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Chapter 6 Purchases and Purchases Journal 采购和采购日记账.

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Presentation on theme: "Chapter 6 Purchases and Purchases Journal 采购和采购日记账."— Presentation transcript:

1 Chapter 6 Purchases and Purchases Journal 采购和采购日记账

2 Now, let ’ s talk about purchase!

3 Merchandize Inventory Sales tax payable AssetO’ELiabilityRevenueExpense = purchase Sales Purchase R&A + - Sales R&A + - Purchase Accounts

4 Purchase Dept Supplier Receiving Dept Accounting Dept Department Purchase requisition Purchase order Receiving report Delivery Invoice verification Payment record Purchase procedures and control

5 Record the purchases of merchandise on account only. What is the difference between the sales journal and purchases journal? What is the similarity? Purchases Journal

6 Cash Discount/Purchases Discount/Sales Discount A deduction from the invoice price granted to induce early payment of the amount due. Terms Time Due Discount Period Full amount less discount Credit Period Full amount due Purchase or Sale Exh. 6-7

7 Credit Terms and Cash Discount 信贷 / 信用条件 现金折扣 2/10, n/30 Read as: “ Two ten, net thirty ” When manufacturers and wholesalers sell their products on account, the credit terms are stated in the invoice.

8 Credit Terms and Cash Discount 2/10, n/30 Percentage of Discount # of Days Discount Is Available Otherwise, the Full Amount Is Due # of Days when Full Amount Is Due

9 Trade Discount Example Jen Co, Inc. offers a 30% trade discount on orders of 1,000 units or more of their popular product Racer. Each Racer has a list price of $5.25. Example Jen Co, Inc. offers a 30% trade discount on orders of 1,000 units or more of their popular product Racer. Each Racer has a list price of $5.25. Used by manufacturers and wholesalers to change selling prices without republishing their catalogs.

10 Recording Purchases at Gross Invoice Price(periodic method) On July 6, Play Clothes purchased $4,000 of merchandise on credit with terms of 2/10, n/30 from Kid’s Clothes. Prepare the journal entry for Play Clothes.

11 Recording Purchases at Gross Invoice Price Purchases are recorded at their gross amounts. Purchases discounts taken are recorded when payment is made inside the discount period. Gross Method 总价法

12 Recording Purchases at Gross Invoice Price On July 6, Play Clothes purchased $4,000 of merchandise on credit with terms of 2/10, n/30 from Kid’s Clothes. Prepare the journal entry for Play Clothes.

13 Recording Purchases at Gross Invoice Price On July 15, Play Clothes pays the amount due to Kid’s Clothes. Prepare the journal entry for Play Clothes.

14 Recording Purchases at Gross Invoice Price On July 15, Play Clothes pays the amount due to Kid’s Clothes. Prepare the journal entry for Play Clothes. Reduces Purchase $4,000  98% = $3,920

15 Purchase Discounts After we post these entries, the accounts involved look like this: Purchase Accounts Payable 7/6 4,000 7/ /15 4,000 Bal. 4,000 Bal. 0 Purchase Discounts Cash 7/ XXXX

16 Recording Purchases at Gross Invoice Price Now, assume that Play Clothes waited until July 20 to pay the full amount due to Kid’s Clothes. Prepare the journal entry for Play Clothes.

17 Recording Purchases at Gross Invoice Price Now, assume that Play Clothes waited until July 20 to pay the full amount due to Kid’s Clothes. Prepare the journal entry for Play Clothes.

18 Slide 6-18 Credit Terms and Cash Discounts Purchases are recorded at their net amounts. Purchase discounts (购货 折扣) lost are recorded when payment is made outside the discount period. Net (price) Method 净价法

19 Slide 6-19 Credit Terms and Cash Discounts On July 6, Play Clothes purchased $4,000 of merchandise on credit with terms of 2/10, n/30 from Kid’s Clothes. Prepare the journal entry for Play Clothes.

20 Slide 6-20 Credit Terms and Cash Discounts $4,000 * 98% = $3,920 On July 6, Play Clothes purchased $4,000 of merchandise on credit with terms of 2/10, n/30 from Kid’s Clothes. Prepare the journal entry for Play Clothes.

21 Slide 6-21 Credit Terms and Cash Discounts On July 15, Play Clothes pays the net amount due to Kid’s Clothes. Prepare the journal entry for Play Clothes.

22 Slide 6-22 Credit Terms and Cash Discounts On July 15, Play Clothes pays the net amount due to Kid’s Clothes. Prepare the journal entry for Play Clothes.

23 Slide 6-23 Credit Terms and Cash Discounts Now, assume that Play Clothes waited until July 20 to pay the amount due in full to Kid’s Clothes. Prepare the journal entry for Play Clothes.

24 Slide 6-24 Credit Terms and Cash Discounts Nonoperating Expense Now, assume that Play Clothes waited until July 20 to pay the amount due in full to Kid’s Clothes. Prepare the journal entry for Play Clothes.

25 Managing Discounts If we fail to take a 2/10, n/30 discount, is it really expensive? 36.5% annual rate 365 days ÷ 20 days × 2% = 36.5% annual rate Days in a year Days in a year Number of additional days before payment Number of additional days before payment Percent paid to keep money Percent paid to keep money

26 Exercise Lamprino Appliance use periodic inventory system. On June 10,Lamprino purchase 10 televisions from Mitsu Industries on account for a total of $3000. the terms of purchase were 2/10,n/30. On June 20, Lamprino paid the account payable. Prepare the journal entries to record these transaction at : net price method Gross method

27 Double Posting Post from the purchases journal to the subsidiary ledger accounts respectively (Account Payable Ledger) Post from purchases journal to the controlling account in a summary (Account Payable account in general ledger)

28 Purchases Returns and Allowances Purchases Return... Merchandise returned by the purchaser to the supplier. Purchases Allowance... A reduction in the cost of defective merchandise received by a purchaser from a supplier.

29 Purchases Returns and Allowances After we post these entries, the accounts involved look like this: Purchases Accounts Payable 3/27 48,000 3/ / Bal. 48,000 Bal. 43 , 000 Purchases Returns and Allowances

30 Double Posting Post from the general journals to the subsidiary accounts respectively (Account Payable Ledger) Post from general journals to the controlling account in a summary (Account Payable account and Purchase R&A in general ledger)

31 expense + - Purchase Purchase R&A Purchase Discount expense + Revenue Sales + Sales R&A ++ Sales Discount + - -

32 The inventory on hand and the cost of goods sold for the year are not determined until year-end. Periodic Inventory System

33 Specific identification LIFO Average cost FIFO We use one of these inventory valuation methods in periodic inventory system. Periodic Inventory System

34 Cost of Goods Sold Ending Inventory Oldest Costs Recent Costs First-In, First-Out Method (FIFO) 先进先出法

35 Cost of Goods Sold Ending Inventory Recent Costs Oldest Costs Last-In, First-Out Method (LIFO) 后进先出法

36 Specific Identification 具体辨认法 When a unit is sold, the specific cost of the unit sold is added to cost of goods sold.

37 Since specific identification is so easy, can’t we use it all the time? Not really. Specific identification is hard to use when we sell a lot of inventory that has lots of different costs.

38 Cost of Goods Available for Sale Units on hand on the date of sale ÷ Average-Cost Method 平均成本法 When a unit is sold, the average cost of each unit in inventory is assigned to cost of goods sold.

39

40 Once a company has adopted a particular accounting method, it should follow that method consistently, rather than switch methods from one year to the next. The Principle of Consistency 一致性 / 一贯性原则

41 Assignment Problem2 on page 236

42 Continue…… 6


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