Chapter 12 - Introduction to merchandising businesses: Purchases. After completing this chapter, students will be able to: Apply the procedure for checking the accuracy of invoices; use an unpaid invoice file; explain the difference between FOB shipping point and FOB destination; demonstrate the procedure for handling purchases returns and allowances; compute purchases discounts. | CHAPTER TWELVE INTRODUCTION TO MERCHANDISING BUSINESSES: PURCHASES 1. Apply the procedure for checking the accuracy of invoices. 2. Use an unpaid invoice file. 3. Explain the difference between FOB shipping point and FOB destination. 4. Demonstrate the procedure for handling purchases returns and allowances. 5. Compute purchases discounts. INTRODUCTION TO MERCHANDISING BUSINESSES: PURCHASES Objectives: 12- Purchasing Merchandise Businesses that purchase merchandise must have orderly procedures for checking the accuracy of invoices and for making prompt payments. 12- Transportation Charges When a business purchases merchandise, it may be required to pay transportation charges from the supplier’s warehouse. These charges are an added cost of the merchandise. 12- Purchase Returns and Allowances When a business returns goods or receives an allowance, there is a decrease in the cost of its merchandise purchases. 12- Purchase Discounts Cash discounts are called sales . | CHAPTER TWELVE INTRODUCTION TO MERCHANDISING BUSINESSES: PURCHASES 1. Apply the procedure for checking the accuracy of invoices. 2. Use an unpaid invoice file. 3. Explain the difference between FOB shipping point and FOB destination. 4. Demonstrate the procedure for handling purchases returns and allowances. 5. Compute purchases discounts. INTRODUCTION TO MERCHANDISING BUSINESSES: PURCHASES Objectives: 12- Purchasing Merchandise Businesses that purchase merchandise must have orderly procedures for checking the accuracy of invoices and for making prompt payments. 12- Transportation Charges When a business purchases merchandise, it may be required to pay transportation charges from the supplier’s warehouse. These charges are an added cost of the merchandise. 12- Purchase Returns and Allowances When a business returns goods or receives an allowance, there is a decrease in the cost of its merchandise purchases. 12- Purchase Discounts Cash discounts are called sales discounts by the seller and purchases discounts by the buyer. The discounts apply to the cost of merchandise only. 12- Accounting Terminology Extensions FOB destination FOB shipping point Free on board Purchase invoice Purchases discounts Purchases returns and allowances. Sales discounts Sales invoices Tickler file Unpaid invoice file 12- Chapter Summary A purchase invoice is a bill that a buyer receives for a purchase of merchandise. Invoices must be paid within the discount period to obtain the cash discount. 12- Chapter Summary (continued) An unpaid invoice file is used to keep track of due dates. FOB shipping point means that the purchaser must pay the transportation charges. FOB destination means that the seller must pay the transportation charges. 12- Chapter Summary (continued) Purchases returns and allowances decrease the cost of merchandise purchased. A credit memorandum shows that the supplier will reduce the purchaser’s account balance by the amount of the return
