Chapter 9 Journalizing Purchases and Cash Payments.

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Presentation transcript:

Chapter 9 Journalizing Purchases and Cash Payments

Merchandising Corporation Retail vs. Wholesale Retail-sells directly to the customer Wholesale-sells to the retailer

Corporation vs Sole Proprietorship Capital Stock vs Capital Shares of Stock- unit of ownership Shareholders/stockholders- individuals who own 1 or more share of stock

Special Journals Purchases- purchases on account Cash Payments- cash credits Sales- sales on account Cash Receipts- cash debits General- any other transaction

Merchandising Business Purchasing Merchandise - items that are purchased from a vendor and will be sold Cost of Merchandise Markup- usually a % of cost Selling Price Cost of Merch. + Markup = Selling Price

Purchasing Merchandise With Cash Purchases debited Cash credited Cash Payments journal On Account Purchases debited Accounts Payable credited Purchases journal

Concept: Historical Cost The actual amount paid is the amount recorded on the books.

The Purchases Journal

Purchases Invoice

Cash Payments journal- cash credit

Cash Discount Given by the vendor to encourage prompt payment. Vendor allows a reduction in the invoice amount. Example: Purchases Discount

Other Discounts List price- the retail price listed in a catalog or Internet site Trade discount- a reduction in list price granted to customers for ordering larger quantities of merchandise