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Journalizing Purchases and Cash Payments Using Special Journals
Dawson_David Thursday, February 3, 2011 9:19:28 AM ET
Partnership A business in which two or more persons combine
their assets and skills.
Partner Each member of a partnership.
Business Entity Concept Reports, and financial records of the business are
kept separate from the personal records of the partners.
Dawson_David Thursday, February 3, 2011 9:19:28 AM ET
Merchandising Business A business that purchases and sells goods.
Retail Merchandising Business A merchandising business that sells to those who use
or consume the goods.
Merchandise Goods that a merchandising business purchases to sell.
Wholesale Merchandising Business A business that buys and resells merchandise to
retail merchandising businesses. Dawson_David Thursday, February 3, 2011 9:19:28 AM ET
Special Journal A journal used to record only one kind of transaction.
– Purchase Journals – Cash Payments Journal – Sales Journal – Cash Receipts Journal
Dawson_David Thursday, February 3, 2011 9:19:28 AM ET
Cost of Merchandise The price a business pays for goods it purchases
to sell.
Markup The amount added to the cost of merchandise to
establish the selling price.
Revenue earned from the sale of merchandise includes both the cost of merchandise and the markup.
The cost of merchandise is kept in a separate general ledger account.
Dawson_David Thursday, February 3, 2011 9:19:28 AM ET
Vendor A business from which merchandise is purchased
or supplies or other assets are bought.
The account used for recording the cost of merchandise is Purchases.
Purchases Account – Only used when merchandise is purchased – Cost account – Temporary account. – Normal Debit Balance – Reduces Capital when merchandise is purchased
Dawson_David Thursday, February 3, 2011 9:19:28 AM ET
Historical Cost Applied when the actual amount paid for the
merchandise or other items bought is recorded.
Purchase on Account A transaction in which the merchandise purchased
is to be paid for later.
Accounts Payable The total amount owed to all vendors.
– Liability Account – Normal Credit Balance
Dawson_David Thursday, February 3, 2011 9:19:28 AM ET
Purchases Journal A special journal used to record only purchases of
merchandise on account. A purchase on account transaction is recorded on
only one line. Special Amount Column A journal amount column headed with an account
title. Used to save time.
Dawson_David Thursday, February 3, 2011 9:19:28 AM ET
Purchase Invoice An invoice used as a source document for
recording a purchase on account transaction.
Terms of Sale An agreement between a buyer and a seller about
payment for merchandise. – 2/10, n/30
Dawson_David Thursday, February 3, 2011 9:19:28 AM ET
1
3
4
2
3. Initials of person who checked invoice.
1. Stamp date received and purchase invoice number.
4. Review vendor’s terms of sale.
2. Place a check mark by each amount.
Dawson_David Thursday, February 3, 2011 9:19:28 AM ET
1 3 4 2
3. Write the purchase invoice number in the Doc. No. column.
1. Write the date.
4. Write the amount of the invoice in the special amount column.
2. Write the vendor name in the Account credited column.
November 2. Purchased merchandise on account from Crown Ltd., $2,039.99. Purchase Invoice No. 83.
Dawson_David Thursday, February 3, 2011 9:19:28 AM ET
3. Write word Total.
1. Rule a single line across amount column.
4. Add the amount column.
2. Write the date.
5. Write total amount below single line. 6. Rule double lines across amount column.
5 1
3 4
2 6
Dawson_David Thursday, February 3, 2011 9:19:28 AM ET
p. 228 Audit Your Understanding
p. 228 (p. 203) Work Together
p. 228 (p. 204) On Your Own
p. 245 (p. 209) Application Problem 10-1
Dawson_David Thursday, February 3, 2011 9:19:28 AM ET
Journalizing Cash Payments Using a Cash Payments Journal
Dawson_David Thursday, February 3, 2011 9:19:28 AM ET
Cash Payments Journal A special journal used to record only cash payment
transactions.
General Amount Column A journal amount column that is not headed with an
account title.
The source document for most cash payments is a check.
Dawson_David Thursday, February 3, 2011 9:19:28 AM ET
2. Write the account title column.
5 1 4 2
3. Write the check number.
1. Write the date.
4. Write the debit amount. 5. Write the credit amount.
3
November 1. Purchased merchandise for cash, $575.00 Check No. 290.
Dawson_David Thursday, February 3, 2011 9:19:28 AM ET
November 2. Purchased merchandise for cash, $731.00 Check No.291.
November 5. Paid cash for office supplies, $34.00. Check No. 292.
Dawson_David Thursday, February 3, 2011 9:19:28 AM ET
5 1
3 4 2
3. Write the check number.
1. Write the date.
4. Write the debit amount.
2. Write the vendor name.
5. Write the credit amount.
November 7. Paid cash on account to Pacific Imports, $1,050.00, covering Purchase Invoice No. 81. Check No.294.
Dawson_David Thursday, February 3, 2011 9:19:28 AM ET
5 1
3 4 2
3. Write the check number.
1. Write the date.
4. Write the debit amount.
2. Write the account title.
5. Write the credit amount.
November 9. Paid cash for advertising, $150.00. Check No.296.
Dawson_David Thursday, February 3, 2011 9:19:28 AM ET
p. 233 Audit Your Understanding
p. 233 (p. 205) Work Together
p. 233 (p. 206) On Your Own
p. 245 (p. 211) Application Problem 10-2
Dawson_David Thursday, February 3, 2011 9:19:28 AM ET
Performing Additional Cash Payments Journal Operations
Dawson_David Thursday, February 3, 2011 9:19:28 AM ET
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. Accounts Affected Supplies—Office Supplies—Store Advertising Expense Miscellaneous Expense Cash
Dawson_David Thursday, February 3, 2011 9:19:28 AM ET
5 1 3
4
2
3. Write the check number.
1. Write the date.
4. Write the debit amounts.
2. Write the titles of accounts for which petty cash was used.
5. Write the credit amount.
Dawson_David Thursday, February 3, 2011 9:19:28 AM ET
November 10. Michelle Wu, partner, withdrew cash for personal use, $1,200.00. Check No. 298.
Accounts Affected Michelle Wu, Drawing Cash
Dawson_David Thursday, February 3, 2011 9:19:28 AM ET
5 1 3
4
2
3. Write the check number.
1. Write the date.
4. Write the debit amount.
2. Write the account title.
5. Write the credit amount.
Dawson_David Thursday, February 3, 2011 9:19:28 AM ET
1
3 4 2
3. Write Carried Forward.
1. Rule a single line.
4. Place check mark in Post. Ref. column.
2. Write the date.
5. Write each column total.
6
5
6. Rule double line.
Dawson_David Thursday, February 3, 2011 9:19:28 AM ET
1
3 4 2
3. Write the words Brought Forward.
1. Write the journal page number.
4. Place check mark in Post. Ref. column.
2. Write the date.
5. Record column totals brought forward from previous page.
5
Dawson_David Thursday, February 3, 2011 9:19:28 AM ET
1 3 2
3. Write Totals.
1. Rule a single line.
4. Write each column total.
2. Write the date.
5. Rule double line.
5
4
Dawson_David Thursday, February 3, 2011 9:19:28 AM ET
p. 239 Audit Your Understanding
p. 239 (p. 205) Work Together
p. 239 (p. 206) On Your Own
p. 246 (p. 211) Application Problem 10-3
Dawson_David Thursday, February 3, 2011 9:19:28 AM ET
Journalizing Other Transactions Using a General Journal
Dawson_David Thursday, February 3, 2011 9:19:28 AM ET
2. Write the account title.
5
1 3 4 2
3. Write the memorandum number.
1. Write the date.
4. Write the debit amount. 5. Write the account title
and vendor name. 6. Place diagonal line in Post. Ref. column.
6
7. Write the credit amount.
7
November 6. Bought store supplies on account from Foxfire Supply, $210.00. Memo No. 52.
Dawson_David Thursday, February 3, 2011 9:19:28 AM ET
Purchases Karl Koehn, Drawing
November 12. Karl Koehn, partner, withdrew merchandise for personal use, $300.00. Memorandum No. 53.
Accounts Affected Karl Koehn, Drawing Purchases
Entered Debit side Credit side
Change Increased Decreased
Classification Drawing Cost
normal balance 300.00
normal balance 300.00
Dawson_David Thursday, February 3, 2011 9:19:28 AM ET
5
1 3
4
2
3. Write the memorandum number.
1. Write the date.
4. Write the debit amount.
2. Write the account title Karl Koehn, Drawing.
5. Write the account title Purchases. 6. Write the credit amount.
6
Dawson_David Thursday, February 3, 2011 9:19:28 AM ET
p. 243 Audit Your Understanding
p. 243 (p. 207) Work Together
p. 243 (p. 207) On Your Own
p. 246 (p. 213) Application Problem 10-4
p. 246 (p. 215-217) Mastery Problem 10-5
p. 247 (p. 219-222) Challenge Problem 10-6
Dawson_David Thursday, February 3, 2011 9:19:28 AM ET