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