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Journalizing Purchases and Cash Payments Using Special Journals

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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.....

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