WEBVTT

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So, $3,950, okay?

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And then my last transaction,

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it is N for Nancy, I guess.

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Or Nathan.

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Is that on the 31st, we issue credit memo

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for $595 merchandise return
from March 30th transaction,

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the previous day.

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The cost of that merchandise was $390.

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So, we did a transaction similar to that,

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where we had a return.

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So, we have an account.

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It's going to be called
Sales Return and Allowances.

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So, we're going to debit
because the normal side

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for sales return allowances
and sales discount--

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contra revenue account--

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is going to be on the debit side

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because revenue--the normal side--

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is going to be on the credit side.

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And then, we want to make sure we credit
the accounts receivable

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for this customer.

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And the credit memo issue was for $595.

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This $595

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cost us $390.

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So, we want to make sure we do like almost a reverse entry

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where we first debit
the merchandise inventory.

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And then, we

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credit cost of goods sold.

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And it was for $390, okay?

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So, now I want to go to my subsidiary
ledger account for my customer,

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making sure that I put in
that credit of $595.

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So, this is transaction N.

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And this is for credit memo number 2

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for $595 that we're giving back
to the customer.

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And so, this customer no longer owes us
$3,950.

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By crediting it--

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This is, again, a subsidiary accounts receivable

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is still an accounts receivable account;

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the normal side's on the debit side.

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By crediting it,

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we're reducing the balance that the customer owed to us.

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This will complete all our journal entries.

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You can check it against your solution.

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Um, if you went through the whole process
of doing a general ledger,

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you can also check against the general ledger solution for each account.

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Um, but my subsidiary account
is now put together.

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You can check it against the solution,

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but what you want to put together is,

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um, the accounts receivable schedule, okay?

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So, basically, we want to know

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what is the makeup of my accounts receivable?

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So, what you want to do is,

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you would look at the balance for each of your customer.

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Uh, Durant, Durant, Durant.

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The balance is $250.

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And then, for Ron Lenham,

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it is...

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$3355.

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And then, also for--
oops, excuse me--

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Penny, the balance is--

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Penny, Penny, Penny,

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the balance is $800.

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And then, for Jim Zamara.

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Zamara, sorry.

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Um, I'm awful, awful, awful with names.

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The balance is $750,

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which add up to be $5155.

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So, your balance for accounts receivable--

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So, here let's just show you really quickly.

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If you have done all of your
general ledger correctly,

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you will see that,

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um, again, that beginning balance
is given to you under Data.

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So, under Data, that $5000,

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um, accounts receivable balance

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was make up a sum of between
all of your customer:

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$250, plus $550, plus $800, plus $550

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would equals to $2150.

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If you have kept track
of all your transactions

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for accounts receivable, the total is $5155.

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The purpose of a schedule
of accounts receivable--

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Um, oops.

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The purpose of a schedule of accounts receivable

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is to know that what is that make up
of $5,155?

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How much each customer owe you?

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And even more sophisticated report

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will be called a Schedule of Accounts Receivable.

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Would also--

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you'll learn in a 200-level financial accounting class--

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where it will show, um,
not only how much each customer owe you

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but how much they owe you within 0 to 30 days,

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31 to 60 days,

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and then 61 to 90 days,

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or 90 days beyond.

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Usually, the longer they owe you the money,

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the less likely they will pay you back.

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And this would be something that you will learn

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when you learn about bad debt expense

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in Financial 200 financial accounting class.

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In this class, in your Introduction to Accounting class,

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you always assume your customer
will pay you on-- you know, on time--

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and you will always pay your vendors on time.

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But in financial accounting, a second--

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um, 200 level, you will learn
what happens when they don't pay you.

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Okay, this is a much longer video than I intended.

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Sorry, there was a lot of back and forth,

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and then I also wanted to give you
some additional information.

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Um, the key again of this particular
video for this chapter

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is you need to know how to record journal entry

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for perpetual inventory system
under the gross method.

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You need to know how to figure out

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and put together your
schedule of accounts receivable.

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Okay.

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Well, um, thank you for watching the video,

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and I hope that this is helpful in your learning.

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Please email me if you have any questions

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and I will see you guys later.
Thank you. Bye.