1. Learning Objectives © 2015 Cengage Learning. All Rights Reserved. LO7Journalize departmental cash payments using a cash payments journal. LO8Post cash payments to an accounts payable ledger and a general ledger. LESSON1-3 Journalizing and Posting Cash Payments

2. © 2015 Cengage Learning. All Rights Reserved. Departmental Cash Payments ●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. SLIDE 2 LO7 Lesson 1-3 © 2015 Cengage Learning. All Rights Reserved.

3. Journalizing a Purchases Discount LO7 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. Lesson 1-3 SLIDE 3 © 2015 Cengage Learning. All Rights Reserved. 1 1 2 2 3 3 4 4 5 5 6 6 DateVendor Name Check Number Debit Discount Check Amount

4. © 2015 Cengage Learning. All Rights Reserved. Taking Advantage of Purchases Discounts (after a Purchase Return or Allowance) LO7 Lesson 1-3 SLIDE 4 © 2015 Cengage Learning. All Rights Reserved. The source document for this transaction is a check. Net 302% Ten

5. © 2015 Cengage Learning. All Rights Reserved. Journalizing a Cash Payment with a Discount, After a Purchases Return or Allowance LO7 May 3. Paid cash on account to Teton Seating Co., $629.16, covering Purchase Invoice #670 for $824.00, less Debit Memorandum #28 for $182.00, and less 2% discount, $12.84. Check #733. Lesson 1-3 SLIDE 5 © 2015 Cengage Learning. All Rights Reserved. 1 1 2 2 3 3 4 4 5 5 6 6 DateVendor Name Check Number Debit Discount Check Amount

6. © 2015 Cengage Learning. All Rights Reserved. Journalizing “Simple” Cash Payments (no discounts, returns & allowances) LO7 May 4. Paid cash to Jenkins Co. for supplies, $214.00. Check #734 May 5. Paid cash to Rackley Properties for rent, $1800.00. Check #735 May 6. Paid cash to GH Patrick Industries for grill accessories, $152.60. Check #736 Lesson 1-3 SLIDE 6 © 2015 Cengage Learning. All Rights Reserved. 1 1 2 2 3 3 4 4 5 5 DateAccount Title Check Number Debit Check Amount

7. © 2015 Cengage Learning. All Rights Reserved. Cash Payment to Replenish Petty Cash ●An amount of cash kept on hand and 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. LO7 Lesson 1-3 SLIDE 7 © 2015 Cengage Learning. All Rights Reserved.

8. Journalizing Cash Payments to Replenish Petty Cash LO7 May 31. Paid cash to replenish the petty cash fund $120.70: supplies, $35.75; advertising expense – grills, $50.00; miscellaneous expense, $34.95. Check #742 Lesson 1-3 SLIDE 8 © 2015 Cengage Learning. All Rights Reserved. 1 1 2 2 3 3 4 4 5 5 DateAccount Title Check Number Debit Check Amount

9. © 2015 Cengage Learning. All Rights Reserved. Posting from a Cash Payments Journal LO8 Lesson 1-3 SLIDE 9 © 2015 Cengage Learning. All Rights Reserved. The accounting procedures for posting from a cash payments journal are the same as those followed for posting from the purchases journal. Vendor Account Post to Vendor Account Column Total Account 1 1 3 3 4 4 2 2

10. © 2015 Cengage Learning. All Rights Reserved. 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? SLIDE 10 ANSWER Accounts Payable is debited; Cash and Purchases Discount—Furniture are credited. Lesson 1-3 © 2015 Cengage Learning. All Rights Reserved.

11. Lesson 1-3 Audit Your Understanding 2.Where are cash payments affecting accounts that are not listed in the column headings recorded? SLIDE 11 ANSWER In the General Debit and Credit columns of the cash payments journal. Lesson 1-3 © 2015 Cengage Learning. All Rights Reserved.

12. Lesson 1-3 Audit Your Understanding 3.Why is a petty cash fund always replenished on the last day of a fiscal period? SLIDE 12 ANSWER To ensure that all expenses are recorded during the fiscal period in which they occurred. Lesson 1-3 © 2015 Cengage Learning. All Rights Reserved.