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Journalizing Purchases & Cash Payments - Lesson 10-1

Learn about partnership, merchandising business, retail and wholesale merchandising, cost of merchandise, markup, and vendors. Understand how to journalize purchases and cash payments.

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Journalizing Purchases & Cash Payments - Lesson 10-1

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  1. Accounting I Chapter 10 - Journalizing Purchases & Cash Payments

  2. TERMS REVIEW partnership partner merchandising business retail merchandising business merchandise wholesale merchandising business cost of merchandise markup vendor Lesson 10-1, page 232

  3. TERMS REVIEW Partnership A business in which two or more persons combine their assets and skills. Lesson 10-1, page 226

  4. TERMS REVIEW Partner Each member of a partnership. Lesson 10-1, page 226

  5. TERMS REVIEW Merchandising Business A business that purchases and sells goods. Lesson 10-1, page 228

  6. TERMS REVIEW Retail Merchandising Business A merchandising business that sells to those who use or consume the goods. Lesson 10-1, page 228

  7. TERMS REVIEW Merchandise Goods that a merchandising business purchases to sell. Lesson 10-1, page 228

  8. TERMS REVIEW Wholesale Merchandising Business A business that buys and resells merchandise to retail merchandising businesses. Lesson 10-1, page 228

  9. TERMS REVIEW Cost of Merchandise The price a business pays for goods it purchases to sell. Lesson 10-1, page 230

  10. TERMS REVIEW Markup The amount added to the cost of merchandise to establish the selling price. Lesson 10-1, page 230

  11. TERMS REVIEW Vendor A business from which merchandise is purchased or supplies or other assets are bought. Lesson 10-1, page 230

  12. EXPANDED JOURNAL Lesson 10-1, page 229

  13. Purchases Cash PURCHASING MERCHANDISE FOR CASH November 1. Purchased merchandise for cash, $575.00 Check No. 290. 1. Which accounts are affected? Purchases Cash Debit Normal Balance 575.00  2. How is each account classified? Purchases is a cost account. Cash is an asset account. Debit Normal Balance 3. How is each classification changed? Costs are increased. Assets are decreased. 575.00  4. How is each amount entered in the accounts? Costs increase on the debit side. Assets decrease on the credit side. Lesson 10-1, page 231

  14.  PURCHASING MERCHANDISE FOR CASH 1 6 3 2 4 5 1. Write the date. 2. Place a check mark in the Account Title column to show that no account title is needed. 3. Write the check number. 4. Place a check mark in the Post. Ref. column to show that amounts are not to be posted individually. 5. Write the debit amount. 6. Write the credit amount. Lesson 10-1, page 231

  15. Work Together & On Your Own – Page 232

  16. TERMS REVIEW purchase invoice terms of sale Lesson 10-2, page 237

  17. TERMS REVIEW Purchase Invoice An invoice used as a source document for recording a purchase on account transaction. Lesson 10-2, page 233

  18. TERMS REVIEW Terms of Sale An agreement between a buyer and a seller about payment for merchandise. Lesson 10-2, page 233

  19. PURCHASE INVOICE 1 4 2 3 1. Stamp date received and purchase invoice number. 2. Place a check mark by each amount. 3. Initials of person who checked invoice. 4. Review vendor’s terms of sale. Lesson 10-2, page 233

  20. Purchases Accounts Payable PURCHASING MERCHANDISE ON ACCOUNT November 2. Purchased merchandise on account from Crown Ltd., $2,039.99. Purchase Invoice No. 83. 1. Which accounts are affected? Purchases Accounts Payable Debit Normal Balance 2,039.00  2. How is each account classified? Purchases is a cost account. Accounts Payable is a liability account. Credit Normal Balance 3. How is each classification changed? Costs are increased. Liabilities are increased. 2,039.00  4. How is each amount entered in the accounts? Costs increase on the debit side. Liabilities increase on the credit side. Lesson 10-2, page 234

  21. PURCHASING MERCHANDISE ON ACCOUNT 2 1 3 4 5 1. Write the date. 2. Write the vendor name in the Account Title column. 3. Write the purchase invoice number in the Doc. No. column. 4. Write the credit amount. 5. Write the debit amount. Lesson 10-2, page 234

  22. BUYING SUPPLIES FOR CASH 2 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. Lesson 10-2, page 235

  23. BUYING SUPPLIES ON ACCOUNT 2 3 6 1 4 5 1. Write the date. 2. Write the account title. 3. Write the memorandum number. 4. Write the debit amount. 5. Write the vendor name. 6. Write the credit amount. Lesson 10-2, page 236

  24. Work Together & On Your Own – Page 237

  25. CASH PAYMENT ON ACCOUNT 2 1 3 4 5 1. Write the date. 2. Write the vendor name. 3. Write the check number. 4. Write the debit amount. 5. Write the credit amount. Lesson 10-3, page 238

  26. CASH PAYMENT OF AN EXPENSE 2 1 3 4 5 1. Write the date. 2. Write the vendor name account title. 3. Write the check number. 4. Write the debit amount. 5. Write the credit amount. Lesson 10-3, page 239

  27. Miscellaneous Expense Advertising Expense Supplies—Office Supplies—Store Cash 47.00 31.00 35.00 92.00 205.00 CASH PAYMENT TO REPLENISH PETTY CASH November 9. Paid cash to replenish the petty cash fund, $205.00: office supplies, $35.00; store supplies, $47.00; advertising, $92.00; miscellaneous, $31.00. Check No. 297. Entered Debit side Debit side Debit side Debit side Credit side Accounts Affected Supplies—Office Supplies—Store Advertising Expense Miscellaneous Expense Cash Classification Asset Asset Expense Expense Asset Change Increased Increased Increased Increased Decreased normal balance normal balance normal balance    normal balance normal balance   Lesson 10-3, page 240

  28. CASH PAYMENT TO REPLENISH PETTY CASH 2 1 3 5 4 1. Write the date. 2. Write the titles of accounts for which petty cash was used. 3. Write the check number. 4. Write the debit amounts. 5. Write the credit amount. Lesson 10-3, page 240

  29. Michelle Wu, Drawing Cash 1,200.00 1,200.00 CASH WITHDRAWALS BY PARTNERS November 10. Michelle Wu, partner, withdrew cash for personal use, $1,200.00. Check No. 298. Entered Debit side Credit side Accounts Affected Michelle Wu, Drawing Cash Classification Drawing Asset Change Increased Decreased normal balance normal balance   Lesson 10-3, page 241

  30. CASH WITHDRAWALS BY PARTNERS 2 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. Lesson 10-3, page 241

  31. Karl Koehn, Drawing Purchases 300.00 300.00 MERCHANDISE WITHDRAWALS BY PARTNERS November 12. Karl Koehn, partner, withdrew merchandise for personal use, $300.00. Memorandum No. 53. Entered Debit side Credit side Accounts Affected Karl Koehn, Drawing Purchases Classification Drawing Cost Change Increased Decreased normal balance normal balance   Lesson 10-3, page 242

  32. MERCHANDISE WITHDRAWALS BY PARTNERS 2 1 3 4 5 6 1. Write the date. 2. Write the account title Karl Koehn, Drawing. 3. Write the memorandum number. 4. Write the debit amount. 5. Write the account title Purchases. 6. Write the credit amount. Lesson 10-3, page 242

  33. Work Together & On Your Own – Page 243

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