1. CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 9-2 Journalizing Cash Payments Using a Cash Payments Journal

2. CENTURY 21 ACCOUNTING © Thomson/South-Western 2 LESSON 9-2 CASH PAYMENTS JOURNAL page 242 Cash Payments Journal: a special journal used to record only cash payment transactions. Cash Discount: a deduction that a vendor allows on the invoice amount to encourage prompt payment.

3. CENTURY 21 ACCOUNTING © Thomson/South-Western 3 LESSON 9-2 CASH PAYMENTS JOURNAL page 242 Purchases Discount: a cash discount on purchases taken by a customer. Customer pays less than the invoice amount previously recorded in the purchases account. General Amount Column: a journal amount column that is not headed with an account title. (General Debit & General Credit)

4. CENTURY 21 ACCOUNTING © Thomson/South-Western 4 LESSON 9-2 CASH PAYMENT OF AN EXPENSE page 243 November 2. Paid cash for advertising, $150.00. Check No. 292. 1.Write the date. 2.Write the account title. 3.Write the check number. 4.Write the debit amount. 5.Write the credit amount. 12345

5. CENTURY 21 ACCOUNTING © Thomson/South-Western 5 LESSON 9-2 BUYING SUPPLIES FOR CASH page 243 November 5. Paid cash for office supplies, $94.00. Check No. 293. 1.Write the date. 2.Write the account title. 3.Write the check number. 4.Write the debit amount. 5.Write the credit amount. 12345

6. CENTURY 21 ACCOUNTING © Thomson/South-Western CASH PAYMENTS FOR PURCHASES Trade Discount Trade Discount: a reduction in the list price granted to customers List Price: the retail price listed in a catalog or on an Internet site (suggested by manufacturers) Invoice Amount: the amount after the trade discount has been deducted from the list price 6 LESSON 9-2

7. CENTURY 21 ACCOUNTING © Thomson/South-Western 7 LESSON 9-2 CASH PAYMENTS FOR PURCHASES page 244 November 7. Purchased merchandise for cash, $600.00. Check No. 301. 1.Write the date. 2.Write the account title. 3.Write the check number. 4.Write the debit amount. 5.Write the credit amount. 1 2 345

8. CENTURY 21 ACCOUNTING © Thomson/South-Western CASH PAYMENTS FOR PURCHASES Step 1: Total List Price x Trade Discount Rate = Trade Discount $1,500.00 60% $900.00 Step 2: Total List Price – Trade Discount = Invoice Amount $1,500.00 $900.00 $600.00 8 LESSON 9-2

9. CENTURY 21 ACCOUNTING © Thomson/South-Western 9 LESSON 9-2 CASH PAYMENTS ON ACCOUNT WITH PURCHASES DISCOUNTS page 245 November 8. Paid cash on account to Gulf Craft Supply, $488.04, covering Purchase Invoice No. 82 for $498.00, less 2% discount, $9.96. Check No. 302. 1.Write the date. 2.Write the account title of the vendor. 3.Write the check number. 4.Write the debit amount. 5.Write the credit amount. 12 3 4 6.Write the credit amount. 65

10. CENTURY 21 ACCOUNTING © Thomson/South-Western CASH PAYMENTS ON ACCOUNT WITH PURCHASES DISCOUNTS Step 1: Purchase Invoice Amt. x Purchases Disc. Rate = Purchases Discount $498.00 2% $9.96 Step 2: Purchase Invoice Amount – Purchases Discount = Cash Amt. After Disc. $498.00$9.96 $488.04 10 LESSON 9-2

11. CENTURY 21 ACCOUNTING © Thomson/South-Western CASH PAYMENTS ON ACCOUNT WITH PURCHASES DISCOUNTS 2/10, n/30 is a common term of sale It is read as two ten, net thirty. Two ten means 2% of invoice amount may be deducted if the invoice is paid within 10 days Net thirty means total invoice amount must be paid within 30 days Contra Account: an account that reduces a related account on a financial statement  Purchases Discount is a contra account to Purchases  Contra Accounts have opposite normal balances 11 LESSON 9-2

12. CENTURY 21 ACCOUNTING © Thomson/South-Western 12 LESSON 9-2 CASH PAYMENTS ON ACCOUNT WITH PURCHASES DISCOUNTS page 246 November 13. Paid cash on account to American Paint, $2,650.00, covering Purchase Invoice No. 77. Check No. 303. 1.Write the date. 2.Write the vendor account title. 3.Write the check number. 4.Write the debit amount. 5.Write the credit amount. 12 3 45

13. CENTURY 21 ACCOUNTING © Thomson/South-Western 13 LESSON 9-2 TERMS REVIEW cash payments journal cash discount purchases discount general amount column list price trade discount contra account page 247