1. Accounting Practices 501 Chapter 4 Purchases journal Cathy Saenger, Senior Lecturer, Eastern Institute of Technology © Pearson 2011

2. Ch4B - Purchases journal2 Purchases journal We will now look at the recording of credit purchases in the Purchases Journal (this will not only be limited to inventory purchases) REMEMBER GST is paid on purchases and our credit supplier accounts are called Accounts Payable

3. Ch4B - Purchases journal3 Date Purchases Journal Details Ref Accounts payable Purchases GST paid We can use one column called Sundry for items that do not occur frequently Tel Sundry

4. Ch4B - Purchases journal4 Date Purchases Journal Details Ref Accounts payable Purchases GST paid Tel Sundry Dr Cr Dr By now (because they are colour-coded!) we know which accounts are Debit and which are Credit Let’s do a few transactions to check out this journal Dr

5. Ch4B - Purchases journal5 Date Purchases Journal Details Ref Accounts payable Purchases GST paid Tel Sundry Dr Cr Dr We have to account for GST on purchases Apr 1 : Purchased goods on credit from AB Ltd, $3,680, inv 65 1AB Ltd 3,680480 65 3,200 3680  23 x 3

6. Ch4B - Purchases journal6 Date Purchases Journal Details Ref Accounts payable Purchases GST paid Tel Sundry Dr Cr Dr Apr 2 : Received Invoice from Telecom, $276, inv 91 1AB Ltd 3,680480 65 3,200 We have to account for GST on Telephone expense 276  23 x 3 2Telecom 27636 91 240

7. Ch4B - Purchases journal7 Date Purchases Journal Details Ref Accounts payable Purchases GST paid Tel Sundry Dr Cr Dr Apr 3 : Purchased goods from XY Ltd, $8,280, inv 76 1AB Ltd 3,680480 65 3,200 2Telecom 27636 91 240 We have to account for GST on purchases 8280  23 x 3 3XY Ltd 8,2801,080 76 7,200

8. Ch4B - Purchases journal8 Date Purchases Journal Details Ref Accounts payable Purchases GST paid Tel Sundry Dr Cr Dr Apr 4 : Received the monthly invoice from Ace Power for electricity, $552, inv 16 1AB Ltd 3,680480 65 3,200 2Telecom 27636 91 240 We have to account for GST on electricity 3XY Ltd 8,2801,080 76 7,200 552  23 x 3 4Ace Power 55272 16 480

9. Ch4B - Purchases journal9 Date Purchases Journal Details Ref Accounts payable Purchases GST paid Tel Sundry Dr Cr Dr 1AB Ltd 3,680480 65 3,200 2Telecom 27636 91 240 3XY Ltd 8,2801,080 76 7,200 4Ace Power 55272 16 480 $12,788$10,400$1,668 $240 We now find the totals of each column $480

10. Ch4B - Purchases journal10 Date Purchases Journal Details Ref Accounts payable Purchases GST paid Tel Sundry Dr Cr Dr 1AB Ltd 3,680480 65 3,200 2Telecom 27636 91 240 3XY Ltd 8,2801,080 76 7,200 4Ace Power 55272 16 480 The GST Paid account will be debited with the total of $1,668 The individual suppliers (Acc Payable) will be credited with the individual amounts we owe them The Purchases account will be debited with the total of $10,400 The Accounts Payable control account will be credited with the total of $12,788 $12,788$10,400$1,668 $240 $480 The Telephone account will be debited with the total of $240 The amounts in the Sundry column will be debited to the individual accounts

11. Ch4C - PJ cont11 Date Purchases Journal Details Ref Accounts payable Purchases GST paid Tel Sundry Dr Cr Dr 1AB Ltd 3,680480 65 3,200 2Telecom 27636 91 240 3XY Ltd 8,2801,080 76 7,200 4Ace Power 55272 16 480 $12,788$10,400$1,668 $240 $480 Let’s do some of the postings to the General Ledger

12. Ch4C - PJ cont 12 Date Purchases Journal Details Ref Accounts payable Purchases GST paid Tel Sundry Dr Cr Dr 1AB Ltd 3,680480 65 3,200 2Telecom 27636 91 240 3XY Ltd 8,2801,080 76 7,200 4Ace Power 55272 16 480 $12,788$10,400$1,668 $240 $480 Date General Ledger Details Ref noDrCr Balance ACC PAY CONTROL 30Purchases Jnl12,788Cr PJ1 12,788

13. Ch4C - PJ cont 13 Date Purchases Journal Details Ref Accounts payable Purchases GST paid Tel Sundry Dr Cr Dr 1AB Ltd 3,680480 65 3,200 2Telecom 27636 91 240 3XY Ltd 8,2801,080 76 7,200 4Ace Power 55272 16 480 $12,788$10,400$1,668 $240 $480 Date General Ledger Details Ref noDrCr Balance GST Paid 30 PURCHASES 30 Purchases Jnl1,668Dr 10,400 Dr PJ1 1,668 Purchases Jnl

14. Ch4C - PJ cont14 And … another flutter of the heart!