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Accounting for Purchases and Accounts Payable

Chapter. 8. Accounting for Purchases and Accounts Payable. Section 1: Merchandise Purchases. Section Objectives. Record purchases of merchandise on credit in a three-column purchases journal. Post from the three-column purchases journal to the general ledger accounts.

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Accounting for Purchases and Accounts Payable

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  1. Chapter 8 Accountingfor Purchasesand Accounts Payable Section 1: Merchandise Purchases Section Objectives • Record purchases of merchandise on credit in a three-column purchases journal. • Post from the three-column purchases journal • to the general ledger accounts.

  2. Posting to the General Ledger

  3. Objective 2 Post from the three-column purchases journal to the general ledger accounts.

  4. The purchases journal simplifies the posting process. • Summary amounts are posted at the end of the month.

  5. Proof of Purchases Journal Debits Purchases Debit column $21,750.00 Freight In Debit column 1,565.00 $23,315.00 Credits Accounts Payable Credit column $23,315.00 Before posting, prove the equality of the debits and credits recorded in the purchases journal.

  6. Post a column total to the general ledger in six steps. • Locate the general ledger account. • Enter the date. • Enter the posting reference. • Enter the amount from the purchases journal column. • Enter the new balance in the Debit Balance or Credit Balance column. • Go back to the purchases journal.Enter the general ledger account number under the column total.

  7. (502) (501) PAGE 1 PURCHASES JOURNAL DATE CREDITOR’S INVOICE INV. TERMS POST. ACCOUNTS PURCHASESFREIGHTIN ACCOUNT NUMBER DATE REF. PAYABLE DEBITDEBITCREDITEDCREDIT 20-- Jan. 3 Fashion Designs 5879 12/29/-- 2/10, n/30 2,865.00 2,675.00 190.00 5 The Trend Center 633 12/30/-- n/30 4,055.00 3,880.00 175.00 6 Modern Woman 8011 12/31/-- n/30 3,140.00 2,900.00 240.00 7 World of Fashions 4312 01/03/-- 2/10, n/30 3,935.00 3,675.00 260.00 18 Fashion Warehouse 8997 01/15/-- 2/10, n/30 4,200.00 3,860.00 340.00 22 Inter’l Apparel Shop 7985 01/22/-- n/30 5,120.00 4,760.00 360.00 31 23,315.00 21,750.00 1,565.00 (205) ACCOUNTACCOUNT NO. 205 DATE DESCRIPTION POST. DEBIT CREDIT BALANCE REF. DEBIT CREDIT 20-- Jan. 1 Balance ü 10,800.00 31 P1 23,315.00 23,315.00 Accounts Payable

  8. (502) (501) PAGE 1 PURCHASES JOURNAL DATE CREDITOR’S INVOICE INV. TERMS POST. ACCOUNTS PURCHASESFREIGHTIN ACCOUNT NUMBER DATE REF. PAYABLE DEBITDEBITCREDITEDCREDIT 20-- Jan. 3 Fashion Designs 5879 12/29/-- 2/10, n/30 2,865.00 2,675.00 190.00 5 The Trend Center 633 12/30/-- n/30 4,055.00 3,880.00 175.00 6 Modern Woman 8011 12/31/-- n/30 3,140.00 2,900.00 240.00 7 World of Fashions 4312 01/03/-- 2/10, n/30 3,935.00 3,675.00 260.00 18 Fashion Warehouse 8997 01/15/-- 2/10, n/30 4,200.00 3,860.00 340.00 22 Inter’l Apparel Shop 7985 01/22/-- n/30 5,120.00 4,760.00 360.00 31 23,315.00 21,750.00 1,565.00 (205) ACCOUNTACCOUNT NO. 501 DATE DESCRIPTION POST. DEBIT CREDIT BALANCE REF. DEBIT CREDIT 20-- 31 P1 21,750.00 21,750.00 Purchases

  9. (502) (501) PAGE 1 PURCHASES JOURNAL DATE CREDITOR’S INVOICE INV. TERMS POST. ACCOUNTS PURCHASESFREIGHTIN ACCOUNT NUMBER DATE REF. PAYABLE DEBITDEBITCREDITEDCREDIT 20-- Jan. 3 Fashion Designs 5789 12/29/-- 2/10, n/30 2,865.00 2,675.00 190.00 5 The Trend Center 633 12/30/-- n/30 4,055.00 3,880.00 175.00 6 Modern Woman 8011 12/31/-- n/30 3,140.00 2,900.00 240.00 7 World of Fashions 4312 01/03/-- 2/10, n/30 3,935.00 3,675.00 260.00 18 Fashion Warehouse 8997 01/15/-- 2/10, n/30 4,200.00 3,860.00 340.00 22 Inter’l Apparel Shop 7985 01/22/-- 2/10, n/30 5,120.00 4,760.00 360.00 31 23,315.00 21,750.00 1,565.00 (205) ACCOUNTACCOUNT NO. 502 DATE DESCRIPTION POST. DEBIT CREDIT BALANCE REF. DEBIT CREDIT 20-- 31 P1 1,565.00 1,565.00 Freight In

  10. Advantages of a Purchases Journal

  11. Advantages of a Purchases Journal • Allows for the division of accounting work among different employees • Strengthens the audit trail • Records all credit purchases in one place

  12. R E V I E W SECTION Complete the following sentences: The purchase requisition is sent to the _____________________. purchasing department supplier The purchase order is sent to the _______. receiving report The ______________ shows the quantity and condition of goods received.

  13. R E V I E W SECTION Complete the following sentences: A bill received for goods purchased is called the _______________. purchase invoice Purchases account The _________________ is an account used to record cost of goods bought for resale during a period. The Purchases account has a normal _____ balance. debit

  14. Thank You for using College Accounting, 11th Edition Price • Haddock • Brock

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