Journalizing Posting 1 3 and Cash Payments Learning

Journalizing Posting 1 -3 and Cash Payments Learning Objectives LESSON LO 7 Journalize departmental cash payments using a cash payments journal. LO 8 Post cash payments to an accounts payable ledger and a general ledger. © 2015 Cengage Learning. All Rights Reserved.

Lesson 1 -3 Departmental Cash Payments LO 7 ● Checks are the source documents for most cash payments. ● A deduction that a vendor allows on the invoice amount to encourage prompt payment is called a cash discount. ● When a company that has purchased merchandise on account takes a cash discount, this is referred to as a purchases discount. © 2015 Cengage Learning. All Rights Reserved. SLIDE 2

Lesson 1 -3 Journalizing a Purchases Discount LO 7 May 2. Paid cash on account to Glass Source, $901. 60, covering Purchase Invoice No. 672 for $920. 00, less 2% discount, $18. 40. Check No. 732. 3 1 Date 2 Vendor Name Check Number 4 Debit © 2015 Cengage Learning. All Rights Reserved. 5 Discount 6 Check Amount SLIDE 3

Lesson 1 -3 Taking a Discount after a Purchase Return LO 7 The source document for this transaction is a check. © 2015 Cengage Learning. All Rights Reserved. SLIDE 4

Lesson 1 -3 Cash Payment to Replenish Petty Cash LO 7 ● An amount of cash kept on hand used for making small payments is called petty cash. ● The petty cash fund is replenished on the last business day of each fiscal period to ensure that all expenses are recorded during the fiscal period in which they occurred. [Matching Expenses with Revenues] ● To replenish petty cash, a check is written for the amount spent from the fund. © 2015 Cengage Learning. All Rights Reserved. SLIDE 5

Lesson 1 -3 Posting from a Cash Payments Journal LO 8 2 1 Post to Vendor Account 3 Column Total 4 Account The accounting procedures for posting from a cash payments journal are the same as those followed for posting from the purchases journal. © 2015 Cengage Learning. All Rights Reserved. SLIDE 6

Lesson 1 -3 Audit Your Understanding 1. Which general ledger accounts are affected, and how, by a cash payment on account for outdoor furniture that includes a purchases discount? ANSWER Accounts Payable is debited; Cash and Purchases Discount—Furniture are credited. © 2015 Cengage Learning. All Rights Reserved. SLIDE 7

Lesson 1 -3 Audit Your Understanding 2. Where are cash payments affecting accounts that are not listed in the column headings recorded? ANSWER In the General Debit and Credit columns of the cash payments journal. © 2015 Cengage Learning. All Rights Reserved. SLIDE 8

Lesson 1 -3 Audit Your Understanding 3. Why is a petty cash fund always replenished on the last day of a fiscal period? ANSWER To ensure that all expenses are recorded during the fiscal period in which they occurred. © 2015 Cengage Learning. All Rights Reserved. SLIDE 9