LESSON 9-1Journalizing Purchases Using a Purchases
Journal
Service Business◦ Sell services for a fee
TechKnow Consulting Merchandising Business
◦ Purchase and sell goods Merchandise
◦ Goods that a business purchases
Service VS. Merchandising Business
A journal used to record only one kind of transaction
Special Journals
1. Purchases Journal For all purchases of merchandise on account
2. Cash payments journal For all cash payments
3. Sale Journal For all sales of merchandise on account
4. Cash receipts journal For all cash receipts
5. General Journal For all other transactions
Special Journals cont.
Cost of Merchandise◦ The price a business
pays for a good Markup
◦ The amount added to the cost of merchandise to establish a selling price
Vendor◦ A business from which
merchandise is purchased
Purchasing Merchandise p. 236
A transaction in which the merchandise purchased is to be paid at a later date.
Purchases on Account
IMPORTANT: Only records purchases of merchandise on
account
All of Hobby Shack’s purchase on account transactions debit Purchases, and credit Accounts Payable
Purchases Journal
Special Amount Column
Source document for recording a purchase on account transaction◦ Quantity◦ Description◦ Price◦ Total amount of the invoice
Purchase Invoice
9LESSON 9-1
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1. Stamp the date received andpurchase invoice number.
PURCHASE INVOICE1
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4. Review the vendor’s terms.
3. Initials of the person whochecked the invoice.
2. Place a check mark by each amount.
PURCHASING MERCHANDISE ON ACCOUNT
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November 2. Purchased merchandise on account from Crown Distributing, $2,039.00. Purchase Invoice No. 83.
1. Write the date.
2. Write the vendor name.
3. Write the purchase invoice number.
4. Write the amount of the invoice.
TOTALING AND RULING A PURCHASES JOURNAL
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page 240
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61. Rule a single line across the amount column.
2. Write the date.
3. Write the word Total.
4. Add the amount column.
5. Write the total.
6. Rule double lines across the amount column.
Chapter 9 Section 1 Quiz What kind of transactions are recorded on the
purchases journal?◦ Purchase of Merchandise on Account
What are special amount columns in a journal used for?◦ Frequently occurring transactions
Why are there two account titles in the amount column of the purchases journal?◦ Because the same two accounts are always affected
by a purchase on account transaction Define: Markup
◦ The amount added to the cost of merchandise to establish a selling price.
Chapter 9 Section 2
Using the Cash Payments Journal
Lesson Objectives Students will
◦ Discuss discounts and what they are used for
◦ Examine the different types of Terms of Sale
◦ Identify the use of a Cash Payments Journal
Cash Payments Journal A special journal used to record only cash
payment transactions
Cash Discount◦ A deduction that a vendor allows in the invoice to
encourage prompt payment.
CASH PAYMENT OF AN EXPENSE page 243
November 2. Paid cash for advertising, $150.00. Check No. 292.
1. Write the date.2. Write the account title.3. Write the check number.4. Write the debit amount.5. Write the credit amount.
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BUYING SUPPLIES FOR CASH page 243
November 5. Paid cash for office supplies, $94.00. Check No. 293.
1. Write the date.2. Write the account title.3. Write the check number.4. Write the debit amount.5. Write the credit amount.
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Trade Discounts List Price
◦ Retail prices listed in a catalog or on an internet site
Trade Discount◦ A reduction in the list price granted to customers
When a trade discount is granted, the seller’s invoice shows actual amount charged
Step 1◦ Total Price x Trade Discount Rate=Trade
Discount
Step 2◦ Total List Price - Trade Discount= Invoice
Amount
Cash Payment for Purchases Using a Trade Discount
November 7. Purchased merchandise for cash, $1,500, less a 60% trade discount. Check no. 301
$1,500 x 60% = $900
$1,500 - $900 = $600
CASH PAYMENTS FOR PURCHASES page 244
November 7. Purchased merchandise for cash, $600.00. Check No. 301.
1. Write the date.2. Write the account title.3. Write the check number.4. Write the debit amount.5. Write the credit amount.
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Cash Payment on Account with Purchase Discounts Terms of Sale
◦ 2/10, n/30 Two ten, net thirty
2% discount if paid within 10 days of purchase
Net 30◦ Total must be paid within 30 days
Examples 5/7, n/30
◦ What does it mean? 5% discount if you pay within 7 days, otherwise
pay in full in 30 days 3/15, n/60
◦ What does it mean? 3% discount if you pay within 15 days, otherwise
full payment is due in 60 days
Step 1◦ Purchase Invoice Amount x Discount Rate = Purchases
Discount
Step 2◦ Purchase Invoice Amount – Purchase Discount Amount=Cash Amount
AFTER discount
Discount Steps
$498 x 2% (.02) = $9.96
$498 - $9.96 = $488.04
November 8. Paid cash on account to Gulf Craft Supply, $488.04, covering Purchase Invoice No. 82 for $498.00, less 2% discount, $9.96. Check No. 302.
CASH PAYMENTS ON ACCOUNT WITH PURCHASES DISCOUNTS page 245
November 8. Paid cash on account to Gulf Craft Supply, $488.04, covering Purchase Invoice No. 82 for $498.00, less 2% discount, $9.96. Check No. 302.
1. Write the date.2. Write the account title of the vendor.
3. Write the check number.4. Write the debit amount.5. Write the credit amount.
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6. Write the credit amount.
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CASH PAYMENTS ON ACCOUNT WITH PURCHASES DISCOUNTS page 246
November 13. Paid cash on account to American Paint, $2,650.00, covering Purchase Invoice No. 77. Check No. 303.
1. Write the date.2. Write the vendor account title.3. Write the check number.4. Write the debit amount.5. Write the credit amount.
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Chapter 9 Section 3
Performing Additional Cash Payments Journal Operations
PETTY CASH REPORT
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6.Write the actual amount of cash on hand. 8
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1.Write the date and custodian name.
2.Write the fund total.
3.Summarize petty cash payments.
4.Calculate and write the total payments.
5.Calculate and write the recorded amount on hand.
7.Subtract the actual amount on hand from the recorded amount on hand and write the amount.
8.Write the total of the replenish amount.
REPLENISHING A PETTY CASH FUND
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1. Date
2. Account titles3. Check number 4. Expense
amounts5. Cash short as a
debit; cash over as a credit
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4 6. Total cash payment
TOTALING, PROVING, AND RULING A CASH PAYMENTS JOURNAL PAGE TO CARRY TOTALS FORWARD
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page 250
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61. Rule a single line.2. Write the date.
3. Write the words Carried Forward in the Account Title column.
4. Place a check mark in the Post. Ref. column.5. Write each column total.6. Rule double lines.
STARTING A NEW CASH PAYMENTS JOURNAL PAGE
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1. Write the journal page number.2. Write the date.
3. Write the words Brought Forward in the Account Title column.4. Place a check mark in the Post. Ref. column.
5. Record the column totals.
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TOTALING, PROVING, AND RULING A CASH PAYMENTS JOURNAL AT THE END OF A MONTH
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1. Rule a single line.2. Write the date.
3. Write the word Totals in the Account Title column.4. Write each column total.5. Rule double lines.
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LESSON 9-4
Journalizing Other Transactions Using a General Journal
MEMORANDUM FOR BUYING SUPPLIES ON ACCOUNT page 254
BUYING SUPPLIES ON ACCOUNT
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November 6. Bought store supplies on account from Gulf Craft Supply, $210.00. Memorandum No. 52.
1.Write the date. 5.Write the account title and vendor name.2.Write the account title.
6.Place a diagonal line in the Post. Ref. column.
3.Write the memorandum number.
7.Write the credit amount.4.Write the debit amount.
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DEBIT MEMORANDUM FOR PURCHASES RETURNS AND ALLOWANCES page 256
4. Write debit memorandum number.
November 28. Returned merchandise to Crown Distributing, $252.00, covering Purchase Invoice No. 80. Debit Memorandum No. 78.
JOURNALIZING PURCHASES RETURNS AND ALLOWANCES page 257
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1.Write the date.5. Write the amount.2.Write the account title
and vendor name. 6. Write Purchases Returns and Allow.3.Place a diagonal line in
the Post. Ref. column. 7. Write the amount.
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TERMS REVIEW purchases return purchases allowance debit memorandum
page 258