1. Chapter 9 Journalizing Purchases and Cash Payments

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

3. 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

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

5. 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

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

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

8. The Purchases Journal

9. Purchases Invoice

10. Cash Payments journal- cash credit

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

14. 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