Journalizing Purchases and Cash Payments Using Special...

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.


  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


  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.


  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


  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


  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.


  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


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.


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.


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


  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


Journalizing Cash Payments Using a Cash Payments Journal


  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.


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.


November 2. Purchased merchandise for cash, $731.00 Check No.291.

November 5. Paid cash for office supplies, $34.00. Check No. 292.


5 1

3 4 2


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.


5 1

3 4 2


1. Write the date.


2. Write the account title.


November 9. Paid cash for advertising, $150.00. Check No.296.




  p. 233 (p. 206) On Your Own



Performing Additional Cash Payments Journal Operations


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


5 1 3

4

2


1. Write the date.

4. Write the debit amounts.

2. Write the titles of accounts for which petty cash was used.



November 10. Michelle Wu, partner, withdrew cash for personal use, $1,200.00. Check No. 298.

Accounts Affected Michelle Wu, Drawing Cash


5 1 3

4

2


1. Write the date.





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.


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


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




  p. 239 (p. 206) On Your Own



Journalizing Other Transactions Using a General Journal



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

November 6. Bought store supplies on account from Foxfire Supply, $210.00. Memo No. 52.


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


5

1 3

4

2

3. Write the memorandum number.

1. Write the date.


2. Write the account title Karl Koehn, Drawing.

5. Write the account title Purchases. 6. Write the credit amount.

6




  p. 243 (p. 207) On Your Own


  p. 246 (p. 215-217) Mastery Problem 10-5

  p. 247 (p. 219-222) Challenge Problem 10-6


Journalizing Purchases and Cash Payments Using Special...

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