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Journalizing Purchases Using a Purchases Journal.

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LESSON 9-1 Journalizing Purchases Using a Purchases Journal
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Page 1: Journalizing Purchases Using a Purchases Journal.

LESSON 9-1Journalizing Purchases Using a Purchases

Journal

Page 2: Journalizing 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

Page 3: Journalizing Purchases Using a Purchases Journal.

A journal used to record only one kind of transaction

Special Journals

Page 4: Journalizing Purchases Using a Purchases Journal.

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.

Page 5: Journalizing Purchases Using a Purchases Journal.

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

Page 6: Journalizing Purchases Using a Purchases Journal.

A transaction in which the merchandise purchased is to be paid at a later date.

Purchases on Account

Page 7: Journalizing Purchases Using a Purchases Journal.

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

Page 8: Journalizing Purchases Using a Purchases Journal.

Source document for recording a purchase on account transaction◦ Quantity◦ Description◦ Price◦ Total amount of the invoice

Purchase Invoice

Page 9: Journalizing Purchases Using a Purchases Journal.

9LESSON 9-1

2

1. Stamp the date received andpurchase invoice number.

PURCHASE INVOICE1

3

4

page 238

4. Review the vendor’s terms.

3. Initials of the person whochecked the invoice.

2. Place a check mark by each amount.

Page 10: Journalizing Purchases Using a Purchases Journal.

PURCHASING MERCHANDISE ON ACCOUNT

1

2

3 4

page 239

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.

Page 11: Journalizing Purchases Using a Purchases Journal.

TOTALING AND RULING A PURCHASES JOURNAL

23 4 5

page 240

1

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.

Page 12: Journalizing Purchases Using a Purchases Journal.

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.

Page 13: Journalizing Purchases Using a Purchases Journal.

Chapter 9 Section 2

Using the Cash Payments Journal

Page 14: Journalizing Purchases Using a Purchases 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

Page 15: Journalizing Purchases Using a Purchases 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.

Page 16: Journalizing Purchases Using a Purchases Journal.

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.

1 2 3 4 5

Page 17: Journalizing Purchases Using a Purchases Journal.

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.

1 2 3 4 5

Page 18: Journalizing Purchases Using a Purchases Journal.

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

Page 19: Journalizing Purchases Using a Purchases Journal.

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

Page 20: Journalizing Purchases Using a Purchases Journal.

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.

12

3 4 5

Page 21: Journalizing Purchases Using a Purchases Journal.

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

Page 22: Journalizing Purchases Using a Purchases Journal.

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

Page 23: Journalizing Purchases Using a Purchases Journal.

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.

Page 24: Journalizing Purchases Using a Purchases Journal.

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.

1 23

4

6. Write the credit amount.

65

Page 25: Journalizing Purchases Using a Purchases Journal.

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.

1 23

4 5

Page 26: Journalizing Purchases Using a Purchases Journal.

Chapter 9 Section 3

Performing Additional Cash Payments Journal Operations

Page 27: Journalizing Purchases Using a Purchases Journal.

PETTY CASH REPORT

2

page 248

6.Write the actual amount of cash on hand. 8

4

1

3

65

7

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.

Page 28: Journalizing Purchases Using a Purchases Journal.

REPLENISHING A PETTY CASH FUND

5 6

page 249

1. Date

2. Account titles3. Check number 4. Expense

amounts5. Cash short as a

debit; cash over as a credit

1

2 3

4 6. Total cash payment

Page 29: Journalizing Purchases Using a Purchases Journal.

TOTALING, PROVING, AND RULING A CASH PAYMENTS JOURNAL PAGE TO CARRY TOTALS FORWARD

2 34

5

page 250

1

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.

Page 30: Journalizing Purchases Using a Purchases Journal.

STARTING A NEW CASH PAYMENTS JOURNAL PAGE

1

2 3 4

page 251

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.

5

Page 31: Journalizing Purchases Using a Purchases Journal.

TOTALING, PROVING, AND RULING A CASH PAYMENTS JOURNAL AT THE END OF A MONTH

23 4

page 252

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.

1

5

Page 32: Journalizing Purchases Using a Purchases Journal.

LESSON 9-4

Journalizing Other Transactions Using a General Journal

Page 33: Journalizing Purchases Using a Purchases Journal.

MEMORANDUM FOR BUYING SUPPLIES ON ACCOUNT page 254

Page 34: Journalizing Purchases Using a Purchases Journal.

BUYING SUPPLIES ON ACCOUNT

1

23

4

56

page 255

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.

7

Page 35: Journalizing Purchases Using a Purchases Journal.

DEBIT MEMORANDUM FOR PURCHASES RETURNS AND ALLOWANCES page 256

Page 36: Journalizing Purchases Using a Purchases Journal.

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

12

34

5

6

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.

7

Page 37: Journalizing Purchases Using a Purchases Journal.

TERMS REVIEW purchases return purchases allowance debit memorandum

page 258


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