The Cash Payments

Name______

Date______

THE CASH PAYMENTS

JOURNAL

Objectives

/ After completing this chapter, you should be able to:
1. Record transactions in a cash payments journal.
2. Total, prove, and rule the cash payments journal.
3. Post from the cash payments journal to the appropriate general ledger accounts.
4. Select the correct special journal or the general journal for recording transactions.
Reading Assignment / Read Chapter 18 in your textbook.
Reading Comprehension Exercises / Complete the exercises below and on the next page of this study guide. Then verify your work with the self-check answers at the back of the guide. If you have difficulty or make many errors, reread the chapter in your textbook before continuing.
Text Applications / Complete any exercises and problems in the textbook that your instructor has assigned. Use a separate sheet of paper for the exercises. All the necessary forms for the problems are in your workbook. Use the self-checks in the workbook to verify your solutions to the problems.

EXERCISE 18-1.

Read each of the following statements carefully. Inthe Answer column, write Tif the statement is true or Fif it is false.

Answer

1. / The cash payments journal is a special journal for recording transactions involving the payment of cash for merchandise only. / 1. ______
2. / Each entry in the cash payments journal includes a check number. / 2. ______
3. / Both cash purchases of merchandise and credit purchases of merchandise can be entered in the cash payments journal. / 3. ______
4. / The cash payments journal usually has special columns for the accounts that a business uses most often in recording its cash payments. / 4. ______
5. / When a check is issued to pay a creditor on account, the transaction is entered in the cash payments journal. / 5. ______
6. / The Other Accounts Debit column of the cash payments journal is used for debits to accounts for which there are no special columns. / 6. ______
7. / The information needed to journalize cash payments usually comes from a business’s checkbook. / 7. ______
8. / The amounts in the Cash Credit column of the cash payments journal are posted individually during the month. / 8. ______
9. / The letter X is written in parentheses below the total of the Other Accounts Debit column to show that this total is not posted. / 9. ______
10. / The abbreviation CP and the journal page number are used to identify postings from the cash payments journal. / 10. ______
11. / The use of a cash payments journal eliminates repetitious journalizing and posting. / 11. ______
12. / Even though a business uses special journals, there may be a need for a general journal. / 12. ______

EXERCISE 18-2. The Lancaster Outdoor Furniture Company has a cash payments journal with the five money columns listed below. Decide which columns would be used to record each of the following transactions. Write the identifying letters of the proper columns.

Money Columns of Cash Receipts Journal

A. Accounts Payable Debit / D. Purchases Discount Credit
B. Merchandise Purchases Debit / E. Cash Credit
C. Other Accounts Debit
Transactions /

Answer

1. Issued Check 222 for $2,200 to make a cash purchase of merchandise. / 1. ______
2. Issued Check 223 for $4,210 to PVC Products to pay Invoice 451B. / 2. ______
3. Issued Check 224 for $1,820 to pay the salaries of employees. / 3. ______
4. Issued Check 225 for $6,860 to Twining Bridge Corporation to pay Invoice 6792
($7,000), less discount ($140). / 4. ______
5. Issued Check 226 for $90to purchase an electronic calculator for the office. / 5. ______
6. Issued Check 227 for $1,000 for a cash withdrawal by Randi Stern, the owner. / 6. ______
7. Issued Check 228 for $210 to pay the electric bill. / 7. ______
8. Issued Check 229 for $770 to pay the sales tax collected from customers to the state. / 8. ______

EXERCISE 18-3. The accounting system of the Giantsteppe Clothing Center contains the five journals listed below. Abbreviations for these journals are shown in parentheses. Identify the journal that would be used for recording each of the following transactions. Write the proper abbreviation in the Answer column.

Journals

/ Transactions / Answer
Sales Journal (S) / 1. Sold merchandise for cash. / 1.______
Purchases Journal (P) / 2. Paid cash for the monthly rent. / 2.______
Cash Receipts Journal (CR) / 3. Purchased store equipment on credit. / 3.______
Cash Payments Journal (CP) / 4. Received cash from a customer on account. / 4.______
General Journal (J) / 5. Sold merchandise on credit. / 5.______
6. The owner withdrew cash from the business. / 6.______
7. Purchased merchandise for cash. / 7.______
8. Sold used office equipment for cash. / 8.______
9. Paid cash to a creditor on account. / 9.______
10. The owner invested additional cash in the business. / 10.______
11. Purchased merchandise on credit. / 11.______
12. Purchased supplies for cash. / 12.______
13. Sold a used delivery truck on credit. / 13.______
14. Purchased computer equipment for cash. / 14.______
15. Paid sales tax to the state. / 15.______
16. Issued a credit memorandum for merchandise
returned by a credit customer. / 16.______
17. Recorded closing entries. / 17.______

See the self-check answers at the back of the study guide booklet.

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Chapter 18