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Cash invoice sample for Accounting

welcome to count thoughts in this lesson we're going to be looking at the cash payments journal going to explain what it is and explain what the format for the cash payments john looks like and go through a thorough example in completing the cash payments journal so if this is your first time looking at the cash payments journal it should give you a good idea of how to do the cash payments journal and you should be able to do it on your own so what is the cash payments journal the cash payments journal is used to record all cash paid by the entity during the period this could be actual cash paid cheques written out or electronic transfers so however the entity pays money out that will be recorded in the cash payments journal now remember cash received or owed by the entity is not recorded in the cash payments journal the other journals for which we record those ones like cash received is recorded in the cash receipts journal and we've done this lesson you'll find it in the link in the description below so what does the cash payments journal look like well here it is we have the name of the company and that is how you record it you write the name of the company we have eldos flowers over here and then you write the name of the journal it's the cash payments journal and for the period for which it is prepared so here an example is december 2021 and then you have here the document number you put the document number that you are given in your transactions if you you're not given a document number you can just record the document numbers in sequence like 0 1 0 2 0 3 and so forth but if you're given the document numbers you'd record it there and then you have the day here and this is the day of the month so for example we have put 0 1 which means the first day of the month of december 2021 as you can see up here as an example and then you have the details over here now the details here is either the name of the person that you are paying the money to or if you are paying it using cash you could write the cash and you will see how it works just now with an example that will be going through and then you've got what is called folio or f o l this is a cross reference code and it is usually a number or a combination of numbers and letters and it is mainly for connecting two different records so this is showing you where else it is found in another record or where it's taken to or it's coming from so we're not going to worry much about this one here in completing the cash payments journal and then we have bank this is where we will record all the amounts that we are paying out okay so if on the first day of the month you paid out 10 000 run you will put it here under bank okay and then what else do you have you have here purchases which is another column here so if you purchased inventory or merchandise or stock you'd record that amount under purchases as well so it could be the same amount as you have on the bank and then you have creditors this column here is when you're paying your creditors so if you bought something from someone on credit or from a supplier on credit and now you're paying them you'd record it over here under creditors discount received if you received any discount from your creditors for instance you would record it under discount received and then we have wages as well wages is if you have paid particular wages then you record it under there and then sundry account what do you do in the sentry account well the sundry account is where you record all the other amounts for which you do not have a column what do i mean by that well if you can see here we have three columns or we have four columns rather we have purchases we have creditors we have discount received and we have wages we don't have any other column let's say you paid for water and electricity for instance you don't have a column for it and electricity you will put it in the sundry account so the sundry account is where you record all the other accounts for which you do not have a column so if you have water and electricity like i just mentioned you'd record the amount here and you record the detail as water and electricity but if you're paying for something like wages or creditors like i mentioned you have columns for those you'll put it over here now yours might look slightly different if you have an example in your book or you've gone through it in a class or in your study guide how might it be different well you might have a column for let's say water and electricity and here i have a column for wages you may not have for wages but you'll get the idea here if you do not have a column for a particular thing you do you put it in the sunday account but if you have a column for it you put it in its specific column so that is just what i have to mention but other than that you will understand it very well as you go through the example so now that we know the format for the cash payments journal let's go through an example in completing it here's the example we're told that the information given below was extracted from the records of eldos flowers ignore v80 so here we are going to ignore that we have done another lesson on the cash payments journal where we have to take into account vat you'll find it in the link in the description as well we are asked to record them in the cash payments journal for december 2021 the company uses a periodic inventory system now many students like to ignore that statement whether it's using a periodic inventory system or a perpetual inventory system but it's actually very important when you're completing your journal and i'll explain when we get to those particular examples where we have to take into account what inventory system they're using so we know they're using periodic inventory system so we'll have to take it into account now let's begin on the first day of the month you can see on the red here is the day of the month so let's start on the first day we have benny b the owner invested 30 000 in the business issued received zero one zero what happened here the owner invested thirty thousand run in the business now the question is do we record in the cash payments journal or do we not well this is money that is coming into the account of the business that means you are not paying it out remember cash payments journal is only focused on the money that is paid out by the business but here this is money coming in so we're going to skip that one over there so i'm going to highlight whatever we are skipping in purple and then whatever we are doing once we are done i'll highlight it in black so let's highlight that one there because we're not going to take that into account because it's money received and not paid out okay on the second day of the month we paid the month's rent by check three thousand right check number zero one was issued now what happened here we paid money out so what do we know we know that it has to go into the cash payments john we paid it using a cheque so we put the date which is zero two and we have the check number which is zero one so we're going to put the document number at zero one and the day as zero two so let's go to our cash payment journal you can see they have already put the document number zero one and then the day there is zero two and what is the detail that we have to take into account here what did we pay for we can see here we paid for the month's rent so we paid for rental but we paid it using cash so we're going to record cash under details the details section is where you record the name of the supplier or how you paid for it so we paid for wages using cash and then we're going to skip the folio here for now as i mentioned earlier on and then in the bank section is how much we paid out how much did we pay we paid three thousand runners you saw in the example and then we go ahead we see do we have a column here for rent well we have for purchases we are for creditors we have a discount received we have wages we do not have a column for rent that means it will go into the sundry account i hope it's making sense now without us explaining earlier so we put the amount there three thousand rand and the details is going to be rent okay and we've just completed the first transaction so let's go back and highlight it in black because we've just completed that one and it went into the cash payments journal now on the third of the month we bought inventory from ego capital by check 2500 check zero two so here we both invented from ego capital so you always ask yourself in every transaction did we pay money out or did we receive money well in this case we paid money out it goes into the cash payments journal so we put the document number here as zero two and then the day is zero three so let's go ahead and do that one document number zero two day zero three now who did we buy this inventory from or which supplier did we buy from well let's go back as you can see we bought inventory from ego capital so we're going to put the name of the supplier the ego capital and this is what we meant when you say it under details you put the name of the person that you are paying but you'll notice for the first one we put cash because we're not given the name of the landlord that we're paying or the person to whom we're paying the rentals okay i hope that one has cleared it out so if you're given the name you put it under details if you're not given the name then you put it as cash and the details and you'll see as we continue along as well and the amount there is the one that we are given and if you go back you will see it's 2500 that is how much we bought the inventory for so put that 2500 now that is what goes under bank now where else do we put this 2500 well now that is where the inventory system that the company uses comes into play remember if they're using the periodic inventory system as they are in this particular example then you will have purchases and we'll put it there under purchases as well 2500 if it was the perpetual inventory system if your example is using the perpetual inventory system then instead of purchases you have what's called inventory and you'll put it under inventory instead of purchases so you'll have a column for inventory instead of purchases but here we have purchases because it's using the periodic inventory system okay so we've just completed that one so we go and highlight the one that we have just done on the third and then on the sixth we received a rent from a tenant king wave limited 1 500 receive 0 1 1 well what do you do with this one well if you guessed we do not put in the cash payments journal you would be correct this one causing the cash receipts journal and you find the link to that particular lesson in the description below as mentioned so this one here will skip it does not go into the cash payments journal because we are receiving money and not paying it out so let's highlight that one and what i encourage you to do going forward from here is to pause it and try and finish it off on your own and gauge your understanding of doing the cash payments journal and once you're done you can come back and continue the video and compare your answers to mine and see how well you did so go ahead and do that okay i hope you've completed it and if you've done it on your own you will better understand it if you can attempt it before looking at the solution so on the eighth we paid for insurance by check 1200 okay so obviously it's day zero eight and the document number will just follow the sequence we have done two solvents highlighted by the black we've done zero one and zero two so we're just gonna put this on a zero three and that's what i meant anyone i said if you're not given the document number then you'll just follow the sequence or put sequences in it okay and you can see here also we are not given the name of the insurer or the company to whom we are paying the insurance so we're just going to put cash as the details so let's go ahead and do that we have zero three as the document number we are following the sequence and the day zero eight and the detailed day as you can see i mentioned we're not given the name of the company so we just put cash there and under bank we put 1 200 because that is how much we paid for insurance now which other column do we put this well as you can see we have no column for insurance what does that mean it means it will go into the sundry account so we go to the sundry account and put 1200 and then under details we put the insurance i hope it's making sense let's go back and highlight that one as you've just completed on the ninth we bought inventory on credit from chiligo 1000 rent so here we bought inventory but we bought it on credit we did not buy it on cash so that's very important because sometimes students would look at the word bought inventory and they would immediately assume it goes to the cash payments journal but hold on did we pay cash no we have not paid it yet because we bought it on credit so since we have not paid it yet we will not record it in the cash payments only only recorded in the cash payments journal when you are making the payment so let's highlight that one and then on the 10th we bought inventory on credit from your capital 3000 rent again that's the same thing we're going to skip that one because we didn't pay actual cash we bought it on credit so let's highlight that one and what do we mean by buying on credit well it means that you took the inventory but you have not paid yet you're going to pay at the later date that's what that means and then on the 14th inventory was sold for cash as per exceed 0 1 2 12 000 rent does this go into the cash payments journal no it does not because we are selling inventory here we are not buying inventory so by selling inventory on cash we are receiving the cash and not paying it out so this one goes into the cash receipts john it does not go into the cash payments journal that we are doing right now so let's highlight that one in purple as well and then on the 18th paid wages by check 1 800. okay so here we paid for wages then it definitely goes into the cash payments journal so we're going to put the document number we're not given here so we're going to continue with our sequence and the date is the 18th and then the amount is 1200 so let's go ahead and do that document number zero four and the day is day 18. so here for wages we're going to put it as cash so usually when you have wages you put it as cash and you put the amount there one thousand eight hundred now do we have a column for wages yes we do if we have the column for wages that's why we put the one thousand eight hundred and that's the last column before sunday account so we'll put the 1800 and we've just completed that one so let's go back and highlight that one on the 21st we borrowed 15 000 rent from muller bank and deposited the check receipt 013 well he borrowed money and we deposited the check meaning money was coming in and we're not paying out so it does not go into the cash payments journal so let's highlight that one and then on the 23rd we bought equipment from chiltree by check 7000 rent so this one goes into the cash payments journal because we bought equipment by cheque so our document number will continue with the sequence and our date is the 23rd and then we'll have to put the name of the person from whom bought this equipment and the name is chill tree so here we are given the name so let's go ahead and do that the document number is 0-5 the day is 23rd and then if you go back you will see the name of the entity from whom we bought the equipment is chill tree so we're going to put that as the details chill tree and then and the bang will put the amount 7 000 that's how much we bought the equipment for and do we have a column for equipment no we do not so we are going to put in the sundry account so put the amount seven thousand rent there and under details we put equipment okay i hope it now makes much more sense what goes under sundry account okay let's go back and highlight that as you've just completed on the 30th issued a check to chilego in full settlement of account after deducting 10 percent discount this is very important to pay attention to the details that you're given you issued a check to shiligo now you're asking yourself who is shiligo well usually you look back through the transactions and see if you can pick up the name shiligo because we did not just issue a check to them we issued a check in full settlement meaning whatever we bought from them on credit we are paying it in full but it's after deducting a 10 discount meaning they did give us a 10 discount now if you looked at our lesson and you watched our full lesson on the cash receipts journal this will be quite easy for you to go through but we'll go into it in great detail so that even if you are looking at the cash receipts journal later it will be much easier in addressing a similar transaction so here is what you do you go back through your transactions and see if you can find chilego and if you look back you'll see that on the ninth who bought inventory on credit from shiligo and that's the only place we find shiligo there which is a supply because of buying inventory from them and we bought it on credit so we owed them how much 1 000 runners per the ninth you can see we bought it on credit from them and it's one thousand rand so since we owed them one thousand rent we have fully settled that's one thousand rand however they did give us a ten percent discount so we know that's on the thirtieth day of the month so we're going to put that as the day and the document number will continue the sequence so let's do just that we're going to put the document number 0 6 continuing with the sequence and the day is day 30 and what is the detail here well as you can see it's chili go the name of the supplier that we are paying so we'll go ahead and put the chili go okay so let's go back and calculate how much we actually paid them and how much the discount was that we received so how much discount do you receive well as you can see here it's the 1000 rent that we owed them on the 9th remember you always go back and check the name of the supplier and see how much you owe them times the 10 percent discount that they gave us and the discount is 100 rent so if they gave us a discount of 100 how much do we actually pay them well the amount paid was 1 000 rent times 90 how did i get 90 well if 100 is what we owe them and they give us 10 discount 100 minus ten percent gives us ninety percent that means we only paid ninety percent and the amount that we actually paid is nine hundred rand it's very important for you to calculate both the discount and the amount that you actually paid them and you'll see how it works in the cash payments journal another way you could have calculated this is just by taking the 1 000 minus the discount of 100 grand and it will give you that 900 that we have calculated down there okay so let's go back to our cash payments journal as you can see here we've just put under bank there 900 it's very important you put the amount that you actually paid them and not the 1000 rent that you owed them because you only paid 900 because of the discount that you are given okay now that you've put the 900 run and uh bank what else do we do when we go to the creditors column remember creditors column is for what you have paid or what you have settled with your creditors how much are you going to put under the creditors column and this is where many students make the mistake so you have to pay very careful attention to this what you put under the creditors column is not how much you actually paid them but how much you actually settled that's why it's very important that they told us that we settled in full because if we settled in full it means we no longer owe them the full amount of 1000 rent that is what you put under the creditors column okay if your transaction told you you paid partly the amount that you owed your creditor then you put in the amount that you actually paid but in this case they told us we settled in full and we only paid 900 because of the discount so and the credits have to put the full amount of 1000 rent i hope it has made sense because we've settled the full 1000 rent even though we only paid 900 but it's because they gave us a discount and that is where the next column comes in discount received was 100 so we put the 100 and we have just completed that one there i hope it's made sense creditors column you put the full amount that you owe them if you've settled in full another discount received obviously you put the discount that you actually receive and under the bank column you put the actual amount that you paid to the supplier okay so let's go back and highlight that one as we have just completed it so we highlight it and you can see we have just completed all the transactions that we have to go through now that you have completed it all we have to do is go back to our cash payments journal and just put down our total so we'll just add the totals for all the columns for which we have amounts and we will have the amounts there so you can see under pan we have 16 400 and we have the totals for all the other columns here and that is how you do the cash payments journal i hope it has made sense i hope you've gained value from this lesson and you now know how to do the cash payments journal you'll find the link to our next lesson on the cash payments channel in the description below where we take into account v80 as well as the lessons on the cash receipts journal and other journals as well if you have indeed gained value consider subscribing to our channel liking this video and share it to those you think it might help till next time cheers