LESSON 9 1 Journalizing Purchases Using a Purchases

LESSON 9 -1 Journalizing Purchases Using a Purchases Journal CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

Lesson 9 -1 SLIDE Merchandising Businesses LO 1 n Goods that a business purchases to sell are called merchandise. n A business that purchases and resells goods is called a merchandising business. n A merchandising business that sells to those who use or consume the goods is called a retail merchandising business. n A wholesale merchandising business buys and resells merchandise primarily to other merchandising businesses. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 2

Lesson 9 -1 SLIDE 3 Forming a Corporation n A corporation is an organization with the legal rights of a person which many persons or other corporations may own. n The articles of incorporation, a legal document that identifies basic characteristics of a corporation, is a part of the application submitted to a state to become a corporation. n A state approves the formation of a corporation by issuing a charter, the legal right for a business to conduct operations as a corporation. Continued on next s CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

Lesson 9 -1 SLIDE 4 Forming a Corporation n Each unit of ownership in a corporation is called a share of stock. n The owner of one or more shares of stock is called a stockholder. n The total shares of ownership in a corporation are called capital stock. Continued on next s CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

Lesson 9 -1 SLIDE 5 Using Special Journals n A journal used to record only one kind of transaction is called a Special Journal. Continued on next s CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

Lesson 9 -1 SLIDE 6 Purchasing Merchandise n The price a business pays for goods it purchases to sell is called a cost of merchandise. n The amount added to the cost of merchandise to establish the selling price is called markup. n A business from which merchandise is purchased or supplies or other assets are bought is called a vendor. Continued on next s CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

7 PURCHASING MERCHANDISE CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning page 236 LESSON 9 -1

Lesson 9 -1 SLIDE 8 Purchases on Account n A transaction in which the merchandise purchased is to be paid for later is called a purchase on account. Continued on next s CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

9 PURCHASES ON ACCOUNT page 236 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 9 -1

Lesson 9 -1 10 SLIDE Purchases Journal n A special journal used to record only purchases of merchandise on account is called a purchases journal. n Purchases journal has a special amount column similar to out special column journal. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

11 PURCHASES JOURNAL CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning page 237 LESSON 9 -1

Lesson 9 -1 12 SLIDE Purchase Invoice n An invoice used as a source document for recording a purchase on account transaction is called a purchases journal. n An agreement between a buyer and a seller about payment for merchandise is called the terms of sale. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

13 PURCHASE INVOICE page 238 1 4 2 3 1. Stamp the date received and purchase invoice number. 3. Initials of the person who checked the invoice. 2. Place a check mark by each amount. 4. Review the vendor’s terms. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 9 -1

14 PURCHASING MERCHANDISE ON ACCOUNT page 239 November 2. Purchased merchandise on account from Crown Distributing, $2, 039. 00. Purchase Invoice No. 83. 2 1 1. 2. 3. 4. 3 4 Write the date. Write the vendor name. Write the purchase invoice number. Write the amount of the invoice. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 9 -1

15 TOTALING AND RULING A PURCHASES JOURNAL page 240 1 2 4 3 1. Rule a single line across the amount column. 2. Write the date. 3. Write the word Total. 4. Add the amount column. 5. Write the total. 6. Rule double lines across the amount column. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 5 6 LESSON 9 -1

LESSON 9 -2 Journalizing Cash Payments Using a Cash Payments Journal CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

Lesson 9 -4 CASH PAYMENTS JOURNAL n A cash payments journal is a special journal used to record only cash payment transactions. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

18 CASH PAYMENT OF AN EXPENSE page 243 November 2. Paid cash for advertising, $150. 00. Check No. 292. 1 1. 2. 3. 4. 5. 2 3 4 5 Write the date. Write the account title. Write the check number. Write the debit amount. Write the credit amount. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 9 -2

19 BUYING SUPPLIES FOR CASH page 243 November 5. Paid cash for office supplies, $94. 00. Check No. 293. 1 1. 2. 3. 4. 5. 2 3 4 5 Write the date. Write the account title. Write the check number. Write the debit amount. Write the credit amount. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 9 -2

20 CASH PAYMENTS FOR PURCHASES page 244 November 7. Purchased merchandise for cash, $600. Check No. 301. 2 1 1. 2. 3. 4. 5. 3 4 5 Write the date. Write the account title. Write the check number. Write the debit amount. Write the credit amount. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 9 -2

Lesson 9 -4 21 SLIDE Cash Discount n A cash discount is a deduction that a vendor allows on an invoice amount to encourage prompt payment. n When a company that has purchased merchandise on account takes a cash discount, it is called a purchases discount. n A journal amount column that is not headed with an account title is called a general amount column. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

Lesson 9 -4 22 SLIDE Trade Discount n The retail price listed in a catalog or on an Internet site is called a list price. n A trade discount is a reduction in the list price granted to a merchandising business. n An account that reduces a related account on a financial statement is called a contra account. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

23 CASH PAYMENTS ON ACCOUNT WITH PURCHASES DISCOUNTS 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. 5 1 1. 2. 3. 4. 5. 6. 2 3 page 245 6 4 Write the date. Write the account title of the vendor. Write the check number. Write the debit amount. Write the credit amount. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 9 -2

24 CASH PAYMENTS ON ACCOUNT WITHOUT 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 1. 2. 3. 4. 5. 2 3 4 5 Write the date. Write the vendor account title. Write the check number. Write the debit amount. Write the credit amount. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 9 -2

LESSON 9 -3 Performing Additional Cash Payments Journal Operations CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

26 PETTY CASH REPORT 1. Write the date and 1 custodian name. 2. Write the fund total. 3. Summarize petty cash payments. 4. Calculate and write the 3 total payments. 5. Calculate and write the recorded amount on hand. 5 6. Write the actual amount of cash on hand. 7. Subtract the actual amount on hand from the recorded amount on hand write the amount. 8. Write the total of the replenish amount. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning page 248 2 4 6 7 8 LESSON 9 -3

27 REPLENISHING A PETTY CASH FUND page 249 1. 2. 3. 4. 5. Date Account titles Check number Expense amounts Cash short as a debit; cash over as a credit 6. Total cash payment 4 5 6 1 2 3 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 9 -3

Lesson 9 -4 28 SLIDE CASH SHORT AND (OVER) n A petty cash on hand amount that is less than recorded amount is called a cash short. n Less cash in Petty Cash n Debit Cash Short and Over n A petty cash on hand amount that is more than recorded amount is called a cash over. n More cash in Petty cash n Credit Cash Short and Over CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

TOTALING, PROVING, AND RULING A CASH PAYMENTS JOURNAL PAGE TO CARRY TOTALS FORWARD 29 page 250 1 2 1. 2. 3. 4. 5. 6. 3 4 5 Rule a single line. Write the date. Write the words Carried Forward in the Account Title column. Place a check mark in the Post. Ref. column. Write each column total. Rule double lines. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 6 LESSON 9 -3

30 STARTING A NEW CASH PAYMENTS JOURNAL PAGE page 251 1 2 1. 2. 3. 4. 5. 3 4 5 Write the journal page number. Write the date. Write the words Brought Forward in the Account Title column. Place a check mark in the Post. Ref. column. Record the column totals. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 9 -3

TOTALING, PROVING, AND RULING A CASH PAYMENTS JOURNAL AT THE END OF A MONTH 31 page 252 1 2 1. 2. 3. 4. 5. 3 4 Rule a single line. Write the date. Write the word Totals in the Account Title column. Write each column total. Rule double lines. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 5 LESSON 9 -3

LESSON 9 -4 Journalizing Other Transactions Using a General Journal CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

33 MEMORANDUM FOR BUYING SUPPLIES ON ACCOUNT CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning page 254 LESSON 9 -4

34 BUYING SUPPLIES ON ACCOUNT page 255 November 6. Bought store supplies on account from Gulf Craft Supply, $210. 00. Memorandum No. 52. 2 1 1. Write the date. 2. Write the account title. 3. Write the memorandum number. 4. Write the debit amount. 4 3 5 7 6 5. Write the account title and vendor name. 6. Place a diagonal line in the Post. Ref. column. 7. Write the credit amount. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 9 -4

Lesson 9 -4 35 SLIDE PURCHASES RETURN AND ALLOWANCE n Credit allowed for the purchase price of returned merchandise, resulting in a decrease accounts payable, is called a purchases return. n Credit allowed for part of the purchase price of merchandise that is not returned, resulting in a decrease accounts payable, is called a purchases allowance. n A form prepared by the customer showing the price deduction taken by the customer for the returns and allowances is called a debit memorandum. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

36 DEBIT MEMORANDUM FOR PURCHASES page 256 RETURNS AND ALLOWANCES CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 9 -4

37 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 4 6 1. Write the date. 2. Write the account title and vendor name. 3. Place a diagonal line in the Post. Ref. column. 4. 5. 6. 7. 3 7 Write debit memorandum number. Write the amount. Write Purchases Returns and Allow. Write the amount. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 9 -4