Accounting

1
Accounting

• Chapter 9 Review

2
Purchases

• The Purchases account is a COST account.
• Purchases Discount is a CONTRA account to
  Purchases.
• The normal balance of a contra account is
  opposite the normal balance of their related
  accounts. What is the normal balance of Purchases
  Discount?
• Purchases Returns and Allowances is a CONTRA
  account to Purchases.
• What is the normal balance of Purchases Returns
  and Allowances?

credit
credit
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Purchases Discount

• 1/10, n/30What does it mean?
• Merchandise is purchased for 500 on November 1,
  with terms of 2/10, n/30. The amount due to the
  vendor on November 9 is
• Merchandise with a list price of 1000 was
  purchased on account for 600 on November 1.
  Terms were 2/10, n/30. Payment was made on
  November 17. What amount was paid?

1 discount if paid within 10 days, net (all) due
within 30 days
490
600
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Trade Discount

• Trade discounts are NOT recorded. They are what
  is taken off the price to determine the price you
  are paying.
• Example
• Purchased a desk for cash from Office Equipment
  Company with a list price of 1,870. The trade
  discount is 60. What is the amount recorded to
  cash?

748
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Abbreviations

• Purchases journal
• P
• Cash Payments journal
• CP
• General journal
• G

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Petty Cash

• The petty cash fund is 200. Receipts show 154
  and the cash in the box if 50. What is the
  entry to the Cash Short and Over account?

Credit of 4
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Miscellaneous

• Source document for a cash purchase?
• To what account is a purchase of supplies
  recorded?
• Accounting ConceptHistorical Cost
• When purchases are recorded at their cost plus
  the cost of shipping and taxes.

Check
Supplies (asset account)