Module 20/20

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Module 2020- Special Journals In this section you will be working with partnerships and with merchandising businesses who buy inventory to resell it.

Your chart of accounts is expanded and now there will be three sets of ledgers: 1. General ledgers (4 digit numbers ex. Assets 1000's liabilities 2000's) A new section introduced in-between revenue and expenses is called cost of merchandise.

Revenue (4000's), cost of merchandise (5000's), expenses (6000's) DR balance Dr balance 2. Accounts receivable ledger: 3 digit account numbers - this is an asset ledger - account numbers are in the 100's - these are assets which are owed to the company 3. Accounts payable ledger: 3 digit numbers - This is the liability ledger - Account numbers are in the 200's - These liabilities are not paid yet The controlling accounts for these 2 ledgers are in the general ledger and are named accounts receivable and payable.

Transactions for a merchandising business are done in a 11 column combination journal. These are used for to types of transactions categories: purchases (merchandise business buys) Sales (sells) CH. 13 Purchases and cash payments Ways to purchase merchandise A Company may purchase merchandise for 1. Cash 2. An account Purchase for cash Eg. Purchase merchandise for cash $200.00 C1 To accounts are affected, purchases and cash Both of these accounts have column titles in the combination journal. Thus the transaction is inserted as follows: Date Account tile Doc# P.R. Purchase dr Cash cr Mar 30 * C1 * 200.00 200.00 Purchase an account Eg. Purchase merchandise an account from staples co, 200.00,P1 (purchase order #1) These accounts are affected: Purchase and accounts payable Dr Cr In the combination journal the following accounts are used: Date Acct.tile Doc# Accts. Payblecr Purchase dr Mar 30 Staples co P1 200.00 200.00 Ways to buy supplies A Company may buy supplies for cash or on account Buy supplies for cash: supplies dr cash cr Buying supplies on account: Eg. Bought supplies on account from grand and toy,500.00 M1 Supplies dr account payable cr This entry requires 2 rows in the combination journal date Account title Doc# General DRAccount payable CR Mar 30 Supplies Grand and toy M1 500.00 500.00 Cash payments transactions All transactions that you pay cash for are in this section.

Payment on account Ex. Paid an account for grand and toy for amount owed 500.00 covering memo1 c1.

Account payable dr cash cr Others transactions The owner can withdraw merchandise Corrections to entries Withdraw merchandise: J.Doe owner withdrew merchandise forpersonal use 75.00 M2 J.Doe drawing 75.00 DR purchases 75.00 CR Mar30 j.Doe drawing M2 75.00 75.00 Correcting entry: - used when mistakes are made