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Devotchka Co. uses special journals and a general journal. The following transactions occurred...

Question:

Devotchka Co. uses special journals and a general journal. The following transactions occurred during May 2016:

May 1 Z. Devotchka invested $25,000 cash in the business.
2 Sold merchandise to A. A. Bondy for $5,600 cash. The cost of the merchandise was $3,500.
3 Purchased merchandise for $4,300 from Y. Vandyver using check no. 101.
14 Paid salary to D. Dilego $1,200 by issuing check no. 102.
16 Sold merchandise on account to S. Stevens for $840, terms n/30. The cost of merchandise sold was $500.
22 A check of $7,200 is received from S. Sufjan in full for invoice 101; no discount given.

Instructions:

(a) Prepare a multiple-column cash receipts journal and a multiple-column cash payments journal.

(b) Record the transaction(s) for May that should be journalized in the cash receipts journal and cash payments journal.

Cash Disbursement Journal

Cash Disbursement Journal pertains to a special journal used by businesses to record its transactions that involve an actual cash payment such as payment of interest expense. One of the benefits of having a special journal for such transaction is the convenience of tracking down numerous cash spending items undertaken by the business.

Answer and Explanation:

  • Cash Receipts Journal

Date Account Credited Invoice No. Explanation Cash
(Dr.)
Sales Discounts
(Dr.)
Sales Revenue
(Cr.)
Other Income Accounts
(Cr.)
Other Accounts
(Cr.)
May 01 Owner's Capital - Investment of the owner $25,000 $25,000
May 02 Sales Revenue - Cash Sales of Merchandise 5,600 5,600
May 22 Accounts Receivable 101 Payment of Customer 7,200 7,200
  • Cash Payment Journal

Date Account Debited Check No. Explanation Cash
(Cr.)
Purchase Discounts
(Cr.)
Purchases
(Dr.)
Expense Accounts
(Dr.)
Other Accounts
(Dr.)
May 03 Merchandise Inventory 101 Purchase of Merchandise $4,300 $4,300
May 14 Salary Expense 102 Payment of Salary $1,200 $1,200

Learn more about this topic:

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How to Manage Cash Disbursements

from Finance 101: Principles of Finance

Chapter 18 / Lesson 4
2.9K

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