1. Journalizing Purchases and Cash Payments February 9,2012
Accounting
Journalizing Purchases and Cash Payments
February 9,2012

2. Cinnamon Challenge

3. LESSON 9-1 Journalizing Purchases Using a Purchases Journal
4/14/2017
LESSON 9-1
Journalizing Purchases Using a Purchases Journal

4. Real World Accounting Page 233
Read the OfficeMax Article and answer the two questions that follow.

5. Real World Accounting
Answer: 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.

6. Internet Activity
On the same page (233), research the three types of corporations and answer the three questions that follow.

7. Chapter 9.1 Vocabulary merchandise merchandising business
page 241
merchandise
merchandising business
retail merchandising business
wholesale merchandising business
corporation
share of stock
capital stock
stockholder
special journal
cost of merchandise
markup
vendor
purchase on account
purchases journal
special amount column
purchase invoice
terms of sale
LESSON 9-1

8. Chapter 9.1 Pyramid merchandise merchandising business
retail merchandising business
wholesale merchandising business
corporation
share of stock
capital stock
stockholder
LESSON 9-1

9. Chapter 9.1 Pyramid special journal cost of merchandise markup vendor
purchase on account
purchases journal
special amount column
purchase invoice
terms of sale
LESSON 9-1

10. Critical 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.

11. The 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.

12. Question Why would a business organize as a corporation?
Answer: Because two or more owners can provide the capital required to operate the business.

14. Question #2
Can you identify a significant difference between a proprietorship and a corporation?
Answer: A corporation exists independent of its owners.

15. There 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.

16. Special Journal A journal used to record only one kind of transaction.
Hobby Shack uses five journals to record daily transactions.

17. Using Special Journals
Purchases Journal-for all purchases of merchandise on account
Cash Payments journal-for all cash payments
Sales Journal-for all sales of merchandise on account
Cash Receipts journal-for all cash receipts
General Journal-for all other transactions

18. Purchasing 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 income
If the mark up is too high, sales might be lost to competitors with a lower price.

19. PURCHASING MERCHANDISE
page 236
The 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

20. PURCHASES ON ACCOUNT
page 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

21. PURCHASES JOURNAL
page 237
A special journal used to record only purchases of merchandise on account.
LESSON 9-1

22. PURCHASE INVOICE
page 238 1 4 2 3
1. 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

23. PURCHASING MERCHANDISE ON ACCOUNT
page 239
November 2. Purchased merchandise on account from Crown Distributing, $2, Purchase Invoice No. 83. 2 1 3 4
1. Write the date.
2. Write the vendor name.
3. Write the purchase invoice number.
4. Write the amount of the invoice.
LESSON 9-1

24. TOTALING AND RULING A PURCHASES JOURNAL
page 240 1 4 5 3 2 6
1. 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

25. TERMS REVIEW merchandise merchandising business
page 241
merchandise
merchandising business
retail merchandising business
wholesale merchandising business
corporation
share of stock
capital stock
stockholder
special journal
cost of merchandise
markup
vendor
purchase on account
purchases journal
special amount column
purchase invoice
terms of sale
LESSON 9-1

26. Journalizing Cash Payments Using a Cash Payments Journal
Accounting-Chapter 9-2
Journalizing Cash Payments Using a Cash Payments Journal
FEBRUARY 15, 2012

27. Previously…
Reviewed accounting terms related to purchases for a merchandising business
Created our own definition and pictures
100,000 Pyramid (You All LOVED It)
Learned about the different types of corporations
LLCs
C corporations
S corporations
Journalized purchases and Cash Payments (9.1)

28. Agenda 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

29. Vocabulary Review
Your 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.

30. Team Vocab Rules
One 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 answer
Cheating = Starting Over

31. “Don’t Ruin It” Team Vocabulary Quiz
merchandise
merchandising business
retail merchandising business
wholesale merchandising business
corporation
share of stock
capital stock
stockholder
special journal
cost of merchandise
markup
vendor
purchase on account
purchases journal
special amount column
purchase invoice
terms of sale

32. Late Bell Ringer
Please provide your best answer on the bell ringer handout that you picked up this morning. Be Prepared to discuss!

33. Late Bell Ringer Answer:
An invoice for supplies can easily be confused with one for merchandise
The 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.

34. OBJECTIVES 9.2
Define Accounting terms related to cash payments for a merchandising business
Identify account concepts and practices related to cash payments for a merchandising business
Journalize cash payments and cash discounts using a cash payments journal.

35. Cash Payments
Every 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?

36. General Amount v. Special Amount Column
General Amount Column:
Not headed with an Account title.
Special Amount Column:
Headed with an Account title
GENERAL
SPECIAL
TITLE
NO TITLE

37. General 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.
GENERAL
SPECIAL
TITLE
NO TITLE

38. Think about this….
Why would a vendor offer a cash discount to a customer?
Answer: To encourage early payment

39. CASH PAYMENTS JOURNAL
page 242
Cash Discount-Deduction that a vendor allows on the invoice amount to encourage prompt payment
Purchases Discount-Cash discount on purchases taken by a customer. (notice the column on the worksheet)
LESSON 9-2

40. Cash Payment of an Expense
A cash payment of an expense results in an increase in the expense and a decrease in cash
Expense is debited and Cash is credited.
Example: Hobby Shack-Pays for an expense at the time the transaction occurs…Lets take a look!

41. CASH 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

42. CASH PAYMENT OF AN EXPENSE
page 243
November 2. Paid cash for advertising, $ Check No. 292. 1 2 3 4 5
1. 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.

43. BUYING SUPPLIES FOR CASH
LESSON 9-2
4/14/2017
BUYING SUPPLIES FOR CASH
page 243
November 5. Paid cash for office supplies, $ Check No. 293. 1 2 3 4 5
1. 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

44. Question
What 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.

45. CASH PAYMENTS FOR PURCHASES
page 244
November 7. Purchased merchandise for cash, $ Check No. 301. 2 1 3 4 5
1. 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

46. TERMS 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

47. CASH PAYMENTS ON ACCOUNT WITH PURCHASES DISCOUNTS
page 245
November 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. 5 6 1 2 4 3
1. 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

48. CASH PAYMENTS ON ACCOUNT WITHOUT PURCHASES DISCOUNTS
page 246
November 13. Paid cash on account to American Paint, $2,650.00, covering Purchase Invoice No. 77. Check No. 303. 1 2 4 5 3
1. 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

49. TERMS REVIEW cash payments journal cash discount purchases discount
general amount column
list price
trade discount
contra account
LESSON 9-2

50. Exit Ticket
Merchandise is purchased for $2,000 on March 5th with terms 2/10,N/30. What is the amount due on
March 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?