LESSON 9 2 Journalizing Cash Payments Using a

LESSON 9 -2 Journalizing Cash Payments Using a Cash Payments Journal CENTURY 21 ACCOUNTING © Thomson/South-Western

2 CASH PAYMENTS JOURNAL Name of vendor – paying on account. or account title paid; ex. – rent expense Amount when paying for an expense; purchases, supplies, etc. CENTURY 21 ACCOUNTING © Thomson/South-Western Amount paying on account. page 242 Discount for paying early on account; determined by “terms” on invoice; 2/10, n/30 This column is ALWAYS used; Total amount paid, minus any discounts LESSON 9 -2

3 CASH PAYMENT OF AN EXPENSE page 243 November 2. Paid cash for advertising, $150. 00. Check No. 292. 1 1. 2. 3. 4. 5. 2 3 4 5 Write the date. Write the account title. Write the check number. Write the debit amount. Write the credit amount. CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 9 -2

4 BUYING SUPPLIES FOR CASH page 243 November 5. Paid cash for office supplies, $94. 00. Check No. 293. 1 1. 2. 3. 4. 5. 2 3 4 5 Write the date. Write the account title. Write the check number. Write the debit amount. Write the credit amount. CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 9 -2

5 CASH PAYMENTS FOR PURCHASES page 244 November 7. Purchased merchandise for cash, $600. Check No. 301. 2 1 1. 2. 3. 4. 5. 3 4 5 Write the date. Write the account title. Write the check number. Write the debit amount. Write the credit amount. CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 9 -2

6 TRADE DISCOUNTS n List Price – the retail price listed in a catalog or on an Internet site. n aka “suggested retail price” n Trade Discount – a reduction in the list price granted to customers. n Often given to those who purchase large quantities or who frequently purchase. n 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. ) n NO journal entry needed for a trade discount. CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 9 -2

7 Trade Discount - example Example of Trade Discount: November 6, Paid cash to Vendors R Us for merchandise, with a list price of $1850. 00 less 50% trade discount. CASH PAYMENTS JOURNAL 1 2 PAGE 1 3 4 ACCOUNTS GENERAL DATE 1 Nov. ACCOUNT TITLE 6 Purchases CK. POST. NO. REF. 301 2 CENTURY 21 ACCOUNTING © Thomson/South-Western DEBIT 925. 00 CREDIT PAYABLE CASH DEBIT CREDIT 925. 00 1 2 LESSON 9 -2

8 PURCHASE DISCOUNTS n Stated as a % n Deducted from the invoice amount n Terms of sale, example: 2/10, n/30 n 2% discount if paid within 10 days of the invoice date n N = net amount (total invoice amount) due within 30 days n Classification – a Contra cost account n Has the opposite normal balance side of its related acct. , Purchases n Reduces the Purchases account n See pg. 245 CENTURY 21 ACCOUNTING © Thomson/South-Western Purchase Disc. LESSON 9 -2

9 CASH PAYMENTS ON ACCOUNT WITH PURCHASES DISCOUNTS 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. 5 1 1. 2. 3. 4. 5. 6. 2 3 page 245 6 4 Write the date. Write the account title of the vendor. Write the check number. Write the debit amount. Write the credit amount. CENTURY 21 ACCOUNTING © Thomson/South-Western 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 1. 2. 3. 4. 5. 2 3 4 5 Write the date. Write the vendor account title. Write the check number. Write the debit amount. Write the credit amount. CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 9 -2

11 TERMS REVIEW n n n n page 247 cash payments journal cash discount purchases discount general amount column list price trade discount contra account CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 9 -2