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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