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

14. Practice questions
Exercise 5.1
Exercise 5.3
Exercise 5.5

15. Homework
 Exercise 5.2
 Exercise 5.4