LESSON 9-2

1. LESSON 9-2 Journalizing Cash Payments Using a Cash Payments Journal Original created by M.C. McLaughlin, Thomson/South-Western Modified by Deborah L. Burns, Johnston County Schools, West Johnston High School

2. CASH PAYMENTS JOURNAL page 242 • A special journal used to record only cash payment transactions is called a cash payments journal • 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 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 • The retail price listed in a catalog or on an Internet site is called a list price • A reduction in the list price granted to customers is called a trade discount. • When a trade discount is granted, the seller’s invoice shows the actual amount charged (less the trade discount). The amount charged is the invoice amount LESSON 9-2

6. CASH PAYMENTS FOR PURCHASES page 244 November 7. Purchased merchandise for cash, $600.00. (Original list price $1500 less a 60% trade discount.) 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

7. CASH PAYMENTS ON ACCOUNT WITH PURCHASES DISCOUNTS • 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 • An account that reduces a related account on a financial statement is called a contra account • Purchases discount is a contra account to Purchases • The normal balance for contra accounts are opposite the normal balances of their related accounts LESSON 9-2

8. CASH PAYMENTS ON ACCOUNT WITH PURCHASES DISCOUNTS • A cash discount is stated as a percentage deducted from the nvoice amount • 2/10, n/30 – means 2% of the invoice amount may be deducted if the invoice is paid within 10 days of the invoice • Purchases discounts are recorded in a general ledger account titled Purchases Discount 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 WITHOUT 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