Chapter 4Recording Transactions in a General

Journal

Journals

Journal- A form used for recording transactions in chronological order

Journalizing- Recording transactions to a journal

What’s the reason to record in a journal?

4-1

Entry- info for each transaction recorded in a journal

General Journal- all kinds of entries recorded in two amount columns

What columns are included?

Date, Account Title, Doc. #, Post. Ref, Debit, Credit

Important Things to Remember

Accuracy- info recorded includes debit and credit parts of each transaction. This info can be verified by comparing journal with transaction data

Chronological Order- journal entries are ordered by date

Double- Entry Accounting- recording of both the debit and credit parts (each transaction affects two accounts)

*****DEBITS= CREDITS******

FYI

Source Documents- a business paper from which info is obtained

Where did these lists of transactions and amounts come from?

This is the proof the transaction occurred;

EX: check stubs

Should only be recorded if it happened. WHY

Checks & InvoicesChecks- p. 67- orders a bank to pay cash from a bank account

Encore makes all cash payments by check, source doc is check stub (more in Ch 6)

Invoice- a form describing the goods & services sold, quantity, & prices

Called a sales invoice if used as a SD for a sale

Checks and invoices are numbered and in sequence

Other Source Documents

Receipts- written acknowledgement for cash received (prepared by Encore for cash received other than sales)

Memorandums- a form that has a brief message describing the transaction

used when no other SD is prepared or more explanation is needed

Calculator Tapes- printed from a register or electronic calculator- shows amounts and totals

Parts of a Journal Entry

Entries consist of 4 Parts-

DATE

DEBIT

CREDIT

SOURCE DOCUMENT (Doc No)

Received Cash from Owner as an Investment

August 1. Received cash from owner as an investment, $10,000.00. Receipt No. 1

Date? Debit? Credit? Source Document?

FYI- Don’t used $ or decimals on a journal

Paid Cash for Supplies

August 3. Paid Cash for supplies, $1,577.00. Check No. 1

If you draw a T-Account and analyze the transaction, journaling is much easier

Date? Debit? Credit? Source Doc?

Practice- p. 71

Terms Review

Audit Your Understanding #1-3

Work Together- #4

On Your Own #5

4.2

Paid Cash for Insurance

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

Analyze the transaction

Date? Debit? Credit? Source Document?

**Remember Debits=Credits***

Bought Supplies on Account

August 7. Bought supplies on account from Ling Music Supplies, $2,720.00. Memorandum No.1

Make a T-Chart to analyze the account

Date? Debit? Credit? Source Document?

Some FYI

Spelling is important

All amounts recorded must have a title in the Account Title Column

The account title that is credited is normally indented

Paid Cash on Account

August 11. Paid cash on account to Ling Music Supplies, $1,360.00. Check No. 3

What does the T-Chart look like? Analyze this transaction.

Date? Debit? Credit? Source Document?

Practice- p. 75

Audit Your Understanding- #1-4

Work Together- (use the same working paper as 4.1) #5

On Your Own- p. 6

4.3

August 12. Received cash from sales, $325.00. Tape No. 12

Analyze this transaction in a T-Account

How is this transaction entered in the journal?

Don’t forget to record the Source Document in Doc. No. Column

Sold Services on Account

August 12. Sold services on account to Kids Time, $200.00. Sales Invoice No. 1

Analyze and enter this transaction in the journal.

Don’t forget- there must be a debit and a credit.

Paid Cash for an Expense

August 12. Paid cash for rent, $250.00. Check No. 4

Date? Debit? Credit? Source Document?

Received Cash on Account

August 12. Received cash on account from Kids Time, $100.00. Receipt No. 2.

Date? Debit? Credit? Source Document?

FYI

Increases in expenses and withdrawals decrease owner’s equity. Decreases in owner’s equity are recorded as debits. Therefore, increases in expenses and in withdrawals are recorded as debits.

Paid Cash to Owner

For Personal Use- Withdrawal (Affects Drawing account)

August 12. Paid cash to owner for personal use, $1000.00 Check No. 6

4 Questions?

Date? Account Titles? Debits? Credits? Doc. No?

4.3 Practice p. 81

Audit Your Understanding #1-5

Work Together #6

On Your Own #7

4.4- Starting a New Journal Page

When is a journal page complete?

Do not record a new entry if there is only one line remaining on the page

Starting a New Page

Start by writing the page number of the journal in the space provided in the heading

Standard Accounting Practices

Errors are corrected neatly by drawing a line through the incorrect item. Write the correct item immediately above the canceled item

If an entire entry is incorrect and found before the next entry is entered draw a neat line through each item and journalize the correct entry on the next lines

If incorrect items are found after other entries have been made, draw neat lines and enter correctly above

Standard Accounting Practices, Cont.

Write in full if space is permitted. Only abbreviate when there is limited space

No dollar signs or decimals (decimals ok in Excel)

Do not leave cents columns blank.

Neatness is important!

4.4 Practice p. 85

Audit Your Understanding #1-3

Work Together #4,5

On Your Own #6, 7