Basic Bookkeeping Online Guide » d. Journals

General Journal

slang — Thu, 18 Oct 2007 10:19:11 +0000

Some of the advantages in using Journals are as follows:

transactions which occur infrequently and adjustments necessary at the close of an accounting period require evidence as a basis of recording. Journal vouchers are used to support such transactions and by being signed by responsible officials, they constitute entries for the General Journal. It is therefore easier to detect fraud or errors.
journals being book of Prime Entry, journal entries reduce the risk of omitting to record any transaction
the narrations given to all general journal entries explain the nature of the transactions. Each narration provides a record of entries made in the ledgers.

Journal:SALES Journal

slang — Thu, 18 Oct 2007 10:18:24 +0000

Explained below is another special journal or subsidiary book which is called the Sales Journal , the details being explained below:-

The Sales Journal

This Journal records all sales on CREDIT. The book is written up from the duplicate of sales invoices. It contains only credit sales related to the goods originally bought for resale.
Sales Journal as follows:

Date	Invoice No	Particulars	Folio No	Details($)	Monthly Total($)
2007
Jan 1	4230	Mr ABC	SL 8	190.00
20	4231	Mr BCD	SL 11	150.00
31	4232	Mr BDE	SL 15	450.00
					$790.00 ======

When the Sales Journal is written up, the various amounts would then be posted to the debit side of the various debtors’ accounts in the Sales Ledger and the total credit sales of the period posted to the credit of the Sales Accounts.
Sales Ledger:
Folio No : SL8
Debtor:Mr. ABC

2007		$
Jan 1	Invoice No 4230	190

Folio No : SL 11
Debtor:Mr. BCD

2007		$
Jan 20	Invoice No 4231	150

SL No 15
Debtor:Mr. BDE

2007		$
Jan 31	Invoice No 4232	450

Journal:PURCHASE Journal

slang — Thu, 18 Oct 2007 07:59:17 +0000

We have Sales Journal, now let’s look at another subsidiary book or special journal called the Purchase Journal:-

The Purchase Journal

This Journal records all purchases on CREDIT. The book is written up from the actual invoices received from trade suppliers.

Purchase Journal as follows:

Date	Invoice No	Particulars	Folio No	Details($)	Monthly Total($)
2007
Jan 1	72306	Supplier A	PL 8	190.00
20	42315	Supplier B	PL 11	150.00
31	42327	Supplier C	PL 15	450.00
					$790.00 ======

When the Purchase Journal is written up, the various amounts would then be posted to the credit side of the various creditors accounts in the Purchase Ledger and the total credit purchases of the period posted to the debit of the Purchases Accounts.

Purchases Ledger:

Folio No : PL8

Creditor-Supplier A

		2007		$
		Jan 1	72306	190.00

Folio No : PL 11

Creditor-Supplier B

		2007		$
		Jan 20	Bill no 42315	150.00

PL No 15

Creditor-Supplier C

		2007		$
		Jan 1	42327	450.00

Journal:Cash PAYMENT Journal

slang — Thu, 18 Oct 2007 07:58:28 +0000

Let’s look at another special journal which is the Cash Payment Journal:

The Cash Payment Journal

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

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

A typical Cash Payment Journal format is as follows:

Date

Particulars

Cheque

Folio

Purchases

Discount

Cash

Purchases

Trade

Creditors

Sundry

Payments

Bank

(a)

(b)

(d)

(e)

(f)

(g)

(h)

(i)

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 :

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..
Debit the various creditors or other accounts with amounts paid to them ( column i)
Credit Cash at Bank Account with the total payments made in that period.

Journal:Cash Receipts Journal

slang — Thu, 18 Oct 2007 07:57:38 +0000

Let’s look at another Journal which relates to cash which is the Cash Receipt Journal.

The Cash Receipts Journal

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

duplicate receipts for amounts received from debtors
daily cash sale sheets
bank statement for items such as deposits made direct into the bank by customers and interest on investments collected by bank and credited to the accounts.

A typical Cash Receipt Journal format is as follows:

Date

Particulars

Folio

Sales

Discount

Cash

Sales

Debtors

Sundry

Receipts

Bank

(a)

(b)

Â©

(d)

(e)

(f)

(g)

(h)

Column:-

(a) date of receipt

(b) name of payer

Â© the ledger folio when the amount is posted

(d) discount allowed to customers for prompt payment

(e) sales where cash is paid immediately

(f) amount received from trade debtors

(g) sundry receipts such as rent received or interest received

(h) the amount banked which should be the total of the amount received on a particular date.

The following Cash entries are posted to the ledger :

Debit Sales Discount Allowed Account with the monthly total of the Sales Discount column (column d) and credit the various Debtors Accounts with their respective amount.
Credit the various debtors with the amount appearing the Sales Debtors column (column f)
Credit other Income Accounts ( column g) with sundry receipts
Debit Cash At Bank with the Total Amount banked ( column h)

The Technique Of Journalizing(Part2of2)

slang — Thu, 18 Oct 2007 05:48:00 +0000

In earlier article of Part1, we learned about the journal and its importance.

This Part 2 show us the technique of journalizing. When we do journalizing, there are normally two scenarios which might involve single entry or compound journal entry

Append below the illustration:

SINGLE ENTRY Of Journalizing:

Illustration:

On 23/2/07, Company XYZ bought an Office Equipment which cost $5,000 cash.

Solution:

GENERAL JOURNAL JV No.1

Date	Narration	Ref/ Account Codes	Dr	Cr
23/2/07	Office Equipment	1450	5,000
	Bank Account	1100		5,000
	Being purchase of Office equipment

COMPOUND ENTRY: More than two accounts in journalizing

Illustration:

Dec 1 Invested $7,000 cash in the business

10 Bought office equipment for $5,000 paid $3,000 in cash and balance on account

15 Paid $1,000 cash on balance owed to equipment vendor

29 Withdrew $1,000 cash for personal use.

The Company chart of accounts shows:

1000 Bank

1100 Equipment

2000 Accounts Payable

3000 Proprietor, Capital

3100 Proprietor, Drawing

Solution:

GENERAL JOURNAL JV NO: 3

Date	Narration	Ref/ Account Code	Dr	Cr
1/12/06	Bank	1000	7,000
	Owner,Capital	3000		7,000
	Being record of owner’s investment of cash in business
10/12/06	Office Equipment	1100	5,000
	Bank	1000		3,000
	Accounts Payable	2000		2,000
	Being purchase of office equipment partly on cash and on credit
15/12/06	Accounts Payable	2000	1,000
	Bank	1000		1,000
	Being part settlement of office equipment supplier account
29/12/06	Owner,Drawing A/c	3100	1,000
	Bank	1000		1,000
	Being owner’s drawing of cash for personal use.

Journal And The Purpose Of Having Journal(Part1of2)

slang — Wed, 17 Oct 2007 13:46:20 +0000

This article is to explain what is a Journal and its purpose.

JOURNAL:

· Are books in which information from source documents is first recorded hence is called Books Of Original Entry or Books Of Prime Entry.

· Also known as a day book as daily transactions of a business are recorded in order of date.

TYPES OF JOURNAL:

Journals can be classified as:

Specialized journals like Sales Journal, Returns Inwards Journal, Purchase Journal and Return Outwards. Cash Receipt Journal,Cash Payment Journal)
General Journal

PURPOSES or ROLE in the Accounting Process

Records similar transactions such as credit sales of goods into one book in order of ate
Cuts down unnecessary details in the ledger as only totals are posted to the ledger.
Provides an important middle step between source documes and the ledger accounts and
Acts as an aid for posting to the ledger by analyzing a transaction into its debit and credit entry.

Others:

Journalizing means entering transaction data in the Journal
The standar form and content of journal entries are as follows:
the date
the name of account to be debited and the amount
the name of account to be credited and the amount
a description and explanation of the transaction (ie narrative)
a reference number for te source documents giving proof of the transaction.