Cash Payments Journal

Learning Objectives LO8 Record cash payments using a cash payments journal. LO9 Record replenishment of a petty cash fund. 2014 Cengage Learning. All Rights Reserved. Lesson 9-4 Cash Payments Journal LO8 A cash payments journal is a special journal used to record only cash payment transactions. 2014 Cengage Learning. All Rights Reserved. SLIDE 2 Lesson 9-4

Trade Discount LO8 The retail price listed in a catalog or on an Internet site is called a list price. A trade discount is a reduction in the list price granted to a merchandising business. The price after the trade discount has been deducted from the list price is referred to as the net price. 2014 Cengage Learning. All Rights Reserved. SLIDE 3 Lesson 9-4 Cash Discount LO8

A cash discount is a deduction that a vendor allows on an invoice amount to encourage prompt payment. A journal amount column that is not headed with an account title is called a general amount column. 2014 Cengage Learning. All Rights Reserved. SLIDE 4 Lesson 9-4 Cash Payment of an Expense LO8 Advertising Expense November 3. Wrote a check to Kelser Promotions for advertising, $600.00. Check No. 689. 600.00

Cash 600.00 1 Date 2 Account Title 3 Check Number 4 2014 Cengage Learning. All Rights Reserved. Debit 5 Credit SLIDE 5

Lesson 9-4 Buying Supplies for Cash LO8 SuppliesOffice November 6. Wrote a check to Wells Office Supply for store supplies, $56.20. Check No. 690. 56.20 Cash 56.20 1 Date 2 Account Title 3 Check Number

4 2014 Cengage Learning. All Rights Reserved. Debit 5 Credit SLIDE 6 Lesson 9-4 Cash Payments for Purchases LO8 Purchases November 9. Purchased merchandise from Polar Refrigeration for cash, $480.00. Check No. 697.

480.00 Cash 480.00 1 Date 2 Account Title 3 Check Number 4 2014 Cengage Learning. All Rights Reserved. Debit 5 Credit SLIDE 7

Lesson 9-4 Cash Payments on Account with Purchases Discounts LO8 The period of time during which a customer may take a cash discount is called the discount period. When a company that has purchased merchandise on account takes a cash discount, it is called a purchases discount. An account that reduces a related account on a financial statement is called a contra account. 2014 Cengage Learning. All Rights Reserved. SLIDE 8 Lesson 9-4

Cash Payments on Account with Purchases Discounts Accounts Payable November 14. Paid cash on account to Galle Electric, $627.20, covering Purchase Invoice No. 489 for $640.00, less 2% discount, $12.80. Check No. 702. LO8 640.00 Purchases Discount 12.80 Cash 2 Vendor Name 627.20 Purchase Invoice Amount 4

1 Date 3 Check Number Cash Discount 5 2014 Cengage Learning. All Rights Reserved. Purchase Invoice Amount 6 Less the Cash Discount SLIDE 9 Lesson 9-4 Cash Payments on Account without Purchases Discounts November 21. Wrote a check to S&R Imports to pay on account, $2,512.00, covering Purchase Invoice No. 468. Check No. 706.

LO8 Accounts Payable 2,512.00 Cash 2,512.00 2 Vendor Name 1 Date 3 Check Number Total Purchase 4 Invoice Account 2014 Cengage Learning. All Rights Reserved. Total Purchase 5

Invoice Amount SLIDE 10 Lesson 9-4 Replenishing a Petty Cash Fund LO9 November 22. Paid cash to replenish the petty cash fund, $214.82: advertising, $124.00; store supplies, $62.18; miscellaneous, $28.95; cash over, $0.31. Check No. 707. Date Account Title

Check Number Amounts Cash Over is a Credit Total Cash Payment 2014 Cengage Learning. All Rights Reserved. SLIDE 11 Lesson 9-4 Lesson 9-4 Audit Your Understanding 1. What is the net price of an item with a $1,200.00 list price having a 60% trade discount? ANSWER $480.00

2014 Cengage Learning. All Rights Reserved. SLIDE 12 Lesson 9-4 Lesson 9-4 Audit Your Understanding 2. Why would a vendor offer a cash discount to a customer? ANSWER To encourage early payment 2014 Cengage Learning. All Rights Reserved. SLIDE 13 Lesson 9-4 Lesson 9-4 Audit Your Understanding 3. What is recorded in the general amount columns of the cash payments journal?

ANSWER Cash payment transactions that do not occur often 2014 Cengage Learning. All Rights Reserved. SLIDE 14 Lesson 9-4 Lesson 9-4 Audit Your Understanding 4. What is meant by terms of sale 2/10, n/30? ANSWER Two ten means 2% of the invoice amount may be deducted if the invoice is paid within 10 days of the invoice date. Net thirty means that the total invoice amount must be paid within 30 days. 2014 Cengage Learning. All Rights Reserved.

SLIDE 15 Lesson 9-4 Lesson 9-4 Audit Your Understanding 5. When journalizing a cash payment to replenish petty cash, what is entered in the Account Title column of the cash payments journal? ANSWER The titles of the accounts for which the petty cash funds were used 2014 Cengage Learning. All Rights Reserved. SLIDE 16 Lesson 9-4 Lesson 9-4 Audit Your Understanding 6. How is cash short recorded in the account, Cash Short and Over?

ANSWER As a debit 2014 Cengage Learning. All Rights Reserved. SLIDE 17

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