LESSON 9-1
Journalizing Purchases
Using a Purchases Journal
Original created by M.C. McLaughlin, Thomson/South-Western
Modified by Deborah L. Burns, Johnston County Schools, West Johnston High School
CENTURY 21 ACCOUNTING © Thomson/South-Western
2
Merchandising Businesses
page 236
A business that purchases and sells goods is called
a merchandising business
Goods that a business purchases to sell are called
merchandise
A merchandising business that sells to those who
use or consume the goods is called a retail
merchandising business
A business that buys & resells merchandise in
retail merchandising businesses is called a
wholesale merchandising business
CENTURY 21 ACCOUNTING © Thomson/South-Western
LESSON 9-1
3
Merchandising Businesses
page 236
A journal used to record only one kind of
transaction is called a special journal
Most merchandising businesses use 5 special
journals to record daily transactions:
Purchases journal – for all purchases of merchandise
on account
Cash payment journal – for all cash payments
Sales journal – for all sales of merchandise on account
Cash receipts journal – for all cash receipts
General journal – for all other transactions
CENTURY 21 ACCOUNTING © Thomson/South-Western
LESSON 9-1
4
PURCHASING MERCHANDISE
page 236
The price a business pays for goods it purchases to sell is called cost
of merchandise.
The amount added to the cost of merchandise to establish the
selling price is called markup
The account used for recording the cost of merchandise is titled
purchases.
Purchases is classified as a cost account because it is in the cost of
merchandise division in the chart of accounts.
Purchases is a temporary account & has a normal debit balance
A business from which merchandise is
purchased or supplies or other assets are
bought is called a vendor
CENTURY 21 ACCOUNTING © Thomson/South-Western
LESSON 9-1
5
PURCHASES ON ACCOUNT
page 236
The cost account, Purchases, is used only to record the cost of
merchandise purchased.
A transaction in which the merchandise purchased is to be paid for
later is called a purchase on account
Businesses that purchase on account from many vendors will have
many accounts for vendors. The total amount owed to all vendors
can be summarized in a single general ledger account titled Accounts
Payable
CENTURY 21 ACCOUNTING © Thomson/South-Western
LESSON 9-1
6
PURCHASES JOURNAL
page 237
A special journal used to record only purchases of merchandise on
account is called a purchases journal
A purchase on account transaction is recorded on only one line of
the purchases journal
A journal amount column headed with an account title is called a
special amount column
Using special amount columns eliminates writing general ledger
account titles in the Account Title column and saves time
CENTURY 21 ACCOUNTING © Thomson/South-Western
LESSON 9-1
7
PURCHASE INVOICE
When a vendor sells merchandise to a buyer, the vendor prepares a
form showing what has been sold.
A form describing the goods sold, the quantity, and the price is
known as an invoice
An invoice used as a source document for recording a purchase on
account transaction is called a purchase invoice
A purchase invoice lists the
quantity, the description, the
price of each item, and the
total amount of the invoice
CENTURY 21 ACCOUNTING © Thomson/South-Western
LESSON 9-1
8
PURCHASE INVOICE
page 238
1
4
2
3
1. Stamp the date received and
purchase invoice number.
3. Initials of the person who
checked the invoice.
2. Place a check mark by each amount.
4. Review the vendor’s terms.
CENTURY 21 ACCOUNTING © Thomson/South-Western
LESSON 9-1
9
PURCHASING MERCHANDISE ON
ACCOUNT
page 239
November 2. Purchased merchandise on account from Crown
Distributing, $2,039.00. Purchase Invoice No. 83.
2
1
1.
2.
3.
4.
3
4
Write the date.
Write the vendor name.
Write the purchase invoice number.
Write the amount of the invoice.
CENTURY 21 ACCOUNTING © Thomson/South-Western
LESSON 9-1
10
TOTALING AND RULING A PURCHASES
JOURNAL
page 240
Purchases journal is always ruled at the end of each month, even if
the page for the month is not full
1
2
4
3
1. Rule a single line across
the amount column.
2. Write the date.
3. Write the word Total.
5
4. Add the amount column.
6
5. Write the total.
6. Rule double lines across
the amount column.
CENTURY 21 ACCOUNTING © Thomson/South-Western
LESSON 9-1
11
TERMS REVIEW
 merchandise
 merchandising business
 retail merchandising
business
 wholesale
merchandising business
 corporation
 share of stock
 capital stock
 stockholder
CENTURY 21 ACCOUNTING © Thomson/South-Western
page 241









special journal
cost of merchandise
markup
vendor
purchase on account
purchases journal
special amount column
purchase invoice
terms of sale
LESSON 9-1