Accounting IIAccounting IIChapter 17Chapter 17

Special Journals:Special Journals:Purchases & Cash PaymentPurchases & Cash Payment

Purchases JournalPurchases JournalA special journal used to record all purchases on account

Recording the Purchase of Merchandise on Account

On December 14 On YourMark received Invoice 7894from Pro Runner Warehousefor merchandise purchasedon account, $2,300, terms2/10, n/30.

JOURNAL ENTRY

Posting to the Accounts Payable Subsidiary Ledger

Each transaction is separately posted to the accounts payable subsidiary ledger.

Posting from the General Debit Column

Daily postings are made from the General Debit column of the purchases journal to the appropriate accounts in the general ledger.

Totaling, Proving, and Ruling the Purchases Journal

Steps:Steps:1. Draw a single rule across the three amount

columns: Accounts Payable Credit, Purchases Debit, and General Debit.

2. Foot each amount column.3. Test for equality of debits & credits4. Enter the date of the journal is being totaled.5. Enter the three column totals below the

footing.6. Draw a double rule below the three amount

columns.

Importance of Importance of Cash Payments JournalCash Payments Journal

• Cash is a major asset of a business; therefore, it is essential that a business keep accurate records of both the inflow and the outflow of cash.

• Used to record all transactions in which cash is paid out or decreased

Cash Payments JournalCash Payments Journal

Recording Cash PaymentRecording Cash Paymentof an Assetof an Asset

Transaction: Paid $1,500 toKeystone InsuranceCompany for thepremium on a six-month policy, Check 1001