1
00:00:00,840 --> 00:00:04,599
So, $3,950, okay?

2
00:00:04,600 --> 00:00:07,919
And then my last transaction,

3
00:00:07,920 --> 00:00:11,079
it is N for Nancy, I guess.

4
00:00:11,080 --> 00:00:12,679
Or Nathan.

5
00:00:12,680 --> 00:00:17,159
Is that on the 31st, we issue credit memo

6
00:00:17,160 --> 00:00:21,839
for $595 merchandise return
from March 30th transaction,

7
00:00:21,840 --> 00:00:23,199
the previous day.

8
00:00:23,200 --> 00:00:26,279
The cost of that merchandise was $390.

9
00:00:26,280 --> 00:00:28,679
So, we did a transaction similar to that,

10
00:00:28,680 --> 00:00:30,119
where we had a return.

11
00:00:30,120 --> 00:00:31,599
So, we have an account.

12
00:00:31,600 --> 00:00:35,959
It's going to be called
Sales Return and Allowances.

13
00:00:35,960 --> 00:00:38,439
So, we're going to debit
because the normal side

14
00:00:38,440 --> 00:00:41,919
for sales return allowances
and sales discount--

15
00:00:41,920 --> 00:00:43,119
contra revenue account--

16
00:00:43,120 --> 00:00:44,999
is going to be on the debit side

17
00:00:45,000 --> 00:00:46,399
because revenue--the normal side--

18
00:00:46,400 --> 00:00:48,119
is going to be on the credit side.

19
00:00:48,120 --> 00:00:52,479
And then, we want to make sure we credit
the accounts receivable

20
00:00:52,480 --> 00:00:55,079
for this customer.

21
00:00:55,080 --> 00:01:01,959
And the credit memo issue was for $595.

22
00:01:01,960 --> 00:01:05,579
This $595

23
00:01:05,580 --> 00:01:14,059
cost us $390.

24
00:01:14,060 --> 00:01:17,979
So, we want to make sure we do like almost a reverse entry

25
00:01:17,980 --> 00:01:23,939
where we first debit
the merchandise inventory.

26
00:01:23,940 --> 00:01:26,539
And then, we

27
00:01:26,540 --> 00:01:31,179
credit cost of goods sold.

28
00:01:31,180 --> 00:01:35,859
And it was for $390, okay?

29
00:01:35,860 --> 00:01:40,899
So, now I want to go to my subsidiary
ledger account for my customer,

30
00:01:40,900 --> 00:01:45,259
making sure that I put in
that credit of $595.

31
00:01:45,260 --> 00:01:51,899
So, this is transaction N.

32
00:01:51,900 --> 00:01:56,699
And this is for credit memo number 2

33
00:01:56,700 --> 00:02:02,739
for $595 that we're giving back
to the customer.

34
00:02:02,740 --> 00:02:08,469
And so, this customer no longer owes us
$3,950.

35
00:02:08,470 --> 00:02:10,349
By crediting it--

36
00:02:10,350 --> 00:02:13,189
This is, again, a subsidiary accounts receivable

37
00:02:13,190 --> 00:02:15,029
is still an accounts receivable account;

38
00:02:15,030 --> 00:02:17,869
the normal side's on the debit side.

39
00:02:17,870 --> 00:02:18,909
By crediting it,

40
00:02:18,910 --> 00:02:22,549
we're reducing the balance that the customer owed to us.

41
00:02:22,550 --> 00:02:25,309
This will complete all our journal entries.

42
00:02:25,310 --> 00:02:27,589
You can check it against your solution.

43
00:02:27,590 --> 00:02:30,989
Um, if you went through the whole process
of doing a general ledger,

44
00:02:30,990 --> 00:02:35,429
you can also check against the general ledger solution for each account.

45
00:02:35,430 --> 00:02:38,709
Um, but my subsidiary account
is now put together.

46
00:02:38,710 --> 00:02:41,069
You can check it against the solution,

47
00:02:41,070 --> 00:02:44,429
but what you want to put together is,

48
00:02:44,430 --> 00:02:47,749
um, the accounts receivable schedule, okay?

49
00:02:47,750 --> 00:02:50,029
So, basically, we want to know

50
00:02:50,030 --> 00:02:53,269
what is the makeup of my accounts receivable?

51
00:02:53,270 --> 00:02:55,189
So, what you want to do is,

52
00:02:55,190 --> 00:02:58,749
you would look at the balance for each of your customer.

53
00:02:58,750 --> 00:03:01,149
Uh, Durant, Durant, Durant.

54
00:03:01,150 --> 00:03:04,889
The balance is $250.

55
00:03:04,890 --> 00:03:08,889
And then, for Ron Lenham,

56
00:03:08,890 --> 00:03:13,049
it is...

57
00:03:13,050 --> 00:03:14,609
$3355.

58
00:03:14,610 --> 00:03:20,649
And then, also for--
oops, excuse me--

59
00:03:20,650 --> 00:03:26,009
Penny, the balance is--

60
00:03:26,010 --> 00:03:27,249
Penny, Penny, Penny,

61
00:03:27,250 --> 00:03:31,409
the balance is $800.

62
00:03:31,410 --> 00:03:36,729
And then, for Jim Zamara.

63
00:03:36,730 --> 00:03:37,529
Zamara, sorry.

64
00:03:37,530 --> 00:03:40,889
Um, I'm awful, awful, awful with names.

65
00:03:40,890 --> 00:03:42,849
The balance is $750,

66
00:03:42,850 --> 00:03:45,689
which add up to be $5155.

67
00:03:45,690 --> 00:03:47,769
So, your balance for accounts receivable--

68
00:03:47,770 --> 00:03:49,969
So, here let's just show you really quickly.

69
00:03:49,970 --> 00:03:54,649
If you have done all of your
general ledger correctly,

70
00:03:54,650 --> 00:03:56,049
you will see that,

71
00:03:56,050 --> 00:04:00,449
um, again, that beginning balance
is given to you under Data.

72
00:04:00,450 --> 00:04:04,609
So, under Data, that $5000,

73
00:04:04,610 --> 00:04:07,989
um, accounts receivable balance

74
00:04:07,990 --> 00:04:11,229
was make up a sum of between
all of your customer:

75
00:04:11,230 --> 00:04:14,949
$250, plus $550, plus $800, plus $550

76
00:04:14,950 --> 00:04:17,269
would equals to $2150.

77
00:04:17,270 --> 00:04:19,829
If you have kept track
of all your transactions

78
00:04:19,830 --> 00:04:24,429
for accounts receivable, the total is $5155.

79
00:04:24,430 --> 00:04:28,549
The purpose of a schedule
of accounts receivable--

80
00:04:28,550 --> 00:04:30,269
Um, oops.

81
00:04:30,270 --> 00:04:33,269
The purpose of a schedule of accounts receivable

82
00:04:33,270 --> 00:04:37,469
is to know that what is that make up
of $5,155?

83
00:04:37,470 --> 00:04:40,189
How much each customer owe you?

84
00:04:40,190 --> 00:04:44,069
And even more sophisticated report

85
00:04:44,070 --> 00:04:47,309
will be called a Schedule of Accounts Receivable.

86
00:04:47,310 --> 00:04:48,869
Would also--

87
00:04:48,870 --> 00:04:52,149
you'll learn in a 200-level financial accounting class--

88
00:04:52,150 --> 00:04:56,869
where it will show, um,
not only how much each customer owe you

89
00:04:56,870 --> 00:05:00,459
but how much they owe you within 0 to 30 days,

90
00:05:00,460 --> 00:05:02,029
31 to 60 days,

91
00:05:02,030 --> 00:05:03,909
and then 61 to 90 days,

92
00:05:03,910 --> 00:05:07,439
or 90 days beyond.

93
00:05:07,440 --> 00:05:09,319
Usually, the longer they owe you the money,

94
00:05:09,320 --> 00:05:11,839
the less likely they will pay you back.

95
00:05:11,840 --> 00:05:13,999
And this would be something that you will learn

96
00:05:14,000 --> 00:05:17,719
when you learn about bad debt expense

97
00:05:17,720 --> 00:05:19,839
in Financial 200 financial accounting class.

98
00:05:19,840 --> 00:05:22,559
In this class, in your Introduction to Accounting class,

99
00:05:22,560 --> 00:05:25,439
you always assume your customer
will pay you on-- you know, on time--

100
00:05:25,440 --> 00:05:27,959
and you will always pay your vendors on time.

101
00:05:27,960 --> 00:05:30,239
But in financial accounting, a second--

102
00:05:30,240 --> 00:05:34,079
um, 200 level, you will learn
what happens when they don't pay you.

103
00:05:34,080 --> 00:05:36,679
Okay, this is a much longer video than I intended.

104
00:05:36,680 --> 00:05:38,679
Sorry, there was a lot of back and forth,

105
00:05:38,680 --> 00:05:42,959
and then I also wanted to give you
some additional information.

106
00:05:42,960 --> 00:05:46,839
Um, the key again of this particular
video for this chapter

107
00:05:46,840 --> 00:05:49,959
is you need to know how to record journal entry

108
00:05:49,960 --> 00:05:52,879
for perpetual inventory system
under the gross method.

109
00:05:52,880 --> 00:05:55,199
You need to know how to figure out

110
00:05:55,200 --> 00:05:58,839
and put together your
schedule of accounts receivable.

111
00:05:58,840 --> 00:05:59,439
Okay.

112
00:05:59,440 --> 00:06:01,319
Well, um, thank you for watching the video,

113
00:06:01,320 --> 00:06:04,079
and I hope that this is helpful in your learning.

114
00:06:04,080 --> 00:06:06,079
Please email me if you have any questions

115
00:06:06,080 --> 00:06:08,560
and I will see you guys later.
Thank you. Bye.