CHAPTER 4:
Journalizing Transaction in a General Journal
 OBJECTIVES:
 Define accounting terms related to journalizing
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transactions.
Identify accounting concepts and practices related
to journalizing transactions.
Record in a general journal transactions to set up
a business.
Record in a general journal transactions to buy
insurance for cash and supplies on account.
Record in a general journal transactions that affect
owner’s equity and receiving cash on account.
Start a new journal page.
JOURNAL:
 Form used for recording transactions
in chronological order.
 Provides a history of the business.
 Different types of journals - one we
are using today is called a GENERAL
JOURNAL.
 The process of recording
transactions in a journal is called
JOURNALIZING.
Journal Entry
 Four parts:
1.Date
2.DR
3.CR
4.Source document – a business form
that proves the transaction occurred
Ch 4-1: Journals, Source Documents,
and Recording Entries in a Journal
GENERAL JOURNAL: A journal with two amount
columns in which all kinds of entries can be recorded.
*Entries are made in pen, and recorded in the order they
occurred
A GENERAL JOURNAL
WHY use a journal???
•Accuracy  DR=CR
•Chronological Order
•Store all info for transactions in one place
•Columns (better than separate T-accounts)
Lesson 4-1, page 66
Double-Entry Accounting
– Every entry has two parts a debit and a credit.
– Assures that debits equal credits.
Source Document: Where the transaction came from
– Describes each transaction.
– Proof each transaction occurred.
– Examples:
• Check stub - C
• Receipt - R
• Calculator tape – T
• Memorandum – M
• Sales invoice - S
Objective Evidence: (meaning, non-biased evidence)
 A source document is prepared for every entry.
CHECKS - C
** USED FOR ALL CASH PAYMENTS
** Pre-numbered to account for all checks
** Prepare check stub at same time as check
(Ch. 6)
Lesson 4-1, page 67
SALES INVOICES - S
** Prepared when services are sold ON ACCOUNT
** AKA Sales ticket or sales slip
** Shows price, quantity, date, description
** Prepared in duplicate (2-part form)
(Original –Customer; Duplicate – source document)
Lesson 4-1, page 67
OTHER SOURCE DOCUMENTS – R, M, T
 Receipt (R) – business form giving written acknowledgement
for cash received
– Source doc for cash received from transactions other than sales
• Ie: Cash from investment
 Memorandum (M) – form on which a brief message is written
describing a transaction
– Used when no other source doc is prepared or when an
additional explanation is needed
• Ie: buy supplies on account
 Calculator Tape (T) – total amount of all cash received from
sales during a specific time period (day, week)
– Single source doc for total sales
– Figure comes from a printing electronic calculator
– Numbered according to date cash is totaled
OTHER SOURCE DOCUMENTS – R, M, T
Lesson 4-1, page 68
Source Documents (Objective Evidence)
 Check




KNOW
THIS!
– Paying cash
Sales Invoice
– Selling on account
Receipts
– When receiving cash for anything BUT
sales
Memorandum
– Buying on account
Calculator Tape
– Summary of cash received
RECEIVED CASH FROM OWNER AS AN INVESTMENT
August 1. Received cash from owner as an investment,
$10,000.00. Receipt No. 1.
Lesson 4-1, page 69
RECEIVED CASH FROM OWNER AS AN INVESTMENT
August 1. Received cash from owner as an investment,
$10,000.00. Receipt No. 1.
Cash
1. Which accounts are affected?
Cash
Barbara Treviño, Capital
2. How is each account classified?
Cash is an asset account.
Barbara Treviño, Capital is an owner’s equity
account.
Debit
Normal Balance
10,000.00

Barbara Treviño, Capital
3. How is each classification changed?
Assets are increased.
Owner’s equity is increased.
4. How is each amount entered in the accounts?
Assets increase on the debit side.
Owner’s equity accounts increase on the credit side.
Credit
Normal Balance
10,000.00

Lesson 4-1, page 69
RECEIVED CASH FROM OWNER AS AN INVESTMENT
August 1. Received cash from owner as an investment,
$10,000.00. Receipt No. 1.
2
3
1
4
1. Write the date.
2. Debit Cash.
3. Credit Barbara
Treviño, Capital.
4. Write the source
document number.
Lesson 4-1, page 69
PAID CASH FOR SUPPLIES
Aug. 3. Paid cash for supplies, $1577.00. Check No. 1
1
4
2
3
Lesson 4-1, page 70
TERMS REVIEW
journal
journalizing
entry
general journal
double-entry accounting
source document
check
invoice
sales invoice
receipt
memorandum
TO DO:
Audit your Understanding, pg 71
Work Together, pg 71
Lesson 4-1, page 71
On your own, pg 71
Chapter 4-2: Journalizing Buying
Insurance, Buying on Account,
and Paying on Account
REVIEW SOURCE DOCS
C R M T S
PAID CASH FOR INSURANCE
August 4. Paid cash for insurance, $1,200.00. Check No. 2.
Prepaid Insurance
2. How is each account classified?
Prepaid Insurance is as asset account.
Cash is as asset account.
3. How is each classification changed?
Assets are increased.
Assets are decreased.
Debit
Normal Balance
1,200.00

Cash
Debit
Normal Balance
1,200.00

1. Which accounts are affected?
Prepaid Insurance
Cash
4. How is each amount entered in the accounts?
Assets increase on the debit side.
Journal – page 72
Assets decrease on the credit side.
Lesson 4-2, page 72
BOUGHT SUPPLIES ON ACCOUNT
August 7. Bought supplies on account from Ling Music Supplies,
$2,720.00. Memorandum No.1.
4
2
1
3
1. Write the date.
2. Debit Supplies.
3. Credit Accounts Payable—Ling Music Supplies.
4. Write the source document number.
Lesson 4-2, page 73
PAID CASH ON ACCOUNT
August 11. Paid cash on account to Ling Music Supplies,
$1,360.00, Check No. 3.
Accts. Pay.—Ling Music Supplies
Cash
Debit
Normal Balance
1,360.00

2. How is each account classified?
Accts. Pay.—Ling Music Supplies is a liability account.
Cash is an asset account.
3. How is each classification changed?
Liabilities are decreased.
Assets are decreased.
Credit
Normal Balance
1,360.00

1. Which accounts are affected?
Accounts Payable—Ling Music Supplies
Cash
4. How is each amount entered in the accounts?
Liabilities decrease on the debit side.
Assets decrease on the credit side.
Lesson 4-2, page 74
PAID CASH ON ACCOUNT
August 11. Paid cash on account to Ling Music Supplies,
$1,360.00, Check No. 3.
4
1
2
3
1. Write the date.
2. Debit Accounts Payable—Ling Music Supplies.
3. Credit Cash.
4. Write the source document number.
Lesson 4-2, page 74
TO DO:
 Work Together, pg 75
 On your own, pg 75
CHAPTER 4-3:
 Journalizing Transactions That
Affects Owner’s Equity and
Receiving Cash on Account
REVIEW SOURCE DOCS
C R M T S
RECEIVED CASH FROM SALES
August 12. Received cash from sales, $325.00. Tape No. 12.
Cash
1. Which accounts are affected?
Cash
Sales
2. How is each account classified?
Cash is as asset account.
Sales is as revenue account.
3. How is each classification changed?
Assets are increased.
Revenues are increased.
4. How is each amount entered in the accounts?
Assets increase on the debit side.
Revenues increase on the credit side.
Debit
Normal Balance
325.00

Sales
Credit
Normal Balance
325.00

Lesson 4-3, page 76
RECEIVED CASH FROM SALES
August 12. Received cash from sales, $325.00. Tape No. 12.
4
1
2
3
1. Write the date.
2. Debit Cash.
3. Credit Sales.
4. Write the source document number.
Lesson 4-3, page 76
SOLD SERVICES ON ACCOUNT
August 12. Sold services on account to Kids Time, $200.00. Sales
Invoice No. 1.
Accounts Rec.—Kids Time
1. Which accounts are affected?
Accounts Receivable—Kids Time
Sales
Debit
Normal Balance
200.00

2. How is each account classified?
Accounts Receivable—Kids Time is an asset account.
Sales is as revenue account.
3. How is each classification changed?
Assets are increased.
Revenues are increased.
4. How is each amount entered in the accounts?
Assets increase on the debit side.
Revenues increase on the credit side.
Sales
Credit
Normal Balance
200.00

Lesson 4-3, page 77
SOLD SERVICES ON ACCOUNT
August 12. Sold services on account to Kids Time, $200.00. Sales
Invoice No. 1.
1
4
2
3
1. Write the date.
2. Debit Accounts Receivable—Kids Time.
3. Credit Sales.
4. Write the source document number.
Lesson 4-3, page 77
PAID CASH FOR AN EXPENSE
August 12. Paid cash for rent, $250.00. Check No. 4.
Rent Expense
2. How is each account classified?
Rent Expense is an expense account.
Cash is an asset account.
3. How is each classification changed?
Expenses are increased.
Assets are decreased.
Debit
Normal Balance
250.00

Cash
Debit
Normal Balance
250.00

1. Which accounts are affected?
Rent Expense
Cash
4. How is each amount entered in the accounts?
Expenses increase on the debit side.
Assets decrease on the credit side.
Lesson 4-3, page 78
PAID CASH FOR AN EXPENSE
August 12. Paid cash for rent, $250.00. Check No. 4.
1
1. Write the date.
2. Debit Rent Expense.
3. Credit Cash.
4. Write the source document number.
4
2
3
Lesson 4-3, page 78
RECEIVED CASH ON ACCOUNT
August 12. Received cash on account from Kids Time, $100.00.
Receipt No. 2.
Cash
1. Which accounts are affected?
Cash
Accounts Receivable—Kids Time
Debit
Normal Balance
100.00
2. How is each account classified?

Cash is an asset account.
Accounts Rec.—Kids Time is an asset account. Accounts Rec.—Kids Time
4. How is each amount entered in the accounts?
Assets increase on the debit side.
Assets decrease on the credit side.
Debit
Normal Balance
100.00

3. How is each classification changed?
Assets are increased.
Assets are decreased.
Lesson 4-3, page 79
RECEIVED CASH ON ACCOUNT
August 12. Received cash on account from Kids Time, $100.00.
Receipt No. 2.
1
4
2
3
1. Write the date.
2. Debit Cash.
3. Credit Accounts Receivable—Kids Time.
4. Write the source document number.
Lesson 4-3, page 79
PAID CASH TO OWNER FOR PERSONAL USE
August 12. Paid cash to owner for personal use, $100.00. Check
No. 6.
Barbara Treviño, Drawing
Debit
Normal Balance
100.00

2. How is each account classified?
Barbara Treviño, Drawing is an owner’s
equity account.
Cash is an asset account.
3. How is each classification changed?
Withdrawals are increased. (This results in a
decrease in owner’s equity.)
Assets are decreased.
Cash
Debit
Normal Balance
4. How is each amount entered in the accounts?
Owner’s equity accounts decrease on the debit side.
Assets decrease on the credit side.
100.00

1. Which accounts are affected?
Barbara Treviño, Drawing
Cash
Lesson 4-3, page 80
PAID CASH TO OWNER FOR PERSONAL USE
August 12. Paid cash to owner for personal use, $100.00. Check
No. 6.
1
4
2
3
1. Write the date.
2. Debit Barbara Treviño, Drawing.
3. Credit Cash.
4. Write the source document number.
Lesson 4-3, page 80
TO DO:
 Work Together, pg 80
 On your own, pg 80
 Application Problems 4-2, 4-3
Chapter 4-4:
Starting a New Journal Page
A COMPLETED JOURNAL PAGE
Lesson 4-4, page 82
STARTING A NEW GENERAL JOURNAL PAGE
If only 1 line left on a journal page, record the ENTIRE transaction
on the next journal page.
Easier to verify debits and credits.
First write in the page number in top right corner.
Lesson 4-4, page 83
Standard Accounting Practices
 Errors – Cancel the error by neatly drawing a line
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through the incorrect item and writing the correct item
immediately above the canceled item.
Errors caught before next entry – Draw neat lines
through the errors and write correct entry on next
blank lines.
Errors caught after other entries have been
journalized – Draw neat lines through the errors and
write in corrections above them.
Abbreviations – Only permitted when space is limited.
Dollars and cents signs not used in journalizing.
Two zeros are written in cents column, despite
whether your entry contains whole numbers.
Use a ruler to draw lines for corrections.
STANDARD ACCOUNTING PRACTICES
4
1
6
2
3
5
5
Lesson 4-4, page 84
TO DO:
 Work Together, pg 85
 On your own, pg 85
 Application Problems 4-1, 4-2, 4-3, 4-4, 4-5