Chapter 3 Journalizing Transactions. Journals, Source Documents, and Recording Entries in a Journal...
-
Upload
hortense-nichols -
Category
Documents
-
view
216 -
download
2
Transcript of Chapter 3 Journalizing Transactions. Journals, Source Documents, and Recording Entries in a Journal...
![Page 1: Chapter 3 Journalizing Transactions. Journals, Source Documents, and Recording Entries in a Journal GAAP (Generally Accepted Accounting Practice) (principles)](https://reader036.fdocuments.net/reader036/viewer/2022082709/56649cf05503460f949c0168/html5/thumbnails/1.jpg)
Chapter 3
Journalizing Transactions
![Page 2: Chapter 3 Journalizing Transactions. Journals, Source Documents, and Recording Entries in a Journal GAAP (Generally Accepted Accounting Practice) (principles)](https://reader036.fdocuments.net/reader036/viewer/2022082709/56649cf05503460f949c0168/html5/thumbnails/2.jpg)
Journals, Source Documents, and Recording Entries in a Journal
GAAP (Generally Accepted Accounting Practice) (principles) is to make a more permanent record by recording transactions in a journal
A form for recording transactions in chronological order is called a journal
Recording transactions in a journal is called journalizing
![Page 3: Chapter 3 Journalizing Transactions. Journals, Source Documents, and Recording Entries in a Journal GAAP (Generally Accepted Accounting Practice) (principles)](https://reader036.fdocuments.net/reader036/viewer/2022082709/56649cf05503460f949c0168/html5/thumbnails/3.jpg)
Journals
The type of journal that is used is determined by nature of business and number of transactions
Five amt col.: General Debit, General Credit, Sales Credit, Cash Debit, Cash Credit
Page 57 - Journal
![Page 4: Chapter 3 Journalizing Transactions. Journals, Source Documents, and Recording Entries in a Journal GAAP (Generally Accepted Accounting Practice) (principles)](https://reader036.fdocuments.net/reader036/viewer/2022082709/56649cf05503460f949c0168/html5/thumbnails/4.jpg)
Special Amount Columns
A journal amount column headed with an account title is called a special amount column. -- Used for frequently occurring transactions
Most transactions involve receipt or payment of Cash
A large number of transactions involve receiving cash from Sales
Special amount columns are used for Sales Credit, Cash Debit and Cash Credit
Eliminates writing an account title in the Account Title Column
![Page 5: Chapter 3 Journalizing Transactions. Journals, Source Documents, and Recording Entries in a Journal GAAP (Generally Accepted Accounting Practice) (principles)](https://reader036.fdocuments.net/reader036/viewer/2022082709/56649cf05503460f949c0168/html5/thumbnails/5.jpg)
General Amount Columns
A journal amount column that is not headed with an account title is called a general amount column.
General Debit and General Credit
![Page 6: Chapter 3 Journalizing Transactions. Journals, Source Documents, and Recording Entries in a Journal GAAP (Generally Accepted Accounting Practice) (principles)](https://reader036.fdocuments.net/reader036/viewer/2022082709/56649cf05503460f949c0168/html5/thumbnails/6.jpg)
Benefits of a Journal
Accuracy -- Debit and credit parts of each transaction are recorded in one place
Transactions are recorded in chronological order -- easy to locate
Information for each transaction recorded in a journal is called an entry
The recording of debit and credit parts of a transaction is called double-entry accounting
Affects at least two accounts -- assures that debits equal credits
![Page 7: Chapter 3 Journalizing Transactions. Journals, Source Documents, and Recording Entries in a Journal GAAP (Generally Accepted Accounting Practice) (principles)](https://reader036.fdocuments.net/reader036/viewer/2022082709/56649cf05503460f949c0168/html5/thumbnails/7.jpg)
Source Documents
A business paper from which information is obtained for a journal entry is called a source document. Proves that the transaction did occur
Accounting concept: Objective Evidence – a source document is prepared for every transaction
RULES Transactions should be journalized only if it
occurred Amounts must be accurate and true
verify by comparing entry with source document.
![Page 8: Chapter 3 Journalizing Transactions. Journals, Source Documents, and Recording Entries in a Journal GAAP (Generally Accepted Accounting Practice) (principles)](https://reader036.fdocuments.net/reader036/viewer/2022082709/56649cf05503460f949c0168/html5/thumbnails/8.jpg)
Examples of Source Documents
Check stub – describes information about the cash payment transaction
Checks – a business form ordering a bank to pay cash from a bank account.
All cash payments are made by check Invoice – a form describing the goods or services sold,
the quantity, and the price. -- Prenumbered Sales Invoice – an invoice used as a source
document for recording a sale on account Also called sales ticket or sales slip
PAGES 58-59
![Page 9: Chapter 3 Journalizing Transactions. Journals, Source Documents, and Recording Entries in a Journal GAAP (Generally Accepted Accounting Practice) (principles)](https://reader036.fdocuments.net/reader036/viewer/2022082709/56649cf05503460f949c0168/html5/thumbnails/9.jpg)
Examples of Source Documents
Receipts – a business form giving written acknowledgement for cash received. When cash is received from other sources other than
sales, prepare a receipt -- Prenumbered Memorandum – a form on which a brief message is written
describing a transactions Used when no other source document is prepared or
when additional explanation is needed, Prenumbered Calculator Tape – total amount of cash received from sales is
printed on electronic calculator -- daily salesT12 – tape for twelfth day of the month --- page 75
![Page 10: Chapter 3 Journalizing Transactions. Journals, Source Documents, and Recording Entries in a Journal GAAP (Generally Accepted Accounting Practice) (principles)](https://reader036.fdocuments.net/reader036/viewer/2022082709/56649cf05503460f949c0168/html5/thumbnails/10.jpg)
Recording Transactions in aFive-Column Journal
Entry consists of 4 parts:1. Date 2. Debit 3. Credit 4. Source document
DATE1st entry on journal page – must contain year, month, and dayall other entries – must contain day only
DEBITDebits to cash – use special amount columnWrite amount
CREDITCredits to cash – use special amount columnCredits to Sales – use special amount columnAll other credits -- Write title of account to be credited Write amount
SOURCE DOCUMENTWrite number in Doc. No. columnDocument number – a cross reference from the journal to the source document
![Page 11: Chapter 3 Journalizing Transactions. Journals, Source Documents, and Recording Entries in a Journal GAAP (Generally Accepted Accounting Practice) (principles)](https://reader036.fdocuments.net/reader036/viewer/2022082709/56649cf05503460f949c0168/html5/thumbnails/11.jpg)
Proving and Ruling a Journal
After next to last line of journal page is used, columns are proved and ruled before totals are carried forward to next page.
Also at end of each month – prove and rule a journal
![Page 12: Chapter 3 Journalizing Transactions. Journals, Source Documents, and Recording Entries in a Journal GAAP (Generally Accepted Accounting Practice) (principles)](https://reader036.fdocuments.net/reader036/viewer/2022082709/56649cf05503460f949c0168/html5/thumbnails/12.jpg)
Proving and Ruling a Journal – Lesson 3-4
Verify that total debits on the page equal total credits
3 steps1. add each of the amount columns
2. add the debit column totals, and then add the credit column totals
3. verify that the total debits and total credits are equal
PROVING A JOURNAL
![Page 13: Chapter 3 Journalizing Transactions. Journals, Source Documents, and Recording Entries in a Journal GAAP (Generally Accepted Accounting Practice) (principles)](https://reader036.fdocuments.net/reader036/viewer/2022082709/56649cf05503460f949c0168/html5/thumbnails/13.jpg)
Ruling a Journal Page
1. Rule a single line across all amount columns directly below the last entry
2. On next line, write the date3. Write the words Carried Forward in the Account
Title column -- check mark in Post Ref column to show that nothing on this line needs to be posted
4. Write each column total below the single line5. Rule double lines below the column totals across all
amount columns
![Page 14: Chapter 3 Journalizing Transactions. Journals, Source Documents, and Recording Entries in a Journal GAAP (Generally Accepted Accounting Practice) (principles)](https://reader036.fdocuments.net/reader036/viewer/2022082709/56649cf05503460f949c0168/html5/thumbnails/14.jpg)
Starting a New Journal Page
Column totals from previous page are carried forward to a new page
1. Write page number at the top of journal2. Write the date – year, month and day3. Write the words Brought Forward in the
Acct Title Col. -- check mark in Post Ref4. Record the column totals
![Page 15: Chapter 3 Journalizing Transactions. Journals, Source Documents, and Recording Entries in a Journal GAAP (Generally Accepted Accounting Practice) (principles)](https://reader036.fdocuments.net/reader036/viewer/2022082709/56649cf05503460f949c0168/html5/thumbnails/15.jpg)
Completing a JournalAt the End of the Month
1. Prove last page-- debits equal credits
2. Prove cashCash on hand at beginning of month 0.00
plus total cash received during month (debit) + 15,600.00Equals total = 15,600.00less total cash paid during month (credit) - 6,980.00Equal cash balance at the end of the month = 8,620.00(this should equal checkbook balance on the nextunused check stub) = 8,620.00
3. Rule journal
![Page 16: Chapter 3 Journalizing Transactions. Journals, Source Documents, and Recording Entries in a Journal GAAP (Generally Accepted Accounting Practice) (principles)](https://reader036.fdocuments.net/reader036/viewer/2022082709/56649cf05503460f949c0168/html5/thumbnails/16.jpg)
Standard Accounting Practices
Page 77