Purchase Requisition-Form used to request the purchase of assets. Authorized person prepares and sends form to the purchasing department. Purchase Order-Written order to buy goods from a specific vendor. Receiving Report-is prepared when goods are received from vendor. Cash and trade discounts-Cash discounts are available if the bill is paid within the discount period.
Trade discounts are percentage reductions from the total amount of the invoice.
Purchases Account Used to record the cost of merchandise purchased. The amount of each purchase is debit to this account. Purchases Returns and Allowances A contra-purchases account used to record purchases returns and allowances. Reported as a deduction from Purchases on the income statement. The amount of each purchase returned or allowance grated is credited to the account.