Lesson Plan 7.2 Analyze and Journalize. and Cash Payments

Lesson Plan 7.2 – Analyze and Journalize Purchases and Cash Payments Course Title – Accounting I Session Title – Analyze and Journalize Purchases and ...
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Lesson Plan 7.2 – Analyze and Journalize Purchases and Cash Payments Course Title – Accounting I Session Title – Analyze and Journalize Purchases and Cash Payments Lesson Purpose – Demonstrate skill in analyzing and journalizing purchases and cash payment transactions using a computerized accounting system.

Behavioral Objectives       

Analyze transactions relating to purchases and cash payments. Analyze transactions relating to contra cost of merchandise accounts. Journalize transactions relating to purchases and cash payments. Journalize transactions relating to contra cost of merchandise accounts. Calculate trade and purchase discounts. Analyze posting of purchases and cash payments. Analyze transactions with cash over and cash short in the petty cash fund.

Preparation TEKS Correlations:

2010 TEKS Correlations:

This lesson, as published, correlates to the following TEKS. Any changes/alterations to the activities may result in the elimination of any or all of the TEKS listed. 120.42.C 2.b. analyze transactions relating to purchase and sale of merchandise; 2.c. record transactions in special journals; 4.f. open and replenish a petty cash fund and journalize transactions; 7.a. follow oral and written instructions; 7.b. develop time management skills by setting priorities for completing work as scheduled. 7.c. make decisions using appropriate accounting concepts; 7.e. perform accounting procedures using manual and automated methods; 7.g. demonstrate use of the numeric keypad by touch

This lesson, as published, correlates to the following TEKS. Any changes/alterations to the activities may result in the elimination of any or all of the TEKS listed. 130.166.C 4.c. – journalize and post entries to establish and replenish petty cash; 5. – The student performs accounting functions specific for a merchandising business. The student is expected to explain the nature of special journals and recording transactions in special journals.

Lesson Plan 7.2 – Analyze and Journalize

Copyright © Texas Education Agency, 2011. All rights reserved.

ACCOUNTING 1

TAKS Correlation: MATH Objective 10: The student will demonstrate an understanding of the mathematical processes and tools used in problem solving.

Materials, Equipment and Resources:   

Textbook Accounting Software Journal Input Forms

Teaching Strategies:  

Observation Graded Assignments

Lesson Content: Instruction on trade and purchase discounts and the accounts related to these types of transactions. Students analyze and journalize purchases and cash payments, petty cash short and over and calculate petty cash short and over.

Assessment:  

Observation Graded Assignments

Additional Resources: Textbooks: Guerrieri, Donald J., Haber, Hoyt, Turner. Glencoe Accounting RealWorld Applications and Connections. Glencoe McGraw-Hill 2000. ISBN/ISSN 0-02-815004-X. Ross, Kenton, Gilbertson, Lehman, and Hanson. Century 21 Accounting Multicolumn Journal Anniversary Edition, 1st Year Course. SouthWestern Educational and Professional Publishing, 2003. ISBN/ISSN: 0-538-43524-0 Ross, Kenton, Gilbertson, Lehman, and Hanson. Century 21 General Journal Accounting Anniversary Edition, 7th Edition. SouthWestern Educational and Professional Publishing, 2003. ISBN/ISSN: 0-538-43529-1. Websites: Glencoe College Accounting Practice Problems. 2003 Glencoe/McGrawHill. http://www.glencoe.com/qe/qe39pp.php?qi=833.

Lesson Plan 7.2 – Analyze and Journalize

Copyright © Texas Education Agency, 2011. All rights reserved.

ACCOUNTING 1

Activity 7.2.1 – Identifying Terms – 7.2.1 Course Title – Accounting I Session Title – Analyze and Journalize Purchases and Cash Payments Activity Purpose – Identify terms related to corporations, purchases and cash payment transactions.

TEKS Correlations:

2010 TEKS Correlations:

This lesson, as published, correlates to the following TEKS. Any changes/alterations to the activities may result in the elimination of any or all of the TEKS listed. 120.42.C 7.a. follow oral and written instructions; 7.b. develop time management skills by setting priorities for completing work as scheduled;

This lesson, as published, correlates to the following TEKS. Any changes/alterations to the activities may result in the elimination of any or all of the TEKS listed. 130.166.C

N/A

TAKS Correlation: WRITING Objective 5: The student will produce a piece of writing that demonstrates a command of the conventions of spelling, capitalization, punctuation, grammar, usage, and sentence structure. Objective 6: The student will demonstrate the ability to revise and proofread to improve the clarity and effectiveness of a piece of writing.

Materials, Equipment and Resources:     

Textbook Internet Butcher Paper Tape Vocabulary Strips

Teaching Strategies:  

Observation Verbal Drill

Activity 7.2.1 – Identifying Terms

Copyright © Texas Education Agency, 2011. All rights reserved.

ACCOUNTING 1

Activity Outline: 1. Using index cards, define these terms: common stock corporation list price publicly held corporation purchases discount purchases return retained earnings

Proxy share of stock trade discount board of directors

preferred stock capital stock cash discount par value

cash short purchases allowance dividends

cash over debit memorandum capital stock

2. Ask your students to drill each other on the terms. 3. Have your students divide into teams of 3 or 4 and write the terms on butcher paper. Post the butcher paper in different corners of the room or walls of the room 4. Have your students use the definitions below and run a race to see which team can match the definitions with the terms. An organization with the legal rights of a person, which can be owned by many persons Each unit of ownership in a corporation Total share of ownership in a corporation A business’ printed or catalog price A reduction in the list price granted customers A deduction a vendor allows on the invoice amount to encourage prompt payment A cash discount on purchases taken by a customer A petty cash on hand amount that is less than a recorded amount A petty cash on hand amount that is more than a recorded amount Credit allowed for the purchase price of returned merchandise, resulting in a decrease in the customer’s accounts payable Credit allowed for part of the purchase price of merchandise that is not returned, resulting in a decrease in the customer’s accounts payable A form prepared by the customer showing the price deduction taken by the customer for returns and allowances Corporation in which stock is widely held, has a large market and is usually traded on the New York Stock Exchange or the American Stock Exchange The entity that governs and is responsible for the affairs of a corporation. Members are elected by the stockholders. The amount assigned to each share of stock before it is sold The stock when a corporation issues only one class of capital stock Giving the stockholders’ voting rights to someone else if they Activity 7.2.1 – Identifying Terms

Copyright © Texas Education Agency, 2011. All rights reserved.

ACCOUNTING 1

can not be present Stock that has certain privileges over common stocks. Used to appeal to as many investors as possible Distribution of stock to shareholders

Assessment:  

Observation Quiz on Terms

Define Terms 1.

common stock

2.

proxy

3.

board of directors

4.

preferred stock

5.

debit memorandum

6.

retained earnings

7.

publicly held corporation

8.

dividends

9.

share of stock

10.

corporation

Activity 7.2.1 – Identifying Terms

Copyright © Texas Education Agency, 2011. All rights reserved.

ACCOUNTING 1

Activity 7.2.2 – Analyzing and Journalizing Purchases Discounts Course Title – Accounting I Session Title – Analyze and Journalize Purchases and Cash Payments Activity Purpose – Analyze and journalize purchases discount entries. TEKS Correlations:

2010 TEKS Correlations:

This lesson, as published, correlates to the following TEKS. Any changes/alterations to the activities may result in the elimination of any or all of the TEKS listed. 120.42.C 7.a. follow oral and written instructions; 7.b. develop time management skills by setting priorities for completing work as scheduled; 7.e. perform accounting procedures using manual and automated methods; 7.g. demonstrate use of the numeric keypad by touch

This lesson, as published, correlates to the following TEKS. Any changes/alterations to the activities may result in the elimination of any or all of the TEKS listed. 130.166.C

N/A

TAKS Correlation: MATH Objective 10: The student will demonstrate an understanding of the mathematical processes and tools used in problem solving.

Materials, Equipment and Resources: 

Textbook

Teaching Strategies:   

Observation Demonstration Verbal Drill

Activity 7.2.2 – Analyzing and Journalizing Purchases Discounts

Copyright © Texas Education Agency, 2011. All rights reserved.

ACCOUNTING 1

Activity Outline: 1. Demonstrate calculations of trade discounts. Emphasize that the actual price paid is the amount journalized with trade discounts.

Item

List Price

Black Ink Cartridges White 8 ½ x 11 Paper CD-RWs Laptop Computers

$23.50 ea $2.50 rm $.88 ea $2,250. 00

Numbe r Purcha sed

Actual Trade Price Paid Disco (Amount unt Journalize d) 200 5% =23.50*200* 5% 4,000 6% 400 10

3% 7%

2. Explain cash discounts and the meaning of 2/10, n/30. Discuss why a business gives a business customer a cash discount. 3. Explain the contra account Purchases Discount. Demonstrate the normal balance side of Purchases Discount and why it is a normal credit balance. 4. Model calculations of a purchases discount. You might want to also use “T” accounts to model the transactions. Terms on Invoice 2/10, n/30 n/EOM 3/10, n/30 1/10, n/EOM

Invoice Amount $2,150.00 $909.00 $5,500.00 $427.00

Cash Discount =2150*2%

5. Model analysis of the above purchases discounts for journal entries. For further practice, you might want to ask your students to create the written word problem from the table. When Purchased When Paid Purchase Accts. Accts. Purch. Cash s DR Pay Pay DR Disct. CR CR CR 2,150.00 2,150. 2,150.0 43.00 2,107. 00 0 00 909.00 909.00 5,500.00 5,500. 00 427.00 427.00 Emphasize that Accounts Payable is always debited for the original amount of the invoice; otherwise, there would be no explanation for that amount. Activity 7.2.2 – Analyzing and Journalizing Purchases Discounts

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ACCOUNTING 1

Also emphasize that debits equal credits after each transaction. Mention that Purchases Discount will reduce the total amount of Purchases for the fiscal period. 6. Have students enter these transactions in a Purchases Journal Input Form and a Cash Payments Journal Input Form. 7. Ask students to enter the transactions using computerized accounting software. To make it easier, you might want to have them use the same accounts payable account for all four transactions. This can be one that is already set up in the system. Use the current or appropriate date.

Assessment:  

Observation Graded Assignment Quality Feature

Score

Takes notes Participates in calculations of problems in class Answers verbal drills accurately Transactions entered in the correct forms with the correct amounts and accounts Transactions entered in the computer accurately Completes in a timely manner

Activity 7.2.2 – Analyzing and Journalizing Purchases Discounts

Copyright © Texas Education Agency, 2011. All rights reserved.

ACCOUNTING 1

Activity 7.2.3 – Analyzing and Journalizing Purchases Returns and Allowances Course Title – Accounting I Session Title – Analyze and Journalize Purchases and Cash Payments Activity Purpose – Analyze and journalize purchases returns and allowances OLD TEKS Correlations:

2010 TEKS Correlations:

This lesson, as published, correlates to the following TEKS. Any changes/alterations to the activities may result in the elimination of any or all of the TEKS listed. 120.42.C 7.a. follow oral and written instructions; 7.b. develop time management skills by setting priorities for completing work as scheduled; 7.e. perform accounting procedures using manual and automated methods; 7.g. demonstrate use of the numeric keypad by touch

This lesson, as published, correlates to the following TEKS. Any changes/alterations to the activities may result in the elimination of any or all of the TEKS listed. 130.166.C 7.e. – process sales orders, invoices, returns, and allowances

TAKS Correlation: MATH Objective 10: The student will demonstrate an understanding of the mathematical processes and tools used in problem solving.

Materials, Equipment and Resources: 

Textbook

Teaching Strategies:   

Observation Demonstration Verbal Drill

Activity 7.2.3 – Analyzing and Journalizing Purchases Returns and Allowances

Copyright © Texas Education Agency, 2011. All rights reserved.

ACCOUNTING 1

Activity Outline: 1. Explain the contra Purchases account, Purchases Return and Allowances. Use a visual like a cracked glass and an article of clothing with a missing button or a tear that can be repaired. Explain that these accounts can be separated to have a Purchases Return account and a Purchases Allowances account, but unless the business has a lot of these, it is simpler to put them together. The amount of Purchases and Returns can also be placed directly in the Purchases account, but doing this, makes it harder to locate the amount of purchases returns and allowances for financial decision-making. 2. Demonstrate the normal balance side of this account, using Purchases Discount as an example. Explain the increase and decrease side of the account and its affect on Purchases. Use “T” accounts to demonstrate the sides of the accounts. 3. Demonstrate these transactions: Transaction Purchased merchandise on account from Joyles, Inc., $925.00. Returned broken merchandise to Joyles, Inc. $500.00 Purchased merchandise on account from ABC, Inc. $2,500.00 Returned merchandise from ABC, Inc. $22.50 Paid cash for merchandise $990.00 Returned merchandise from cash transaction $220.00

Account DR Purchases $925.00

Accounts Payable/Joyles, Inc. $500.00 Purchases $2,500.00 Accounts Payable/ABC, Inc. $22.50 Purchases $990.00 Cash $220.00

Account CR Accounts Payable/Joyles, Inc. $925.00 Purchases Ret. and Allow. $500.00 Accounts Payable/ABC, Inc. $2,500.00 Purchases Ret. and Allow. $22.50 Cash $990.00 Purchases Ret. and Allow. $220.00

4. Use the appropriate input forms for journalizing these entries. 5. Enter the information using a computerized software application.

Assessment:  

Observation Graded Assignment Quality Feature

Score

Takes notes Participates in class discussion Participates and appropriately answers verbal drills Correct input forms used Transactions correctly entered in software application Completes in a timely manner

Activity 7.2.3 – Analyzing and Journalizing Purchases Returns and Allowances

Copyright © Texas Education Agency, 2011. All rights reserved.

ACCOUNTING 1

Activity 7.2.4 – Proving Petty Cash Course Title – Accounting I Session Title – Analyze and Journalize Purchases and Cash Payments Activity Purpose – Prove petty cash and journalize transactions. OLD TEKS Correlations:

2010 TEKS Correlations:

This lesson, as published, correlates to the following TEKS. Any changes/alterations to the activities may result in the elimination of any or all of the TEKS listed. 120.42.C 4.f. open and replenish a petty cash fund and journalize transactions; 7.a. follow oral and written instructions; 7.b. develop time management skills by setting priorities for completing work as scheduled; 7.e. perform accounting procedures using manual and automated methods; 7.g. demonstrate use of the numeric keypad by touch

This lesson, as published, correlates to the following TEKS. Any changes/alterations to the activities may result in the elimination of any or all of the TEKS listed. 130.166.C 4.c. – journalize and post entries to establish and replenish petty cash;

TAKS Correlation: MATH Objective 10: The student will demonstrate an understanding of the mathematical processes and tools used in problem solving.

Materials, Equipment and Resources: 

Textbook

Teaching Strategies:   

Observation Demonstration Verbal Drill

Activity 7.2.4 – Proving Petty Cash

Copyright © Texas Education Agency, 2011. All rights reserved.

ACCOUNTING 1

Activity Outline: 1. Review the transaction to establish a petty cash fund. 2. Demonstrate the analysis of journalizing cash payments to replenish petty cash funds. Explain the Cash Short and Over account using a “T” account to demonstrate the increase side for cash over and for cash short. 3. Have students prepare a Petty Cash Report spreadsheet for these replenishing transactions: 

Replenished petty cash $53.00 for cash paid out: Supplies $23.00, Miscellaneous Expense, $30.00 with a beginning petty cash balance of $100.00 and cash on hand of $47.00.



Replenished petty cash $75.00. Cash paid out: Supplies $50.00, Repair Expense, $20.00 with a beginning petty cash balance of $200.00 and the actual count of cash $125.00.



Replenished petty cash $76.00. Cash paid out: Miscellaneous Expense $78.00 with a beginning petty cash balance of $100.00 and the actual count of cash $24.00.

4. Demonstrate journal entries for the above transactions. Have students journalize the above transactions using an input form and computerized accounting software. Transaction 1

2

3

Debits Supplies $23.00 Miscellaneous Expense $30.00 Supplies $50.00 Repair Expense $20.00 Cash Short and Over $5.00 Miscellaneous Expense $78.00

Credits Cash $53.00

Cash $75.00 Cash $76.00 Cash Short and Over $2.00

Assessment:  

Observation Graded Assignment

Quality Feature Participates in class discussion Appropriately answers verbal drills Journal input forms and computer entries accurate Completes in a timely manner

Activity 7.2.4 – Proving Petty Cash

Score

Copyright © Texas Education Agency, 2011. All rights reserved.

ACCOUNTING 1