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Starting a Merchandising Business Organized as a Partnership

Starting a Merchandising Business Organized as a Partnership. Lecture Presentation 9 -4 Journalizing Other Transactions Using a General Journal. Learning Objectives. Define and Identity terms and practices related to purchases returns and allowances for a merchandising business.

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Starting a Merchandising Business Organized as a Partnership

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  1. Starting a Merchandising Business Organized as a Partnership Lecture Presentation 9-4 Journalizing Other Transactions Using a General Journal

  2. Learning Objectives • Define and Identity terms and practices related to purchases returns and allowances for a merchandising business. • Journalize purchases returns and allowances and other transactions using a general journal.

  3. The General Journal • Not all transactions are recorded in Special Journals • We use the General Journal for these kinds of transactions • If a transaction does not go in the Purchases Journal, Cash Payments Journal, Sales Journal, or Cash Receipts Journal, it goes in the General Journal.

  4. Buying Supplies on Account • Seven step process to journalize this transaction (see page 241) • Write the date in the Date column • Write the account title of the Debit Account Supplies – Store or Supplies – Office in the Account Title Column • Write the Memorandum number in the Doc. No. column • Record the debit amount in the Debit column • Write both the General Ledger Account Title & Vendor Name of the Credit Account Accounts Payable / Vendor Name in the Account Title Column on the next line, indented • Place a diagonal line in the Post. Ref. column to show that a single credit amount is posted to two accounts (We’ll cover this more in Chapter 12) • Record the credit amount in the Credit column

  5. Debit Memorandum for Purchases Returns and Allowances • Customer may want to return damaged merchandise… • Purchases Return – credit allowed for the purchase price of returned merchandise, resulting in a decrease in the customer’s A/P. • If damaged or a different quality then ordered the vendor may let the customer keep at a reduced price… • Purchases Allowance – credit allowed for part of the purchase price of merchandise that is not returned, resulting in a decrease in the customer’s A/P. • Debit Memorandum - a form prepared by the customer showing the price deduction taken by the customer for returns and allowances.

  6. Journalizing Purchases Returns and Allowances • Purchases Returns and Allowances decrease the amount of Purchases, therefore, it is a contra account to Purchases. • The normal balance of Purchases Returns and Allowances is a credit. (the opposite of the NB for Purchases) • Important to remember….. • DebitAccounts Payable/Vendor Name • Put a slash in Post Ref • CreditPurchases Returns and Allow.

  7. Terms and Questions • What Journal is used to record transactions that cannot be recorded in special journals? • General Journal • Why is a memorandum used as the source document when supplies are bought on account? • To note that the invoice is for store-supplies and not for purchases • Why are two account titles written for the credit amount when supplies are bought on account? • Because the single credit amount is posted to two accounts • When is the equality of debits and credits proved for a general journal? • After each general journal entry is recorded

  8. Work Together/On Your Own • Page 258…Work Together 9-4 • Page 258…On Your Own 9-4 • Page 261… • Application Problem 9-4 • Page 262… • Application Problem 9-5 • Mastery Problem 9-6

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