Transcript Accounting 3

Accounting 3
Chapter 18
Section 4
General Journal
 For corporations, general journals are used
to record any information that will not go into
any of the special journals.
 This usually includes any transactions
involving memorandums.
Example of General Journal
General Journal
Date
Account Title
Doc.
Post
No.
Ref.
Page ___
Debit
Credit
Purchases Returns and
Allowances
 When customers do not want to keep
merchandise that is inferior or damaged,
they may be allowed to return it. This
credit is called a Purchases Return.
 When customers’ merchandise is
damaged but still usable, they may be
allowed a credit off of what is owed for
that merchandise. This credit is called a
Purchases Allowance.
Debit Memorandums
 A Debit Memorandum is a form prepared
by the customer showing the price
deduction taken by the customer for
returns and allowances.
 It is 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.
Example of Debit
Memorandum
Debit Memorandum 78
March 8, 2007
Date: _______________
To:
Winning Edge, Inc.
1420 College Plaza
Second Round, Inc.
Atlanta, GA 30337-1726
162 Webster Road
Miami, FL 33127-6214
Account Number:
280
Quantity
22
Units
Dz.
Description
Grade 2 driving range golf
balls, your invoice number
16724, are being returned
by mail. Our order specified
grade 3 golf balls.
Price
6.50
Total
143.00
Journalizing Purchases
Returns and Allowances
 Purchases returns and allowances decrease
the amount of purchases. Therefore,
Purchases Returns and Allowances is a contra
account (an account that reduces a related
account on a financial statement) to
Purchases.
 Purchases Returns and Allowances has a
normal credit balance.
 Example transaction and visual steps on next
slide.
March 8. Returned merchandise to Second Round, Inc.,
$143.00, covering Purchase Invoice No. 230. Debit
Memorandum No. 78.
3
General Journal
Date
Mar
Account Title
8
Accounts Pay/ Second Round, Inc.
Doc.
Post
No.
Ref.
DM78
Page ___
Debit
1
4
3
Credit
00
Purchases Ret. and Allowances
1
Both the Accounts Payable and Second Round, Inc.
accounts must be debited for this transaction. Rather than
taking up two lines for the accounts debited (and also unbalancing the accounting equation), Accounts Payable and
Second Round, Inc. must be written on the same line.
The second line of any entry in the general journal needs
to be indented.
4
3
00
Journalizing Buying
Supplies on Account
 This is handled just like supplies has
always been except that Accounts
Payable and the vendor account name
must be on the credit line of the entry.
 Example Transaction: March 9. Bought
supplies on account from Winter
Supplies, $316.00. Memorandum No. 26.
 Visual steps on next slide.
3
General Journal
Date
Mar
Account Title
9
Supplies
Accounts Pay/ Winter Supplies
Doc.
Post
No.
Ref.
M26
Page ___
Debit
3
1
6
Credit
00
3
1
6
00
Posting from a General
Journal
 Posting must be done individually to all accounts
involved in each entry.
 Most accounts will be in the general ledger. However,
vendor accounts are in the Accounts Payable ledger.
 The posting reference for the general journal is a G
along with the page number.
 On the lines which use two accounts, both account
numbers must be included in the posting reference
column of the general journal. Ex.
 Posting will be demonstrated in the Work Together
problem.
Work Together p. 475
General Journal
Date
Mar
Account Title
3
Accounts Pay/ Trainor Company
Doc.
Post
No.
Ref.
DM18
Supplies
Debit
2
3
8
Credit
00
5115
Purchases Ret. and Allowances
5
3
Page ___
M355
1140
1
5
2
Store Equipment
M356
1215
4 2
3
5
Accts Pay/ Retail Displays, Inc.
3
8 00
1
5
2 00
2
3
5
00
Accounts Pay/ Hughes Supply
7
2
00
4
00
To see the postings, click on the posting reference
numbers which are hyperlinked.
Assignment
General Ledger
Account
Date
Supplies
Item
Mar 1
Date
7
Ref
Debit
Credit
1140
BALANCE
DEBIT
CREDIT
2 7 6 3 00
G3
1 5 2 00
2 9 1 5 00
Store Equipment
Item
Mar 1
Post
Balance
5
Account
Acct No.
Post
Ref
Acct No.
Debit
Balance
Credit
BALANCE
DEBIT
12 7 6 1 00
G3
4 2 3 5 00
16 9 9 6 00
CREDIT
1215
General Ledger
Account
Date
Accounts Payable
Item
Mar 1
Post
Ref
2115
Acct No.
Debit
Credit
BALANCE
DEBIT
CREDIT
Balance
3 1 3 1 00
3
G3
5
G3
1 5 2 00
3 0 4 5 00
7
G3
4 2 3 5 00
7 2 8 0 00
Account
Date
3
2 8 9 3 00
Purchases Returns and Allowances
Item
Mar 1
2 3 8 00
Post
Ref
Debit
Acct No.
Credit
Balance
5115
BALANCE
DEBIT
CREDIT
6 9 2 00
G3
2 3 8 00
9 3 0 00
Account
Hughes Supply
Date
Item
Mar 1
Date
7
Ref
Debit
Credit
Credit
Balance
4 7 2 00
G3
6 2 4 00
Acct No.
Retail Displays, Inc.
Item
Mar 1
Post
Balance
5
Account
Accounts Payable Ledger
Acct No. 420
Post
Ref
Debit
Credit
Balance
430
Credit
Balance
1 6 8 7 00
G3
4 2 3 5 00
5 9 2 2 00
Accounts Payable Ledger
Account
Date
Mar 1
3
Trainor Company
Item
Post
Ref
Acct No.
Debit
Balance
Credit
450
Credit
Balance
9 7 2 00
G3
2 3 8 00
7 3 4 00
Assignment
 Do Application 18-5 by hand.
 Turn it into Mrs. Middleton.
 Complete Master 18-7 on the computer.
 Follow instructions from Browser window.
 Print all journals and ledgers used.
 Turn into Mrs. Middleton.
 Move on to Chapter 19 Section 1.