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)