1. Special Journals: Purchases and Cash Payments Making Accounting Relevant Merchandising businesses operate on a cycle of buying and selling goods. Making Accounting Relevant Merchandising businesses operate on a cycle of buying and selling goods. Select a local business. Discuss the operations of the business: how items are purchased for resale, how the merchandise is displayed and stocked, how sales are conducted, and how the business might pay for this merchandise.

2. Section 1The Purchases Journal What You’ll Learn  The purpose of the purchases journal.  How to record purchases on account in the purchases journal.  How to post from the purchases journal to the general and accounts payable subsidiary ledger accounts.  How to total, prove, and rule the purchases journal. What You’ll Learn  The purpose of the purchases journal.  How to record purchases on account in the purchases journal.  How to post from the purchases journal to the general and accounts payable subsidiary ledger accounts.  How to total, prove, and rule the purchases journal.

3. Why It’s Important The purchases journal helps businesses keep track of purchases on account. Why It’s Important The purchases journal helps businesses keep track of purchases on account. Section 1The Purchases Journal (cont'd.) Key Terms  purchases journal Key Terms  purchases journal

4. The Purchases Journal A special journal used to record all purchases on account. The Purchases Journal A special journal used to record all purchases on account. Section 1The Purchases Journal (cont'd.)

5. Recording the Purchase of Merchandise on Account Section 1The Purchases Journal (cont'd.) Business Transaction On December 14, On Your Mark received Invoice 7894 from Pro Runner Warehouse for merchandise purchased on account, $2,300, terms 2/10, n/30. JOURNAL ENTRY

6. Posting to the Accounts Payable Subsidiary Ledger Each transaction is separately posted to the accounts payable subsidiary ledger. Posting to the Accounts Payable Subsidiary Ledger Each transaction is separately posted to the accounts payable subsidiary ledger. Section 1The Purchases Journal (cont'd.)

7. Posting from the General Debit Column Daily postings are made from the General Debit column of the purchases journal to the appropriate accounts in the general ledger. Posting from the General Debit Column Daily postings are made from the General Debit column of the purchases journal to the appropriate accounts in the general ledger. Section 1The Purchases Journal (cont'd.)

8. Totaling, Proving, and Ruling the Purchases Journal To complete the purchases journal, follow these steps: Totaling, Proving, and Ruling the Purchases Journal To complete the purchases journal, follow these steps: 1.Draw a single rule across the three amount columns: Accounts Payable Credit, Purchases Debit, and General Debit. 2.Foot each amount column. 3.Test for the equality of debits and credits. 1.Draw a single rule across the three amount columns: Accounts Payable Credit, Purchases Debit, and General Debit. 2.Foot each amount column. 3.Test for the equality of debits and credits. Section 1The Purchases Journal (cont'd.)

9. Totaling, Proving, and Ruling the Purchases Journal (cont'd.) 4.In the Date column, on the line below the single rule, enter the date the journal is being totaled. 5.On the same line, write the word “Totals” in the Creditor’s Account Credited column. 6.Enter the three column totals, in ink, just below the footings. 7.Draw a double rule across the three amount columns. 4.In the Date column, on the line below the single rule, enter the date the journal is being totaled. 5.On the same line, write the word “Totals” in the Creditor’s Account Credited column. 6.Enter the three column totals, in ink, just below the footings. 7.Draw a double rule across the three amount columns. Section 1The Purchases Journal (cont'd.)

10. Check Your Understanding In the purchases journal, the General Debit column total is not posted. Explain why. Section 1The Purchases Journal (cont'd.)