CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

LESSON 9-4LESSON 9-4

Journalizing Other Transactions Using a General Journal

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

GENERAL JOURNALGENERAL JOURNAL

Not all transactions can be recorded in special journals. Those that cannot be are recorded in a general journal

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LESSON 9-4

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

BUYING SUPPLIES ON ACCOUNTBUYING SUPPLIES ON ACCOUNT Supplies a company buys to sell to customers should be

recorded as a merchandise purchase. However, supplies a company buys for use by employees to run the business should be recorded as store (or office) supplies

When a company receives an invoice from a vendor, a memo is attached noting that the invoice is for store supplies and not for merchandise.

The asset account Supplies-Store has a normal debit balance and increases on the debit side

The liability account Accounts Payable has a normal credit balance and increases on the credit side

The equality of debits and credits for each general journal entry is checked after each entry is recorded.

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LESSON 9-4

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

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LESSON 9-4

MEMORANDUM FOR BUYING SUPPLIES MEMORANDUM FOR BUYING SUPPLIES ON ACCOUNTON ACCOUNT page 254

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

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LESSON 9-4

BUYING SUPPLIES ON ACCOUNTBUYING SUPPLIES ON ACCOUNT

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2233

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5566

page 255

November 6. Bought store supplies on account from Gulf Craft Supply, $210.00. Memorandum No. 52.

1. Write the date. 5. Write the account title and vendor name.2. Write the account title.

6. Place a diagonal line in the Post. Ref. column.

3. Write the memorandum number.

7. Write the credit amount.4. Write the debit amount.

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CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

DEBIT MEMORANDUM FOR PURCHASES DEBIT MEMORANDUM FOR PURCHASES RETURNS AND ALLOWANCESRETURNS AND ALLOWANCES

A customer may not want to keep low quality or damaged merchandise.

Customers may be allowed to return all or part of an order A purchase return is credit for the purchase price of returned

merchandise resulting in a decrease in the customer’s accounts payable

Customers may chose to keep merchandise that is a different quality or damaged.

The vendor may offer a reduced price for these items A purchases allowance is credit for part of the purchase price that is

not returned resulting in a decrease in the customer’s accounts payable

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LESSON 9-4

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

DEBIT MEMORANDUM FOR PURCHASES DEBIT MEMORANDUM FOR PURCHASES RETURNS AND ALLOWANCESRETURNS AND ALLOWANCES

Purchase Returns / Purchase Allowances should be confirmed in writing

A debit memorandum is a form prepared by the customer showing the price deduction taken for returns and allowances Called a debit memorandum because the customer records the

amount as a debit (deduction) to the vendor account to show the decrease in the amount owed

Can be used as a source document for journalizing purchases returns and allowances

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LESSON 9-4

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

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LESSON 9-4

DEBIT MEMORANDUM FOR PURCHASES DEBIT MEMORANDUM FOR PURCHASES RETURNS AND ALLOWANCESRETURNS AND ALLOWANCES page 256

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

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LESSON 9-4

4. Write debit memorandum number.

November 28. Returned merchandise to Crown Distributing, $252.00, covering Purchase Invoice No. 80. Debit Memorandum No. 78.

JOURNALIZING PURCHASES RETURNS JOURNALIZING PURCHASES RETURNS AND ALLOWANCESAND ALLOWANCES page 257

1122

3344

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66

1. Write the date.

5. Write the amount.2. Write the account title and vendor name. 6. Write Purchases Returns and Allow.

3. Place a diagonal line in the Post. Ref. column.

7. Write the amount.

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CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

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LESSON 9-4

TERMS REVIEWTERMS REVIEW

purchases return purchases allowance debit memorandum

page 258

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

WORK TOGETHER 9-4 (page 258)WORK TOGETHER 9-4 (page 258)

Journalizing other transactions using a general journal

1. Using the current year, journalize the following transactions on page 8 of the general journal. Source documents are abbreviated as follows: memorandum, M; debit memorandum, DM. Save your work to complete ON YOUR OWN 9-4

Transactions:

Oct. 5. Bought store supplies on account from Design Supplies, $180.000. M36

Oct. 7. Returned merchandise to Hendrix Products, $540.000. DM65

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LESSON 9-4

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

Journalizing Other Transactions using a Journalizing Other Transactions using a General JournalGeneral Journal

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LESSON 9-4

8

Purchases Returns and Allowances

540.00Accounts Payable/Hendrix Products7 DM65 540.00

Accounts Payable/Designer Supplies

180.00Oct. 5 Supplies - Store M35 180.00

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

ON YOUR OWN 9-4 (page 258)ON YOUR OWN 9-4 (page 258)

Journalizing other transactions using a general journal

Use the journal you started for Work Together 9-4

1. Using the current year, journalize the following transactions, continuing on the next blank line of page 8 of the general journal. Source documents are abbreviated as follows: memorandum, M; debit memorandum, DM.

Transactions:

Oct. 11. Bought office supplies on account from Office Express, $240.00. M36

Oct. 14. Returned merchandise to Fretz Industries, $1,239.00. DM66

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LESSON 9-4

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

AUDIT YOUR UNDERSTANDING AUDIT YOUR UNDERSTANDING

Answer the following questions. Turn in when done.

1. What journal is used to record transactions that cannot be recorded in special journals?

2. Why is a memorandum used as the source document when supplies are bought on account?

3. Why are two account titles written for the credit amount when supplies are bought on account?

4. When is the equality of debits and credits proved for a general journal?

5. If purchases returns and allowances are a decrease in purchases, why are returns and allowances credited to a separate account?

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LESSON 9-4

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

AUDIT YOUR UNDERSTANDING cont.AUDIT YOUR UNDERSTANDING cont.

6. What is a primary difference between a purchases return and a purchases allowance?

7. When is a debit memorandum a proper source document for a purchases return or allowance?

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LESSON 9-4

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

APPLICATION PROBLEM 9-5APPLICATION PROBLEM 9-5

Complete Application Problem 9-5 (page 262) using the aplia online accounting papers

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LESSON 9-4