Advanced Accounting
Unit 1 - Departmentalized
Accounting
• Chapter 1 - Recording Departmental
Purchases and Cash Payments
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TERMS REVIEW
Lesson 1-1
Asset – anything of value that is owned
Liability – Amount owed by a business
Equities – Financial rights to assets of a business
Owner’s equity – Amount remaining after the
value of all liabilities is subtracted from the
value of all assets
Accounting equation: Assets = Liabilities +
Owner’s Equity
Source document – Original business papers that
contain info about business transactions
Journal – Form for recording transactions in aLesson 1-1, page 11
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TERMS REVIEW
Special journal – Journal used to record only
one kind of transaction
double-entry accounting – Recording of debit
and credit portions of each transaction
Account – Record summarizing all info
pertaining to a single item in the accounting
equation
Ledger – Group of accounts
general ledger – Contains all accounts needed
to prepare financial statements
Lesson 1-1, page 11
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TERMS REVIEW
Subsidiary ledger – Ledger that is
summarized in a single general ledger
account
Controlling account – Account in a general
ledger that summarizes all accounts in a
subsidiary ledger
File maintenance – Procedure for arranging
accounts in a general ledger, assigning
account numbers and keeping records
current
Lesson 1-1, page 11
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THE ACCOUNTING EQUATION
(LEFT side of equation)
Assets
(RIGHT side of equation)
=
Liabilities + Owner’s Equity
Lesson 1-1, page 6
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GENERAL JOURNAL
Assets
=
Liabilities + Owner’s Equity
Left side
Right side
T Account
DEBIT
(Left side)
CREDIT
(Right side)
Lesson 1-1, page 7
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TERMS REVIEW
Lesson 1-2
Departmental accounting system –
Accounting system showing accounting
info for two or more departments
Merchandising business – Business that
purchases and sells goods
Posting – transferring info from a journal into
a ledger account
Debit memorandum – Form prepared by the
customer showing the price deduction
taken by the customer for returns and
allowances
Lesson 1-2, page 19
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TERMS REVIEW
Contra account – Account that reduces a
related account on a financial statement;
i.e. Purchases returns and allowances is
contra account to purchases; Drawing is
contra account to capital.
Contra balance – Account balance opposite
the normal balance
Lesson 1-2, page 19
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JOURNALIZING PURCHASES ON ACCOUNT
June 1. Purchased tennis equipment on account from
Tennis Warehouse, $845.00. Purchase Invoice No. 336.
TENNIS WAREHOUSE
976 CENTURY BLVD
CUBLIN, CA 94565-1101
SOLD TO
MasterSport
4750 Appian Way
San Jose, CA 95125-0210
TERMS 2/10, n30
2
QUANITY
10 ea.
10 dz.
STOCK NO.
GRX1
RG TAPE
DESCRIPTION
Graphite racquet
Ready-Grip Tape
DATE May 29, 20-OUR ORDER NO. 98-117
CUSTOMER’ ORDER NO. 336
SHIP VIA TRUCK
UNIT PRICE
60.00
24.50
TOTAL AMOUNT
600.00
245.00
3
Total Invoice
1
845.00
4
1. Write approval
date.
2. Write vendor
name.
3. Record invoice
number.
4. Write invoice
amount.
5. Write invoice
amount.
5
Lesson 1-2, page 13
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POSTING FROM A PURCHASES JOURNAL
1
2
1.
2.
3.
4.
5.
Write the date.
Write journal page number.
Record credit amount.
Calculate new account balance.
Write vendor number.
3
5
4
Lesson 1-2, page 14
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POSTING THE TOTALS OF A PURCHASES JOURNAL
1
2
5
3
4
1.
2.
3.
4.
5.
Write the date.
Write journal page number.
Write column total.
Calculate new account balance.
Write account number (in parentheses).
Lesson 1-2, page 15
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PURCHASES JOURNAL WITH POSTING COMPLETED
Lesson 1-2, page 15
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JOURNALIZING A DEBIT MEMORANDUM
June 3. Returned tennis equipment to Key Tennis Company,
$54.50, from Purchase Invoice No 333. Debit Memorandum No 22.
1. Write the date.
2. Enter vendor name.
3. Record debit memo
number.
4. Write the amount.
5. Write the amount.
2
1
3
4
5
Lesson 1-2, page 17
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POSTING FROM A PURCHASES RETURNS AND
ALLOWANCES JOURNAL
Lesson 1-2, page 18
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TERMS REVIEW
Lesson 1-3
Cash discount – Deduction that a vendor
allows on the invoice amount to
encourage prompt payment
Purchases discount – Cash discount on
purchases taken by a customer
Petty cash – Amount of cash kept on hand
and used for making small payments
Bank statement – Report of deposits,
withdrawals, and bank balance sent to a
depositor by a bank
Lesson 1-3, page 27
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JOURNALIZING A PURCHASES DISCOUNT
June 1. Paid cash on account to Champion Tennis Supply,
$514.50, covering Purchase Invoice No. 331 for tennis equipment
for $525.00 less 2% discount, $10.50. Check No. 315.
1
2
1.
2.
3.
4.
3
Write the date.
Enter vendor name.
Record the check number.
Write the debit amount.
4
5
6
5. Record the
discount amount.
6. Enter the credit amount.
Lesson 1-3, page 21
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TAKING A DISCOUNT AFTER A PURCHASE RETURN
June 1. Paid cash on account to Golf-Tee, Inc., $220.50, covering Purchase
Invoice No. 332 for golf equipment for $275.00, less Debit Memorandum No.
20 for $50.00, and less 2% discount, $4.50. Check No 316.
Amount owed on invoice:
Original Purchase Invoice
Amount (P332)
$275.00
–
–
Purchases Return
(DM20)
50.00
=
=
Purchase Invoice Amount
After Return
$225.00


Purchases Discount
Rate
2%
=
=
Purchases
Discount
$4.50
=
=
Total
Amount Due
$220.50
Purchases discount:
Purchase Invoice Amount
After Return
$225.00
Amount due after purchases discount:
Purchase Invoice Amount
After Return
$225.00
–
–
Purchases Discount
$4.50
Lesson 1-3, page 22
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RECORDING ENTRIES IN A CASH PAYMENTS JOURNAL
June 1. Paid cash for office supplies, $136.00. Check No. 317.
1
1.
2.
3.
4.
5.
2
3
Write the date.
Enter the account title.
Record the check number.
Write the debit amount.
Enter the credit amount.
4
5
Supplies—Office
136.00
Cash
136.00
Lesson 1-3, page 23
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CASH PAYMENT TO REPLENISH PETTY CASH
June 30. Paid cash to replenish the petty cash fund, $402.00: office
supplies, $164.00; store supplies, $136.00; advertising, $56.00;
miscellaneous expense, $46.00. Check No. 350.
2
4
3
5
1
1. Write the date.
2. Enter the account titles.
3. Record check number.
4. Write the debit amounts.
5. Enter the credit amount.
Lesson 1-3, page 24
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RECONCILING A BANK STATMENT
(1) Checkbook Balance
1
33,231.55
$ __________
Date
6/30
Bank Charges
Description
Amount
Service Charge
12.80
Credit Card Fee
340.00
20,525.23
$ __________
4
(4) Bank Balance
Date: June 30, 20--
Outstanding Deposits
Amount
12,828.52
5
12,828.52
(5) Add Total Outstanding Deposits $ __________
2
(6) Total
6
33,353.75
$ __________
352.80
(2) Deduct Total Bank Charges $ __________
Outstanding Checks
Check No
Amount
350
402.00
351
73.00
475.00
(7) Deduct Total Outstanding Checks$ __________
7
3
(3) Adj. Checkbook Balance
1.
2.
3.
32,878.75
$ __________
Enter checkbook balance.
Enter and add bank charges.
Deduct bank charges to obtain
checkbook balance.
4.
5.
6.
7.
8.
(8) Adjusted Bank Balance
32,878.75
$ __________
8
Enter bank balance from statement.
Enter and add outstanding deposits.
Add outstanding deposits to balance.
Deduct total outstanding checks.
Verify adjusted checkbook balance
and adjusted bank balance are the
same.
Lesson 1-3, page 25
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JOURNALIZING BANK CHARGES
June 30. Received bank statement
showing bank service charge,
$12.80. Memorandum No 18.
Miscellaneous Expense
12.80
Cash
12.80
June 30. Recorded credit card fee
expense for June, $340.00.
Memorandum No. 19.
Credit Card Fee Expense
340.00
Cash
340.00
Lesson 1-3, page 26
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