JOURNALS
Journal is a book where the information from source documents is first recorded. It is also known as book of original entry.
Journal is a book of prime entry in which transactions are copied in order of date. The entries as they are copied, are classified into debits and credits, so as to facilitate them being correctly posted afterwards in the ledger.
Journals can be classified as:
General Journals
Specialized Journals
- Sales Journal
- Returns Inwards Journal
- Purchases Journal
- Returns Outwards Journal
The General Journal Format
Recording into the General Journal
The following entries are recorded in the General Journal
These entries usually arise when the business has just started or a new set of books has been opened. Such entry is made on the basis of accounting equation i.e. debiting all assets and crediting liabilities and capital account.
Example
Sam is opening a new set of books for the accounting year. He is carrying forward his previous year’s assets and liabilities. On 1st January 2008, he has the following:
Building |
$20,000 |
Furniture |
$10,000 |
Debtors |
$2,000 |
Creditors |
$2,000 |
Bank loan |
$4,000 |
Cash |
$500 |
General Journal
Date |
Particulars |
Dr.($) |
Cr.($) |
1st Jan
2008 |
Building
Furniture
Debtors
Cash
Creditors
Bank Loan
Capital
[Being assets, liabilities and capital recorded ] |
20,000
10,000
2,000
500 |
2,000
4,000
26,500 |
Capital is not given and has to be calculated by as follows:
Assets-Liabilities
=$32,500-$6,000
=$26,500
These are entries at the end of the accounting period.
-
Purchase and sale of fixed assets on credit.
All assets purchased or sold on credit are posted in the General Journal. Assets purchased or sold in cash are recorded in the Cash Book.
Example
On 12th May, 2008, Sam purchased a Computer on credit for $1000 from Orion computer ltd.
General Journal
Date |
Particulars |
Dr.($) |
Cr.($) |
|
Office equipment
Orion computer Ltd
[being purchase of Computer on credit] |
1000 |
1000 |
- Entries which are not recorded in any other Journal.
Example
- goods worth $200 were distributed as free sample on 31st March 2008
- On the same date Charity $400 in the form of goods
General Journal
Date |
Particulars |
Dr.($) |
Cr.($) |
31st March 2008 |
Advertisement
Charity
Purchases
[being goods distributed for advertisement and charity] |
200
400 |
600 |
Purchases Journal
This Journal is used to record all the purchases made on credit.
Purchase of fixed assets are recorded in General Journal
Cash purchases are recorded in Cash Book.
Source document used is Invoice received from the supplier.
Format of Purchase Journal
Date |
Particular |
Invoice no. |
Details of Invoice ($) |
Total ($) |
|
Name of the supplier
Less Trade discount
Purchases Account Dr. |
|
|
|
Returns Outwards Journal
Also known as Purchases Returns Journal.
Goods which are purchased on credit but returned later on to the supplier are recorded in this Journal.
Source document used is Credit Note.
Format of Returns Outwards Journal
Date |
Particular |
Invoice no. |
Details of Credit Note ($) |
Total ($) |
|
Name of the supplier
Less Trade discount
Returns Outwards Account Cr. |
|
X
X |
X
X |
Sales Journal
Only sales of goods on credit are recorded in the Sales Journal.
Cash sales are recorded in the Cash Book.
Source document used is Sales Invoice.
Format of Sales Journal
Date |
Particular |
Invoice no. |
Details of Credit Note ($) |
Total ($) |
|
Name of the customer
Less Trade discount
Sales Account Cr. |
|
X
X |
X
X |
|
