Journalizing Purchases and Cash Payments

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Chapter 9

• Journalizing Purchases and Cash Payments

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24. Corporations
Corporation an organization with the legal
rights of a person and which many persons may
own Share of stock each unit of ownership in a
corporation Capital stock total shares of
ownership in a corporation Stockholder an
owner of one or more shares of a corporation
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25. Purchases purchases journal
Merchandise goods that a business purchases to
sell Merchandising business a business that
purchases and sells goods Retail merchandising
business sells to those who use or consume the
goods Wholesale merchandising business buys
and resells merchandise to retail merchandising
businesses
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25. Purchases purchases journal
Cost of merchandise price a business pays for
goods it purchases to sell Markup the amount
added to the cost of merchandise to establish the
selling price Vendor a business from which
merchandise is purchased or supplies or other
assets are bought
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25. Purchases purchases journal
Special journal a journal used to record only
one kind of transaction Five journals we will
use 1. Purchases 2. Cash Payments 3.
Sales 4. Cash Receipts 5. General
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25. Purchases purchases journal
Purchases journal special journal used to
record only purchases of merchandise on
account Purchase on account a transaction in
which the merchandise purchased is to be paid for
later Special amount column a journal amount
column headed with an account title
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25. Purchases purchases journal
Special amount column a journal amount column
headed with an account title Accounting concept
Historical Cost when the actual amount paid for
the merchandise or other items bought is
recorded
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PURCHASE INVOICE
page 238
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4
3
1. Stamp the date received andpurchase invoice
number.
3. Initials of the person whochecked the invoice.
4. Review the vendors terms.
2. Place a check mark by each amount.
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25. Purchases purchases journal
Purchase invoice an invoice used as a source
document for recording a purchase on account
transaction Terms of sale an agreement between
a buyer and a seller about payment for
merchandise
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PURCHASING MERCHANDISE ON ACCOUNT
page 239
November 2. Purchased merchandise on account from
Crown Distributing, 2,039.00. Purchase Invoice
No. 83.
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1
3
4
1. Write the date.
2. Write the vendor name.
3. Write the purchase invoice number.
4. Write the amount of the invoice.
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TOTALING AND RULING A PURCHASES JOURNAL
page 240
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5
3
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1. Rule a single line across the amount column.
4. Add the amount column.
5. Write the total.
2. Write the date.
6. Rule double lines across the amount column.
3. Write the word Total.
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26. Cash payments journal
Cash payments journal special journal used to
record only cash payment transactions Cash
discount a deduction that a vendor allows on
the invoice amount to encourage prompt
payment Purchases discount a cash discount on
purchases taken by a customer
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26. Cash payments journal
General amount column journal amount column
that is NOT headed with an account title
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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.
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2
3
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5
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 PAYMENTS FOR PURCHASES
page 244
November 7. Purchased merchandise for cash,
600.00. Check No. 301.
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1
3
4
5
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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26. Cash payments journal
List price the retail price listed in a
catalog or on an Internet site Trade discount
a reduction in the list price granted to
customers Note No journal entry is made to
show the amount of a trade discount Ex List
price 1,500 less 60 discount
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26. Cash payments journal
Cash discount examples 2/10 n/30 Contra account
an account that reduces a related account on a
financial statement
Normal balance
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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.
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2
4
3
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.
6. Write the credit amount.
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CASH PAYMENTS ON ACCOUNT WITHOUT PURCHASES
DISCOUNTS
page 246
November 13. Paid cash on account to American
Paint, 2,650.00, covering Purchase Invoice No.
77. Check No. 303.
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2
4
5
3
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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33. Cash payments journal (cont)
Cash short petty cash on hand amount that is
less than a recorded amount Cash over petty
cash on hand amount that is more than a
recorded amount
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PETTY CASH REPORT
page 248
1. Write the date and custodian name.
2. Write the fund total.
3. Summarize petty cash payments.
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4. Calculate and write the total payments.
5. Calculate and write the recorded amount on
hand.
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6. Write the actual amount of cash 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.
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REPLENISHING A PETTY CASH FUND
page 249
1. Date
2. Account titles
3. Check number
4. Expense amounts
5. Cash short as a debit cash over as a credit
6. Total cash payment
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TOTALING, PROVING, AND RULING A CASH PAYMENTS
JOURNAL PAGE TO CARRY TOTALS FORWARD
page 250
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2
3
5
1. 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.
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STARTING A NEW CASH PAYMENTS JOURNAL PAGE
page 251
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2
3
4
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
page 252
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3
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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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27. General journal

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BUYING SUPPLIES ON ACCOUNT
page 255
November 6. Bought store supplies on account from
Gulf Craft Supply, 210.00. Memorandum No. 52.
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4
3
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6
5
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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27. General journal
Purchases return credit allowed for the
purchase price of returned merchandise resulting
in a decrease in the customers accounts
payable Purchases allowance credit allowed
for part of the purchase price of merchandise
that is not returned, resulting in a decrease in
the customers accounts payable Debit memorandum
(DM) form prepared by the customer showing the
price deduction taken by the customer for returns
and allowances
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DEBIT MEMORANDUM FOR PURCHASES RETURNS AND
ALLOWANCES
page 256
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JOURNALIZING PURCHASES RETURNS AND ALLOWANCES
page 257
November 28. Returned merchandise to Crown
Distributing, 252.00, covering Purchase Invoice
No. 80. Debit Memorandum No. 78.
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4. Write debit memorandum number.
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.