LESSON Learning Objectives 1 2 Journalizing and Posting

LESSON Learning Objectives 1 -2 Journalizing and Posting Purchases and Purchases Returns LO 3 Explain the purpose of a departmental accounting system. LO 4 Journalize departmental purchases of merchandise on account using a purchases journal. LO 5 Post merchandise purchases to an accounts payable ledger and a general ledger. LO 6 Journalize departmental purchases returns and allowances. © 2015 Cengage Learning. All Rights Reserved.

Lesson 1 -2 Departmental Accounting System LO 3 ● An accounting system showing accounting information for two or more departments is called a departmental accounting system. ● A business that purchases and sells goods is called a merchandising business. ● All departmental purchases of merchandise on account are recorded in a purchases journal and can be traced to a purchase invoice. © 2015 Cengage Learning. All Rights Reserved. SLIDE 2

Lesson 1 -2 Journalizing Purchases on Account May 1. Purchased furniture on account from Backyard Furniture Mfg. , $1, 869. 35. Purchase Invoice No. 675. 1 2 Approval Date Vendor Name 3 Invoice Number 4 Invoice Amount © 2015 Cengage Learning. All Rights Reserved. LO 4 5 Sales Department SLIDE 3

Lesson 1 -2 Posting the Totals of a Purchases Journal Page Number Date 2 3 Column Total 1 5 Account Number Account Balance © 2015 Cengage Learning. All Rights Reserved. LO 5 4 SLIDE 4

Lesson 1 -2 Journalizing Purchase Returns and Allowances • When merchandise is returned to a vendor, the vendor’s LO 6 account and Accounts Payable are reduced by a debit. Purchases Returns and Allowances is a contra account to the purchases account. An account that reduces a related account on a financial statement is called a contra account. © 2015 Cengage Learning. All Rights Reserved. SLIDE 5

Lesson 1 -2 Debit Memorandum LO 6 ● A form prepared by the customer showing the price deduction taken by the customer for a return or an allowance is called a debit memorandum. © 2015 Cengage Learning. All Rights Reserved. SLIDE 6

Lesson 1 -2 Audit Your Understanding 1. When Whiley’s grills department purchases merchandise on account, which general ledger accounts are affected, and how? ANSWER Purchases—Grills is debited; Accounts Payable is credited. © 2015 Cengage Learning. All Rights Reserved. SLIDE 7

Lesson 1 -2 Audit Your Understanding 2. Which general ledger accounts are affected, and how, by a return of furniture department merchandise? ANSWER Accounts Payable is debited; Purchases Returns and Allowances—Furniture is credited. © 2015 Cengage Learning. All Rights Reserved.