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College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756

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Chapter
Section
BuyFindarrow_forward

College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756
Textbook Problem

CASH PAYMENTS JOURNAL Sam Santiago operates a retail variety store. The books include a cash payments journal and an accounts payable ledger. All cash payments (except petty cash) are entered in the cash payments journal.

Selected account balances on May 1 are as follows:

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The following are the transactions related to cash payments for the month of May:

May 1    Issued Check No. 426 in payment of May rent (Rent Expense), $2,400.

3    Issued Check No. 427 to Mueller’s Distributors in payment of merchandise purchased on account, $3,600, less a 3% discount. Check was written for $3,492.

7    Issued Check No. 428 to Van Kooning in partial payment of merchandise purchased on account, $5,500. A cash discount was not allowed.

12    Issued Check No. 429 to Fantastic Toys for merchandise purchased on account, $5,200, less a 1% discount. Check was written for $5,148.

15    Issued Check No. 430 to City Power and Light (Utilities Expense), $1,720.

18    Issued Check No. 431 to A-1 Warehouse for a cash purchase of merchandise, $4,800.

26    Issued Check No. 432 to Goya Outlet for merchandise purchased on account, $3,800, less a 2% discount. Check was written for $3,724.

30    Issued Check No. 433 to Mercury Transit Company for freight charges on merchandise purchased (Freight-In), $1,200.

31    Issued Check No. 434 to Town Merchants for a cash purchase of merchandise, $3,000.

Required

  1. 1. Enter the transactions in a cash payments journal. Total, rule, and prove the cash payments journal.
  2. 2. Post from the cash payments journal to the general ledger and accounts payable ledger. Use general ledger account numbers as shown in the chapter

1.

To determine

Prepare the given transactions in a cash payments journal and total the each column of cash payments journal.

Explanation

Cash payments journal: Cash payments journal refers to the journal that is used to record the all transaction which is involve the cash payments. For example, the business paid cash to employees (salary paid to employees).

Cash payments journal is used to record merchandise purchases made in cash and payments of accounts payable. It also records all other cash payments to various purposes. To include all these transactions, companies use multi-column cash payments journal.

Prepare the given transactions in a cash payments journal and total the each column of cash payments journal:

Table (1)

Working note 1:

Calculate the amount of purchases discounts (credit) on dated 3rd May:

Purchases discounts(credit)on dated 3rdMay}=(Amount paid for merchandised purchased on account×Discount rate)=($3,600×3%)=$108

Working note 2:

Calculate the amount of purchases discounts (credit) on dated 12th May:

Purchases discounts(credit)on dated 12thMay}=(Check issued for merchandised purchased on account×Discount rate)

2.

To determine

Post the cash payment journal to the general ledger and accounts payable ledger.

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