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Chapter 9

Chapter 9. Journalizing Purchases and Cash Payments. Merchandising Corporation. Retail vs. Wholesale Retail-sells directly to the customer Wholesale-sells to the retailer. Corporation vs Sole Proprietorship. Capital Stock vs Capital Shares of Stock- unit of ownership

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Chapter 9

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  1. Chapter 9 Journalizing Purchases and Cash Payments

  2. Merchandising Corporation • Retail vs. Wholesale • Retail-sells directly to the customer • Wholesale-sells to the retailer

  3. Corporation vs Sole Proprietorship • Capital Stock vs Capital • Shares of Stock- unit of ownership • Shareholders/stockholders- individuals who own 1 or more share of stock

  4. Special Journals • Purchases- purchases on account • Cash Payments- cash credits • Sales- sales on account • Cash Receipts- cash debits • General- any other transaction

  5. Merchandising Business • Purchasing Merchandise - items that are purchased from a vendor and will be sold • Cost of Merchandise • Markup- usually a % of cost • Selling Price • Cost of Merch. + Markup = Selling Price

  6. With Cash Purchases debited Cash credited Cash Payments journal On Account Purchases debited Accounts Payable credited Purchases journal Purchasing Merchandise

  7. The actual amount paid is the amount recorded on the books. Concept: Historical Cost

  8. The Purchases Journal

  9. Purchases Invoice

  10. Cash Payments journal- cash credit

  11. Cash Discount • Given by the vendor to encourage prompt payment. • Vendor allows a reduction in the invoice amount. • Example: Purchases Discount

  12. Other Discounts • List price- the retail price listed in a catalog or Internet site • Trade discount- a reduction in list price granted to customers for ordering larger quantities of merchandise

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