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Journalizing Cash Payments Using a Cash Payments Journal

Learn how to journalize cash payments for purchases, expenses, and accounts using a cash payments journal. Understand trade and purchase discounts and their impact on the journal entries.

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Journalizing Cash Payments Using a Cash Payments Journal

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  1. LESSON 9-2 Journalizing Cash Payments Using a Cash Payments Journal

  2. CASH PAYMENTS JOURNAL page 242 Name of vendor – paying on account. or account title paid; ex. – rent expense Amount when paying for an expense; purchases, supplies, etc. Discount for paying early on account; determined by “terms” on invoice; 2/10, n/30 Amount paying on account. This column is ALWAYS used; Total amount paid, minus any discounts LESSON 9-2

  3. 1 2 3 4 5 CASH PAYMENT OF AN EXPENSE page 243 November 2. Paid cash for advertising, $150.00. Check No. 292. 1. Write the date. 2. Write the account title. 3. Write the check number. 4. Write the debit amount. 5. Write the credit amount. LESSON 9-2

  4. BUYING SUPPLIES FOR CASH page 243 November 5. Paid cash for office supplies, $94.00. Check No. 293. 1 2 3 4 5 1. Write the date. 2. Write the account title. 3. Write the check number. 4. Write the debit amount. 5. Write the credit amount. LESSON 9-2

  5. CASH PAYMENTS FOR PURCHASES page 244 November 7. Purchased merchandise for cash, $600.00. Check No. 301. 2 1 3 4 5 1. Write the date. 2. Write the account title. 3. Write the check number. 4. Write the debit amount. 5. Write the credit amount. LESSON 9-2

  6. TRADE DISCOUNTS • List Price – the retail price listed in a catalog or on an Internet site. • aka “suggested retail price” • Trade Discount – a reduction in the list price granted to customers. • Often given to those who purchase large quantities or who frequently purchase. • When a trade discount is given, the seller’s invoice shows the actual amount charged. (The trade discount has already been given, see pg. 244.) • NO journal entry needed for a trade discount. LESSON 9-2

  7. Trade Discount - example LESSON 9-2

  8. PURCHASE DISCOUNTS • Stated as a % • Deducted from the invoice amount • Terms of sale, example: 2/10, n/30 • 2% discount if paid within 10 days of the invoice date • N = net amount (total invoice amount) due within 30 days • Classification – a Contra cost account • Has the opposite normal balance side of its related acct., Purchases • Reduces the Purchases account • See pg. 245 Purchase Disc. LESSON 9-2

  9. 5 6 CASH PAYMENTS ON ACCOUNT WITH PURCHASES DISCOUNTS page 245 November 8. Paid cash on account to Gulf Craft Supply, $488.04, covering Purchase Invoice No. 82 for $498.00, less 2% discount, $9.96. Check No. 302. 1 2 4 3 1. Write the date. 2. Write the account title of the vendor. 3. Write the check number. 4. Write the debit amount. 5. Write the credit amount. 6. Write the credit amount. LESSON 9-2

  10. CASH PAYMENTS ON ACCOUNT WITH PURCHASES DISCOUNTS page 246 November 13. Paid cash on account to American Paint, $2,650.00, covering Purchase Invoice No. 77. Check No. 303. 1 2 4 5 3 1. Write the date. 2. Write the vendor account title. 3. Write the check number. 4. Write the debit amount. 5. Write the credit amount. LESSON 9-2

  11. TERMS REVIEW page 247 • cash payments journal • cash discount • purchases discount • general amount column • list price • trade discount • contra account LESSON 9-2

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