It is necessary, when making the original entries in the journals, to indicate all postings which are to be omitted, by entering a check mark, ✔, or a cross, ❌, in the ledger folio column of the journal.

The purchase on a note payable, one method of recording which was explained on [page 140], may also be handled more directly by either of the methods explained above for a cash purchase. In the case of the note, however, the journals used are the purchase and general journals.

Similar methods are employed, also, for handling the cash sale and the sale against a customer’s note.

Columnar Analysis of Cash Receipts and Disbursements.—As illustrated in the chapters on purchase and sales journals, additional money columns are often used for the purpose of analyzing the purchases and sales by departments or classes of commodities. A similar analysis of both the cash receipts and cash disbursements may aid in segregating certain classes of cash items and thus save labor in posting. Of cash receipts, two classes are usually more active than all others combined. More cash is received from cash sales and from customers on account than from any other source. Accordingly, two additional columns may be used with these headings. All cash receipts must be entered in the Total, Bank, or Net Cash column, as it is variously termed, and then distributed into any special columns provided. Thus all “Cash Sales” would be extended, both in the Net Cash and in the Sales column, and all receipts from customers would be entered in the Net Cash and in the Accounts Receivable column.

In the case of cash disbursements, the number of columns depends upon the degree of analysis desired. At least two additional columns are frequently found, one for creditors and one for expenses. Where cash purchases are numerous they may be segregated, or where any particular class of expense is of frequent occurrence it may be shown in a separate column. Where one ledger is used for customers, creditors, and general accounts, there is little gain in segregating customers and creditors by special columns in the cash book, except as a slight aid in posting. Where separate ledgers are used, it is important to have separate customers and creditors columns in the cash book, as will be shown later in connection with the subject of controlling accounts. Illustration and explanation of the columnar cash book are given on [pages 158 and 159].

Cash Discounts Analyzed.—Sales and purchase discounts are another class of transactions best handled through the cash book, although, strictly speaking, they are not cash transactions. When a customer buys goods on account, he is usually offered two bases of settlement, depending on the length of the credit term allowed. Thus, 2% off is frequently allowed if payment is made within 10 days; otherwise the full amount of the invoice must be paid. Because the vendor does not know, at the time of entry on his books, on which basis settlement will be made, he makes the charge at the full invoiced amount. If the customer takes advantage of the discount offered, he pays less than the amount at which his account stands debited, yet the vendor must credit his account for the full amount of the original charge, in order to cancel his entire claim against the customer. To illustrate, a customer buys $100 worth of merchandise, with 2% off if paid within 10 days. On the 10th day he pays $98. The sale entry would be:

The cash entry would be:

But this does not cancel in full the $100 claim against the customer. The $2 discount, an allowance for early payment, is an expense to the business and must be charged to an expense account called “Sales Discount,” and the customer must be given $2 additional credit, the entry being: