The General Journal Journalizing the recording process!

Unit

5

THE RECORDING PROCESSTHE RECORDING PROCESS

1. Analyse each transaction.

2. Enter transaction in a journal.

3. Transfer journal information to ledger accounts.

JOURNAL

JOURNAL

LEDGER

THE JOURNALTHE JOURNAL

Transactions are initially recorded in chronological order in a journal before being transferred to the accounts.

Every company has a general journal which contains

1. spaces for dates,

2. account titles and explanations,

3. references, and

4. two money columns.

The journal makes several significant contributions to the recording process:

WHY THE JOURNALWHY THE JOURNAL

1. It discloses, in one place, the complete effect of a transaction.

2. It provides a chronological record of transactions.

3. It helps to prevent or locate errors because the debit and credit amounts for each entry can be readily compared.

JOURNALIZINGJOURNALIZING

Entering transaction data in the journal is known as journalizing.

Separate journal entries are made for each transaction.

A complete entry consists of

1. the date of the transaction,

2. the accounts and amounts to be debited & credited, and

3. a brief explanation of the transaction.

JOURNAL FORM

Page: _____

TECHNIQUE OF JOURNALIZINGTECHNIQUE OF JOURNALIZING

The date of the transaction is entered in the date column.The date of the transaction is entered in the date column.

GENERAL JOURNAL J1

Date Account Titles and Explanation Ref. Debit Credit2002

Sept. 1 Cash 15,000 M. Doucet, Capital 15,000

Invested cash in business.

1 Equipment 7,000 Cash 7,000

Purchased equipment for cash.

TECHNIQUE OF JOURNALIZINGTECHNIQUE OF JOURNALIZING

The debit account title is entered at the extreme left margin of the Account Titles and Explanation column. The credit account title is indented on the next line.

The debit account title is entered at the extreme left margin of the Account Titles and Explanation column. The credit account title is indented on the next line.

GENERAL JOURNAL J1

Date Account Titles and Explanation Ref. Debit Credit2002

Sept. 1 Cash 15,000 M. Doucet, Capital 15,000

Invested cash in business.

1 Equipment 7,000 Cash 7,000

Purchased equipment for cash.

TECHNIQUE OF JOURNALIZINGTECHNIQUE OF JOURNALIZING

The amounts for the debits are recorded in the Debit column and the amounts for the credits are recorded in the Credit column.

The amounts for the debits are recorded in the Debit column and the amounts for the credits are recorded in the Credit column.

GENERAL JOURNAL J1

Date Account Titles and Explanation Ref. Debit Credit2002

Sept. 1 Cash 15,000 M. Doucet, Capital 15,000

Invested cash in business.

1 Equipment 7,000 Cash 7,000

Purchased equipment for cash.

TECHNIQUE OF JOURNALIZINGTECHNIQUE OF JOURNALIZING

A brief explanation of the transaction is given.A brief explanation of the transaction is given.

GENERAL JOURNAL J1

Date Account Titles and Explanation Ref. Debit Credit2002

Sept. 1 Cash 15,000 M. Doucet, Capital 15,000

Invested cash in business.

1 Equipment 7,000 Cash 7,000

Purchased equipment for cash.

TECHNIQUE OF JOURNALIZINGTECHNIQUE OF JOURNALIZING

A space is left between journal entries. The blank space separates individual journal entries and makes the journal easier to read.

A space is left between journal entries. The blank space separates individual journal entries and makes the journal easier to read.

GENERAL JOURNAL J1

Date Account Titles and Explanation Ref. Debit Credit2002

Sept. 1 Cash 15,000 M. Doucet, Capital 15,000 Invested cash in business.

1 Equipment 7,000 Cash 7,000 Purchased equipment for cash.

TECHNIQUE OF JOURNALIZINGTECHNIQUE OF JOURNALIZING

The column entitled Ref. is left blank at the time the journal entry is made and is used later when the journal entries are transferred to the ledger accounts.

The column entitled Ref. is left blank at the time the journal entry is made and is used later when the journal entries are transferred to the ledger accounts.

GENERAL JOURNAL J1

Date Account Titles and Explanation Ref. Debit Credit2002

Sept. 1 Cash 15,000 M. Doucet, Capital 15,000 Invested cash in business.

1 Equipment 7,000 Cash 7,000 Purchased equipment for cash.

GENERAL JOURNAL J1

Date Account Titles and Explanation Ref. Debit Credit2002

Oct. 2 Delivery Equipment 14,000 Cash 14,000 Purchased truck for cash.

If an entry involves only two accounts, one debit and one credit, it is considered a simple entry.

If an entry involves only two accounts, one debit and one credit, it is considered a simple entry.

SIMPLE AND COMPOUND JOURNAL ENTRIES

SIMPLE AND COMPOUND JOURNAL ENTRIES

When three or more accounts are required in one journal entry, the entry is referred to as a compound entry.

When three or more accounts are required in one journal entry, the entry is referred to as a compound entry.

COMPOUND JOURNAL ENTRYCOMPOUND JOURNAL ENTRY

GENERAL JOURNAL J1

Date Account Titles and Explanation Ref. Debit Credit2002

Oct. 2 Delivery Equipment 34,000 Cash 8,000 Note Payable 26,000 Purchased truck for cash and note payable.

1

2

3

GENERAL JOURNAL J1

Date Account Titles and Explanation Ref. Debit Credit2002

Oct. 2 Cash 8,000Delivery Equipment 34,000 Note Payable 26,000 Purchased truck for cash and note payable.

COMPOUND JOURNAL ENTRYCOMPOUND JOURNAL ENTRY

This is the wrong format; all debits must be listed before the credits are listed.

This is the wrong format; all debits must be listed before the credits are listed.

The Two-Column General Journal

Step 1 : Record the Date The year and month are shown on each journal page.

Step 2: Record the Debit The debit is shown first

Step 3: Record the Credit The credit is indented

Step 4: Record the Explanation The explanation includes on invoice or cheque

number

A journal presents a chronological history of all the company's transactions.

SUMMARY OF JOURNAL RECORDING

The Opening Entry

Every accounting entry is recorded first in the journal.

This is done even for the first accounting entry, the one that sets up the financial position from a balance sheet.

The journal entry that starts the books off, or "opens" them, is known as the OPENING ENTRY.

2. Write the title of the account debited. Write the debit amount.

RECEIVED CASH FROM OWNER AS AN INVESTMENT

August 1. Received cash from owner as an investment, $5,000.00. Receipt No. 1.

1. Write the date in the Date column.

3. Write the title of the account credited. Write the credit amount.

1 2 2

3 3

PAID CASH FOR SUPPLIES

August 3. Paid cash for supplies, $275.00. Check No. 1.

1 2 2

1. Write the date in the Date column.

3. Write the title of the account credited. Write the credit amount.

2. Write the title of the account debited. Write the debit amount.

3 3

PAID CASH FOR INSURANCE

August 4. Paid cash for insurance, $1,200.00. Check No. 2.

1. Write the date in the Date column.

2. Write the title of the account debited. Write the debit amount.

3. Write the title of the account credited. Write the credit amount.

1 22

33

BOUGHT SUPPLIES ON ACCOUNT

August 7. Bought supplies on account from Supply Depot, $500.00. Memorandum No. 1.

1. Write the date in the Date column.

2. Write the title of the account debited. Write the debit amount.

3. Write the title of the account credited. Write the credit amount.

1

22

33

PAID CASH ON ACCOUNT

August 11. Paid cash on account to Supply Depot, $300.00. Check No. 3.

1. Write the date in the Date column.

2. Write the title of the account debited. Write the debit amount.

3. Write the title of the account credited. Write the credit amount.

1

22

33

RECEIVED CASH FROM SALES

August 12. Received cash from sales, $295.00. Tape No. 12.

1. Write the date in the Date column.

2. Write the title of the account debited. Write the debit amount.

3. Write the title of the account credited. Write the credit amount.

1

33

22

SOLD SERVICES ON ACCOUNT

August 12. Sold services on account to Oakdale School, $350.00. Sales Invoice No. 1.

1. Write the date in the Date column.

2. Write the title of the account debited. Write the debit amount.

3. Write the title of the account credited. Write the credit amount.

1

33

22

PAID CASH FOR AN EXPENSE

August 12. Paid cash for rent, $300.00. Check No. 4.

1. Write the date in the Date column.

2. Write the title of the account debited. Write the debit amount.

3. Write the title of the account credited. Write the credit amount.

1

33

22

RECEIVED CASH ON ACCOUNT

August 18. Received cash on account from Oakdale School, $200.00. Receipt No. 2.

1. Write the date in the Date column.

2. Write the title of the account debited. Write the debit amount.

3. Write the title of the account credited. Write the credit amount.

1

33

22

PAID CASH TO OWNER FOR PERSONAL USE

August 18. Paid cash to owner for personal use, $125.00. Check No. 6.

1. Write the date in the Date column.

2. Write the title of the account debited. Write the debit amount.

3. Write the title of the account credited. Write the credit amount.

1

33

22