Chapter 3 Journalizing Transactions 7 Journals and Journalizing

Chapter 3 Journalizing Transactions

7. Journals and Journalizing Journal – a form for recording transactions in chronological order Journalizing – recording transactions in a journal 5 column journal 2 page 56

Journals and Journalizing General amount column – a journal amount column that is NOT headed with an account title Special amount column – a journal amount column headed with an account title, used for transactions that occur frequently (ex: Sales credit, cash debit, cash credit) 3 page 57

Journals and Journalizing Entry – information for each transaction recorded in a journal Double-entry accounting – the recording of the debit and credit parts of a transaction 4 page 57

8. Source Documents Source document – a business paper from which information is obtained for a journal entry Accounting Concept: Objective Evidence • When a source document is prepared for each transaction 5 page 57

Source Documents Check (C) – a business form ordering a bank to pay cash from a bank account 6 page 58

Source Documents Invoice – a form describing the goods or services sold, the quantity, and the price Sales invoice (S) – an invoice used as a source document for recording a sale on account 7 page 58

Source Documents Receipt (R) – a business form giving written acknowledgement for cash received receipt 8 page 59

Source Documents Memorandum (M) – a form on which a brief message is written describing a transaction memorandum 9 page 59

Source Documents Calculator tape (T) – printed total of the amount of cash received for a time period (day) calculator tape 10 page 59

RECEIVED CASH FROM OWNER AS AN INVESTMENT page 60 August 1. Received cash from owner as an investment, $5, 000. Receipt No. 1. 1 3 4 3 2 1. Write the date in the Date column. 2. Write the debit amount in the Cash Debit column. 3. Record the credit amount in the General Credit column. Write the title of the account in the Account Title column. 4. Write the source document number in the Doc. No. column. 11 LESSON 3 -1

PAID CASH FOR SUPPLIES page 61 August 3. Paid cash for supplies, $275. 00. Check No. 1. 1 2 4 2 3 1. Write the date in the Date column. 2. Record the debit amount in the General Debit column. Write the title of the account in the Account Title column. 3. Write the credit amount in the Cash Credit column. 4. Write the source document number in the Doc. No. column. 12 LESSON 3 -1

MORE TRANSACTIONS 13 page 73

PAID CASH FOR INSURANCE August 4. Paid cash for insurance, $1, 200. Check No. 2. 1 2 4 2 3 1. Write the date in the Date column. 2. Record the debit amount in the General Debit column. Write the title of the account in the Account Title column. 3. Write the credit amount in the Cash Credit column. 4. Write the source document number in the Doc. No. column. 14 LESSON 3 -2 page 63

BOUGHT SUPPLIES ON ACCOUNT page 64 August 7. Bought supplies on account from Supply Depot, $500. Memorandum No. 1. 1 2 4 3 2 3 1. Write the date in the Date column. 2. Record the debit amount in the General Debit column. Write the title of the account in the Account Title column. 3. Record the credit amount on the next line in the General Credit column. Write the title of the account in the Account Title column. 4. Write the source document number in the Doc. No. column on the first line of the entry. 15 LESSON 3 -2

PAID CASH ON ACCOUNT page 65 August 11. Paid cash on account to Supply Depot, $300. Check No. 3. 1 2 2 3 4 1. Write the date in the Date column. 2. Record the debit amount in the General Debit column. Write the title of the account in the Account Title column. 3. Write the credit amount in the Cash Credit column. 4. Write the source document number in the Doc. No. column. 16 LESSON 3 -2

RECEIVED CASH FROM SALES August 12. Received cash from sales, $295. 00. Tape No. 12. 1 3 4 3 3 1. Write the date in the Date column. 2. Write the debit amount in the Cash Debit column. 3. Write the credit amount in the Sales Credit column. Place a check mark in the Account Title column. A check mark is also placed in the Post. Ref. column. 4. Write the source document number in the Doc. No. column. 17 LESSON 3 -3 2 page 67

SOLD SERVICES ON ACCOUNT page 68 August 12. Sold services on account to Oakdale School, $350. 00. Sales Invoice No. 1. 2 1 4 2 3 1. Write the date in the Date column. 2. Record the debit amount in the General Debit column. Write the title of the account in the Account Title column. 3. Write the credit amount in the Sales Credit column. 4. Write the source document number in the Doc. No. column. 18 LESSON 3 -3

PAID CASH FOR AN EXPENSE August 12. Paid cash for rent, $300. Check No. 4. 1 2 4 2 3 1. Write the date in the Date column. 2. Write the debit amount in the General Debit column. Write the title of the account in the Account Title column. 3. Write the credit amount in the Cash Credit column. 4. Write the source document number in the Doc. No. column. 19 LESSON 3 -3 page 69

RECEIVED CASH ON ACCOUNT page 70 August 18. Received cash on account from Oakdale School, $200. Receipt No. 2. 1 3 4 3 1. Write the date in the Date column. 2. Write the debit amount in the Cash Debit column. 3. Record the credit amount in the General Credit column. Write the title of the account in the Account Title column. 4. Write the source document number in the Doc. No. column. 20 LESSON 3 -3 2

PAID CASH TO OWNER FOR PERSONAL USE page 71 August 18. Paid cash to owner for personal use, $125. 00. Check No. 6. 1 2 4 2 3 1. Write the date in the Date column. 2. Write the debit amount in the General Debit column. Write the title of the account in the Account Title column. 3. Write the credit amount in the Cash Credit column. 4. Write the source document number in the Doc. No. column. 21 LESSON 3 -3

page 73 9. Proving and Ruling a Journal o Proving a Journal o Performed before using the last line in a journal before totals are carried forward o Verifies debits = credits o 3 steps 1. Add each of the amount columns 2. Add the debit and credit column totals 3. Verify total debits = total credits 22

Proving and Ruling a Journal o Ruling a Journal…end of page 1. Rule a single line across all columns below last entry 2. Write the current date 3. Write “Carried Forward” in Account Title column and place a check mark in Post Ref. column 4. Write each column total below the single line 5. Rule a double line below column totals to indicate total debits = total credits 23 page 74

RULING A JOURNAL PAGE 2 3 1. Rule a single line. 2. Write the date. 3. Write Carried Forward. 4. Write each column total. 5. Rule double lines. 24 LESSON 3 -4 page 74 1 5 4

Proving and Ruling a Journal o Starting a new Journal Page 1. Write the page number at the top 2. Write the current date 3. Write “Brought Forward” in Account Title column and place a check mark in Post Ref. column 4. Record the column totals 25 page 75

STARTING A NEW JOURNAL PAGE 2 page 75 1 3 1. Write the page number. 4 2. Write the date. 3. Write Brought Forward in the Account Title column. A check mark is also placed in the Post. Ref. column. 4. Record the column totals brought forward from the previous page. 26 LESSON 3 -4

Proving and Ruling a Journal o End of Month Ruling o Follow the same steps of ruling except 1. Write “Totals” in Account Title column and DO NOT put a check mark in Post Ref. column 27 page 75

PROVING AND RULING A JOURNAL AT THE END OF A MONTH page 75 2 1. 2. 3. 4. 5. 28 1 3 5 Rule a single line. On the next line, write the date. Write the word Totals. Write each column total. Rule double lines. LESSON 3 -4 4

Proving Cash o. Proving cash – determining that the amount of cash agrees with the accounting record o Start with cash on hand at the beginning of the month o +Add cash received (cash debit column) o =Total o -Minus cash paid (cash credit column) o =Total o Verify this amount matches balance in checkbook 29 page 76

STANDARD ACCOUNTING PRACTICES 2 3 4 1 5 6 8 9 30 page 77 LESSON 3 -4 7