The purchases journal is used to
record credit purchases. The cash
journal is used to record the cash a
business pays out.
Glencoe Accounting
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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
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Section 17.1
The Purchases Journal
Key Term
purchases journal
Glencoe Accounting
Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
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
Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Using the
Purchases Journal
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
Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Using the
Purchases Journal
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
Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Posting from the
Purchases Journal
Section 17.1
The Purchases Journal
Posting from the Purchases Journal
See page 488
Glencoe Accounting
Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Posting from the
Purchases Journal
Section 17.1
The Purchases Journal
Posting from the General Debit Column
See page 489
Glencoe Accounting
Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Posting from the
Purchases Journal
Section 17.1
The Purchases Journal
Totaling, Proving, and Ruling the Purchases Journal
See page 489
Glencoe Accounting
Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Posting from the
Purchases Journal
Section 17.1
The Purchases Journal
Posting the Special Column Totals to the General Ledger
See page 490
Glencoe Accounting
Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Section 17.2
The Cash
Payments Journal
Key Terms
cash payments journal
schedule of accounts payable
proving cash
Glencoe Accounting
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Using the Cash
Payments Journal
Section 17.2
The Cash
Payments Journal
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
Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Using the Cash
Payments Journal
Section 17.2
The Cash
Payments Journal
Cash Payments Journal
Glencoe Accounting
See page 492
Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Using the Cash
Payments Journal
Section 17.2
The Cash
Payments Journal
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
Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Using the Cash
Payments Journal
Section 17.2
The Cash
Payments Journal
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
Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Using the Cash
Payments Journal
Section 17.2
The Cash
Payments Journal
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
Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Using the Cash
Payments Journal
Section 17.2
The Cash
Payments Journal
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
Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Using the Cash
Payments Journal
Section 17.2
The Cash
Payments Journal
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
Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Using the Cash
Payments Journal
Section 17.2
The Cash
Payments Journal
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
Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Using the Cash
Payments Journal
Section 17.2
The Cash
Payments Journal
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
Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Posting from the Cash
Payments Journal
Section 17.2
The Cash
Payments Journal
Posting from the Cash Payments Journal
See page 498
Glencoe Accounting
Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Posting from the Cash
Payments Journal
Section 17.2
The Cash
Payments Journal
Posting from the General Debit Column
See page 500
Glencoe Accounting
Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Posting from the Cash
Payments Journal
Section 17.2
The Cash
Payments Journal
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
Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Posting from the Cash
Payments Journal
Section 17.2
The Cash
Payments Journal
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
Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Posting from the Cash
Payments Journal
Section 17.2
The Cash
Payments Journal
Proving the Accounts Payable Subsidiary Ledger
See page 503
Glencoe Accounting
Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Posting from the Cash
Payments Journal
Section 17.2
The Cash
Payments Journal
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
Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
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.
1. purchase for cash (a) cash payments
2. purchase on credit (a) purchases (b) A/P subsidiary ledger
3. payment of accounts payable (a) cash payments (b) A/P subsidiary ledger
4. purchase of equipment on credit (a) purchases (b) A/P subsidiary ledger
5. cash receipt from customer on account (a) cash receipts (b) A/R subsidiary ledger
6. cash discount taken on accounts payable (a) cash payments (b) A/P subsidiary ledger
7. issued a check to pay an accounts payable (a) cash payments (b) A/P subsidiary ledger
8. bank service charges deducted on bank statement (a) cash payments
Glencoe Accounting
Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
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
E
__________
E
General Credit __________
B
Accounts Payable Debit __________
Purchases Discount Credit
Cash in Bank Credit
Glencoe Accounting
T
__________
T
__________
Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
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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