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………

Purchases Journal DateAccount CreditedPurch No.Post Ref Purch Dr. Accts Pay Cr Special amount columns

Purchased merchandise on account from Pro golf company $ Purchase Invoice No. 179 Purchases Journal DateAccount CreditedPurch No.Post Ref Purch Dr. Accts Pay Cr 2-MarPro Golf Company

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 $ Check 292 Cash Payments Journal DateAccount Title General Accounts Payable Debit Purchase Discount Cash Credit Ck No.Post RefDebitCredit Nov 2Advertising Expense

Paid Cash for office supplies $94.00 Check No. 293 Cash Payments Journal DateAccount Title General Accounts Payable Debit Purchase Discount Cash Credit Ck No.Post RefDebitCredit Nov 2Advertising Expense Nov 5Supplies – Office

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% = $ – 1500 – 900 = $600

Nov. 7. Purchased merchandise for cash, $ Check No. 301 Cash Payments Journal DateAccount Title General Accounts Payable Debit Purchase Discount Cash Credit Ck No.Post RefDebitCredit Nov 2Advertising Expense Nov 5Supplies – Office Nov 7Purchases

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 General Accounts Payable Debit Purchase Discount Cash Credit Ck No. Post RefDebitCredit Nov 2 Advertising Expense Nov 5 Supplies – Office Nov 7 Purchases Nov 8 Gulf Craft Supply

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 General Accounts Payable Debit Purchase Discount Cash Credit Ck No. Post RefDebitCredit Nov 2 Advertising Expense Nov 5 Supplies – Office Nov 7 Purchases Nov 8 Gulf Craft Supply Nov 13 American Paint

Performing Additional Cash Payments Journal Operations 9-3

PETTY CASH FUND REPORT PETTY CASH REPORT DATE:______________________CUSTODIAN_____________ EXPLANATION RECONCILIATION REPLENISH AMOUNT FUND TOTAL 250 PAYMENTS SUPPLIES45.34 ADVERTISING25 MISCELLANEOUS LESS:TOTAL PAYMENTS EQUALS RECORDED AMOUNT ON HAND LESS:ACTUAL AMOUNT ON HAND EQUALSCASH SHORT OR OVER

JOURNALIZING THE PETTY CASH REPORT SUPPLIES45.34 ADVERTISING25 MISCELLANEOUS LESS:TOTAL PAYMENTS EQUALSRECORDED AMOUNT ON HAND LESS:ACTUAL AMOUNT ON HAND EQUALSCASH SHORT OR OVER 1.59 Cash Payments Journal DateAccount Title General Accounts Payable Debit PURCHASE DISCOUNT CREDIT Cash Credit Ck No. Post RefDebitCredit NOV 18SUPPLIES OFFICE Advertising expense Miscellaneous expense cash short and over 1.59 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

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, $ Memorandum No. 52. General Journal DateAccount TitleDoc. No Post Ref.DebitCredit Nov 6 Supplies – StoreM 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 DateAccount Title Doc. No Post Ref.DebitCredit Nov 28Accounts Pay/Crown DistributorsDM Purchase Return and Allowance