The Journal and Source Documents

CHAPTER 6

A journal is a book in which the accounting entries for all transactions are first recorded, before they are recorded in the ledger accounts

The Journal

The simplest form of journal is the two-column general journal. One side is a debit amount and the other is a credit amount. There is also columns for date, particulars and posting reference. Example on page 158

The Two-Column General Journal

• Page number• Entry balance• Blank line• Compound entry• Account Title• Brief explanation

Features of a General Journal

This is the process of recording accounting entries in the journal.

The journal is known as the book of original entries because each balanced accounting entry is

recorded there first.

Journalizing

Transactions are

recorded in a journal in

order of date

The accounting entries are

transferred to the ledger accounts

Transactions occur

Recording the DataThe Year - Do not repeat it for each entryThe Month - Do not repeat it for each entry. Enter a new month at the point where it occursThe day – The date is repeated no matter how many transactions occur on any given day.

Journalizing in the Two-Columns General Journal

Four Steps:Enter the day in the date columnEnter the name of the accounts to be debited at the left hand sideEnter the name of the accounts to be credited at the left hand side. They are indented Write a brief explanation for the entry beginning at the left side of the particular column on the line beneath the last credit item

Steps in Recording a Journal Entry

This is the journal entry that starts the books off, or “opens” them. Page 170

The Opening Entry

A source document is a business paper that shows the nature of a

transaction and provides all of the information needed to account for it

properly.

Source Documents

A cash sales slip is a business form showing the details of a transaction in which goods or services are sold to a customer for cash.Journal Entry

Dr. Cr.Bank $35.90

Sales $35.90

Cash Sales Slip

A sales invoice is a business form showing the details of a transaction in which goods or services are sold

on account. Page 166

Sales Invoice

Dr CrA/R – S. & s. Boatworks $835.70

Sales $835.70

Journal Entry for a Sales Invoice

A point of sale (POS) terminal is a computerized sales register that allows a business and its customers to exchange funds electronically using debit or credit cards.

At the end of the business day, the accounting clerk will use the POS terminal to print at least two source documents

Point of Sale Summaries

The other common POS summary is a report called a transaction log. Is document generated by a point of sale terminal that contains detailed information about each transaction. Customer’s name and card number.

Transaction Log

It is important for you to realize that credit and debit card transactions are treated as cash receipt from the business’s point of view.

Dr CrBank $734.18

Sales $734.18

Journal Entry for POS Summaries

A purchase invoice is a business form representing a purchase of goods or service on account.

Purchase Invoice

Dr CrEquipment Repairs $241.50 A/P – General Engineering

$241.50

Journal Entries for Purchases Invoices

A cheque copy is a document supporting the accounting entry for a

payment by cheque

Cheque Copies

Dr CrA/P – Sterling Spars $1802.90

Bank $1802.90

Journal entry for a Cheque Copy

This is a business paper that lists the money coming in from customers. Remittance advice This is a form accompanying the cheque explaining the payment

Cash Receipts Daily Summary

Dr CrBank $2142.24

A/R – A. Baldwin$375.00

A/R – F. Perri$965.52

A/R – Pier – Pier 10 Marina$801.72

Journal Entry for a Cash Receipts Daily Summary

A bank debit advice is a bank document informing the business if a decrease made in the business’s bank account

Bank Advices

A bank credit advice is a bank document informing the business of an increase is made in the business’s bank account

Bank Credit Advice

Dr Cr Company A Books

Bank Charges Expense $113.50Bank $113.50

National Bank BooksA/P Company A Bank account $113.50

Interest and charges earned$113.50

Journal entry for a bank debit Advice

Dr CrCompany A Books

Bank $110.50 Interest earned $110.50 National Bank BooksInterest Expense $110.50 A/P Company A Account $110.50

Journal entry for a bank credit Advice