Chapter 9 Journalizing Purchases and Cash Payments Merchandising

Chapter 9 Journalizing Purchases and Cash Payments

Merchandising Business • Retail and Wholesale Merchandising Businesses

Special Journal • Because things are more confusing to a corporation we have to spread things out to make it easier to understand. • We use 5 separate journals to help record – Purchases – Cash Payments – Sales – Cash Receipts

How do they get that price • Cost of Merchandise • Plus Markup 60% • Cost to you……… 60. 00 24. 00 84. 00

Special amount columns Purchases Journal Date Account Credited Purch No. Purch Dr. Accts Pay Cr Post Ref

Purchased merchandise on account from Pro golf company $7254. 00. Purchase Invoice No. 179 Purchases Journal Date Account Credited Purch No. Post Ref Purch Dr. Accts Pay Cr 2 -Mar Pro Golf Company 179 7254

Please work on Aplia “On your Own”

Journalizing Cash Payments Using Cash Payments Journal Section 9 -2

Terms you need to know • Cash Payment Journal – Whenever cash is paid • Cash Discount – A deduction from the original amount when cash is paid also called Purchase Discount

Paid Cash for Advertising $150. 00 Check 292 Cash Payments Journal Date General Accounts Payable Purchase Debit Discount Cash Credit Account Title Ck No. Post Ref Debit Credit Nov 2 Advertising Expense 292 15. 00

Paid Cash for office supplies $94. 00 Check No. 293 Cash Payments Journal Date General Accounts Payable Purchase Debit Discount Cash Credit Account Title Ck No. Post Ref Debit Credit Nov 2 Advertising Expense 292 15. 00 Nov 5 Supplies – Office 293 94. 00

Purchasing Merchandise • WHENEVER YOU SEE THE WORD MERCHANDISE!!!!!! You will use the Purchase account in some fashion.

What happens when we get a discount? • A discount is a reduction in price because of a agreement in contract. – Trade discount • Used when we purchase different amounts – 10 for $20 – 20 for $10 – Trade discounts – $1500 x 60% = $900. 00 – 1500 – 900 = $600

Nov. 7. Purchased merchandise for cash, $600. Check No. 301 Cash Payments Journal Date General Accounts Payable Purchase Debit Discount Cash Credit Account Title Ck No. Post Ref Debit Credit Nov 2 Advertising Expense 292 15. 00 Nov 5 Supplies – Office 293 94. 00 Nov 7 Purchases 301 600. 00

Purchase Discount • Purchase discount is a contra- account – An account that reduces a related account on a financial statement. – Can you name any others

Nov 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 Cash Payments Journal Date Account Title Post Ck No. Ref General Debit Credit Accounts Payable Purchase Cash Debit Discount Credit Nov 2 Advertising Expense 292 15. 00 Nov 5 Supplies – Office 293 94. 00 Nov 7 Purchases 301 600. 00 Nov 8 Gulf Craft Supply 302 498. 00 9. 96 488. 04

Paid cash on account NO DISCOUNT Paid cash on account to American Paint $2, 650 covering Purchase No. 77 Check No. 303 Cash Payments Journal Date Account Title Post Ck No. Ref General Debit Credit Accounts Payable Purchase Cash Debit Discount Credit Nov 2 Advertising Expense 292 15. 00 Nov 5 Supplies – Office 293 94. 00 Nov 7 Purchases 301 600. 00 Nov 8 Gulf Craft Supply 302 498. 00 9. 96 488. 04 Nov 13 American Paint 303 2650. 00

Performing Additional Cash Payments Journal Operations 9 -3

PETTY CASH FUND REPORT PETTY CASH REPORT DATE: ___________ CUSTODIAN_______ EXPLANATION FUND TOTAL PAYMENTS SUPPLIES ADVERTISING MISCELLANEOUS LESS: EQUALS TOTAL PAYMENTS RECORDED AMOUNT ON HAND ACTUAL AMOUNT ON HAND CASH SHORT OR OVER REPLENISH AMOUNT RECONCILIATION 250 45. 34 25 144. 22 214. 56 35. 44 33. 85 1. 59 214. 56 1. 59 216. 15

JOURNALIZING THE PETTY CASH REPORT SUPPLIES 45. 34 ADVERTISING MISCELLANEOUS LESS: EQUALS November 18 Paid cash to replenish the petty cash fund$208: office supplies #32. 33, advertising , $50. 00; miscellaneous, $128. 50, cash short 1. 59 check no 310 25 144. 22 TOTAL PAYMENTS RECORDED AMOUNT ON HAND ACTUAL AMOUNT ON HAND CASH SHORT OR OVER 214. 56 35. 44 33. 85 1. 59 Cash Payments Journal General Post Ck No. Ref Debit Credit Date Account Title NOV 18 SUPPLIES OFFICE Accounts PURCHASE Payable DISCOUNT Debit CREDIT Cash Credit 45. 34 216. 15 25. 00 Advertising expense Miscellaneous expense 144. 22 cash short and over 1. 59

Section 4 Journalizing other transaction s using a general journal • When a transaction does not fit – i. e. When we buy supplies on account or when we buy something don’t like it and return it. It doesn’t fit the criteria of the last two journals – Purchases and cash payments so it must go into the General Journal.

November 6. Bought supplies on account from Gulf Craft Supply, $210. 00. Memorandum No. 52. General Journal Date Account Title Doc. No Post Ref. Debit Credit Nov 6 Supplies – Store M 52 210 Accts Pay/Gulf Craft Supply

• Purchase Return and Allowance – Contra Account to Purchases

Purchase Return and allowance November 28. Returned merchandise to Crown Distributing, $252. 0, covering Purchase Invoice No. 80 General Journal Date Account Title Post Doc. No Ref. Debit Credit Nov 28 Accounts Pay/Crown Distributors DM 78 252. 00 Purchase Return and Allowance 252. 00