Chapter 5 special journals cash transactions clc

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Chapter 5 special journals cash transactions clc

  1. 1. Principle of Accounting Chapter 5 Special Journals – Cash transactions BA. in International Business Foreign Trade University
  2. 2. Outline The need for special journals The role of special journals Cash receipts journal Cash payments journal Cash discounts for debtors and creditors
  3. 3. The need for special journals The need for a permanent record of references to source documents. The need to summarise transactions. Journals are used to record the daily details of transactions.
  4. 4. The role of special journals  Group transactions of a similar nature to ease the posting entries to ledger accounts.  Post summarised data to ledger accounts.
  5. 5. Special journals  Cash receipts journal: records all types of cash receipts by a business.  Receipts include cash sales, amounts collected from debtors, cash contributed by owner, interest on investments.  Source documents: receipts  Cash payments journal: records all payments of cash  Payments include expenses paid, assets bought for cash, cash purchases of goods, payments of amt owing to creditors, withdrawal of cash by the owner.  Source documents: cheque butt
  6. 6. Special journal (Cont’d)  Credit sales journal: is used when the business provides goods on credit.  Source documents: invoices  Credit purchases journal: is used when the business buys its stock on credit.  Source documents: invoices  General journal: records all transactions that are not included in the special journals (unusual type of events)  Eg: Purchase of fixed assets
  7. 7. Cash receipts journal (simple version)Date Account credited Rec Post Cost of Amt Amt no ref sales received bankedJan 2 Cash sales 651 101 30 60 60 5 Debtor – D. Barr 652 402 80 80 6 Capital 653 801 5,000 5,000 12 Cash sales 654 101 30 60 60 14 Cash sales 655 101 70 120 120 17 Debtor- R. Ashworth 656 403 200 200 20 Cash sales 657 101 80 140 140 21 Interest on investments - 103 140 140 28 Debtor – D. Barr 658 402 100 100 31 Total receipts (401) 210 5,900
  8. 8. Cash receipts journal (multi-column version)Date A/c credited Rec Cash sales Other Amt No Equipment Clothing receipts banked CP SP CP SP Jan 2 Cash sales 651 30 60 60 5 Debtor-D.Barr 652 80 80 6 Capital 653 5,000 5,000 12 Cash sales 654 30 60 60 14 Cash sales 655 70 120 120 17 Debtor-Ashworth 656 200 200 20 Cash sales 657 80 140 140 21 Int on investment - 140 140 28 Debtor-D. Barr 658 100 100 31 Total receipts 110 200 100 180 5,520 5,900
  9. 9. Cash payments journal (simple version)Date Account debited Chq No Post ref Amt paid Jan 3 Stock control 901 403 500 4 Drawings 902 802 100 6 Wages 903 202 200 9 Advertising 904 203 80 11 Insurance 905 204 500 12 Creditor – Top Sports 906 601 140 16 Stock control 907 403 400 19 Drawings 908 802 150 20 Wages 909 202 200 24 Advertising 910 203 80 27 Wages 911 202 200 Total payments 401 2,550
  10. 10. Cash payments journal (multi-column version)Date A/c debited Chq Stock Wages Adver- Drawi- Sundry Amt No tising ngs pmts paid Jan 3 Stock control 901 500 500 4 Drawings 902 100 100 6 Wages 903 200 200 9 Advertising 904 80 80 11 Insurance 905 500 500 12 Creditor 906 140 140 16 Stock control 907 400 400 19 Drawings 908 150 150 20 Wages 909 200 200 24 Advertising 910 80 80 27 Wages 911 200 200 Total payments 900 600 160 250 640 2,550
  11. 11. Cash discounts for debtors and creditors Credit customers are offered a cash discount because:  Reduce the likelihood of bad debts  Early cash received can be used for other payments  Reduce time taken to settle debts by debtors, thus improve liquidity Eg: Credit terms: “2/7: n/30” The customer will receive 2% discount if he pays his debt within 7 days. If he does not make early payment within 7 days, the amount owed will be due within 30 days.
  12. 12. Discount allowed Cash receipts journalDate A/c credited Rec Disc. Debtors Cash sales Sundry Amt No allowed CP SP bankedOct 1 Cash sales CRS 100 200 200 2 M. Hardinge 435 5 200 195 3 S.Clarke 436 10 400 390 4 Cash sale CRS 340 690 690 5 S. Malachowski 437 15 600 585 7 Cash sales CRS 230 470 7 Interest - 100 570 30 1,200 670 1,360 100 2,630
  13. 13. Discount received Cash payments journalDate A/c debited Chq Disc Creditors Stock Sundry Amt No received control pmts paidOct 1 Stock control 101 800 800 2 Loan repayment 102 500 500 3 SKC Pty Ltd 103 20 400 380 4 Callum Industries 104 10 400 390 5 Stock control 105 900 900 6 Drawings 106 800 800 7 J.B. & Sons 107 10 200 190 40 1,000 1,700 1,300 3,960
  14. 14. Practice questionsExercise 5.1Exercise 5.3Exercise 5.5
  15. 15. Homework Exercise 5.2 Exercise 5.4
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