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

MEMORANDUM FOR BUYING SUPPLIES
ON ACCOUNT page 254
2

Not all transactions can be recorded in special journals

When a business buys supplies on account, an invoice is received from the vendor which is similar to the purchase invoice received when purchases are made
 To make sure no mistake is made, a memorandum is attached to the invoice, noting the invoice is for supplies
CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 9-4

BUYING SUPPLIES ON ACCOUNT
November 6. Bought store supplies on account from Gulf Craft
Supply, $210.00. Memorandum No. 52.
3 page 255
2
1
1. Write the date.
2. Write the account title.
3. Write the memorandum number.
4. Write the debit amount.
5
4
3
6
5. Write the account title and vendor name.
6. Place a diagonal line in the
Post. Ref. column.
7. Write the credit amount.
7
CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 9-4

DEBIT MEMORANDUM FOR PURCHASES
RETURNS AND ALLOWANCES page 256
4

Customers may not want to keep merchandise that is inferior in quality or is damaged when received.

Credit allowed for the purchase price of returned merchandise, resulting in a decrease in the customer’s accounts payable, is called a purchases return

When merchandise is damaged but still usable or is of different quality than that ordered, the vendor may let the customer keep the merchandise at a reduced price

Credit allowed for part of the purchase price of merchandise that is not returned, resulting in a decrease in the customer’s accounts payable, is called a purchases discount
CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 9-4

DEBIT MEMORANDUM FOR PURCHASES
RETURNS AND ALLOWANCES page 256
5

A purchases return or allowance should be confirmed in writing

A form prepared by the customer showing the price deduction taken by the customer for returns & allowances is called a debit memorandum
 Purchases Returns & Allowances is a contra account to Purchases

The debit memorandum is used as the source document for journalizing purchases returns
& allowances
CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 9-4

JOURNALIZING PURCHASES RETURNS
AND ALLOWANCES page 257
6
November 28. Returned merchandise to Crown Distributing, $252.00, covering Purchase Invoice No. 80. Debit Memorandum No. 78.
1
2
6
1. Write the date.
2. Write the account title and vendor name.
3. Place a diagonal line in the
Post. Ref. column.
5
3
4
7
4. Write debit memorandum number.
5. Write the amount.
6. Write Purchases Returns and Allow .
7. Write the amount.
CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 9-4

7 page 258
TERMS REVIEW
 purchases return
 purchases allowance
 debit memorandum
CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 9-4