Transcript
LESSON
9-4 Accounting for Cash Payments
LO8 Record cash payments using a cash
payments journal.
LO9 Record replenishment of a petty cash fund.
Learning Objectives
Cash Payments Journal
A cash payments journal is a special journal used
to record only cash payment transactions.
LO8
SLIDE 2
Lesson 9-4
Trade Discount
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.
LO8
SLIDE 3
Lesson 9-4
Cash Discount
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.
LO8
SLIDE 4
Lesson 9-4
Cash Payment of an Expense
November 3. Wrote a check to Kelser Promotions for advertising, $600.00. Check No. 689.
Advertising Expense
600.00
Cash
600.00
3
Check Number
1
Date
5
Credit
4
Debit
2
Account Title
LO8
SLIDE 5
Lesson 9-4
Buying Supplies for Cash
November 6. Wrote a check to Wells Office Supply for store supplies, $56.20. Check No. 690.
Supplies—Office
56.20
Cash
56.20
3
Check Number
1
Date
5
Credit
4
Debit
2
Account Title
LO8
SLIDE 6
Lesson 9-4
Cash Payments for Purchases
November 9. Purchased merchandise from Polar Refrigeration for cash, $480.00. Check No. 697.
Purchases
480.00
Cash
480.00
3
Check Number
1
Date
5
Credit
4
Debit
2
Account Title
LO8
SLIDE 7
Lesson 9-4
Cash Payments on Account with Purchases Discounts
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.
LO8
SLIDE 8
Lesson 9-4
Cash Payments on Account with Purchases Discounts
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.
3
Check
Number
1
Date
5
Cash Discount
4
Purchase Invoice Amount
2
Vendor
Name
Accounts Payable
640.00
Purchases Discount
12.80
6
Purchase Invoice Amount
Less the Cash Discount
Cash
627.20
LO8
SLIDE 9
Lesson 9-4
Cash Payments on Account without Purchases Discounts
Accounts Payable
2,512.00
Cash
2,512.00
3
Check
Number
1
Date
5
Total Purchase Invoice Amount
4
Total Purchase
Invoice Account
2
Vendor Name
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
SLIDE 10
Lesson 9-4
Replenishing a Petty Cash Fund
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.
Check
Number
Date
Cash Over is
a Credit
Amounts
Account
Title
Total Cash
Payment
LO9
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
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
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
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.
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
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
SLIDE 17
Lesson 9-4
