Chapter 8--Purchases Journal--College Accounting
Synonyms for Freight in would be
Shipping and Transportation In and Freight
Where would you find the amount of purchases for a period?
The income statement
Freight in is the amount paid by the seller to deliver merchandise sold to a customer
and freight in is added to purchases to determine the total cost.
A/P ledger may include accounts for creditors who
are not suppliers of merchandise.
Purchases journal strengthens
audit trail
When you purchase merchandise for cash, it's recorded in the
cash payments journal
Postings to the accounts payable ledger should be made
daily
When recording a return of merchandise purchased on credit,
debit Accounts Payable and credit Purchases Returns and Allowances
Purchases account has a normal
debit balance
Returns of damaged merchandise or returns are recorded in the
general journal
Check marks next to the individual amounts in the purchases journal mean that the amounts
have been posted to the accounts payable subsidiary ledger
Merchandise that's purchased on credit and returned
includes a dr to A/P and a CR to Purchases Returns and Allowances
Purchase Returns and Allowances account
is a contra cost of goods sold account whose normal side balance is a credit.
At the end of the accounting period, the total of the accounts in the A/P subsidiary ledger
must agree to to the total in the company's a/p ledger account.
Purchases returns and allowances has a
normal credit balance
Purchases has a
normal debit balance
Purchases of supplies on credit and purchases that are returned will be entered in
the general journal
Invoice date and credit terms must be carefully recorded in the purchases journal because
the invoice date and credit terms determine when payment is due.
source document for recording a purchase of merchandise on credit is
the purchase invoice
Purchases of merchandise on credit should be recorded in
the purchases journal
Amounts that are recorded in the general journal require two postings,
then a diagonal line is used to separate the two posting references in the post reference column.
Dr Purchases Cr Accounts Payable
when the company purchases on credit
After you total purchases journal amounts, then
you write appropriate account numbers below the the totals
Credit terms of 2/10, n/30
Means if you pay within 10 days you will get a 2% discount or you can pay the total amount owed within 30 days
Normal Debit Balance
Purchases
A purchases journal is used to journalize ____.
Purchases of merchandise on account
Freight charges are debited to
the Freight in account
credit memorandum
A form prepared by the vendor showing the amount deducted for returns and allowances
Individual entries in the purchases journal are posted to the
A/P subsidiary ledger
Amounts are posted from the purchases journal to the
A/P subsidiary ledger during the month
Purchases of merchandise for cash is recorded in
Cash payments journal
When sales department needs goods, it send the purchasing department a form called
a purchase requisition
A purchase invoice lists the quantity, the description, and the price of each item and shows the total amount of the purchase after
a supplier of merchandise has been selected.
Source document is the supplier's invoice for a
purchases on credit transactions
A/P subsidiary ledger is used, entry to A/P
requires two posting references in the general journal.
Purchases account is a
temporary account (The Purchases account is a temporary account classified as a cost of goods sold account on the income statement.)
The total of the balances in the individual creditor's accounts (a/p subsidiary ledger) should agree with the balance of
the Accounts Payable account in the general ledger. (control account)
