Section 2: Cash Receipts Journal

ACCOUNTING I IMS. ALLTUCKER

Section 2: Cash Receipts Journal

Learning Objectives

What you will learn: How to record transactions in the cash receipts journal How to post from the cash receipts journal to accounts

receivable subsidiary ledger accounts How to post amounts in the general credit columns of

cash receipts journal to general ledger accounts How to post column totals How to prepare a schedule of accounts receivable

Why it’s important: Use of cash receipts journal will save time and reduce

errors

Cash Receipts Journal

Cash receipts Payments made from charge customers Cash sales Bank card sales Sale of other business assets

Cash Receipts Journal

Special journal used to record all cash receipt transactions

Every transaction recorded in cash receipts journal REQUIRES a debit to cash in bank Cash in bank debit column

Contains six amount columns

Cash Receipts Journal

Recording Cash from Charge Customers

Business Transaction

On December 5, OnYour Mark received $212from Casey Klein toapply on account,Receipt 301.

JOURNAL ENTRY

Recording Cash Received on Account, Less a Cash Discount

Business Transaction

On December 12, On Your Mark received $1,470from South Branch High School Athletics in pay-ment of Sales Slip 51 for $1,500 less the discount of $30, Receipt 302.

JOURNAL ENTRY

Recording Cash Sales

Business Transaction

On December 15, On YourMark records the cash salesfor the first two weeks ofDecember, $3,000, and $180in related sales taxes,Tape 55.

JOURNAL ENTRY

Posting to the Accounts Receivable Subsidiary Ledger

Daily postings are made from the Accounts Receivable Credit column to the accounts receivable subsidiary ledger

Ensures that customer accounts are always present

Posting to the Accounts Receivable Subsidiary Ledger

1. Enter the date of the transaction in the ledger account

2. Enter the post reference CR—cash receipts Example: CR12

3. enter the amount shown in the acct/rec credit column of the cash receipts journal

4. Compute new balance5. Enter a check mark in the post reference

column in cash receipts journal

Posting to the Accounts Receivable Subsidiary Ledger

Posting the General Credit Column

1. Enter the date of the transaction 2. Enter the journal letter and page number3. Enter amount from general column 4. compute new balance5. Return to cash receipts journal and enter

the general ledger account number in post reference

Posting the General Credit Column

Footing, Totaling, Proving and Ruling the CR Journal

1. Draw a single line across the six columns, below the last transaction

2. foot the columns3. Test for the equality of debits and credits4. Enter date of last transaction 5. Write “Totals”6. Enter the column totals in pen7. Double rule the amount columns** column totals are then posted to the general

ledger

Posting Column totals to the General Ledger

There are six amount columns in a CR journalONLY 5 COLUMN TOTALS ARE POSTED

Total of the general credit column is NOT posted Entries have already been posted, individually, to the

general ledger accounts

Posting Column totals to the General Ledger

1. Place a check mark in parenthesis under the General column total—this total is not posted

2. Post the sales total to the sales account credit column3. post the sales tax payable4. Post the accounts receivable total5. post the Sales discount total6. Post the cash in bank total7. Compute new balances for each8. Write the account number of each account below the

double lineLOOK ON PAGE 437 FOR AN EXAMPLE

Proving the Acct/Rec. Subsidiary Ledger

At the end of the month you have to prove that the Accounts Receivable (controlling account) total EQUALS the total of all subsidiary account

Schedule of Accounts Receivable report listing each charge customer, the balance in the customer’s account, and the total amount due from all customers

May be prepared on plain paper

Schedule of Accounts Receivable

Errors in the Subsidiary Ledger

Proving accounts receivable Internal control procedure that often uncovers certain

types of errors Detects a failure to post a transaction Detects a failure in computing new balances DOES NOT provide assurance that transactions were

posted to the correct customer account within the subsidiary ledger These types of errors are often detected when a

customer finds an error in their monthly billing