizer, you want to know how quickly customers are paying their bills. Where do you find this information?

The accounts receivable ledger lists detailed information for each customer's account, including the amounts, dates of transactions, and dates of payments. It shows how long customers wait before paying their bills.

Review Need-To-Know 7-4