Chapter 8 - Accounting for purchases and accounts payable. After reading this chapter, you should be able to: Record purchases of merchandise on credit in a three-column purchases journal, post from the three-column purchases journal to the general ledger accounts, post credit purchases from the purchases journal to the accounts payable subsidiary ledger,. | 1- McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved. Accounting for Purchases and Accounts Payable Section 1: Merchandise Purchases Chapter 8 Section Objectives Record purchases of merchandise on credit in a three-column purchases journal. Post from the three-column purchases journal to the general ledger accounts. The Accounting Department receives the invoice and copies of the purchase order and receiving report The Purchasing Department issues an authorized purchase order and sends it to the selected supplier The Sales Department sends an authorized purchase requisition to the Purchasing Department A receiving report is prepared when the merchandise is received Purchasing Procedures Dr. Cr. 600 Cr. Dr. 550 Purchases Cr. Dr. 50 Freight In + = Cost of Goods Sold Total invoice (credit Accounts Payable) $ Price of goods (debit Purchases) $ Freight charge (debit Freight In) The cost of goods sold accounts have normal | 1- McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved. Accounting for Purchases and Accounts Payable Section 1: Merchandise Purchases Chapter 8 Section Objectives Record purchases of merchandise on credit in a three-column purchases journal. Post from the three-column purchases journal to the general ledger accounts. The Accounting Department receives the invoice and copies of the purchase order and receiving report The Purchasing Department issues an authorized purchase order and sends it to the selected supplier The Sales Department sends an authorized purchase requisition to the Purchasing Department A receiving report is prepared when the merchandise is received Purchasing Procedures Dr. Cr. 600 Cr. Dr. 550 Purchases Cr. Dr. 50 Freight In + = Cost of Goods Sold Total invoice (credit Accounts Payable) $ Price of goods (debit Purchases) $ Freight charge (debit Freight In) The cost of goods sold accounts have normal debit balances Accounts Payable These four general journal entries require twelve separate postings to general ledger accounts. It takes a great deal of time and effort to post them 2. In the Accounts Payable Credit column, enter the total owed to the supplier. Objective 1 Record purchases of merchandise on credit in a three-column purchases journal 1. Enter the date, supplier’s name, invoice number, invoice date, and credit terms. 3. In the Purchases Debit column, enter the price of the goods purchased . 4. In the Freight In Debit column, enter the freight amount. Examples of Credit Terms Net 30 days or n/30: Payment in full is due 30 days after the date of the invoice. Net 10 days EOM, or n/10 EOM: Payment in full is due 10 days after the end of the month in which the invoice was issued. 2% 10 days, net 30 days; or 2/10, n/30: If payment is made within 10 days of the invoice date, the customer can take a 2 percent discount. Otherwise, payment in full is due
