Download 3.01 part 2

LESSON 1-3
Journalizing and Posting
Cash Payments
CENTURY 21 ACCOUNTING © Thomson/South-Western
2
CASH PAYMENTS JOURNAL
All cash payments are recorded in the cash payments journal
A special journal used to record only cash payment transactions is
called a cash payments journal
 Checks are the source documents for most cash payments
The cash payments journal contains columns for general journal
transactions, accounts payable, purchases discount and cash
A journal amount column that is not headed with an account title is
called a general amount column
CENTURY 21 ACCOUNTING © Thomson/South-Western
LESSON 9-2
3
Cash Payments on Account
 Purchases on account are expected to be paid within the
stated credit period
 A seller may encourage early payment by allowing a
deduction from the invoice amount
 A deduction that a vendor allows on the invoice amount to
encourage prompt payment is called a cash discount
 A cash discount on purchases taken by a customer is
called a purchases discount
CENTURY 21 ACCOUNTING © Thomson/South-Western
LESSON 1-3
4
Purchases Discounts
 Purchases discounts are usually stated as a
percentage
 2/10, n/30
 2/10 - 2% of the invoice amount may be deducted from
the amount due if payment is made within 10 days of
the invoice date
 n/30 – payment of the total invoice amount must be
made within 30 days of the invoice date
 A purchases discount reduces the net amount of
cash paid for a purchase
 Purchases discounts are in the cost of
merchandise division on the income statement
CENTURY 21 ACCOUNTING © Thomson/South-Western
LESSON 1-3
5
JOURNALIZING A
PURCHASES DISCOUNT
page 19
June 1. Paid cash on account to AudioMax, $514.50, covering
Purchase Invoice No. 331 for surround sound audio equipment for
$525.00, less 2% discount, $10.50. Check No. 315.
1
2
3
1. Write the date.
2. Enter vendor name.
3. Record the check number.
4
5
6
4. Write the debit amount.
5. Record the discount amount.
6. Enter the credit amount.
CENTURY 21 ACCOUNTING © Thomson/South-Western
LESSON 1-3
6
TAKING A DISCOUNT AFTER A
PURCHASE RETURN
page 20
June 2. Paid cash on account to Western Digital Systems, $781.55, covering
Purchase Invoice No. 336 for video equipment for $845.00, less Debit
Memorandum No. 22 for $47.50, and less 2% discount, $15.95. Check No. 316.
Amount owed on invoice:
Original Purchase Invoice
Amount (P336)
$845.00
Purchases discount:
Purchase Invoice Amount
After Return
$797.50
Purchases Return
(DM22)
–
47.50
–
×
×
Purchases
Discount Rate
2%
Amount due after purchases discount:
Purchase Invoice Amount
Purchases
–
After Return
Discount
–
$797.50
$15.95
CENTURY 21 ACCOUNTING © Thomson/South-Western
=
=
=
=
=
=
Purchase Invoice
Amount After Return
$797.50
Purchases
Discount
$15.95
Total
Amount Due
$781.55
LESSON 1-3
7
RECORDING ENTRIES IN A CASH
PAYMENTS JOURNAL
page 21
June 2. Paid cash for administrative supplies, $136.00. Check No. 317.
1
1.
2.
3.
4.
5.
2
3
4
5
Write the date.
Enter the account title.
Record the check number.
Write the debit amount.
Enter the credit amount.
CENTURY 21 ACCOUNTING © Thomson/South-Western
LESSON 1-3
8
CASH PAYMENT TO REPLENISH
PETTY CASH
page 22
June 30. Paid cash to replenish the petty cash fund, $402.00:
administrative supplies, $300.00; advertising expense—video, $56.00;
miscellaneous expense, $46.00. Check No. 350.
2
1
3
1. Write the date.
2. Enter account titles.
3. Record the check number.
4
5
4. Write the debit amounts.
5. Enter the credit amount.
CENTURY 21 ACCOUNTING © Thomson/South-Western
LESSON 1-3
9
POSTING FROM A CASH
PAYMENTS JOURNAL
CENTURY 21 ACCOUNTING © Thomson/South-Western
page 23
LESSON 1-3
10
TERMS REVIEW
page 24
 cash discount
 purchases discount
 petty cash
CENTURY 21 ACCOUNTING © Thomson/South-Western
LESSON 1-3