Understanding Bookkeeping

The Cash Payment Journal

This Journal records all CASH PAYMENTS. The sources of information required to write up this Journal are as follow:

1. cheque stubs for all payments made by cheque
2. bank statement for items such as bank charges, dishonored cheques and interest on bank overdraft

A typical Cash Payment Journal format is as follows:

Column:-

(a) date of payment

(b) name of payee

( c) cheque number

(d) ledger folio of the account to which item is posted

(e) discount received from suppliers for prompt payment

(f) purchases paid immediately with cash

(g) cash paid to trade creditors

(h) other payments such as rent paid

(i) total amounts paid with one cheque drawn.

The following Cash entries are posted to the ledger :

1. Debit the various Creditors Accounts with their respective amounts in the Purchases Discount column (column e) and credit Purchase Discount Account with the monthly total..
2. Debit the various creditors or other accounts with amounts paid to them ( column i)
3. Credit Cash at Bank Account with the total payments made in that period.