3LESSON 9-1 Journalizing Purchases Using a Purchases Journal 4/14/2017LESSON 9-1Journalizing Purchases Using a Purchases Journal
4Real World Accounting Page 233 Read the OfficeMax Article and answer the two questions that follow.
5Real World AccountingAnswer: Some of the costs of manufacturing an item are the same, regardless of the number of items manufactured. By purchasing larger quantities of an item, the unit cost of manufacturing the item may be reduced. A large company like Boise can influence the manufacture to pass along those savings.
6Internet ActivityOn the same page (233), research the three types of corporations and answer the three questions that follow.
7Chapter 9.1 Vocabulary merchandise merchandising business page 241merchandisemerchandising businessretail merchandising businesswholesale merchandising businesscorporationshare of stockcapital stockstockholderspecial journalcost of merchandisemarkupvendorpurchase on accountpurchases journalspecial amount columnpurchase invoiceterms of saleLESSON 9-1
8Chapter 9.1 Pyramid merchandise merchandising business retail merchandising businesswholesale merchandising businesscorporationshare of stockcapital stockstockholderLESSON 9-1
9Chapter 9.1 Pyramid special journal cost of merchandise markup vendor purchase on accountpurchases journalspecial amount columnpurchase invoiceterms of saleLESSON 9-1
10Critical Thinking Page 234 Read the critical thinking article on page 234 of the textbook and write your answers on your vocabulary handout.Answer: The amount of capital needed by a very large corporation cannot be provided by a single individual. By combining the capital invested by many individual stockholders, a corporation can accumulate the resources required to purchase the assets needed to operate the business.
11The Business-Hobby Shack, INC. Hobby Shack, Inc. is the business that will be used to illustrate all the chapters in Part 2 of this class.
12Question Why would a business organize as a corporation? Answer: Because two or more owners can provide the capital required to operate the business.
14Question #2Can you identify a significant difference between a proprietorship and a corporation?Answer: A corporation exists independent of its owners.
15There are many types of journals… A business with a limited number of daily transactions may record all entries in one journal.A business with many daily transactions may choose a separate journal for each kind of transaction.
16Special Journal A journal used to record only one kind of transaction. Hobby Shack uses five journals to record daily transactions.
17Using Special Journals Purchases Journal-for all purchases of merchandise on accountCash Payments journal-for all cash paymentsSales Journal-for all sales of merchandise on accountCash Receipts journal-for all cash receiptsGeneral Journal-for all other transactions
18Purchasing Merchandise Businesses add markups to the cost of merchandise to establish selling prices.Markups must cover all expenses of the business plus enough to earn a net incomeIf the mark up is too high, sales might be lost to competitors with a lower price.
19PURCHASING MERCHANDISE page 236The account used for recording the cost of merchandise is title purchases. It is a cost account and reduces capital. It has a normal debit balance, therefore the purchases account increases by a debit and decreases by a credit.LESSON 9-1
20PURCHASES ON ACCOUNTpage 236“Purchased Merchandise” always means that purchases is debited. It is a liability account that summarizes the amounts owed to all vendors. It has a normal credit balance, therefore, the accounts payable account increases by a credit and decreases by a debit.LESSON 9-1
21PURCHASES JOURNALpage 237A special journal used to record only purchases of merchandise on account.LESSON 9-1
22PURCHASE INVOICEpage 23814231. Stamp the date received and purchase invoice number.3. Initials of the person who checked the invoice.2. Place a check mark by each amount.4. Review the vendor’s terms.LESSON 9-1
23PURCHASING MERCHANDISE ON ACCOUNT page 239November 2. Purchased merchandise on account from Crown Distributing, $2, Purchase Invoice No. 83.21341. Write the date.2. Write the vendor name.3. Write the purchase invoice number.4. Write the amount of the invoice.LESSON 9-1
24TOTALING AND RULING A PURCHASES JOURNAL page 2401453261. Rule a single line across the amount column.4. Add the amount column.5. Write the total.2. Write the date.6. Rule double lines across the amount column.3. Write the word Total.LESSON 9-1
25TERMS REVIEW merchandise merchandising business page 241merchandisemerchandising businessretail merchandising businesswholesale merchandising businesscorporationshare of stockcapital stockstockholderspecial journalcost of merchandisemarkupvendorpurchase on accountpurchases journalspecial amount columnpurchase invoiceterms of saleLESSON 9-1
26Journalizing Cash Payments Using a Cash Payments Journal Accounting-Chapter 9-2Journalizing Cash Payments Using a Cash Payments JournalFEBRUARY 15, 2012
27Previously…Reviewed accounting terms related to purchases for a merchandising businessCreated our own definition and pictures100,000 Pyramid (You All LOVED It)Learned about the different types of corporationsLLCsC corporationsS corporationsJournalized purchases and Cash Payments (9.1)
28Agenda Bell Ringer (9.1 Vocab Review) Vocabulary Team Quiz (AKA “Pay Attention to the Bell Ringer so YOU Don’t Ruin it for Everyone Else Activity”Introduce Chapter 9.2 (Journalizing Purchases and Cash Payments)Work Together & On Your Own (Aplia)Wrap Up (Next UP)Exit Ticket
29Vocabulary ReviewYour goal is to match the words contained in the plastic bag to the definitions on the spreadsheet.When done yell “I am awesome, deal with it!”Everyone Stops! (Mr. K checks for accuracy)Third place gets to choose a prize behind door #1, #2, or # 3….2nd place can steal the prize or choose another door, 1st place can pretty do whatever he or she wants.
30Team Vocab RulesOne person starts with the definition, if you have the Vocab word written on your card you must claim it and read the next definition.The class gets two “phone a friends” saves.Class has to agree on the right answerCheating = Starting Over
31“Don’t Ruin It” Team Vocabulary Quiz merchandisemerchandising businessretail merchandising businesswholesale merchandising businesscorporationshare of stockcapital stockstockholderspecial journalcost of merchandisemarkupvendorpurchase on accountpurchases journalspecial amount columnpurchase invoiceterms of sale
32Late Bell RingerPlease provide your best answer on the bell ringer handout that you picked up this morning. Be Prepared to discuss!
33Late Bell Ringer Answer: An invoice for supplies can easily be confused with one for merchandiseThe distinction between the two is in how the items are to be used (Example?)A memo identifying the items to be used as supplies helps avoid recording supplies as a purchase of merchandise.
34OBJECTIVES 9.2Define Accounting terms related to cash payments for a merchandising businessIdentify account concepts and practices related to cash payments for a merchandising businessJournalize cash payments and cash discounts using a cash payments journal.
35Cash PaymentsEvery Cash Payment, no matter what the payment is for, is recorded in the cash payments journal.Question:What is the difference between a general amount column and a special amount column?
36General Amount v. Special Amount Column General Amount Column:Not headed with an Account title.Special Amount Column:Headed with an Account titleGENERALSPECIALTITLENO TITLE
37General Amount v. Special Amount Column Question for YOU!What is recorded in the general amount columns of the cash payments journal?Answer: Cash Payment transactions that do not occur often.GENERALSPECIALTITLENO TITLE
38Think about this….Why would a vendor offer a cash discount to a customer?Answer: To encourage early payment
39CASH PAYMENTS JOURNALpage 242Cash Discount-Deduction that a vendor allows on the invoice amount to encourage prompt paymentPurchases Discount-Cash discount on purchases taken by a customer. (notice the column on the worksheet)LESSON 9-2
40Cash Payment of an Expense A cash payment of an expense results in an increase in the expense and a decrease in cashExpense is debited and Cash is credited.Example: Hobby Shack-Pays for an expense at the time the transaction occurs…Lets take a look!
41CASH PAYMENT OF AN EXPENSE The cash payment increases the advertising expense account balance and decreases the cash account balance.The expense account Advertising Expense has a normal debit balance and increases by a debit of $The asset account Cash also has a normal debit balance and decreases by a credit of $150.00
42CASH PAYMENT OF AN EXPENSE page 243November 2. Paid cash for advertising, $ Check No. 292.123451. Write the date.2. Write the account title.3. Write the check number.4. Write the debit amount.5. Write the credit amount.The cash payment increases the advertising expense account balance and decreases the cash account balance.
43BUYING SUPPLIES FOR CASH LESSON 9-24/14/2017BUYING SUPPLIES FOR CASHpage 243November 5. Paid cash for office supplies, $ Check No. 293.123451. Write the date.2. Write the account title.3. Write the check number.4. Write the debit amount.5. Write the credit amount.LESSON 9-2
44QuestionWhat is the difference between purchasing merchandise and buying supplies?Answer: A business purchases merchandise to sell but buys supplies for use in the business. Supplies are not intended for sale.
45CASH PAYMENTS FOR PURCHASES page 244November 7. Purchased merchandise for cash, $ Check No. 301.213451. Write the date.2. Write the account title.3. Write the check number.4. Write the debit amount.5. Write the credit amount.LESSON 9-2
46TERMS OF SALE 2/10, n/30 What is Meant by…………… ANSWER:2% of the invoice may be deducted if paid within 10 days.Net 30 means that the total invoice amount must be paid within 30 days
47CASH PAYMENTS ON ACCOUNT WITH PURCHASES DISCOUNTS page 245November 8. Paid cash on account to Gulf Craft Supply, $488.04, covering Purchase Invoice No. 82 for $498.00, less 2% discount, $9.96. Check No. 302.5612431. Write the date.2. Write the account title of the vendor.3. Write the check number.4. Write the debit amount.5. Write the credit amount.6. Write the credit amount.LESSON 9-2
48CASH PAYMENTS ON ACCOUNT WITHOUT PURCHASES DISCOUNTS page 246November 13. Paid cash on account to American Paint, $2,650.00, covering Purchase Invoice No. 77. Check No. 303.124531. Write the date.2. Write the vendor account title.3. Write the check number.4. Write the debit amount.5. Write the credit amount.LESSON 9-2
50Exit TicketMerchandise is purchased for $2,000 on March 5th with terms 2/10,N/30. What is the amount due onMarch 11 ________March 17 ________Merchandise with a list price of $3,000 is purchased on account for $1,800 on May 1. Terms are 1/15,N/30. How much is due if paid on May 20th?