Sales and Purchase Journals Discount Calculations Financial Accounting SS 1

Lesson Plan: Working Exercises on Sales Journals and Return Inward Journal / Working Exercises on Purchase Journal and Return Outward Journal

Subject: Financial Accounting
Class: SS1
Term: 1
Week: 8
Age: 15-16 years
Topic: Working Exercises on Sales Journals and Return Inward Journal / Working Exercises on Purchase Journal and Return Outward Journal
Sub-topic: Solving Problems on Subsidiary Books of Accounts
Duration: 1 hour
Behavioral Objectives:
By the end of the lesson, students should be able to:

1. Solve problems on subsidiary books of accounts, including Sales, Purchase, Return Inward, and Return Outward Journals.
2. Explain the meaning and types of discounts.
3. Calculate the trade discount in the journals.

Keywords:

• Sales Journal
• Purchase Journal
• Return Inward Journal
• Return Outward Journal
• Trade Discount
• Cash Discount
• Subsidiary Books

Set Induction (5 mins)

The teacher will begin by engaging the students in a brief discussion about the importance of subsidiary books in accounting. Questions like, “Have you ever purchased goods on credit or returned something to a supplier?” will be asked to relate to the topic. The teacher will explain how these transactions are recorded in different journals.

Entry Behavior

Students should be familiar with basic accounting concepts like journals and ledgers from previous lessons. They should understand the basic transactions of sales and purchases.

Learning Resources and Materials:

• Chalkboard/Whiteboard
• Accounting Exercise Sheets
• Projector (if available)
• Sample journals for practical exercises

Building Background/Connection to Prior Knowledge:

Students should recall previous lessons on subsidiary books (Sales and Purchase Journals, Return Inward and Return Outward Journals). The teacher will remind students of the steps involved in posting transactions into these journals.

Embedded Core Skills:

• Numeracy Skills: Calculating discounts and journal entries.
• Critical Thinking: Analyzing and solving accounting problems.
• Problem Solving: Applying theoretical knowledge to practical exercises.

Learning Materials:

• Sales Journal
• Purchase Journal
• Return Inward Journal
• Return Outward Journal

Instructional Materials:

• Whiteboard markers
• Sample transactions on paper
• Accounting calculators

Content:

1. Sales Journal:
   • Used to record credit sales.
   • Example:
     • Sold goods worth ₦50,000 on credit to XYZ Ltd.
     • Transaction: Debit Accounts Receivable ₦50,000, Credit Sales ₦50,000.
2. Purchase Journal:
   • Used to record credit purchases.
   • Example:
     • Purchased goods worth ₦30,000 on credit from ABC Ltd.
     • Transaction: Debit Purchases ₦30,000, Credit Accounts Payable ₦30,000.
3. Return Inward Journal:
   • Used to record returns from customers (sales returns).
   • Example:
     • Goods worth ₦5,000 returned by XYZ Ltd.
     • Transaction: Debit Sales Returns ₦5,000, Credit Accounts Receivable ₦5,000.
4. Return Outward Journal:
   • Used to record returns to suppliers (purchase returns).
   • Example:
     • Returned goods worth ₦3,000 to ABC Ltd.
     • Transaction: Debit Accounts Payable ₦3,000, Credit Purchase Returns ₦3,000.
5. Discounts in Accounting:
   • Trade Discount: Given at the time of purchase or sale and deducted from the list price.
   • Cash Discount: Given for early payment.

Presentation Steps:

Step 1: Revision of Previous Topic (5 mins)
The teacher will review the basics of subsidiary books (Sales Journal, Purchase Journal, Return Inward Journal, and Return Outward Journal) by asking students to provide examples and explain the purpose of each journal.

Step 2: Introduction of New Topic (10 mins)
The teacher will explain the new concepts—working exercises on subsidiary books—by walking students through sample transactions for each journal. The teacher will highlight how trade and cash discounts are applied in accounting.

Step 3: Student Contributions and Corrections (15 mins)
Students will be asked to solve accounting problems on subsidiary books (sales, purchase, return inward, and return outward) on the board. The teacher will guide the class through each solution and make necessary corrections.

Teacher’s Activities:

• Introduce the topic with real-life examples.
• Explain the differences between sales and purchase journals, as well as return inward and return outward journals.
• Guide students through the examples, ensuring they understand how to post transactions.
• Facilitate class discussion on trade and cash discounts and how they are applied to transactions.
• Supervise student work on practical exercises.

Learner’s Activities:

• Actively participate in the revision and discussions.
• Solve problems on subsidiary books of accounts.
• Calculate trade discounts and apply them to the journal entries.
• Collaborate with peers to ensure understanding.

Class Activity Discussion (FAQs):

Frequently Asked Questions (FAQs):

1. What is the purpose of a sales journal?
   Answer: The sales journal is used to record credit sales made by the business. It helps track the amount owed by customers.
2. How do you record a return in the Return Inward Journal?
   Answer: When goods are returned by customers, you debit the Sales Returns account and credit Accounts Receivable.
3. What is the difference between a purchase journal and a return inward journal?
   Answer: A purchase journal records credit purchases, while a return inward journal records goods returned by customers.
4. How is the trade discount applied in the journal entries?
   Answer: The trade discount is deducted from the list price before recording the sale or purchase in the journal.
5. What is a cash discount, and how does it affect the accounting records?
   Answer: A cash discount is given to customers who pay their bills early. It is recorded as a reduction in the sales or purchase amount.
6. Can you record a cash transaction in the Sales Journal?
   Answer: No, the Sales Journal is for credit sales only. Cash transactions are recorded in the Cash Book.
7. What is the role of the Return Inward Journal in accounting?
   Answer: It helps businesses track the returns of goods sold to customers and adjust the accounts receivable balance.
8. How is the trade discount applied in the journal entries?
   Answer: The trade discount is deducted from the list price before recording the sale or purchase in the journal.
9. What happens when goods are returned to a supplier?
   Answer: The transaction is recorded in the Return Outward Journal by debiting Accounts Payable and crediting Purchase Returns.
10. Why are subsidiary books important in accounting?
    Answer: They help in organizing and summarizing transactions, which makes it easier to prepare financial statements and ensures accurate record-keeping.

Objective Questions (15 Fill-in-the-Blank Questions with Options a, b, c, or d):

1. The __________ journal is used to record credit sales.
   a) Sales
   b) Purchase
   c) Cash
   d) Return Inward
2. The __________ journal is used to record goods returned by customers.
   a) Sales
   b) Purchase
   c) Return Inward
   d) Return Outward
3. __________ is deducted from the list price when a trade discount is offered.
   a) Sales Tax
   b) Cash Discount
   c) Trade Discount
   d) Discount Tax
4. The __________ journal is used to record purchases made on credit.
   a) Purchase
   b) Sales
   c) Cashbook
   d) Return Outward
5. When a customer returns goods, we __________ the Accounts Receivable.
   a) Debit
   b) Credit
   c) Ignore
   d) Increase
6. A __________ discount is given to customers who make early payments.
   a) Trade
   b) Quantity
   c) Cash
   d) Volume
7. The __________ journal records returns made to suppliers.
   a) Sales
   b) Purchase
   c) Return Outward
   d) Cashbook
8. Trade discount is usually calculated on the __________ price.
   a) Net
   b) List
   c) Credit
   d) Sales
9. The __________ journal is used for recording credit purchases.
   a) Return Outward
   b) Purchase
   c) Return Inward
   d) Sales
10. __________ is the first step in calculating the trade discount.
    a) Sales Price
    b) Trade Discount Percentage
    c) Net Price
    d) Credit Terms
11. The __________ journal records purchases returns from suppliers.
    a) Purchase Journal
    b) Return Inward Journal
    c) Return Outward Journal
    d) Sales Journal
12. A __________ is a record of goods sold on credit.
    a) Sales Journal
    b) Purchase Journal
    c) Return Inward Journal
    d) Return Outward Journal
13. The __________ journal is used to record purchases returns.
    a) Sales Journal
    b) Purchase Journal
    c) Return Outward Journal
    d) Return Inward Journal
14. __________ is used to reduce the amount owed by customers.
    a) Trade Discount
    b) Return Inward
    c) Sales Tax
    d) Cash Discount
15. In the sales journal, the entry is made under the __________ column.
    a) Accounts Receivable
    b) Sales Returns
    c) Purchase Returns
    d) Cash Sales

Evaluation Questions (10 Questions):

1. Explain the role of subsidiary books in accounting.
2. How would you record a credit sale of ₦20,000 in the Sales Journal?
3. What is the difference between a trade discount and a cash discount?
4. If goods worth ₦15,000 are returned by a customer, how would you record this transaction in the Return Inward Journal?
5. How do you apply trade discounts in journal entries?
6. What is the procedure for recording returns in the Return Outward Journal?
7. Explain how the Purchase Journal differs from the Sales Journal.
8. How does the Return Inward Journal affect the Accounts Receivable balance?
9. When goods are returned by customers, which accounts are affected?
10. Why are discounts important in accounting, and how do they impact the financial records?

Conclusion:

The teacher will recap the importance of subsidiary books and how they simplify recording transactions such as sales, purchases, and returns. The teacher will emphasize the correct application of trade and cash discounts, reinforcing the practical skills needed for accounting in real-life business scenarios.