Journalizing Purchases and Cash Payments Using Special

Journalizing Purchases and Cash Payments Using Special Journals

Dawson_David

Thursday, February 3, 2011 9:19:28 AM ET

  Partnership   A business in which two or more persons combine

their assets and skills.   Partner   Each member of a partnership.   Business Entity Concept   Reports, and financial records of the business are

kept separate from the personal records of the partners.

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  Merchandising Business   A business that purchases and sells goods.   Retail Merchandising Business   A merchandising business that sells to those who use

or consume the goods.   Merchandise   Goods that a merchandising business purchases to sell.   Wholesale Merchandising Business   A business that buys and resells merchandise to

retail merchandising businesses. Dawson_David


  Special Journal   A journal used to record only one kind of transaction.

–  Purchase Journals –  Cash Payments Journal –  Sales Journal –  Cash Receipts Journal

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  Cost of Merchandise   The price a business pays for goods it purchases

to sell.   Markup   The amount added to the cost of merchandise to

establish the selling price.   Revenue earned from the sale of merchandise

includes both the cost of merchandise and the markup.   The cost of merchandise is kept in a separate

general ledger account. Dawson_David


  Vendor   A business from which merchandise is purchased

or supplies or other assets are bought.   The account used for recording the cost of

merchandise is Purchases.   Purchases Account

–  Only used when merchandise is purchased –  Cost account –  Temporary account. –  Normal Debit Balance –  Reduces Capital when merchandise is purchased Dawson_David


  Historical Cost   Applied when the actual amount paid for the

merchandise or other items bought is recorded.   Purchase on Account   A transaction in which the merchandise purchased

is to be paid for later.   Accounts Payable   The total amount owed to all vendors.

–  Liability Account –  Normal Credit Balance Dawson_David


  Purchases Journal   A special journal used to record only purchases of         Dawson_David

merchandise on account. A purchase on account transaction is recorded on only one line. Special Amount Column A journal amount column headed with an account title. Used to save time.


  Purchase Invoice   An invoice used as a source document for

recording a purchase on account transaction.   Terms of Sale   An agreement between a buyer and a seller about

payment for merchandise. –  2/10, n/30

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1. Stamp date received and purchase invoice number. 2. Place a check mark by each amount. 3. Initials of person who checked invoice. 4. Review vendor’s terms of sale. Dawson_David


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November 2. Purchased merchandise on account from Crown Ltd., $2,039.99. Purchase Invoice No. 83.

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1. Write the date. 2. Write the vendor name in the Account credited column. 3. Write the purchase invoice number in the Doc. No. column. 4. Write the amount of the invoice in the special amount column.

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1. Rule a single line across amount column. 2. Write the date. 3. Write word Total. 4. Add the amount column. 5. Write total amount below single line. 6. Rule double lines across amount column. Dawson_David


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  p. 228 Audit Your Understanding   p. 228 (p. 203) Work Together   p. 228 (p. 204) On Your Own   p. 245 (p. 209) Application Problem 10-1

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Journalizing Cash Payments Using a Cash Payments Journal

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  Cash Payments Journal   A special journal used to record only cash payment

transactions.   General Amount Column   A journal amount column that is not headed with an

account title.   The source document for most cash payments is a

check. Dawson_David


November 1. Purchased merchandise for cash, $575.00 Check No. 290.

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1. Write the date. 2. Write the account title column. 3. Write the check number. 4. Write the debit amount. 5. Write the credit amount.

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November 2. Purchased merchandise for cash, $731.00 Check No.291. November 5. Paid cash for office supplies, $34.00. Check No. 292.

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November 7. Paid cash on account to Pacific Imports, $1,050.00, covering Purchase Invoice No. 81. Check No.294.

1 2 1. Write the date. 2. Write the vendor name. 3. Write the check number. 4. Write the debit amount. 5. Write the credit amount.

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November 9. Paid cash for advertising, $150.00. Check No.296.

1 2 1. Write the date. 2. Write the account title. 3. Write the check number. 4. Write the debit amount. 5. Write the credit amount.

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Performing Additional Cash Payments Journal Operations

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November 9. Paid cash to replenish the petty cash fund, $205.00: office supplies, $35.00; store supplies, $47.00; advertising, $92.00; miscellaneous, $31.00. Check No. 297. Accounts Affected Supplies—Office Supplies—Store Advertising Expense Miscellaneous Expense Cash

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1. Write the date. 2. Write the titles of accounts for which petty cash was used. 3. Write the check number. 4. Write the debit amounts. 5. Write the credit amount.

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November 10. Michelle Wu, partner, withdrew cash for personal use, $1,200.00. Check No. 298. Accounts Affected Michelle Wu, Drawing Cash

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1. Write the date. 2. Write the account title. 3. Write the check number. 4. Write the debit amount. 5. Write the credit amount.

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1. Rule a single line. 2. Write the date. 3. Write Carried Forward. 4. Place check mark in Post. Ref. column. 5. Write each column total. 6. Rule double line.

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1. Write the journal page number. 2. Write the date. 3. Write the words Brought Forward. 4. Place check mark in Post. Ref. column. 5. Record column totals brought forward from previous page.

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1. Rule a single line. 2. Write the date. 3. Write Totals. 4. Write each column total. 5. Rule double line.

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Journalizing Other Transactions Using a General Journal

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November 6. Bought store supplies on account from Foxfire Supply, $210.00. Memo No. 52.

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1. Write the date. 2. Write the account title. 3. Write the memorandum number. 4. Write the debit amount. 5. Write the account title and vendor name. 6. Place diagonal line in Post. Ref. column. 7. Write the credit amount. Dawson_David


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November 12. Karl Koehn, partner, withdrew merchandise for personal use, $300.00. Memorandum No. 53.

Karl Koehn, Drawing normal balance



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300.00


Classification Drawing Cost

Change Increased Decreased

Purchases normal balance

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Accounts Affected Karl Koehn, Drawing Purchases

300.00

Entered Debit side Credit side

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1. Write the date. 2. Write the account title Karl Koehn, Drawing. 3. Write the memorandum number. 4. Write the debit amount. 5. Write the account title Purchases. 6. Write the credit amount.

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  p. 243 Audit Your Understanding   p. 243 (p. 207) Work Together   p. 243 (p. 207) On Your Own   p. 246 (p. 213) Application Problem 10-4   p. 246 (p. 215-217) Mastery Problem 10-5   p. 247 (p. 219-222) Challenge Problem 10-6

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Journalizing Purchases and Cash Payments Using Special

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