Chapter 3-1
Journals, Source Documents, and
Recording Entries in a Journal
New Vocabulary
• Journal:
A form for recording transactions in
chronological order.
• Journalizing:
Recording transactions in a journal.
• Advantages of Journalizing:
– Accuracy -- debit and credit parts of a
transaction are recorded in one place.
– Chronological record -- transactions are
recorded in order by date.
2
Remember:
The nature of the
business determines
the type of journal
used.
3
Special Amount Column
• A journal amount column headed with an
account title.
General Amount Column
• A journal amount column that is not headed
with an account title.
4
A Five-Column Journal:
Has five amount columns: (Ex. Page 66)
• General Debit
• General Credit
• Sales Credit (Special Amount Column)
• Cash Debit (Special Amount Column)
• Cash Credit (Special Amount Column)
5
• Double-entry Accounting:
The recording of debit and credit parts of a
transaction.
• Source Document: A business
paper from which information is obtained for a
journal entry.
6
Check (Example on pg. 67)
• A business form ordering a bank to pay cash
from a bank account.
7
More Vocab
• Invoice: A form describing the goods or
services sold, the quantity, and the price.
• Sales Invoice: An invoice used as a
source document for recording a sale on account.
8
Receipt
• A business form giving written
acknowledgement for cash received.
The receipt number helps keep track of all
receipts.
receipt
9
Memorandum
• A form on which a brief message is written
describing a transaction.
memorandum
10
Calculator Tapes
• A small business may use a printing
calculator to total the daily cash sales. This
becomes a source document for the total
sales of the day.
calculator tape
11
Steps to Journalizing
Aug. 1. Received cash from owner, Micah
Ringleberg, as an investment. $10,000.00. Receipt
No. 1.
• What accounts are affected?
• Cash and Micah Ringleberg, Capital
• Are they increased or decreased?
– Both are increased
• Are they debited or credited?
– Cash is debited, Micah Ringleberg, Capital is
credited.
12
RECEIVED CASH FROM OWNER AS
AN INVESTMENT
page 60
August 1. Received cash from owner as an investment, $5,000.00.
Receipt No. 1.
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.
13
PAID CASH FOR SUPPLIES
page 61
August 3. Paid cash for supplies, $275.00. Check No. 1.
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
Auditing Your Understanding
In what order are transactions recorded in a
journal?
• Chronological
Why are source documents important?
• They provided objective evidence of the
transaction.
List the four parts of a journal entry.
• Date, debit amount, credit amount, source
document.
15
Assignments
Review Abbreviations:
• What are the five source
documents?
• C, M, R, S, T.
• Check, Memorandum, Receipt,
Sales Invoice, and Calculator Tape
• Work Together in book (p.71)
16
LESSON 3-2
Journalizing Buying Insurance,
Buying on Account, and Paying
on Account
PAID CASH FOR INSURANCE
page 63
August 4. Paid cash for insurance, $1,200.00. Check No. 2.
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.
18
BOUGHT SUPPLIES ON ACCOUNT
page 64
August 7. Bought supplies on account from
Supply Depot, $500.00. Memorandum No. 1.
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.
19
PAID CASH ON ACCOUNT
page 65
August 11. Paid cash on account to Supply Depot, $300.00. Check
No. 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.
20
Audit Your Understanding
Which journal columns are used to
record paying cash for insurance?
• General debit, Cash credit
Which journal columns are used to
record buying supplies on account?
• General debit, General credit
21
Assignments
• Aplia.com
22
LESSON 3-3
Journalizing Transactions That Affect
Owner’s Equity and Receiving Cash on
Account
What does a check mark in the
Account Title Column mean?
• Check Mark Indicates that each amount in the
entry is recorded in a special amount column.
• In double-entry accounting, each transaction
affects at least two accounts.
• At least one account will be debited and one
account will be credited.
24
RECEIVED CASH FROM SALES
page 67
August 12. Received cash from sales, $295.00. Tape No. 12.
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.
25
SOLD SERVICES ON ACCOUNT
page 68
August 12. Sold services on account to Oakdale School, $350.00.
Sales Invoice No. 1.
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.
26
PAID CASH FOR AN EXPENSE
page 69
August 12. Paid cash for rent, $300.00. Check No. 4.
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.
27
RECEIVED CASH ON ACCOUNT
page 70
August 12. Received cash on account from Oakdale School,
$200.00. Receipt No. 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.
28
PAID CASH TO OWNER FOR
PERSONAL USE
page 71
August 12. Paid cash to owner for personal use, $125.00. Check No.
6.
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.
29
Audit Your Understanding
Which journal columns are used to record receiving
cash from sales?
• Cash Debit; Sales Credit
Which journal columns are used to record sales on
account?
• General Debit; Sales Credit
Which journal columns are used to record paying cash
for an expense?
• General Debit; Cash Credit
30
Audit Your Understanding
Which journal columns are used to record receiving
cash on account?
• Cash Debit; General Credit
Which journal columns are used to record paying cash
to owner for personal use?
• General Debit; Cash Credit
31
LESSON 3-4
Proving and Ruling a
Journal
PROVING A JOURNAL PAGE
1
2
page 73
2
3
1. 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.
33
RULING A JOURNAL PAGE
page 74
1
2
3
1. Rule a single line.
2. Write the date.
3. Write Carried Forward.
4. Write each column total.
5. Rule double lines.
5
4
34
STARTING A NEW JOURNAL PAGE
page 75
1
2
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.
35
PROVING AND RULING A JOURNAL AT
page 75
THE END OF A MONTH
1
2
3
1. Rule a single line.
2. On the next line, write the date.
3. Write the word Totals.
4. Write each column total.
5. Rule double lines.
5
4
36
Proving Cash
•Determining that the
amount of cash agrees
with the accounting
records.
37
Proving cash -- 1st Step:
Calculate the cash balance: (pg. 76)
1. Cash on hand at the beginning of the month
2. Plus total cash received during the month.
(Cash Debit column)
3. Equals total.
4. Less total cash paid during the month. (Cash
Credit column
5. Equals cash balance at the end of the
month.
38
Proving cash -- 2nd Step:
1. Verify that the cash balance equals
the checkbook balance on the next
unused check stub in the checkbook.
2. If they are the same, cash is proved.
39
Standard Accounting Practices
• Correct errors by drawing a line through
the error. Write the correct item
immediately above the canceled item.
• Words in accounting records are written in
full when time permits. Abbreviate only
when necessary if space is limited.
• Dollar and cents signs and decimal points
are not used when writing on ruled
accounting paper.
40
More Standard Accounting
Practices
• Two zeros are written in the cents column when an
amount is in even dollars.
• A single line is ruled across amount columns to indicate
addition or subtraction.
• A double line is ruled across the amount column to
indicate that the totals have been verified as correct.
• NEATNESS is important so there is never any doubt.
41
Audit Your Understanding
•
•
•
•
List the three steps to proving a journal.
Add all debit column totals.
Add all credit column totals.
Verify that debit totals = credit totals.
42
Audit Your Understanding
List the three steps to proving a journal.
• Add all debit column totals.
• Add all credit column totals.
• Verify that debit totals = credit totals.
43
Audit Your Understanding
State the formula for proving cash.
• Cash on hand at beginning of the month.
• Add Cash received (Cash Debit column
total)
• Total
• Subtract Cash paid (Cash Credit column
total)
• Equals cash balance at the end of the
month.
• Compare with checkbook balance on next
unused check stub.
44
Audit Your Understanding
List the five steps to rule a journal at
the end of a month.
1. Rule a single line across all amount columns
directly below the last entry to indicate that
the columns are to be added.
2. On the next line, write the date.
3. Write the word Totals in the Account title
column
4. Write each column total below the single line.
5. Rule double lines below the column totals
across all amount columns.
45
The more you understand, the less you have to
memorize.