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LESSON 9-1

LESSON 9-1. Journalizing Purchases Using a Purchases Journal. Service VS. Merchandising Business. Service Business Sell services for a fee TechKnow Consulting Merchandising Business Purchase and sell goods Merchandise Goods that a business purchases. Special Journals.

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LESSON 9-1

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

  2. Service VS. Merchandising Business • Service Business • Sell services for a fee • TechKnow Consulting • Merchandising Business • Purchase and sell goods • Merchandise • Goods that a business purchases

  3. Special Journals • A journal used to record only one kind of transaction

  4. Special Journals cont. • 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

  5. Purchasing Merchandise p. 236 • 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

  6. Purchases on Account • A transaction in which the merchandise purchased is to be paid at a later date.

  7. 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 Special Amount Column

  8. Purchase Invoice • Source document for recording a purchase on account transaction • Quantity • Description • Price • Total amount of the invoice

  9. 2 PURCHASE INVOICE page 238 1 4 3 1. Stamp the date received andpurchase invoice number. 3. Initials of the person whochecked the invoice. 2. Place a check mark by each amount. 4. Review the vendor’s terms. LESSON 9-1

  10. PURCHASING MERCHANDISE ON ACCOUNT page 239 November 2. Purchased merchandise on account from Crown Distributing, $2,039.00. Purchase Invoice No. 83. 2 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.

  11. 1 6 TOTALING AND RULING A PURCHASES JOURNAL page 240 4 5 3 2 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.

  12. 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.

  13. Chapter 9 Section 2 Using the Cash Payments Journal

  14. 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

  15. 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.

  16. 1 2 3 4 5 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.

  17. BUYING SUPPLIES FOR CASH page 243 November 5. Paid cash for office supplies, $94.00. Check No. 293. 1 2 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.

  18. 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

  19. Cash Payment for Purchases Using a Trade Discount • Step 1 • Total Price x Trade Discount Rate=Trade Discount • Step 2 • Total List Price - Trade Discount= Invoice Amount 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

  20. CASH PAYMENTS FOR PURCHASES page 244 November 7. Purchased merchandise for cash, $600.00. Check No. 301. 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.

  21. 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

  22. 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

  23. Discount Steps • Step 1 • Purchase Invoice Amount x Discount Rate = Purchases Discount • Step 2 • Purchase Invoice Amount–Purchase Discount Amount=Cash Amount AFTER discount 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. $498 x 2% (.02) = $9.96 $498 - $9.96 = $488.04

  24. 5 6 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 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.

  25. 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 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.

  26. Chapter 9 Section 3 Performing Additional Cash Payments Journal Operations

  27. 1 3 4 5 6 7 PETTY CASH REPORT page 248 1. Write the date and custodian name. 2. Write the fund total. 3. Summarize petty cash payments. 2 4. Calculate and write the total payments. 5. Calculate and write the recorded amount on hand. 8 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.

  28. 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 4 5 6 1 3 2

  29. 1 6 TOTALING, PROVING, AND RULING A CASH PAYMENTS JOURNAL PAGE TO CARRY TOTALS FORWARD page 250 4 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.

  30. 5 STARTING A NEW CASH PAYMENTS JOURNAL PAGE page 251 1 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.

  31. 1 5 TOTALING, PROVING, AND RULING A CASH PAYMENTS JOURNAL AT THE END OF A MONTH page 252 2 3 4 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.

  32. LESSON 9-4 Journalizing Other Transactions Using a General Journal

  33. MEMORANDUM FOR BUYING SUPPLIES ON ACCOUNT page 254

  34. BUYING SUPPLIES ON ACCOUNT page 255 November 6. Bought store supplies on account from Gulf Craft Supply, $210.00. Memorandum No. 52. 2 4 3 7 1 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.

  35. DEBIT MEMORANDUM FOR PURCHASES RETURNS AND ALLOWANCES page 256

  36. 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. 2 5 1 3 4 6 7 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.

  37. TERMS REVIEW page 258 • purchases return • purchases allowance • debit memorandum

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