Accounting
Chapter 10
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Partnership
Partner
Partners must agree on how each partner will share in a business profit or loss
Section 1
A business that sells a service for a fee is called a service business
Merchandise Business
Retail merchandising business
Merchandise
Wholesale merchandising business
Accounting concept: Going Concern
Special Journal
Types of Special Journals
Purchases Journal: for purchases of merchandise on account
Cash Payments Journal: for all cash payments
Sales Journal: for all cash receipts
General Journal: for all other transactions
Cost of Merchandise
Selling price of merchandise must be greater than the cost of merchandise in order to make a profit
Markup
Only markup increases capital
Vendor
The account used for recording the cost of merchandise is purchases
Cost account that reduces capital
Temporary account
Normal debit balance ( by debit, by credit)
Business supplies purchased are recorded as Supplies
Account Concept: Historical Cost
Accounts Payable- general ledger account to summarize all amounts owed to all vendors
A purchase on account is recorded on one line-it is assumed all entries are debits to purchases and credits to account payable
Special Amount Column
Using special amount column eliminates writing general ledger account titles

Purchase Invoice
Receiving a Purchase Invoice
Stamp the date with purchase invoice number
Place check mark by each amount to show received
Person who checked should initial below total amount
Review vendor terms
Terms of Sale
Journalizing purchase of merchandise on account
Date
Vendor Name
Purchase Invoice #
Write amount of invoice
Total and Ruling a Purchase Journal
Draw single line
Add and list total on next line
Re-add
Draw 2 line
Section 2
General Amount Column
There is a special column for account payable and cash
Journalize purchase of merchandise or supplies with cash
Date
Purchases or Supplies in account title column
Check # recorded
Write debit amount in general debit column
Write credit amount in cash credit column
Journalize a cash payment on account
Date
Write vendor name in account title column
Check # recorded
Debit to Account Payable debit column
Credit amount in the Cash Credit column
Journalize a cash payment for expense
Date
Account title written
Check # recorded
Debit amount to account title in general journal debit column
Write the credit amount in the Cash Credit column
Section 3
To replenish petty cash fund

Date
Separate accounts that petty cash used for
Check #
Debit in General Debit column
Credit in Cash Credit column on 1 st line of entry
To record cash withdrawals by partners
Date
Account title-drawing
Check #
Debit to General Debit column
Credit to Cash Credit Column
A journal is proved and ruled whenever page is filled and always at end of the month
Ruling a cash payments journal
Write “carried forward” on last unused line
Place check mark in Post. Ref.
Enter column totals and double rule
Forwarding totals to next journal page
Write “brought forward” on top line
Make check mark in Post. Ref.
Enter totals brought forward
At the end of the month must rule and total-use “total” instead of “carried forward”
Section 4: Journalizing other transactions in General Journal
Not all transactions can be recorded in a special journal
When supplies bought on account need to attach a memo to the invoice to show not purchased to resell
Journalizing supplies bought on account
Date
Account title
Memo #
Write Account Payable/Vendor Name and credit
In Post. Ref. Draw a / to indicate that this credit amount is posted to two accounts
Journalizing merchandise taken for personal use
Date
Drawing account debited
Purchases credited