1
00:00:00,240 --> 00:00:01,159
Okay.

2
00:00:01,160 --> 00:00:03,919
You don't want to overstate
your cost of inventory

3
00:00:03,920 --> 00:00:04,999
that you have sold

4
00:00:05,000 --> 00:00:07,919
because now this $2,000 of worth--

5
00:00:07,920 --> 00:00:13,159
So, $2,000 is your markup
of the cost of $1250.

6
00:00:13,160 --> 00:00:16,919
$1250 is your actual cost
that you spend buying that inventory,

7
00:00:16,920 --> 00:00:19,079
which you sold for $2,000.

8
00:00:19,080 --> 00:00:24,319
It was part of the journal entry
that happened on the 20th

9
00:00:24,320 --> 00:00:27,439
when you make a sale on ticket number 53

10
00:00:27,440 --> 00:00:29,599
for total of $3,000 worth.

11
00:00:29,600 --> 00:00:32,879
So, what happened in transaction I
on the 24th

12
00:00:32,880 --> 00:00:37,359
is that Penny, your customer,
returned $2,000

13
00:00:37,360 --> 00:00:42,199
of merchandise that cost you $1,250.

14
00:00:42,200 --> 00:00:44,319
So, you want to credit Penny's account,

15
00:00:44,320 --> 00:00:47,919
so you go to your subsidiary ledger.

16
00:00:47,920 --> 00:00:51,359
You look for Penny.

17
00:00:51,360 --> 00:00:56,199
And now, this is on page number three.
[computer chimes]

18
00:00:56,200 --> 00:01:00,779
of the general ledger.

19
00:01:00,780 --> 00:01:04,459
And this is transaction I, okay?

20
00:01:04,460 --> 00:01:07,139
And what you want to do is,
you want to show--

21
00:01:07,140 --> 00:01:12,939
or in the quick explanation
that you can say is this um, um, issue--

22
00:01:12,940 --> 00:01:15,699
Oops.

23
00:01:15,700 --> 00:01:17,659
Credit memo #1.

24
00:01:17,660 --> 00:01:21,859
So, usually when you issue credit memo
to a customer,

25
00:01:21,860 --> 00:01:24,779
it usually means that
you've given credit back

26
00:01:24,780 --> 00:01:26,899
and they have returned the goods to you,

27
00:01:26,900 --> 00:01:29,619
or you go ahead
and just give them credit without,

28
00:01:29,620 --> 00:01:32,539
um, having the goods return to you.

29
00:01:32,540 --> 00:01:36,099
Okay, in this case, it was $2,000

30
00:01:36,100 --> 00:01:38,019
that you credit the customer.

31
00:01:38,020 --> 00:01:43,219
So, this customer no longer owe you $3,800

32
00:01:43,220 --> 00:01:47,419
because they have received

33
00:01:47,420 --> 00:01:52,499
a $2,000 credit
of goods that they have returned to you.

34
00:01:52,500 --> 00:01:53,699
Okay?

35
00:01:53,700 --> 00:01:56,979
So, that's your I.

36
00:01:56,980 --> 00:02:01,169
And now, as we go down,

37
00:02:01,170 --> 00:02:04,689
there's also something on the 26th for J.

38
00:02:04,690 --> 00:02:06,329
We receive cash from Penny

39
00:02:06,330 --> 00:02:10,329
in payment of March 20th ticket number 53.

40
00:02:10,330 --> 00:02:12,369
And here's a little hint:

41
00:02:12,370 --> 00:02:14,649
don't forget about the credit memo
and discount.

42
00:02:14,650 --> 00:02:19,329
Well, originally the transaction happened
on the 20th.

43
00:02:19,330 --> 00:02:22,129
The terms of sale is 4/10.

44
00:02:22,130 --> 00:02:25,369
So, if Penny paid within ten days,

45
00:02:25,370 --> 00:02:29,289
she gets 4% discount, right?

46
00:02:29,290 --> 00:02:31,889
But Penny, on the 24th,

47
00:02:31,890 --> 00:02:34,689
also returned $2,000 worth of goods.

48
00:02:34,690 --> 00:02:39,009
So, in this journal entry you definitely going to get some cash back.

49
00:02:39,010 --> 00:02:41,569
You're also going to debit sales discount,

50
00:02:41,570 --> 00:02:43,649
which, just like sales return and allowances,

51
00:02:43,650 --> 00:02:45,769
the normal side's on the debit side.

52
00:02:45,770 --> 00:02:49,729
If we do sales revenue,
it's a contra sales revenue account.

53
00:02:49,730 --> 00:02:54,409
You are also going to credit
accounts receivable for Penny.

54
00:02:54,410 --> 00:02:56,249
Now, first of all,

55
00:02:56,250 --> 00:03:01,149
if you look at your subsidiary ledger really quickly,

56
00:03:01,150 --> 00:03:04,309
the ticket number 53 was $3,000.

57
00:03:04,310 --> 00:03:06,069
The credit was $2000.

58
00:03:06,070 --> 00:03:09,829
So, for this transaction alone on ticket 53,

59
00:03:09,830 --> 00:03:14,429
it is only $1,000 worth that Penny owe.

60
00:03:14,430 --> 00:03:17,269
Be really careful and read through the description

61
00:03:17,270 --> 00:03:18,749
or the instruction.

62
00:03:18,750 --> 00:03:21,589
In the instruct-- instruction for J,

63
00:03:21,590 --> 00:03:25,389
you receive cash from Penny
in payment of March 20th.

64
00:03:25,390 --> 00:03:27,709
sales ticket number 53.

65
00:03:27,710 --> 00:03:29,629
There was nothing that stated

66
00:03:29,630 --> 00:03:32,629
that Penny is including payment
of this $800,

67
00:03:32,630 --> 00:03:35,709
the beginning balance that you carry over.

68
00:03:35,710 --> 00:03:39,629
So, right now, in terms of
only looking at ticket 53,

69
00:03:39,630 --> 00:03:45,229
there was--
it was originally for sales of $3,000.

70
00:03:45,230 --> 00:03:48,629
$2000 has been returned to you.

71
00:03:48,630 --> 00:03:51,709
So, what you need to make sure you do is that

72
00:03:51,710 --> 00:03:55,589
there's only $1,000 owed

73
00:03:55,590 --> 00:03:59,339
by customer Penny on ticket number 53.

74
00:03:59,340 --> 00:04:01,939
Okay, so pay attention to what the instructions tell you.

75
00:04:01,940 --> 00:04:04,059
If the instructions tell you,

76
00:04:04,060 --> 00:04:08,419
"Received cash from Penny
for sales ticket 53

77
00:04:08,420 --> 00:04:13,019
"plus um...um,
balance owed from previous month,"

78
00:04:13,020 --> 00:04:17,259
then you would use
this particular balance of $1800.

79
00:04:17,260 --> 00:04:21,339
But in this case,
you're only doing $1,000.

80
00:04:21,340 --> 00:04:26,019
So, the accounts receivable is $1,000

81
00:04:26,020 --> 00:04:27,419
that you want to credit.

82
00:04:27,420 --> 00:04:29,219
And sales discount

83
00:04:29,220 --> 00:04:33,379
is going to be calculated by $3000--

84
00:04:33,380 --> 00:04:37,899
that's the original transaction
that happened on the 20th--

85
00:04:37,900 --> 00:04:41,259
minus $2,000

86
00:04:41,260 --> 00:04:43,499
that Penny returned,

87
00:04:43,500 --> 00:04:47,299
times 4%.

88
00:04:47,300 --> 00:04:47,939
Okay?

89
00:04:47,940 --> 00:04:53,739
So, the amount would be $1,000 times 40--
40 [chuckles]

90
00:04:53,740 --> 00:04:55,779
4%: that's $40.

91
00:04:55,780 --> 00:04:59,879
And so, the cash that you receive
will be $1000

92
00:04:59,880 --> 00:05:06,439
minus the sales discount of $40.

93
00:05:06,440 --> 00:05:10,039
Okay?
So, that's how you would debit cash,

94
00:05:10,040 --> 00:05:15,279
debit sales discount, and credit that $1,000.

95
00:05:15,280 --> 00:05:21,999
So, you credit $1,000,
and this was transaction J,

96
00:05:22,000 --> 00:05:27,319
and you're paying off, umm...

97
00:05:27,320 --> 00:05:35,199
You're paying with discount
for ticket number 53.

98
00:05:35,200 --> 00:05:35,639
Okay?

99
00:05:35,640 --> 00:05:41,519
So now, the balance that Penny owes

100
00:05:41,520 --> 00:05:46,079
is going to be $800,

101
00:05:46,080 --> 00:05:49,359
the balance that was carried over
from the previous month.

102
00:05:49,360 --> 00:05:54,199
For whatever reason, Penny has not yet
paid that previous balance.

103
00:05:54,200 --> 00:05:58,680
Penny just make payment on her
current transaction this month, okay?