1. ACCOUNTING FOR PURCHASES AND CASH PAYMENTS
CHAPTER TWELVE
ACCOUNTING FOR PURCHASES AND CASH PAYMENTS

2. PURCHASES Merchandise acquired for resale:
Must be items for RESALE
Procedures and documents vary depending on the size of the business.
Can be made “on account” or for cash

3. PURCHASING PROCESS DOCUMENTS
PURCHASE REQUISITION

4. PURCHASE REQUISITION
A form used to request the purchase of merchandise or other property
Can be prepared by any authorized person
One copy to the Purchasing department
One copy to the Accounting department
One copy kept by the department preparing the requisition

5. PURCHASING PROCESS DOCUMENTS
PURCHASE REQUISITION
PURCHASE ORDER

6. PURCHASE ORDER A written order to buy goods from a specific vendor
Purchasing department reviews and approves the purchase requisition and prepares a purchase order:
One to vendor
One to the Accounting department
One kept in the Purchasing department
Copies may also be sent to the receiving area and to the department initiating the purchase

7. PURCHASING PROCESS DOCUMENTS
PURCHASE ORDER
RECEIVING REPORT

8. RECEIVING REPORT Prepared by the receiving clerk
Indicates what has been received:
Including date of receipt and
condition of the goods
This report will be compared with the purchase order and requisition to determine if items ordered were received in good condition before payment is approved.

9. PURCHASING PROCESS DOCUMENTS
RECEIVING REPORT
PURCHASE INVOICE

10. PURCHASE INVOICE Prepared by the seller
As a bill for the merchandise shipped:
Seller calls it a sales invoice.
Buyer calls it a purchase invoice.
Before payment is made, Accounting department compares the purchase invoices with:
Purchase Requisition
Purchase Order
Receiving Report

11. CASH DISCOUNTS
Available if the bill is paid within the discount period
Buyer calls it a Purchase Discount.
Seller calls it a Sales Discount.

12. TRADE DISCOUNTS Often offered by manufacturers and wholesalers
Reduction from the list or catalog price:
Discounts offered to different classes of customers
Buyer and Seller both record the transaction at the NET amount (after the discount).

13. MERCHANDISE PURCHASES ACCOUNTS
PURCHASES DISCOUNTS
PURCHASES RETURNS & ALLOWANCES
FREIGHT-IN

14. The account is debited when merchandise is purchased.
PURCHASES ACCOUNT
Used to record the cost of merchandise purchased
PURCHASES
DR.
CR. +
The account is debited when
merchandise is purchased.

15. The account is only credited during the closing process.
PURCHASES ACCOUNT
Used to record the cost of merchandise purchased
PURCHASES
DR.
CR. +
The account is only credited
during the closing process.

16. Made $100 purchase for cash
GENERAL JOURNAL
DATE
DESCRIPTION
DEBIT PR
CREDIT 1
Purchases 2
Cash 3
Made cash purchase 4 5
Example:
Made $100 purchase for cash 6 7 8 9 10 11

17. What if the purchase had
GENERAL JOURNAL
DATE
DESCRIPTION PR
DEBIT
CREDIT 1
Purchases 2
Accts. Payable/Vendor 3
Made purchase on account 4 5
What if the purchase had
been made on account? 6 7 8 9 10 11

18. account instead of cash.
GENERAL JOURNAL
DATE
DESCRIPTION
DEBIT PR
CREDIT 1
Purchases 2
Accts. Payable/Vendor 3
Made purchase on account 4 5
We would credit the
Accounts Payable
account instead of cash. 6 7 8 9 10 11

19. GENERAL JOURNAL The specific supplier is identified. Purchases
DATE
DESCRIPTION
DEBIT PR
CREDIT 1
Purchases 2
Accts. Payable/Vendor 3
Made purchase on account 4
The specific supplier
is identified. 5 6 7 8 9 10 11

20. PURCHASE RETURNS AND ALLOWANCES
CONTRA-PURCHASES account used to record purchase returns and purchase allowances.
PURCHASES RETURNS & ALLOWANCES
DR.
CR. +
The account is credited for the amount
of returns and allowances.

21. GENERAL JOURNAL Example: Merchandise purchased on account
DATE
DESCRIPTION
DEBIT PR
CREDIT 1 2 3 4
Example:
Merchandise purchased on account
for $200 is defective and is
returned to the supplier. 5 6 7 8 9 10 11

22. Accounts Payable is debited. The specific vendor is identified.
GENERAL JOURNAL
DATE
DESCRIPTION
DEBIT PR
CREDIT
Accts. Payable/Vendor
200 00 1 2 3 4
Accounts Payable is debited.
The specific vendor is identified. 5 6 7 8 9 10 11

23. GENERAL JOURNAL Purchases Returns & Allowances is credited.
DATE
DESCRIPTION
DEBIT PR
CREDIT
Accts. Payable/Vendor
200 00 1 2
Pur. Returns & Allow.
200 00 3
Returned merchandise 4
Purchases Returns & Allowances is credited.
This account will be shown as a deduction
from the Purchases account on the
Income Statement. 5 6 7 8 9 10 11

24. GENERAL JOURNAL Example: If the same merchandise is retained
DATE
DESCRIPTION
DEBIT PR
CREDIT 1 2 3 4
Example:
If the same merchandise is retained
but the supplier grants a price reduction
of $45 because of the defects 5 6 7 8 9 10 11

25. Accounts Payable is debited to reflect the price reduction.
GENERAL JOURNAL
DATE
DESCRIPTION
DEBIT PR
CREDIT
Accts. Payable/Vendor
45 00 1 2 3
Accounts Payable is debited to
reflect the price reduction. 4 5 6 7 8 9 10 11

26. GENERAL JOURNAL Purchases Returns & Allowances is credited.
DATE
DESCRIPTION
DEBIT PR
CREDIT
Accts. Payable/Vendor
45 00 1 2
Pur. Returns & Allow.
45 00 3
Allowance for defective 4
merchandise 5
Purchases Returns & Allowances is credited.
Same as the entry for Returns! 6 7 8 9 10 11

27. PURCHASES DISCOUNTS + PURCHASES DISCOUNTS
CONTRA-PURCHASES account used to record cash discounts allowed on purchases.
PURCHASES DISCOUNTS
DR.
CR. +
The account is credited for the discount granted
by the vendor for prompt payment.

28. GENERAL JOURNAL Example: Merchandise is purchased for $100
DATE
DESCRIPTION
DEBIT PR
CREDIT 1 2 3 4
Example:
Merchandise is purchased for $100
on account with credit terms 2/10, n/30
and payment is made within
the discount period. 5 6 7 8 9 10 11

29. Accounts Payable is debited
GENERAL JOURNAL
DATE
DESCRIPTION
DEBIT PR
CREDIT
Accts. Payable/Vendor
100 00 1 2 3
Accounts Payable is debited
for the entire amount
of the purchase. 4 5 6 7 8 9 10 11

30. the actual amount paid, $98
GENERAL JOURNAL
DATE
DESCRIPTION
DEBIT PR
CREDIT
Accts. Payable/Vendor
100 00 1 2
Cash
98 00 3 4 5
Cash is credited for
the actual amount paid, $98
($100 - $2 discount). 6 7 8 9 10 11

31. Purchase Discounts is credited for the discount amount, $2
GENERAL JOURNAL
DATE
DESCRIPTION
DEBIT PR
CREDIT
Accts. Payable/Vendor
100 00 1 2
Cash
98 00 3
Purchases Discounts
2 00 4
Made payment on account 5 6
Purchase Discounts is credited
for the discount amount, $2
($100 x 2%). 7 8 9 10 11

32. The account is debited for transportation charges.
FREIGHT-IN
ADJUNCT-PURCHASES account used to record transportation charges on merchandise purchases.
FREIGHT-IN
DR.
CR. +
The account is debited for transportation charges.

33. TRANSPORTATION CHARGES
Expressed as FOB (Free on Board)
FOB Shipping Point:
Buyer pays for transportation.
Freight charges are either listed on invoice or sent as a separate bill.
FOB Destination:
Seller pays for transportation.

34. Merchandise was purchased
GENERAL JOURNAL
DATE
DESCRIPTION
DEBIT PR
CREDIT 1 2 3
Example:
Merchandise was purchased
on account for $400 plus
freight charges of $38. 4 5 6 7 8 9 10 11

35. Purchases is debited only for the cost of the merchandise.
GENERAL JOURNAL
DATE
DESCRIPTION
DEBIT PR
CREDIT
Purchases
400 00 1 2 3 4
Purchases is debited only
for the cost of the merchandise. 5 6 7 8 9 10 11

36. for the transportation costs.
GENERAL JOURNAL
DATE
DESCRIPTION
DEBIT PR
CREDIT
Purchases
400 00 1 2
Freight-In
38 00 3 4
Freight-In is debited
for the transportation costs. 5 6 7 8 9 10 11

37. GENERAL JOURNAL Accounts Payable is credited for
DATE
DESCRIPTION
DEBIT PR
CREDIT
Purchases
400 00 1 2
Freight-In
38 00 3
Accts. Payable/Vendor
438 00 4
Made purchase on account 5
Accounts Payable is credited for
the entire purchase price
(merchandise + freight). 6 7 8 9 10 11

38. GENERAL JOURNAL What if the freight charges were
DATE
DESCRIPTION
DEBIT PR
CREDIT 1 2 3
What if the freight charges were
on a separate bill from the
transportation company? 4 5 6 7 8 9 10 11

39. Purchases is again debited for the cost of the merchandise.
GENERAL JOURNAL
DATE
DESCRIPTION
DEBIT PR
CREDIT
Purchases
400 00 1 2 3 4
Purchases is again debited
for the cost of the merchandise. 5 6 7 8 9 10 11

40. Accounts Payable is credited for the amount due to the supplier.
GENERAL JOURNAL
DATE
DESCRIPTION
DEBIT PR
CREDIT
Purchases
400 00 1 2
Accts. Payable/Vendor
400 00 3
Made purchase on account 4
Accounts Payable is credited for
the amount due to the supplier. 5 6 7 8 9 10 11

41. A separate journal entry is made to record the freight charges.
GENERAL JOURNAL
DATE
DESCRIPTION
DEBIT PR
CREDIT
Purchases
400 00 1 2
Accts. Payable/Vendor
400 00 3
Made purchase on account 4
A separate journal entry is made
to record the freight charges. 5 6 7 8 9 10 11

42. Accounts Payable is credited, transportation company.
GENERAL JOURNAL
DATE
DESCRIPTION
DEBIT PR
CREDIT
Purchases
400 00 1 2
Accts. Payable/Vendor
400 00 3
Made purchase on account 4 5
Freight-In
38 00 6
Accts. Payable/Vendor
38 00 7
Freight charges on purchase
Accounts Payable is credited,
but the vendor is the
transportation company. 8 9 10 11

43. GROSS PROFIT Also called Gross Margin
Difference between Net Sales and Cost of Goods Sold
Tells management the amount of sales dollars available to cover expenses, after covering the cost of the goods sold

44. Let’s look at an example.
GROSS PROFIT
FORMULA:
NET SALES
COST OF GOODS SOLD
GROSS PROFIT
Let’s look at an example.

45. EXAMPLE NET SALES COST OF GOODS SOLD GROSS PROFIT $200
During the month, 20 hats are sold for $10 each. The hats were originally purchased for $7.50 each.
NET SALES
COST OF GOODS SOLD
GROSS PROFIT
$200
20 $10 each = $200 in Sales
There were no Sales Returns & Allowances
or Sales Discounts, so NET SALES = $200.

46. EXAMPLE NET SALES COST OF GOODS SOLD GROSS PROFIT $200 $150
During the month, 20 hats are sold for $10 each. The hats were originally purchased for $7.50 each.
NET SALES
COST OF GOODS SOLD
GROSS PROFIT
$200
$150
20 $7.50each = $150

47. EXAMPLE NET SALES COST OF GOODS SOLD GROSS PROFIT $200 $150 $50
During the month, 20 hats are sold for $10 each. The hats were originally purchased for $7.50 each.
NET SALES
COST OF GOODS SOLD
GROSS PROFIT
$200
$150
$50
The Gross Profit on these 20 hats was $50.
This $50 is used to cover expenses.

48. COMPUTATION OF GROSS PROFIT

49. NORTHERN MICRO Let’s compute the Gross Profit. Sales $200,500
Sales Returns & Allowances
1,200
Purchases
105,000
Purchases Returns & Allowances
800
Purchases Discounts
1,000
Freight-In
300
Merchandise Inventory, 1/1/--
26,000
Merchandise Inventory, 12/31/--
18,000

50. COMPUTATION OF GROSS PROFIT
STEP #1: COMPUTE NET SALES.
FORMULA:
SALES RETURNS & ALLOWANCES
SALES

51. This is the price we charged our customers for the merchandise.
Sales
$200,500
Less: Sales returns & allow
$1,200
Net Sales
$199,300
This is the price we charged our
customers for the merchandise.

52. COMPUTATION OF GROSS PROFIT
STEP #2: COMPUTE GOODS AVAILABLE FOR SALE.
FORMULA:
BEGINNING INVENTORY
COST OF GOODS PURCHASED +

53. This is the cost of ALL the goods that were offered for sale.
Sales
$200,500
Less: Sales returns & allow.
$1,200
Net Sales
$199,300
Cost of Goods Sold:
Merchandise Inv., Jan 1
$26,000
Purchases
$105,000
Less:Purch. ret. & allow.
$ 800
Purchases discounts
1,000
1,800
Net purchases
$103,200
Add freight-in
300
Cost of goods purchased
103,500
Goods available for sale
$129,500
This is the cost of ALL the goods
that were offered for sale.

54. COMPUTATION OF GROSS PROFIT
STEP #3: COMPUTE COST OF GOODS SOLD.
FORMULA:
GOODS AVAILABLEFOR SALE
ENDING INVENTORY

55. Out of the $129,500 of merchandise
Sales
$200,500
Less: Sales returns & allow.
$1,200
Net Sales
$199,300
Cost of Goods Sold:
Merchandise Inv., Jan 1
$26,000
Purchases
$105,000
Less:Purchases ret. & allow.
$ 800
Purchases discounts
1,000
1,800
Net purchases
$103,200
Add freight-in
300
Cost of goods purchased
103,500
Goods available for sale
$129,500
Less Merch. Inv, Dec. 31
18,000
Out of the $129,500 of merchandise
available to sell, $18,000 was not sold.

56. From that we can determine that $111,500 of merchandise was sold.
Sales
$200,500
Less: Sales returns & allow.
$1,200
Net Sales
$199,300
Cost of Goods Sold:
Merchandise Inv., Jan 1
$26,000
Purchases
$105,000
Less:Purchases ret. & allow.
$ 800
Purchases discounts
1,000
1,800
Net purchases
$103,200
Add freight-in
300
Cost of goods purchased
103,500
Goods available for sale
$129,500
Less Merch. Inv., Dec. 31
18,000
Cost of Goods Sold
111,500
From that we can determine
that $111,500 of merchandise was sold.

57. COMPUTATION OF GROSS PROFIT
STEP #4: COMPUTE GROSS PROFIT.
FORMULA:
NET SALES
COST OF GOODS SOLD

58. The merchandise was sold
Sales
$200,500
Less: Sales returns & allow.
$1,200
Net Sales
$199,300
Cost of Goods Sold:
Merchandise Inv., Jan 1
$26,000
Purchases
$105,000
Less:Purchases ret. & allow.
$ 800
Purchases discounts
1,000
1,800
Net purchases
$103,200
Add freight-in
300
Cost of goods purchased
103,500
Goods available for sale
$129,500
Less Merch. Inv., Dec. 31
18,000
Cost of Goods Sold
111,500
Gross Profit
87,800
The merchandise was sold
for $87,800 more than its cost.

59. PURCHASES JOURNAL Purchases of MERCHANDISE for resale Only ON ACCOUNT
Cash purchases would be recorded in the Cash Payments Journal.
Single column format
Purchases Debit/Accounts Payable Credit, OR
Three column
Purchases Debit, Freight-In Debit, Accounts Payable Credit

60. For our example, we will use a single column Purchases Journal.
Page 8
Date
Invoice No.
From Whom Purchased PR
Purchases Debit/ Accounts Payable Credit 1 2 3 4
For our example, we will use
a single column Purchases Journal. 5 6 7 8 9 10 11

61. PURCHASES JOURNAL Example: On April 4th, purchased
Page 8
Date
Invoice No.
From Whom Purchased PR
Purchases Debit/ Accounts Payable Credit
20-- 1
Apr 4
631
Compucraft, Inc.
3,300 2 3 4
Example: On April 4th, purchased
merchandise from Compucraft, Inc. $3,300
Invoice no. 631, dated April 2, n/30. 5 6 7 8 9 10 11

62. All purchases transactions
PURCHASES JOURNAL
Page 8
Date
Invoice No.
From Whom Purchased PR
Purchases Debit/ Accounts Payable Credit
20-- 1
Apr 4
631
Compucraft, Inc.
3,300 2 8
927D
Datasoft
2,500 3 11
804
EZX Corp.
8,700 4 17
611
Printpro Corp.
800 5 23
1465
Televax, Inc.
5,300 6 7
All purchases transactions
are journalized in
the same manner. 8 9 10 11

63. General Ledger accounts.
PURCHASES JOURNAL
Page 8
Date
Invoice No.
From Whom Purchased PR
Purchases Debit/ Accounts Payable Credit
20-- 1
Apr 4
631
Compucraft, Inc.
3,300 2 8
927D
Datasoft
2,500 3 11
804
EZX Corp.
8,700 4 17
611
Printpro Corp.
800 5 23
1465
Televax, Inc.
5,300 6
20,600 7
At the end of the month,
the column is totaled,
ruled, and posted to the
General Ledger accounts. 8 9 10 11

64. “P” for Purchases Journal
FOUR-COLUMN ACCOUNT
501
PURCHASES
Account:
Account No.
BALANCE
DATE
ITEM PR
DR.
CR.
DR.
CR.
20--
Apr. 1
Balance
( /)
17,400 30 P8
20,600
38,000
“P” for Purchases Journal

65. A check mark is placed in the
PURCHASES JOURNAL
Page 8
Date
Invoice No.
From Whom Purchased PR
Purchases Debit/ Accounts Payable Credit
20-- 1
Apr 4
631
Compucraft, Inc.
( /)
3,300 2 8
927D
Datasoft
2,500 3 11
804
EZX Corp.
8,700 4 17
611
Printpro Corp.
800 5 23
1465
Televax, Inc.
5,300 6
20,600 7
(501)
(202)
A check mark is placed in the
PR column when posting
is completed. 8 9 10 11

66. The remaining transactions are posted in the same manner.
PURCHASES JOURNAL
Page 8
Date
Invoice No.
From Whom Purchased PR
Purchases Debit/ Accounts Payable Credit
20-- 1
Apr 4
631
Compucraft, Inc.
( /)
3,300 2 8
927D
Datasoft
( /)
2,500 3 11
804
EZX Corp.
( /)
8,700 4 17
611
Printpro Corp.
( /)
800 5 23
1465
Televax, Inc.
( /)
5,300 6
20,600 7
(501)
(202)
The remaining transactions
are posted in the same manner. 8 9 10 11

67. Now let’s look at the posting for a Purchase Return entry.
GENERAL JOURNAL
DATE
DESCRIPTION PR
DEBIT
CREDIT 1
May 4
Accts. Payable/Televax
200 00 2
Purchases Ret. & Allow.
200 00 3
Returned Merchandise 4
Now let’s look at the posting
for a Purchase Return entry. 5 6 7 8 9 10 11

68. GENERAL JOURNAL The $200 debit is posted to the
DATE
DESCRIPTION PR
DEBIT
CREDIT
Accts. Payable/Televax
200 00 1
May 4
202
/( /) 2
Purchases Ret. & Allow.
200 00 3
Returned Merchandise - 4 5
The $200 debit is posted to the
Accounts Payable controlling account
and to the Subsidiary ledger account
for Televax. 6 7 8 9 10 11

69. GENERAL JOURNAL Purchases Returns and Allowances
DATE
DESCRIPTION PR
DEBIT
CREDIT
Accts. Payable/Televax
200 00 1
May 4
202
/( /) 2
Purchases Ret. & Allow.
200 00
501.1 3
Returned Merchandise - 4 5
Purchases Returns and Allowances
is posted in the normal manner.
Its account number is
recorded in the PR column. 6 7 8 9 10 11

70. CASH PAYMENTS JOURNAL Used to record only cash payments transactions
Every transaction in the journal will involve a credit to the Cash account.
Columns are set up in the journal for the most commonly affected accounts in cash payments transactions.

71. Example: Payment of rent, $2,400 on April 2
CASH PAYMENTS JOURNAL
Page 12
Date
Check No.
Account Debited PR
General Debit 1 2 3 4
Example: Payment of rent, $2,400 on April 2 5 6 7 8 9 10 11

72. CASH PAYMENTS JOURNAL All cash payments (except those
Page 12
Date
Check No.
Account Debited PR
General Debit
20-- 1
Apr. 2
307 2 3 4
All cash payments (except those
from Petty Cash) should be made
by check for good internal control. 5 6 7 8 9 10 11

73. CASH PAYMENTS JOURNAL This column is used for two purposes:
Page 12
Date
Check No.
Account Debited PR
General Debit
20-- 1
Apr. 2
307
Rent Expense
2,400 2 3 4
This column is used for two purposes:
1. To identify a supplier name for
any payment on account
2. To enter the appropriate account name
whenever the “General Debit”
column is used 5 6 7 8 9 10 11

74. CASH PAYMENTS JOURNAL Page 12 General Debit Accts. Pay. Debit
Purchases Debit
Purch. Disc. Credit
Cash Credit 1
2,400
2,400 2 3 4 5 6 7 8 9 10 11

75. Example: On April 4 $1,400 of merchandise
CASH PAYMENTS JOURNAL
Page 12
Date
Check No.
Account Debited PR
General Debit
20-- 1
Apr. 2
307
Rent Expense
2,400 2 4
308 3 4
Example: On April 4 $1,400 of merchandise
was purchased for cash. 5 6 7 8 9 10 11

76. CASH PAYMENTS JOURNAL Page 12 General Debit Accts. Pay. Debit
Purchases Debit
Purch. Disc. Credit
Cash Credit 1
2,400
2,400 2
1,400
1,400 3 4 5 6 7 8 9 10 11

77. Example: On April 10 payment was
CASH PAYMENTS JOURNAL
Page 12
Date
Check No.
Account Debited PR
General Debit
20-- 1
Apr. 2
307
Rent Expense
2,400 2 4
308 3 10
309
B.B. Small 4 5
Example: On April 10 payment was
made on account, $4,800. 6 7 8 9 10 11

78. CASH PAYMENTS JOURNAL Page 12 General Debit Accts. Pay. Debit
Purchases Debit
Purch. Disc. Credit
Cash Credit 1
2,400
2,400 2
1,400
1,400 3
4,800
4,800 4 5 6 7 8 9 10 11

79. Example: On April 14 payment was
CASH PAYMENTS JOURNAL
Page 12
Date
Check No.
Account Debited PR
General Debit
20-- 1
Apr. 2
307
Rent Expense
2,400 2 4
308 3 10
309
B.B. Small 4 14
310
Notes Payable
2,000 5
Example: On April 14 payment was
made on a note payable, $2,000. 6 7 8 9 10 11

80. CASH PAYMENTS JOURNAL Page 12 General Debit Accts. Pay. Debit
Purchases Debit
Purch. Disc. Credit
Cash Credit 1
2,400
2,400 2
1,400
1,400 3
4,800
4,800 4
2,000
2,000 5 6 7 8 9 10 11

81. Example: On April 22 owner withdrew
CASH PAYMENTS JOURNAL
Page 12
Date
Check No.
Account Debited PR
General Debit
20-- 1
Apr. 2
307
Rent Expense
2,400 2 4
308 3 10
309
B.B. Small 4 14
310
Notes Payable
2,000 5 22
311
Gary L. Fishel, Drawing
1,600 6
Example: On April 22 owner withdrew
cash for personal use, $1,600. 7 8 9 10 11

82. CASH PAYMENTS JOURNAL Page 12 General Debit Accts. Pay. Debit
Purchases Debit
Purch. Disc. Credit
Cash Credit 1
2,400
2,400 2
1,400
1,400 3
4,800
4,800 4
2,000
2,000 5
1,600
1,600 6 7 8 9 10 11

83. CASH PAYMENTS JOURNAL Example: On April 24 made payment
Page 12
Date
Check No.
Account Debited PR
General Debit
20-- 1
Apr. 2
307
Rent Expense
2,400 2 4
308 3 10
309
B.B. Small 4 14
310
Notes Payable
2,000 5 22
311
Gary L. Fishel, Drawing
1,600 6 24
312
EZX Corp. 7
Example: On April 24 made payment
on account within the discount period. 8 9 10 11

84. CASH PAYMENTS JOURNAL Page 12 General Debit Accts. Pay. Debit
Purchases Debit
Purch. Disc. Credit
Cash Credit 1
2,400
2,400 2
1,400
1,400 3
4,800
4,800 4
2,000
2,000 5
1,600
1,600 6
8,700 87
8,613 7 8 9 10 11

85. CASH PAYMENTS JOURNAL On a daily basis, the amounts in the
Page 12
Date
Check No.
Account Debited PR
General Debit
20-- 1
Apr. 2
307
Rent Expense
2,400 2 4
308 3 10
309
B.B. Small 4 14
310
Notes Payable
2,000 5 22
311
Gary L. Fishel, Drawing
1,600 6 24
312
EZX Corp. 7
On a daily basis, the amounts in the
“General Debit” column are posted. 8 9 10 11

86. CASH PAYMENTS JOURNAL “CP” for Cash Payments journal is entered
Page 12
Date
Check No.
Account Debited PR
General Debit
20-- 1
Apr. 2
307
Rent Expense
521
2,400 2 4
308 3 10
309
B.B. Small 4 14
310
Notes Payable
201
2,000 5 22
311
Gary L. Fishel, Drawing
312
1,600 6 24
312
EZX Corp. 7
“CP” for Cash Payments journal is entered
in the ledger account’s PR column,
and the account number is entered
in the journal’s PR column. 8 9 10 11

87. CASH PAYMENTS JOURNAL At the end of the month, the columns are
Page 12
Date
Check No.
Account Debited PR
General Debit
20-- 1
Apr. 2
307
Rent Expense
521
2,400 2 4
308 3 10
309
B.B. Small 4 14
310
Notes Payable
201
2,000 5 22
311
Gary L. Fishel, Drawing
312
1,600 6 24
312
EZX Corp. 7
6,000
At the end of the month, the columns are
totaled, equality of debits and credits
is verified, and totals are posted
to the General Ledger. 8 9 10 11

88. CASH PAYMENTS JOURNAL 20,900 20,900 6,000 + 13,500 + 1,400 87 + 20,813
Page 12
General Debit
Accts. Pay. Debit
Purchases Debit
Purch. Disc. Credit
Cash Credit 1
2,400
2,400 2
1,400
1,400 3
4,800
4,800 4
2,000
2,000 5
1,600
1,600 6
8,700 87
8,613 7
6,000
13,500
1,400 87
20,813 8 9
6,000 +
13,500 +
1,400
87 +
20,813 10 =
20,900 =
20,900 11

89. Check mark indicates the column should not be posted.
CASH PAYMENTS JOURNAL
Page 12
General Debit
Accts. Pay. Debit
Purchases Debit
Purch. Disc. Credit
Cash Credit 1
2,400
2,400 2
1,400
1,400 3
4,800
4,800 4
2,000
2,000 5
1,600
1,600 6
8,700 87
8,613 7
6,000
13,500
1,400 87
20,813 8
( /) 9
Check mark indicates the
column should not be posted. 10 11

90. Account numbers indicate
CASH PAYMENTS JOURNAL
Page 12
General Debit
Accts. Pay. Debit
Purchases Debit
Purch. Disc. Credit
Cash Credit 1
2,400
2,400 2
1,400
1,400 3
4,800
4,800 4
2,000
2,000 5
1,600
1,600 6
8,700 87
8,613 7
6,000
13,500
1,400 87
20,813 8
( /)
(202)
(501)
(501.2)
(101) 9
Account numbers indicate
the totals were posted. 10 11

91. Transactions affecting the Accounts Payable ledger are posted daily.
CASH PAYMENTS JOURNAL
Page 12
Date
Check No.
Account Debited PR
General Debit
20-- 1
Apr. 2
307
Rent Expense
521
2,400 2 4
308 3 10
309
B.B. Small 4 14
310
Notes Payable
201
2,000 5 22
311
Gary L. Fishel, Drawing
312
1,600 6 24
312
EZX Corp. 7
6,000 8
Transactions affecting the
Accounts Payable ledger are posted daily. 9 10 11

92. Check mark is entered to indicate the transaction has been posted.
CASH PAYMENTS JOURNAL
Page 12
Date
Check No.
Account Debited PR
General Debit
20-- 1
Apr. 2
307
Rent Expense
521
2,400 2 4
308 3 10
309
B.B. Small
( /) 4 14
310
Notes Payable
201
2,000 5 22
311
Gary L. Fishel, Drawing
312
1,600 6 24
312
EZX Corp.
( /) 7
6,000 8
Check mark is entered to indicate the
transaction has been posted. 9 10 11

93. CASH PAYMENTS JOURNAL Check mark is also entered for transactions
Page 12
Date
Check No.
Account Debited PR
General Debit
20-- 1
Apr. 2
307
Rent Expense
521
2,400 2 4
308
( /) 3 10
309
B.B. Small
( /) 4 14
310
Notes Payable
201
2,000 5 22
311
Gary L. Fishel, Drawing
312
1,600 6 24
312
EZX Corp.
( /) 7
6,000 8
Check mark is also entered for transactions
that do not require individual postings. 9 10 11

94. ACCOUNTS PAYABLE LEDGER
A separate “subsidiary” ledger
Individual accounts for each supplier
Often numbered
Filed either alphabetically or numerically
Accounts Payable account in the general ledger is the “controlling account”

95. SCHEDULE OF ACCOUNTS PAYABLE
Prepared to verify that the sum of the accounts payable ledger balances equals the Accounts Payable balance
Listing of suppliers and their balances
Usually prepared at the end of the month
Total of the balances listed is compared with the balance in the Accounts Payable account

96. Northern Micro Schedule of Accounts Payable April 30, 20--
Compucraft, Inc.
$3,300
Datasoft
2,500
Printpro Corp.
800
Televax, Inc.
5,300
$11,900
This should be the balance in the
Accounts Payable controlling account.