1. Journalizing Purchases and Cash Payments Using Special Journals
Chapter 10
Journalizing Purchases and Cash Payments Using Special Journals

2. Partnerships
Partnership: a business in which two or more persons combine their assets and skills
Partner: each member of a partnership. They agree how much each will share in profits or loss

3. 10.1-Journalizing Purchases Using a Purchases Journal
The Business- Omni Import p.219:
Michelle Wu and Karl Koehn
Merchandising Business: a business that purchases and sells goods
Retail Merchandising Business: sells merchandise (product) to those who use or consume this product

4. 10.1 cont
Wholesale merchandising business: buys and sells merchandise to retail merchandising businesses (resell)

5. Using Special Journals
A journal used to record only one kind of transaction

6. Omni’s Journals Omni has five journals:
Purchases- for all purchases of merchandise on account
Cash Payments- for all cash payments
Sales- for all sales of merchandise on account
Cash receipts- for all cash receipts
General- for all other transactions

7. Purchasing Merchandise
Cost of merchandise- the price a business pays for goods it purchases to sell
Selling price must be greater than cost in order to make a profit
Markup- the amount added to the cost of merchandise to establish the selling price
Vendor- a business from which merchandise is purchases or supplies or other assets are bought

8. Purchases on Account
Purchases- a cost account- is used only for merchandise purchased
Purchase on account- purchase merchandise to be paid for at a later date
An Accounts Payable account is used to summarize amounts owed to vendors- normal credit balance

9. Purchases Journal
Used only to record purchases of merchandise on account
only on one line
Special Amount Column- used for frequently occurring transactions
Saves time- debit Purchases, credit Accounts Payable

10. Purchase Invoice
Form describing the goods sold, the quantity, and the price. Is used as a source document for a purchase sold on account
stamped with the date received and the purchase invoice number
check each item was received
initial of person who checks
review terms of sale

11. Purchasing Merchandise on Account
November 2. Purchased merchandise on Account from Crown LTD, $2, Purchase Invoice No. 83
To Journalize:
Write the date
Write the Vendor name (Crown LTD)
Write the Purchase Number
Write amount in the special amount column: this amount is a debit to Purchases and a credit to Accts Payable

13. Totaling and Ruling a Purchases Journal
Omni rules purchases journal at the end of each month
Rule a single line across the amount column under last entry
Write the date, Total, add the column
Write the total under single rule line and rule a double line under

14. 10.1 Review- p.228 Terms Review Audit Your Understanding #1-4
Work Together #5-6
On Your Own #7-8

15. 10.2 Journalizing Cash Payments Using a Cash Payment Journal
Cash Payments Journals- a special journal used to record only cash payment transactions
All cash payment transactions affect Cash account
some may affect Accounts Payable
General amount, AP Debit, Cash Credit-special columns
S.D- check or memorandum

16. Purchasing Merchandise for Cash
November 1. Purchased merchandise for cash, $ Check No. 290
Date, Purchases (account title)
no special column because Purchases a infrequently made with cash
Check #, Debit-General Debit, Credit- Cash

17. Buying Supplies for Cash
November 5. Paid cash for office supplies, $ Check No. 292.
Not recorded in Purchases Account
Record in Cash Payments Journal the same as purchasing merchandise for cash

18. Cash Payment on Account
November 7. Paid cash on account to Pacific Imports, $1,050.00, covering Purchase Invoice No. 81. Check No
Date, Vendor Name (Pacific Imports), Check #
Debit- A/P Debit Column
Credit- Cash Credit Column

19. Cash Paymnet of An Expense
November 9. Paid Cash for advertising. $ Check No. 296
Date, Account Title- Advertising Expense, Check #
Debit- General Debit
Credit- Cash Credit

20. 10.2 Review- p. 233 Terms Review Audit Your Understanding #1-3
Work Together #4
On Your Own # 5

21. 10.3 Performing Additional Cash Payments Journal Operations
Replenish Petty Cash:
November 9. Paid cash to replenish petty cash fund, $205.00: office supplies, $35.00; store supplies, $47.00; advertising, $92.00; miscellaneous, $ Check No. 297
Date, List account titles affected on separate lines, Check #
Debit- in General Debit; Credit- Total in first line of entry in Cash Credit

22. Cash Withdrawals by Partners
Two Drawing Accounts are used- one for each partner
November 10. Michelle Wu, partner, withdrew cash for personal use, $1, Check No. 298
Cash Payments Journal-Date, Account Title, Check #
General Debit-$1200; Cash Credit $1200

23. Total and Proving
Total and Prove whenever a journal page is full and at the end of each month
Instead of writing TOTAL in account column, write CARRIED FORWARD
Put a check mark in Post Ref- nothing needs to be posted

24. Starting a New Page
Write BROUGHT FORWARD and the balances from the previous Journal Page with the date of entry

25. End of Month Total and Prove as usual at the end of the month
Write the date, TOTAL, and total each column.
Debit Columns=Credit Columns

26. 10.3 Review- p. 239 Audit Your Understanding #1-3 Work Together #4-5
On Your Own #6-7

27. 10.4 Journalizing Other Transactions
Record other transactions in the General Journal- not in Purchases Journal, Cash Payments, Sales or Cash Receipts

28. Buy Supplies on Account
Invoice is sent- Source Document is a Memorandum (not purchase invoice)
November 6. Bought Store Supplies on account from Foxfire Supply, $ Memorandum #52
Two accounts are affected in General Journal- Supplies & A/P-Foxfire
Journalize the same way as you already know

29. Merchandise Withdrawal
November 12. Karl Koehn, partner, withdrew merchandise for personal use, $ Memorandum #53
Debit- K.Koehn Drawing; Credit- Purchases

30. 10.4 Review- p. 243 Audit Your Understanding #1-5 Work Together #6
On Your Own #7

31. The End.....