The Accounting Cycle for a Merchandising Corporation!!!

Chapter 17: Special Journals: Purchases and Cash Payments

Essential Outcomes

Understand the Special Journals by being able to… Explain the purpose of the purchases & cash payments

journals Record transactions in the purchases & cash pavements

journals Post from the special journals to the General Ledger &

Subsidiary Ledgers Total, prove & rule the purchases & cash payments journals Prepare a schedule of accounts payable Prove cash. Define the accounting terms used in this chapter.

Sales JournalCash Receipts Journal

Purchases Journal

Cash Payments Journal

General Journal

Sale of merchandise on account

Receipt of all cash Purchase of any

asset on account Payment of cash,

including payments by check

Any transaction that does not fit into special journals

Journals

Purchases Journal

Purchase of any asset on accountSource document: purchase invoice

The Purchases Journal

Received Invoice 7894 from Pro Runner Warehouse for merchandise purchased on account, $2,300, terms 1/20, n/30.

Purchased store equipment from Champion Store Supply on account for $1200, Invoice #3417.

Posting transactions from the Purchases Journal to the A/P Subsidiary

Ledger

Posting transactions from the Purchases Journal to the General

Ledger

Footing, Totaling, Proving & Ruling the Purchases Journal

Posting the Total of the A/P & Purchases Column

Cash Payments Journal

Used to record all transactions in which cash is paid out or decreased, such as checks & banks statementsSource document: check or bank statement

Paid $1,500 to Keystone Insurance company for the premium on a six-month

insurance policy, check 1001

Start here on Monday.

Purchased merchandise from Fast Lane Athletics for $1,300, ck 1002

Recording Employee Payroll

Recording Miscellaneous Expense

Posting transactions from the Cash Payments Journal to the A/P Subsidiary

Ledger

Posting transactions from the Cash Payments Journal to the A/P Subsidiary

Ledger

Footing, Totaling

, Proving Ruling

& Posting Column Totals

to Cash Paymen

ts Journal

Proving Accounts Payable Subsidiary Ledger

Commit to memory:1. Post Daily:

Any General Debit or Credit column to Gen. Ledger

Accounts Receivable & Accounts Payable to Subsidiary Ledger

2. Post at End of Month: All special amount columns with

account names

Posting Rules

Preparing a Cash Proof

Process of verifying that cash recorded in accounting records agrees with amount entered in checkbook

Preparing the Cash Proof Schedule

In General Ledger

That’s all folks!!!

Now, on to some class activities on our

topic!!!