VCE Accounting Unit 4

1. 17.2
PURCHASING
NON-CURRENT ASSETS

2. © Michael Allison, Trinity Grammar School.
Author’s permission required for external use
 A business purchases a new vehicle to use for deliveries for
cash. Which journal would this go in?
17.2 PURCHASING NON-CURRENT ASSETS
Cash receipt Cheque butt
Cash Receipts
Journal
Cash Payments
Journal
Any cash received? Any cash paid?
Credit sale made? Credit purchase of stock made?

3. © Michael Allison, Trinity Grammar School.
Author’s permission required for external use
 A business purchases a new vehicle to use for deliveries on
credit. Which journal would this go in?
17.2 PURCHASING NON-CURRENT ASSETS
Cash receipt Cheque butt
Sales invoice
Purchase
invoice
Cash Receipts
Journal
Cash Payments
Journal
Sales Journal Purchases Journal
Any cash received? Any cash paid?
Credit sale made? Credit purchase of stock made?
Memo General Journal
Any other transaction?

4. © Michael Allison, Trinity Grammar School.
Author’s permission required for external use
 Why doesn’t this go in the Purchases Journal?
 Because this journal is only for credit purchases of stock
 Credit purchases of non-stock items must go in the General
Journal
17.2 PURCHASING NON-CURRENT ASSETS
Memo General Journal
Any other transaction?
Purchase
invoice
Purchases Journal
Credit purchase of stock made?

5. © Michael Allison, Trinity Grammar School.
Author’s permission required for external use
 So when the firm purchases a Non-Current Asset:
Purchase of
Non-Current
Assets
17.2 PURCHASING NON-CURRENT ASSETS
Cash Payments
Journal
General
Journal
For cash… On credit…

6. © Michael Allison, Trinity Grammar School.
Author’s permission required for external use
 Example: on 2 July a business purchased a
photocopier for $5,000 plus $500 GST with cash
(Cheque 33)
 Example: on 3 July a business purchased stock costing
$2,000 plus $200 GST on credit from Deluxe Décor
(Invoice D12)
17.2 PURCHASING NON-CURRENT ASSETS
Cash Payments Journal
Date Details
Cheque
Number
Bank
Discount
Revenue
Creditors
Control
Stock
Control
Sundries GST
Cash Payments Journal
Date Details
Cheque
Number
Bank
Discount
Revenue
Creditors
Control
Stock
Control
Sundries GST
2 Jul Photocopier 17 5500 5000 500
Cash Payments Journal
Date Details
Cheque
Number
Bank
Discount
Revenue
Creditors
Control
Stock
Control
Sundries GST
2 Jul Photocopier 17 5500 5000 500
Cash Payments Journal
Date Details
Cheque
Number
Bank
Discount
Revenue
Creditors
Control
Stock
Control
Sundries GST
2 Jul Photocopier 17 5500 5000 500
Cash Payments Journal
Date Details
Cheque
Number
Bank
Discount
Revenue
Creditors
Control
Stock
Control
Sundries GST
2 Jul Photocopier 17 5500 5000 500
Cash Payments Journal
Date Details
Cheque
Number
Bank
Discount
Revenue
Creditors
Control
Stock
Control
Sundries GST
2 Jul Photocopier 17 5500 5000 500
Cash Payments Journal
Date Details
Cheque
Number
Bank
Discount
Revenue
Creditors
Control
Stock
Control
Sundries GST
2 Jul Photocopier 17 5500 5000 500
Purchases Journal
Date Creditor
Invoice
Number
Stock
Control
GST
Creditors
Control
3 Jul Deluxe Décor D12 2000 200 2200
Purchases Journal
Date Creditor
Invoice
Number
Stock
Control
GST
Creditors
Control
3 Jul Deluxe Décor D12 2000 200 2200
Purchases Journal
Date Creditor
Invoice
Number
Stock
Control
GST
Creditors
Control
3 Jul Deluxe Décor D12 2000 200 2200
Purchases Journal
Date Creditor
Invoice
Number
Stock
Control
GST
Creditors
Control
3 Jul Deluxe Décor D12 2000 200 2200
Purchases Journal
Date Creditor
Invoice
Number
Stock
Control
GST
Creditors
Control
3 Jul Deluxe Décor D12 2000 200 2200
Purchases Journal
Date Creditor
Invoice
Number
Stock
Control
GST
Creditors
Control
3 Jul Deluxe Décor D12 2000 200 2200
Purchases Journal
Date Creditor
Invoice
Number
Stock
Control
GST
Creditors
Control
3 Jul Deluxe Décor D12 2000 200 2200

7. © Michael Allison, Trinity Grammar School.
Author’s permission required for external use
 Example: on 4 July a business purchased a vehicle for $35,000 plus
$3,500 GST on credit from Newport Holden (invoice CE431).
17.2 PURCHASING NON-CURRENT ASSETS
General Journal
Date Account
General Ledger Subsidiary Ledger
Debit Credit Debit Credit
4 Jul Vehicle [A] 35,000
GST Clearing [L] 3,500
Creditor – Newport Holden [L] 38,500
Purchase on credit of vehicle from Newport Holden
(Inv. CE431)
Vehicles [A]
31 Jul Creditor-Newport Holden 35000
GST Clearing [L]
31 Jul Creditor-Newport Holden 3500
Sundry Creditor – Newport Holden [L]
31 Jul Vehicle/GST Clearing 38500
General Journal
Date Account
General Ledger Subsidiary Ledger
Debit Credit Debit Credit
4 Jul Vehicle [A] 35,000
GST Clearing [L] 3,500
Creditor – Newport Holden [L] 38,500
Purchase on credit of vehicle from Newport Holden
(Inv. CE431)
General Journal
Date Account
General Ledger Subsidiary Ledger
Debit Credit Debit Credit
4 Jul Vehicle [A] 35,000
GST Clearing [L] 3,500
Creditor – Newport Holden [L] 38,500
Purchase on credit of vehicle from Newport Holden
(Inv. CE431)
General Journal
Date Account
General Ledger Subsidiary Ledger
Debit Credit Debit Credit
4 Jul Vehicle [A] 35,000
GST Clearing [L] 3,500
Creditor – Newport Holden [L] 38,500
Purchase on credit of vehicle from Newport Holden
(Inv. CE431)
Vehicles [A]
31 Jul Creditor-Newport Holden 35000
General Journal
Date Account
General Ledger Subsidiary Ledger
Debit Credit Debit Credit
4 Jul Vehicle [A] 35,000
GST Clearing [L] 3,500
Creditor – Newport Holden [L] 38,500
Purchase on credit of vehicle from Newport Holden
(Inv. CE431)
General Journal
Date Account
General Ledger Subsidiary Ledger
Debit Credit Debit Credit
4 Jul Vehicle [A] 35,000
GST Clearing [L] 3,500
Creditor – Newport Holden [L] 38,500
Purchase on credit of vehicle from Newport Holden
(Inv. CE431)
GST Clearing [L]
31 Jul Creditor-Newport Holden 3500
General Journal
Date Account
General Ledger Subsidiary Ledger
Debit Credit Debit Credit
4 Jul Vehicle [A] 35,000
GST Clearing [L] 3,500
Creditor – Newport Holden [L] 38,500
Purchase on credit of vehicle from Newport Holden
(Inv. CE431)
General Journal
Date Account
General Ledger Subsidiary Ledger
Debit Credit Debit Credit
4 Jul Vehicle [A] 35,000
GST Clearing [L] 3,500
Creditor – Newport Holden [L] 38,500
Purchase on credit of vehicle from Newport Holden
(Inv. CE431)
Sundry Creditor – Newport Holden [L]
31 Jul Vehicle/GST Clearing 38500
General Journal
Date Account
General Ledger Subsidiary Ledger
Debit Credit Debit Credit
4 Jul Vehicle [A] 35,000
GST Clearing [L] 3,500
Creditor – Newport Holden [L] 38,500
Purchase on credit of vehicle from Newport Holden
(Inv. CE431)
No entry is made in
Creditors Control or the
Subsidiary Ledger. Why?

8. © Michael Allison, Trinity Grammar School.
Author’s permission required for external use
 This is because a firm’s creditors should be divided into two
groups:
Trade Creditors
• Suppliers that provide stock on credit
• Recorded in Creditors Control
• Each trade creditor has a Subsidiary Ledger
Sundry Creditors
• Suppliers that provide goods other than stock on credit
• Sells the business a Non-Current Asset
• Recorded in a separate creditors ledger
• NOT recorded in Creditors Control
17.2 PURCHASING NON-CURRENT ASSETS

9. © Michael Allison, Trinity Grammar School.
Author’s permission required for external use
Purchase of Recorded in Classified as
Trade
Creditor
Creditors
Control
Sundry
Creditor
Sundry
Creditor-
Smith
Creditor-
Jones
General
Ledger
Subsidiary
Ledger
Stock on credit
Non-Current
Asset on credit
Purchases
Journal
General
Journal
17.2 PURCHASING NON-CURRENT ASSETS

10. © Michael Allison, Trinity Grammar School.
Author’s permission required for external use
 Paying back a creditor…
Trade Creditors
Purchases of stock
Sundry Creditor
Purchases of Non-
Current Assets
Cash Flow Statement
Operating Activities
Investing Activities
Financing Activities
Cash Flow Statement
Operating Activities
Investing Activities
Financing Activities
Cash Flow Statement
Operating Activities Payments to
creditors
Investing Activities
Financing Activities
Cash Flow Statement
Operating Activities
Investing Activities Payments to
sundry creditors
Financing Activities
17.2 PURCHASING NON-CURRENT ASSETS

11. © Michael Allison, Trinity Grammar School.
Author’s permission required for external use
TASK
In-class Homework
SQ1 X
SQ2 X
Ex17.1 X
Ex17.2 X