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Principle of Accounting
                     Chapter 5

         Special Journals – Cash transactions

           BA. in International Business
            Foreign Trade University
Outline
 The need for special journals
 The role of special journals
 Cash receipts journal
 Cash payments journal
 Cash discounts for debtors and creditors
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.
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.
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
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
Cash receipts journal
  (simple version)
Date     Account credited       Rec    Post   Cost of        Amt             Amt
                                no     ref    sales          received        banked
Jan 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
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
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
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
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.
Discount allowed
               Cash receipts journal
Date      A/c credited    Rec   Disc.         Debtors   Cash sales         Sundry   Amt

                          No    allowed                 CP         SP               banked

Oct 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
Discount received
             Cash payments journal

Date     A/c debited         Chq   Disc       Creditors   Stock      Sundry    Amt
                             No    received               control    pmts      paid
Oct 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
Practice questions
Exercise 5.1
Exercise 5.3
Exercise 5.5
Homework
 Exercise 5.2
 Exercise 5.4

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Chapter 5 special journals cash transactions clc

  • 1. Principle of Accounting Chapter 5 Special Journals – Cash transactions BA. in International Business Foreign Trade University
  • 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. 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. 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. 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. 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. Cash receipts journal (simple version) Date Account credited Rec Post Cost of Amt Amt no ref sales received banked Jan 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. 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. 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. 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. 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. Discount allowed Cash receipts journal Date A/c credited Rec Disc. Debtors Cash sales Sundry Amt No allowed CP SP banked Oct 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. Discount received Cash payments journal Date A/c debited Chq Disc Creditors Stock Sundry Amt No received control pmts paid Oct 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