Lesson: 49

Topic: The Sales Journal

Objectives:

The primary focus of this topic is the Sales Journal which we use to record credit sales along with their associated entries to the GST payable account.

A secondary focus for this particular class will be to analyze how GST is actually collected and remitted by businesses. Students will come to appreciate how the entire Goods and Services Tax is only paid by the final consumer of a product - even though it might appear that businesses also pay GST on their purchases.

In addition, we will analyze how an entry to the Sales Return and Allowance account would be recorded within the General Journal.

The Sales Journal is used only for credit sales. Cash sales, as well as payments received on the accounts outlined above, are recorded within the Cash Receipts Journal.

At the end of the month, the amounts still owed to us by our customers are noted within a Schedule of Accounts Receivable.

Method of Instruction and Evaluation:

After a Socratic lecture on the above topics, students will complete the Sales Journal section of Exercise #4 on page 552 of the text (pages 423-426 in the workbook).

Expectations Addressed:

The "Advanced Accounting Practices" strand of the BAF3M Ministry of Education Curriculum Guidelines outlines all of the following specific expectations. The expectations addressed by this lesson have been highlighted below.

• The Accounting Cycle for a Merchandising Business:
  • describe the principal accounting elements particular to a merchandising business (e.g., new accounts, cost of goods sold section, returns, discounts);
  • identify and describe the periodic and perpetual inventory systems and journalize transactions using both systems;
  • assess the effects that transactions have on the accounts and financial statements of a merchandising business;
  • record transactions in the journals and ledgers of a merchandising business;
  • prepare a trial balance and the financial statements, including a detailed cost of goods sold section, for a merchandising business;
  • record the adjusting and closing entries for a merchandising business (e.g., accruals, inventory adjustment);
  • describe the impact of year-end procedures, including adjusting and closing entries, on the financial statements of a merchandising business;
  • describe alternative accounting practices (e.g., special journals and ledgers).
• Accounting for Sales Tax:
  • describe the accounting practices particular to sales tax (e.g., accounts required, financial statement presentation);
  • record transactions related to provincial sales tax (e.g., collections, remittance);
  • record transactions related to federal sales tax (e.g., collections, remittance).
• Computer Applications in Accounting:
  • use accounting or application software to record transactions for a service business;
  • use accounting or application software to record transactions for a merchandising business;
  • use accounting or application software to prepare financial statements.

References:

• Text: Please read this topic (pages 545 - 546) in preparation for the class.
• Web: Please refer to the online handout entitled G.S.T. - The "Big Salad"