Accounting 3
Chapter 18
Section 2
Cash Payments Journal

This is a journal used only to record cash
payment transactions. (If it is not a check, is does
not belong here)
Several of the columns used in the
expanded journal (Accounting 2) are used
here.
 A new column is for the Purchases
Discount Credit special column.

Journalizing Cash Payments for
Expenses





Cash payments for expenses are handled the
same as Accounting 2.
The General Debit and Cash Credit columns are
used.
Checks are the only source document used here,
so you do not have to enter C in the check no.
column.
Transaction Example: March 1. Paid cash for
rent, $4,000.00. Check No. 214.
Visual steps on next slide.
Cash Payments Journal
Date
Mar 1
Account Title
Rent Expense
Ck
Post
No.
Ref.
214
5
Page ___
GENERAL
DEBIT
4 0 0 0 00
CREDIT
Accts Pay
Purch. Disc.
Cash
Debit
Credit
Credit
4 0 0 0 00
Discounts

Introductory Vocabulary
– List Price- A business’s printed or catalog
price.
– Trade Discount- A reduction in list price
granted to some customers.
– Cash Discount- A deduction that a vendor
allows on the invoice amount to encourage
prompt payment.
– Purchases Discount- A cash discount on
purchases taken by a customer.
Trade Discounts
A trade discount means that the customer pays
less than the printed price.
 If a trade discount is given, only the invoice
amount (the price actually paid) is journalized.
 Calculation example:

List price: $1,500 Trade Discount Rate: 60%
Trade Discount= $1,500 x 60% = $900
(LP)$1,500-(TD)$900=$600
$600 is the invoice amount and is the amount
journalized.
Journalizing Cash Payments for
Cash Purchases


These are journalized the same as cash
payments for expenses except the
purchases account is debited.
Example Transaction: March 7.
Purchased merchandise for cash,
$600.00. Check 223.
(This is a continuation of the previous slide’s example)
–
Visual steps on next slide.
5
Cash Payments Journal
Date
Account Title
Mar 7 Purchases
Ck
Post
No.
Ref.
223
Page ___
GENERAL
DEBIT
6 0 0 00
CREDIT
Accts Pay
Purch. Disc.
Cash
Debit
Credit
Credit
6 0 0 00
Cash and Purchases Discounts
A cash discount is stated as a percentage
deducted from the invoice amount for prompt
payment.
 If a cash discount is available, a term of sale
may look like this: 2/10, n/30. This is read Two
Ten, Net Thirty.
 This means that a 2% discount may be
deducted if the invoice is paid within 10 days.
Net Thirty means the total invoice must be paid
within 30 days.

Cash and Purchases Discounts

Calculation of a Cash or Purchases
Discount:
– Purchase Invoice Amount: $7,254
– Purchases Discount Rate: 2%
– (PIA) $7,254 x (PDR)2%=$145.08
-This amount is the Purchases Discount
(PIA) $7,254 – (PD) $145.08 = $7,108.92
-This is the cash amount after discount (CAAD).
Journalizing Cash Payments on
Account
Example Transaction: March 9. Paid cash
on account to Pro Golf Company,
$7,108.92, covering Purchase Invoice No.
179 for $7,254.00, less 2% discount,
$145.08. Check No. 224.
 The PIA is entered into APD, the PD is
entered into Purchases Discount Credit,
and the CAAD is entered into CC.
 Visual steps on next slide.

5
Cash Payments Journal
Date
Account Title
Mar 9
Pro Golf Company
Ck
Post
No.
Ref.
224
Page ___
GENERAL
DEBIT
CREDIT
Accts Pay
Purch. Disc.
Cash
Debit
Credit
Credit
7 2 5 4 00
1 4 5 08
*If there is not a cash discount being utilized, then there will be nothing in the Purchases
Discount Credit column and the PIA will be entered into the APD and CC columns.
7 1 0 8 92
Work Together p. 464
Cash Payments Journal
Date
Apr
Account Title
4
5
16
Ck
Post
No.
Ref.
Page ___
GENERAL
DEBIT
CREDIT
Accts Pay
Purch. Disc.
Debit
Credit
Cash
Credit
Advertising Expense
334
2 7 5 00
2 7 5 00
Purchases
335
7 9 1 20
7 9 1 20
Blanchard Company
336
4 3 4 6 00
8 6 92
4 2 5 9 08
Assignment
on next slide
Assignment
Do Application 18-2 by hand.
 Turn it into Mrs. Middleton.
 Move on to section 18-3.
