The purchases journal is used to record credit purchases

The purchases journal is used to record credit purchases
The purchases journal is used to record credit purchases. The cash journal is used to record the cash a business pays out. Glencoe Accounting Glencoe Accounting Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.

Explain the purpose of the purchases and cash payment journals.
Record transactions in the purchases and cash payments journals. Record payroll transactions in the cash payments journal. Post from the purchases and cash payments journals to the general ledger and the accounts payable subsidiary ledger. Total, prove, and rule the purchases and cash payments journals. Prepare a schedule of accounts payable. Prove cash. Glencoe Accounting Glencoe Accounting Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.

Key Term purchases journal Section 17.1 The Purchases Journal
Glencoe Accounting

Using the Purchases Journal
Section 17.1 The Purchases Journal Purchases Journal See page 485 purchases journal A special journal used to record all transactions in which items are bought on account. Glencoe Accounting

Section 17.1 The Purchases Journal Recording the Purchase of Merchandise on Account Business Transaction On December 14 The Starting Line received Invoice 7894 from Pro Runner Warehouse for merchandise purchased on account, $2,300, terms 2/10, n/30. See page 486 Glencoe Accounting

Section 17.1 The Purchases Journal Journalizing Other Purchases on Account Business Transaction On December 15 The Starting Line received Invoice 3417, dated December 13, from Champion Store Supply for store equipment bought on account, $1,200, terms n/30. See page 487 Glencoe Accounting

Posting from the Purchases Journal
Section 17.1 The Purchases Journal Posting from the Purchases Journal See page 488 Glencoe Accounting

Section 17.1 The Purchases Journal Posting from the General Debit Column See page 489 Glencoe Accounting

Section 17.1 The Purchases Journal Totaling, Proving, and Ruling the Purchases Journal See page 489 Glencoe Accounting

Section 17.1 The Purchases Journal Posting the Special Column Totals to the General Ledger See page 490 Glencoe Accounting

Key Terms cash payments journal schedule of accounts payable
The Cash Payments Journal Section 17.2 Key Terms cash payments journal schedule of accounts payable proving cash Glencoe Accounting

Using the Cash Payments Journal
Section 17.2 Payments to creditors for items bought on account Transactions Included in the Cash Payments Journal Payments for various expenses Payments for wages and salaries Cash decreases for bank service charges and bankcard fees cash payments journal A special journal used to record all transactions in which cash is paid out or decreased. Glencoe Accounting

Section 17.2 Cash Payments Journal See page 492 Glencoe Accounting

Section 17.2 Recording the Cash Purchase of an Asset Business Transaction On December 17 The Starting Line paid $1,500 to Keystone Insurance Company for the premium on a six-month insurance policy, Check 1001. See page 493 Glencoe Accounting

Section 17.2 Recording a Cash Purchase of Merchandise Business Transaction On December 19 The Starting Line purchased merchandise from FastLane Athletics for $1,300, Check 1002. See page 493 Glencoe Accounting

Section 17.2 Recording a Payment on Account Business Transaction On December 24 The Starting Line paid $2,254 to Pro Runner Warehouse for merchandise purchased on account, $2,300 less a discount of $46, Check 1003. See page 494 Glencoe Accounting

Section 17.2 Recording Other Cash Payments Business Transaction On December 24 The Starting Line issued Check 1004 for $275 to Dara’s Delivery Service for shipping charges on merchandise purchased from Sports Link Footwear. See page 495 Glencoe Accounting

Section 17.2 Recording Payment of Payroll Business Transaction On December 31 The Starting Line wrote Check 1012 for $2,974 to pay the payroll of $4,000 (gross earnings) for the pay period ended December 31. The following amounts were withheld: Employees’ Federal Income Tax, $640; Employees’ State Income Tax, $80; Social Security Tax, $248; and Medicare Tax, $58. See page 496 Glencoe Accounting

Section 17.2 Recording Bank Service Charges Business Transaction On December 31 The Starting Line recorded a bank service charge for $20 indicated on the bank statement. See page 496 Glencoe Accounting

Section 17.2 Recording Bankcard Fees Business Transaction On December 31 The Starting Line recorded the bankcard fee of $75 that appeared on the bank statement. See page 497 Glencoe Accounting

Posting from the Cash Payments Journal
Section 17.2 Posting from the Cash Payments Journal See page 498 Glencoe Accounting

Section 17.2 Posting from the General Debit Column See page 500 Glencoe Accounting

Section 17.2 Totaling, Proving, and Ruling the Cash Payments Journal The cash payments journal is proven the same way as other special journals. See page 501 Glencoe Accounting

Section 17.2 Proving the Accounts Payable Subsidiary Ledger A schedule of accounts payable is prepared after posting the column totals. schedule of accounts payable A list of all creditors in the accounts payable ledger, the balance in each account, and the total amount owed to all creditors. Glencoe Accounting

Section 17.2 Proving the Accounts Payable Subsidiary Ledger See page 503 Glencoe Accounting

Section 17.2 On the first line, enter the Cash in Bank beginning balance. On the next line, enter the total cash received during the month. Proving Cash Add the first and second lines. Subtract the cash payments for the month. Compare the result to the balance shown on the last check stub in the checkbook. proving cash The process of verifying that cash recorded in the accounting records agrees with the amount entered in the checkbook. Glencoe Accounting

Question 1 A company has these journals: sales, cash receipts, purchases, cash payments, and general. It also has the following ledgers: accounts receivable subsidiary and accounts payable subsidiary. For each of the following transactions, indicate (a) the correct journal and (b) whether the subsidiary ledger is used. purchase for cash purchase on credit payment of accounts payable purchase of equipment on credit cash receipt from customer on account cash discount taken on accounts payable issued a check to pay an accounts payable bank service charges deducted on bank statement (a) cash payments (a) purchases (b) A/P subsidiary ledger (a) cash payments (b) A/P subsidiary ledger (a) purchases (b) A/P subsidiary ledger (a) cash receipts (b) A/R subsidiary ledger (a) cash payments (b) A/P subsidiary ledger (a) cash payments (b) A/P subsidiary ledger (a) cash payments Glencoe Accounting

General Debit __________ General Credit __________
Question 2 Look at the cash payments journal. Several columns contain information on business transactions. Indicate whether you would post only the column total with a (T), post each individual transaction with an (E), or post each to the subsidiary ledger and the column total to the controlling account in the general ledger (B). General Debit __________ General Credit __________ Accounts Payable Debit __________ Purchases Discount Credit __________ Cash in Bank Credit __________ E E B T T Glencoe Accounting

Question 3 You have a transaction that involves credit. Which journal(s) would you use? If credit is being granted to a customer, you would use the sales journal. If credit is being requested from a vendor, you would use the purchases journal. Glencoe Accounting

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The purchases journal is used to record credit purchases

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The purchases journal is used to record credit purchases

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