JOURNALS AND JOURNALIZING Journal Form for recording transactions

JOURNALS AND JOURNALIZING • Journal – Form for recording transactions in chronological order • Journalizing – Recording transactions in a journal

( CHARACTER COUNTS ) Recognizing Ethical Dilemmas and Actions 1. Privately write down the names of at least five individuals from whom you would feel comfortable seeking advice on ethical dilemmas. § Why did you choose these individuals? § Why did you not choose others you know?

A FIVE – COLUMN JOURNAL 1 DATE ACCOUNT TITLE DOC. POST NO. REF. PAGE 2 GENERAL DEBIT CREDIT 3 SALES CREDIT 4 5 CASH DEBIT CREDIT • Special Amount Column – Journal amount column headed with an account title • General Amount Column – Journal amount column that is not headed with an account title

• Entry – Information for each transaction recorded in a journal • Double-Entry Accounting – Recording of debit and credit parts of a transaction • Source Document – Business paper from which information is obtained for a journal entry • Check – Business form ordering a bank to pay cash from a specific bank account

CHECKS A business form ordering a bank to pay cash from a bank account No. 1 275. 00 $ Date August 3 To Port City Supply For 20 AMT. DEPOSITED PAY TO THE ORDER OF 0 00 8 1 -- August 3, 7549 Broadway Portland, OR 97202 -2531 Supplies BAL BRO’T FOR’D Techknow Consulting -- 5000 00 Port City Supply $ no Two hundred seventy-five and 100 Pacific national bank OTHER Portland, OR SUBTOTAL………………… 5000 00 AMT. THIS CHECK…………. 275 00 BAL. CAR’D. FOR’D………… 4725 00 FOR Supplies : 063101098: 43: 452119: Kim Park 20 -- 275. 00 DOLLARS

SALES INVOICES Form describing the goods or services sold, the quantity and the price Techknow Consulting 7549 Broadway Portland, OR 97202 -2531 Sold to: Oakdale School No. 1 5211 SE Oak Street Date Portland, OR 97208 -5392 Terms 8/12/-30 Days Description Computer Network Setup Total $350. 00

• Invoice – Form describing: Goods and Services sold, Quantity sold and Price • Sales Invoice – Invoice used as source document for recording a sale ON ACCOUNT

OTHER SOURCE DOCUMENTS Business form giving written acknowledgement for cash received No. 1 Receipt No. 1 August 1 20 -From Kim Park For Investment August 1 Date 5, 000 00 Rec’d from For Kim Park Investment Five thousand Techknow Consulting 7549 Broadway Portland, OR 97202 -2531 20 no 100 -- Dollars 5, 000 00 Kim Park Received By • Receipt – A business form giving written acknowledgement for cash received

OTHER SOURCE DOCUMENTS Form on which a brief message is written describing a transaction Techknow Consulting 7549 Broadway Portland, OR 97202 -2531 No. 1 MEMORANDUM Bought supplies on account from Supply Depot, $500. 00 Signed: ___________ Date: _________ Kim Park August 7, 20 -- • Memorandum – A form on which a brief message is written describing a transaction

RECEIVED CASH FROM OWNER AS AN INVESTMENT Date 1 4 2 Source Document JOURNAL 1 DATE ACCOUNT TITLE DOC. POST NO. REF. Debit PAGE 2 GENERAL DEBIT CREDIT 3 SALES CREDIT 4 5000. 00 3 Credit 5 CASH DEBIT CREDIT 20 -- Aug 1 Kim Park, Capital R 1 1 5000. 00

1 Date - Write the date, 20 --, Aug 1, in the Date column. This is the first entry. Therefore, write both the year and month for the first entry only. 2 Debit – The journal has a special amount column for debits to Cash. Write the debit amount, $5000, in the Cash Debit column. Column has heading. You don not need to write it 3 Credit – There is no special amount column with title for the account credited, Kim Park, Capital. Therefore, record credit amount, $5000 in General Credit column. Write account title in Account Title column. 4 Source Document – Write the source document number, R 1, in the Doc No column. The source document number indicates that this is Receipt No. 1 This serves as a cross reference from the Journal to the source document.

PAID CASH FOR SUPPLIES 2 3 Debit JOURNAL 1 DATE ACCOUNT TITLE Credit DOC. POST NO. REF. PAGE 2 GENERAL DEBIT CREDIT 3 SALES CREDIT 1 4 5 CASH DEBIT CREDIT 20 -- Aug 1 Kim Park, Capital 3 Supplies Date 1 R 1 5000. 00 C 1 5000. 00 275. 00 4 Source Document 275. 00 Supplies 275. 00 Cash 275. 00

1 Date - Write the date, 3, in the Date column. This is NOT the first entry. Therefore, do not write the year and month for this entry. 2 Debit – There is NO special amount column for Supplies. Therefore, record the debit amount, $275, in the General Debit column. Write the title, Supplies, in the Account Title column. 3 Credit – The journal has a special amount column for credits to Cash. Write the credit amount, $275, in the Cash Credit column. The title of the account is the column heading. Therefore, do not write the account title in the Account Title column. 4 Source Document – Write the source document number, C 1, in the Doc. No. column. The source document number, C 1 indicates that this is Check No. 1.

End of Lesson REVIEW WORK TOGETHER 3 -1 cont. Journalizing entries in a five-column journal Date 1 4 2 Source Document JOURNAL 1 DATE ACCOUNT TITLE DOC. POST NO. REF. Debit PAGE 2 GENERAL DEBIT CREDIT 3 SALES CREDIT 4 1 5 CASH DEBIT CREDIT 20 -- Apr 1 N. Derner, Capital R 1 2 Supplies C 1 1500. 00 375. 00 3 Credit 1500. 00 375. 00

PAID CASH FOR INSURANCE 2 3 Debit JOURNAL 1 DATE ACCOUNT TITLE Credit DOC. POST NO. REF. PAGE 2 GENERAL DEBIT CREDIT 3 1 4 SALES CREDIT 5 CASH DEBIT CREDIT 20 -- Aug 1 K. Park, Capital R 1 5000. 00 3 Supplies C 1 4 Prepaid Insurance C 2 Date 1 4 5000. 00 275. 00 1200. 00 Source Document Prepaid Insurance 1200. 00 Cash 1200. 00

BOUGHT SUPPLIES ON ACCOUNT 2 3 Debit JOURNAL 1 DATE ACCOUNT TITLE Credit DOC. POST NO. REF. PAGE 2 3 SALES CREDIT GENERAL DEBIT CREDIT 4 1 5 CASH DEBIT CREDIT 20 -- Aug 1 K. Park, Capital R 1 3 Supplies C 1 4 Prepaid Insurance C 2 7 Supplies M 1 5000. 00 275. 00 1200. 00 500. 00 A/P Supply Depot Date 1 5000. 00 500. 00 4 Source Document Supplies 500. 00 Accounts Pay. – Supply Depot 500. 00

PAID CASH ON ACCOUNT 2 Debit JOURNAL 1 DATE ACCOUNT TITLE 7 Supplies DOC. POST NO. REF. M 1 2 GENERAL DEBIT CREDIT Date 1 3 SALES CREDIT 4 1 5 CASH DEBIT CREDIT 500. 00 A/P Supply Depot 11 A/P Supply Depot PAGE 500. 00 C 3 A/P Supply Depot 300. 00 Cash 300. 00 4 Source Document 300. 00 3 Credit

End of Lesson REVIEW WORK TOGETHER 3 -2 cont. Journalizing entries in a five-column journal JOURNAL 1 DATE ACCOUNT TITLE 5 Supplies DOC. POST NO. REF. M 1 PAGE 2 GENERAL DEBIT CREDIT 3 SALES CREDIT 4 1 5 CASH DEBIT CREDIT 500. 00 A/P Palm Supply 500. 00 7 P. P. Insurance C 2 300. 00 9 A/P Palm Supply C 3 250. 00

RECEIVED CASH FROM SALES 3 Credit JOURNAL 1 DATE 12 Date 1 ACCOUNT TITLE DOC. POST NO. REF. 2 GENERAL DEBIT CREDIT T 12 3 SALES CREDIT 295. 00 4 1 PAGE 4 5 CASH DEBIT CREDIT 295. 00 Source Document 2 Debit

SOLD SERVICES ON ACCOUNT 2 Debit JOURNAL 1 DATE ACCOUNT TITLE 12 2 GENERAL DEBIT CREDIT T 12 12 A/R Oakdale School Date DOC. POST NO. REF. A/R – Oakdale School 1350. 00 Sales 350. 00 S 1 3 SALES CREDIT 295. 00 350. 00 4 1 PAGE Source Document 4 5 CASH DEBIT CREDIT 295. 00 350. 00 3 Credit

PAID CASH FOR AN EXPENSE 2 Debit JOURNAL 1 DATE ACCOUNT TITLE 12 2 GENERAL DEBIT CREDIT T 12 3 4 SALES CREDIT 295. 00 1 5 CASH DEBIT CREDIT 295. 00 12 A/R Oakdale School 12 Rent Expense S 1 350. 00 C 4 300. 00 Rent Expense 12 Utilities Expense C 5 40. 00 300. 00 Date DOC. POST NO. REF. PAGE 1 4 Cash 300. 00 Source Document 350. 00 3 Credit

RECEIVED CASH ON ACCOUNT Date 1 4 Source Document JOURNAL 1 DATE ACCOUNT TITLE 12 2 GENERAL DEBIT CREDIT T 12 12 A/R Oakdale School 18 A/R Oakdale School Cash 200. 00 DOC. POST NO. REF. 3 A/R Oakdale School 200. 00 S 1 R 2 Credit 1 PAGE 3 SALES CREDIT 295. 00 350. 00 4 5 CASH DEBIT CREDIT 295. 00 350. 00 200. 00 2 Debit

PAID CASH TO OWNER FOR PERSONAL USE Date 1 2 Debit JOURNAL 1 DATE ACCOUNT TITLE 12 DOC. POST NO. REF. 2 3 GENERAL DEBIT CREDIT T 12 12 A/R Oakdale School 18 A/R Oakdale School S 1 12 K Park, Drawing C 6 4 4 SALES CREDIT 295. 00 350. 00 R 2 Source Document 5 CASH DEBIT CREDIT 295. 00 350. 00 200. 00 125. 00 1 PAGE 200. 00 125. 00 Kim Park, Drawing 125. 00 3 Cash 125. 00 Credit

End of Lesson REVIEW WORK TOGETHER 3 -3 cont. Journalizing that effect owner’s equity JOURNAL 1 DATE ACCOUNT TITLE DOC. POST NO. REF. 12 Rent Expense C 4 13 14 A/R L. Rohe T 13 19 Utilities Expense 2 GENERAL DEBIT CREDIT 3 SALES CREDIT 1 4 1000. 00 2500. 00 510. 00 C 5 148. 00 2500. 00 510. 00 148. 00 255. 00 1000. 00 5 CASH DEBIT CREDIT 1000. 00 S 1 20 A/R L. Rohe R 2 21 N. Derner, Drawing C 6 PAGE 255. 00 1000. 00

PROVING A JOURNAL PAGE 1 Add each Amount column Column 2 Debit Column Totals Add debit totals And credit totals Credit Column Totals General Sales Cash $3, 543. 00 6, 710. 00 $ 5, 750. 00 1, 960. 00 2, 543. 00 Totals 10, 253. 00 3 Totals equal

RULING A JOURNAL PAGE JOURNAL 1 DATE ACCOUNT TITLE DOC. POST NO. REF. 1 PAGE 2 3 SALES CREDIT GENERAL DEBIT CREDIT 4 5 CASH DEBIT CREDIT 20 -- Aug 1 Kim Park, Capital R 1 3 Supplies C 1 4 Prepaid Insurance C 2 20 Supplies M 2 275. 00 1200. 00 50. 00 A/P Thomas Supply Co. 20 Carried Forward Date 2 3 Carried Forward 50. 00 3543. 00 1 5000. 00 Single Rule 5750. 00 4 1960. 00 Column Totals 6710. 00 5 2543. 00 Double Rule

STARTING A JOURNAL PAGE 2 Date DATE 1 JOURNAL 1 ACCOUNT TITLE DOC. POST NO. REF. Page number 2 3 SALES CREDIT GENERAL DEBIT CREDIT 2 PAGE 4 5 CASH DEBIT CREDIT 2000 Aug 20 Brought Forward 3543. 00 5750. 00 4 1960. 00 Column Totals 6710. 00 2543. 00

PROVING AND RULING A JOURNAL PAGE AT THE END OF THE MONTH JOURNAL 1 DATE ACCOUNT TITLE DOC. POST NO. REF. 1 PAGE 2 3 SALES CREDIT GENERAL DEBIT CREDIT 4 5 CASH DEBIT CREDIT 20 -- Aug 20 Brought Forward 1960. 00 6710. 00 T 21 225. 00 31 T 31 190. 00 31 Misc. Expense 31 Totals M 3 21 Date 2 3 Totals 3543. 00 8. 00 4351. 00 1 5750. 00 Single Rule 2543. 00 8. 00 5750. 00 4 3565. 00 Column Totals 8315. 00 5 3351. 00 Double Rule

PROVING CASH Prove page 2 of the Journal 1 Add each Amount column Column 2 Debit Column Totals Add debit totals And credit totals Credit Column Totals General Sales Cash $4, 351. 00 8, 351. 00 $ 5, 750. 00 3, 565. 00 3, 351. 00 Totals 12, 666. 00 3 Totals equal

Prove Cash: Cash on hand at the beginning of the month………………… 0. 00 Plus total cash received during the month…. ………………… 8, 315. 00 Equals Total…………………………… 8, 315. 00 Less total cash paid during the month…………… -3, 351. 00 Equals cash balance at the end of the month………………… 4, 964. 00 Checkbook balance on the next unused check stub………… 4, 964. 00

STANDARD ACCOUNTING PRACTICES JOURNAL 1 DATE 20 -- ACCOUNT TITLE DOC. POST NO. REF. 1 PAGE 2 GENERAL DEBIT CREDIT 3 SALES CREDIT 4 5 CASH DEBIT CREDIT 350 00 28 T 28 29 Rent Expense 29 Repair Expense C 22 5. 00 C 22 50. 00 C 23 100. 00 30 K. Park, Drawing C 24 30 Totals 500. 00 3500. 00 Supplies 29 Misc. Expense 8750. 00 9200. 00 4000. 00 1230. 00 7850. 00

End of Lesson REVIEW WORK TOGETHER 3 -4 cont. Proving and ruling a Journal JOURNAL 1 DATE ACCOUNT TITLE 1000. 00 23 A/R L. Rohe S 2 27 N. Derner, Drawing C 7 375. 00 29 A/R L. Rohe 30 30 Carried Forward 2 DOC. POST GENERAL NO. REF. DEBIT CREDIT 21 N. Derner, Drawing C 6 1 PAGE 3 SALES CREDIT 4 CASH DEBIT CREDIT 1000. 00 375. 00 500. 00 300. 00 R 3 5824. 00 5 7600. 00 300. 00 500. 00 3142. 00 9500. 00 4582. 00

Key Accounting Concepts • Objective Evidence – A source document is prepared for each transaction: – Ex: – Receipt – Check – Invoice etc.