Accounting - Loudoun County Public Schools

Accounting - Loudoun County Public Schools

Accounting Journalizing Purchases and Cash Payments February 9,2012 Cinnamon Challenge http://www.youtube.com/watch?v=Cyk7utV_ D2I&safety_mode=true&persist_safety_mode =1&safe=active http://www.youtube.com/watch? v=qt1Hx_qE6G8&safety_mode=true&persist_s afety_mode=1&safe=active LESSON 9-1 Journalizing Purchases Using a

Purchases Journal Real World Accounting Page 233 Read the OfficeMax Article and answer the two questions that follow. 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. Internet Activity On the same page (233), research the three types of corporations and answer the three questions that follow. Chapter 9.1 Vocabulary

page 241 special journal merchandise merchandising cost of merchandise business retail merchandising business markup wholesale merchandising business vendor

corporation purchase on account share of stock purchases journal capital stock special amount column stockholder purchase invoice terms of sale LESSON 9-1

7 Chapter 9.1 Pyramid merchandise merchandising business

retail merchandising business wholesale merchandising business corporation share of stock capital stock stockholder LESSON 9-1 8 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 9 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. 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. Question Why would a business organize as a corporation? Answer: Because two or more owners can provide the capital required to operate the business. http://www.inc.com/sara-blakely/the-spanxstory-how-sara-blakely-turned-footlesspantyhose-into-a-business.html?nav=vid

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

A journal used to record only one kind of transaction. Hobby Shack uses five journals to record daily transactions. 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 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. 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 19 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 20 PURCHASES JOURNAL page 237 A special journal used to record only purchases of merchandise on account. LESSON 9-1 21

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 vendors terms. LESSON 9-1 22 PURCHASING MERCHANDISE ON ACCOUNT page 239 November 2. Purchased merchandise on account from Crown Distributing, $2,039.00. Purchase Invoice No. 83.

2 1 1. 2. 3. 4. 3 4 Write the date. Write the vendor name. Write the purchase invoice number.

Write the amount of the invoice. LESSON 9-1 23 TOTALING AND RULING A PURCHASES JOURNAL page 240 1 4

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

LESSON 9-1 6 24 TERMS REVIEW page 241 merchandise special journal merchandising cost of merchandise business

retail markup merchandising business wholesale vendor merchandising business corporation purchase on account share purchases of stockjournal capital special stock amount column stockholder

purchase invoice terms of sale LESSON 9-1 25 Accounting-Chapter 9-2 Journalizing Cash Payments Using a Cash Payments Journal FEBRUARY 15, 2012 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) Agenda Bell Ringer (9.1 Vocab Review) Vocabulary Team Quiz (AKA Pay Attention to the

Bell Ringer so YOU Dont 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 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. 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 Dont Ruin It Team Vocabulary Quiz

special journal merchandise merchandising cost of merchandise business retail merchandising business

markup wholesale merchandising business vendor corporation purchase on account share of stock purchases journal capital stock special amount column stockholder purchase invoice

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

NO TITLE TITLE 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

NO TITLE TITLE Think about this. Why would a vendor offer a cash discount to a customer? Answer: To encourage early payment 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 39 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 occursLets take a look! 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 $150.00. The asset account Cash also has a normal debit balance and decreases by a credit of $150.00 CASH PAYMENT OF AN EXPENSE

page 243 November 2. Paid cash for advertising, $150.00. Check No. 292. 1 1. 2. 3. 4. 5. 2 Write the date. Write the account title.

Write the check number. Write the debit amount. Write the credit amount. 3 4 5 The cash payment increases the advertising expense account balance and decreases the cash account balance. BUYING SUPPLIES FOR CASH

page 243 November 5. Paid cash for office supplies, $94.00. Check No. 293. 1 1. 2. 3. 4. 5. 2

3 4 Write the date. Write the account title. Write the check number. Write the debit amount. Write the credit amount. LESSON 9-2 5 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. CASH PAYMENTS FOR PURCHASES

page 244 November 7. Purchased merchandise for cash, $600.00. Check No. 301. 2 1 1. 2. 3. 4. 5.

3 4 Write the date. Write the account title. Write the check number. Write the debit amount. Write the credit amount. LESSON 9-2 5 What is Meant by

TERMS OF SALE 2/10, n/30 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 CASH PAYMENTS ON ACCOUNT WITH PURCHASES DISCOUNTS 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

1 1. 2. 3. 4. 5. 6. 2 4 3

Write the date. Write the account title of the vendor. Write the check number. Write the debit amount. Write the credit amount. Write the credit amount. LESSON 9-2 page 245 6 CASH PAYMENTS ON ACCOUNT WITHOUT page 246 PURCHASES DISCOUNTS

November 13. Paid cash on account to American Paint, $2,650.00, covering Purchase Invoice No. 77. Check No. 303. 1 2 4 3 1. 2. 3. 4. 5.

Write the date. Write the vendor account title. Write the check number. Write the debit amount. Write the credit amount. LESSON 9-2 5 TERMS REVIEW

cash payments journal cash discount purchases discount general amount column list price trade discount contra account LESSON 9-2 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?

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