Special journals: Purchases and cash Payments Chapter 17

Special Journals Journal Transaction Sales Journal Sale of Merchandise on Account Cash Receipts Journal Receipt of Cash (Debit Cash) Purchases Journal Purchase of Any Asset on Account Cash Payments Journal Payment of Cash (Credit Cash)

Journalizing in the Purchases Journal Purchases Journal – a special journal used to record purchase of any asset on account One line Accounts Payable (always), Purchases Debit, General Debit Remember: Resellers do not pay tax on merchandise 5 Steps for merchandise Outlined on pg 483 Extra step for General Debit (account name)

Posting From Purchases Journal to the AP Subsidiary Ledger Post daily from Purchases Journal to AP Subsidiary Similar process compared to posting from Sales Journal Post Reference P# (P for Purchases Journal)

Completing the Purchases Journal Do not post each transaction separately Post totals Accounts Payable (C) and Purchases (D)

Footing, Proving, Totaling and Ruling Single Rule each column Foot the columns Footing – a column total written small and in pencil Prove the journal – Test for the equality of debits and credits. Separate sheet of paper Enter the total amounts, in ink, below the footings Double Rule

Proving at the end of a page Carried Forward No Double Rule Brought Forward

The Cash Payments Journal Cash Payments Journal – A special journal used to record transactions in which cash is paid out Used anytime a company spends cash Purchasing merchandise (cash sales, bankcard sales) Payment to creditors Buying other Assets ??? 3 Accounts Cash, Purchases Discounts and General are the credits General and Accounts Payable debits

Other Cash Payments Payment of Payroll – see pg 493 Use General columns Debit – Salaries expense Credit – Withholding payables Bank Service Charges General Column Debit Miscellaneous Expense

Cash Payments Journal Book Examples Steps go from left to right

Posting from Cash Payments Journal Checks and account numbers Checks for Creditors Account number if you use General columns

Schedule of Accounts Payable Schedule of accounts payable – lists each creditor, the balance and the total due from all creditors Sum on Schedule of AP equals balance in AP controlling account Detects errors in calculations and failing to post Does not detect errors of posting to wrong creditor

Cash Proof Proving cash – the process of verifying that cash recorded in the acct’g records agrees with the amount in the checkbook See page 501 Beginning Cash balance + cash receipts - cash payments Ending Cash balance Compare to check stub balance

Workbook Projects 1,2,3,4,6,8