0:00:00.840,0:00:04.600
So, $3,950, okay?

0:00:04.600,0:00:07.920
And then my last transaction,

0:00:07.920,0:00:11.080
it is N for Nancy, I guess.

0:00:11.080,0:00:12.680
Or Nathan.

0:00:12.680,0:00:17.160
Is that on the 31st,[br]we issue credit memo

0:00:17.160,0:00:21.840
for $595 merchandise return[br]from March 30th transaction,

0:00:21.840,0:00:23.200
the previous day.

0:00:23.200,0:00:26.280
The cost of that merchandise was $390.

0:00:26.280,0:00:28.680
So, we did a transaction similar to that,

0:00:28.680,0:00:30.120
where we had a return.

0:00:30.120,0:00:31.600
So, we have an account.

0:00:31.600,0:00:35.960
It's going to be called[br]Sales Return and Allowances.

0:00:35.960,0:00:38.440
So, we're going to debit[br]because the normal side

0:00:38.440,0:00:41.920
for sales return allowances[br]and sales discount,

0:00:41.920,0:00:43.120
contra revenue account,

0:00:43.120,0:00:45.000
is going to be on the debit side

0:00:45.000,0:00:46.400
because revenue,[br]the normal side,

0:00:46.400,0:00:48.120
is going to be on the credit side.

0:00:48.120,0:00:52.480
And then, we want to make sure we credit[br]the accounts receivable

0:00:52.480,0:00:55.080
for this customer.

0:00:55.080,0:01:01.960
And the credit memo issue was for $595.

0:01:01.960,0:01:04.932
This $595

0:01:04.932,0:01:10.111
cost us $390.

0:01:13.820,0:01:17.980
So, we want to make sure we do[br]like almost a reverse entry

0:01:17.980,0:01:23.940
where we first debit[br]the merchandise inventory.

0:01:23.940,0:01:25.960
And then, we...

0:01:25.960,0:01:30.790
credit cost of goods sold.

0:01:30.790,0:01:35.860
And it was for $390, okay?

0:01:35.860,0:01:40.900
So, now I want to go to my subsidiary[br]ledger account for my customer,

0:01:40.900,0:01:45.260
making sure that I put in[br]that credit of $595.

0:01:45.260,0:01:50.053
So, this is transaction N.

0:01:51.900,0:01:56.410
And this is for credit memo number 2

0:01:56.410,0:02:02.740
for $595 that we're giving back[br]to the customer.

0:02:02.740,0:02:08.230
And so, this customer no longer owes us[br]$3,950.

0:02:08.230,0:02:10.350
By crediting it--

0:02:10.350,0:02:13.190
This is, again,[br]a subsidiary accounts receivable

0:02:13.190,0:02:15.030
is still an accounts receivable account;

0:02:15.030,0:02:17.870
the normal side's on the debit side.

0:02:17.870,0:02:18.910
By crediting it,

0:02:18.910,0:02:22.550
we're reducing the balance[br]that the customer owed to us.

0:02:22.550,0:02:25.310
This will complete[br]all our journal entries.

0:02:25.310,0:02:27.590
You can check it against your solution.

0:02:27.590,0:02:30.800
Um, if you went through the whole process[br]of doing a general ledger,

0:02:30.800,0:02:33.362
you can also check against[br]the general ledger solution

0:02:33.362,0:02:35.430
for each account.

0:02:35.430,0:02:38.670
Um, but my subsidiary account[br]is now put together.

0:02:38.710,0:02:41.070
You can check it against the solution,

0:02:41.070,0:02:44.430
but what you want to put together is

0:02:44.430,0:02:47.750
the accounts receivable schedule,[br]okay?

0:02:47.750,0:02:50.030
So, basically,[br]we want to know

0:02:50.030,0:02:53.270
what is the makeup[br]of my accounts receivable?

0:02:53.270,0:02:55.190
So, what you want to do is,

0:02:55.190,0:02:58.750
you would look at the balance[br]for each of your customer.

0:02:58.750,0:03:01.150
Uh, Durant, Durant, Durant.

0:03:01.150,0:03:04.730
The balance is $250.

0:03:04.730,0:03:08.710
And then, for Ron Lenham,

0:03:08.710,0:03:13.050
it is...

0:03:13.050,0:03:14.610
$3355.

0:03:14.610,0:03:20.470
And then, also for--[br]oops, excuse me--

0:03:20.470,0:03:25.750
Penny, the balance is--

0:03:25.750,0:03:27.250
Penny, Penny, Penny,

0:03:27.250,0:03:31.410
the balance is $800.

0:03:31.410,0:03:35.430
And then, for Jim Zamara.

0:03:35.430,0:03:37.530
Zamara, sorry.

0:03:37.530,0:03:40.890
Um, I'm awful, awful, awful with names.

0:03:40.890,0:03:42.850
The balance is $750,

0:03:42.850,0:03:45.690
which add up to be $5155.

0:03:45.690,0:03:47.770
So, your balance[br]for accounts receivable--

0:03:47.770,0:03:49.970
So, here let's just show you[br]really quickly.

0:03:49.970,0:03:54.650
If you have done all of your[br]general ledger correctly,

0:03:54.650,0:03:56.050
you will see that,

0:03:56.050,0:04:00.450
um, again, that beginning balance[br]is given to you under Data.

0:04:00.450,0:04:04.610
So, under Data, that $5000,

0:04:04.610,0:04:07.990
um, accounts receivable balance

0:04:07.990,0:04:11.230
was make up a sum of between[br]all of your customer:

0:04:11.230,0:04:14.950
$250, plus $550,[br]plus $800, plus $550

0:04:14.950,0:04:17.270
would equals to $2150.

0:04:17.270,0:04:19.830
If you have kept track[br]of all your transactions

0:04:19.830,0:04:24.430
for accounts receivable,[br]the total is $5155.

0:04:24.430,0:04:28.550
The purpose of a schedule[br]of accounts receivable--

0:04:28.550,0:04:30.270
Um, oops.

0:04:30.270,0:04:33.270
The purpose of a schedule[br]of accounts receivable

0:04:33.270,0:04:37.470
is to know that what is that make up[br]of $5,155?

0:04:37.470,0:04:40.190
How much each customer owe you?

0:04:40.190,0:04:44.070
And even more sophisticated report

0:04:44.070,0:04:47.310
will be called[br]a Schedule of Accounts Receivable,

0:04:47.310,0:04:48.870
would also--

0:04:48.870,0:04:52.150
You'll learn in a 200-level[br]financial accounting class;

0:04:52.150,0:04:56.870
--where it will show, um,[br]not only how much each customer owe you

0:04:56.870,0:05:00.460
but how much they owe you[br]within 0 to 30 days,

0:05:00.460,0:05:02.030
31 to 60 days,

0:05:02.030,0:05:03.910
and then 61 to 90 days,

0:05:03.910,0:05:06.230
or 90 days beyond.

0:05:06.230,0:05:09.320
Usually,[br]the longer they owe you the money,

0:05:09.320,0:05:11.840
the less likely they will pay you back.

0:05:11.840,0:05:14.000
And this would be[br]something that you will learn

0:05:14.000,0:05:17.360
when you learn about[br]bad debt expense

0:05:17.360,0:05:19.840
in Financial 200 financial accounting class.

0:05:19.840,0:05:22.560
In this class, in your Introduction[br]to Accounting class,

0:05:22.560,0:05:25.440
you always assume your customer[br]will pay you on-- you know, on time--

0:05:25.440,0:05:27.960
and you will always pay your vendors[br]on time.

0:05:27.960,0:05:30.240
But in financial accounting, a second--

0:05:30.240,0:05:34.080
um, 200 level, you will learn[br]what happens when they don't pay you.

0:05:34.080,0:05:36.680
Okay, this is a much longer video[br]than I intended.

0:05:36.680,0:05:38.680
Sorry, there was a lot of back and forth,

0:05:38.680,0:05:42.960
and then I also wanted to give you[br]some additional information.

0:05:42.960,0:05:46.840
Um, the key again of this particular[br]video for this chapter

0:05:46.840,0:05:49.960
is you need to know[br]how to record journal entry

0:05:49.960,0:05:52.880
for perpetual inventory system[br]under the gross method.

0:05:52.880,0:05:55.200
You need to know how to figure out

0:05:55.200,0:05:58.840
and put together your[br]schedule of accounts receivable.

0:05:58.840,0:06:01.320
Okay, well,[br]thank you for watching the video,

0:06:01.320,0:06:04.080
and I hope that this is helpful[br]in your learning.

0:06:04.080,0:06:06.080
Please email me if you have any questions,

0:06:06.080,0:06:09.710
and I will see you guys later.[br]Thank you! Bye.