Chapter 11 Recording Transactions Using a General Journal Contra Accounts

Vocab General Journal – A journal with two amount columns in which all kinds of entries can be recorded. Purchase Return – Credit allowed for the purchase price of returned merchandise, resulting in a decrease in the customer's account payable to the vendor

Vocab Purchase allowance – credit allowed for part of the purchase price of merchandise that is not returned, resulting in a decrease in the customer’s account payable to the vendor. Debit memorandum – A form prepared by the customer showing the price deduction taken by the customer for a return or an allowance

Contra Accounts Contra Account – this account contradicts its related account or reduces it. It has the opposite normal balance! Purchases go up by a debit, the contra acct., purchases returns and allowance, reduces purchases, and goes up by a credit!

Ch. 11.2 Vocab Sales Return – Credit allowed a customer for the sales price of returned merchandise, resulting in a decrease in the vendor’s accounts receivable. Sales Allowance – Credit allowed a customer for part of the sales price of merchandise that is not returned, resulting in a decrease in the vendor’s accounts receivable. Credit Memorandum – A form prepared by the vendor showing the amount deducted for returns and allowances.