Recording Transactions
in a General Journal
Making Accounting Relevant
Some people keep journals to keep
track of their daily activities.
What do you think a business journal
is used for? What would be contained
in that journal?
Section 1 The Accounting Cycle
Students will be able to:
 Explain the first three steps in the
accounting cycle.
 Explain why is it necessary to
journalize transactions.
 Name and describe several examples
of source documents.
 Apply information from the different
kinds of source documents used in a
business.
Section 1 The Accounting Cycle
Students will be able to:
 Define the accounting terms related to
journalizing transactions in a journal.
 Explain the difference between a
calendar year and a fiscal year.
 Describe the steps to make a general
journal entry
 Make general journal entries and
correct errors in journal entries.
On October 1 Maria Sanchez took $25,000 from
personal savings and deposited that amount to
open a business checking account in the name of
Roadrunner Delivery Service, Memorandum 1.
Chapter 3 The Accounting Equation:
Assets = Liabilities + Owner’s Equity
25,000 =
25,000
Cash in Bank
Maria Sanchez, Capital
Chapter 4 T-Accounts:
Cash in Bank
Maria Sanchez, Capital
25,000
Debit Credit
+
-
Debit
-
25,000
Credit
+
CHAPTER 5
Recording Transactions in the
General Journal
Business Transaction 1 (con’t.)
On October 1 Maria Sanchez took $25,000 from
personal savings and deposited that amount to open a
business checking account in the name of Roadrunner
Delivery Service, Memorandum 1.
JOURNAL ENTRY
7.
Section 1 The Accounting Cycle (con’t.)
The Steps of the Accounting Cycle
Section 1 The Accounting Cycle (con’t.)
The First Step in the Accounting
Cycle: Collecting and Verifying
Source Documents
 The accounting cycle starts by
collecting and verifying the
accuracy of source documents.
 Source document is a paper
prepared as evidence of that
transaction.
Section 1 The Accounting Cycle (con’t.)
The First Step in the Accounting
Cycle: Collecting and Verifying
Source Documents (con’t.)
Invoice:
Lists specific
information
about a
business
transaction
involving the
buying or selling of an item. The invoice contains
the date of the transaction, along with the quantity,
description, and cost of each item.
Section 1 The Accounting Cycle (con’t.)
The First Step in the Accounting
Cycle: Collecting and Verifying
Source Documents (con’t.)
Receipt:
A record of
cash received
by a business.
It indicates the
date the
payment was
received, the
name of the person or business from whom the
payment was received, and the amount of the
payment.
Section 1 The Accounting Cycle (con’t.)
The First Step in the Accounting
Cycle: Collecting and Verifying
Source Documents (con’t.)
Memorandum:
A brief written
message that
describes a
transaction
that takes
place within a
business. Often
used if no other source document exists for the
business transaction.
Section 1 The Accounting Cycle (con’t.)
The First Step in the Accounting
Cycle: Collecting and Verifying
Source Documents (con’t.)
Check Stub:
The check stub
lists the same
information that
appears on a
check: the date
written, the person
or business to
whom the check was written, and the amount of the
check. The check stub also shows the balance in the
checking account before and after each check is
written.
Section 1 The Accounting Cycle (con’t.)
The Second Step in the
Accounting Cycle: Analyzing
Business Transactions
 Analyzing information on the
source documents to determine
the debit and credit parts of each
transaction.
Section 1 The Accounting Cycle (con’t.)
The Third Step in the Accounting
Cycle: Recording Business
Transactions in a Journal
 Record the debit and credit parts of
each business transaction in a
journal.
 A journal is a record of all of the
transactions of a business.
 The process of recording business
transactions in a journal is called
journalizing.
Section 2
Recording Transactions in
the General Journal
Students will be able to:
 Define the accounting terms related to
journalizing transactions in a journal.
 Explain why is it necessary to
journalize transactions.
 Describe the steps to make a general
journal entry
 Make general journal entries and
correct errors in journal entries.
Section 2
Recording Transactions in
the General Journal
Enduring Understanding:
 The general journal is used to
summarize and record all detail daily
transactions of a business.
Essential Questions
 How does a general journal organize
and reflect the value of your
business?
Section 2 Recording Transactions in the General
Journal (con’t.)
Recording a General Journal
Entry (con’t.)
Business Transaction (con’t.)
BUSINESS TRANSACTION ANALYSIS (con’t.)
DEBIT-CREDIT RULE 4. Which account is debited? For
what amount?
5. Which account is credited? For
what amount?
Section 2 Recording Transactions in the General
Journal (con’t.)
Recording a General Journal
Entry (con’t.)
Business Transaction (con’t.)
BUSINESS TRANSACTION ANALYSIS (con’t.)
T ACCOUNTS
6. What is the complete entry in Taccount form?
Section 2 Recording Transactions in the General
Journal (con’t.)
Recording a General Journal
Entry (con’t.)
Business Transaction (con’t.)
BUSINESS TRANSACTION ANALYSIS (con’t.)
JOURNAL ENTRY
7. What is the complete entry in
general journal form?
Section 2 Recording Transactions in the General
Journal (con’t.)
Business Transaction 1
On October 1 Maria Sanchez
took $25,000 from personal
savings and deposited that
amount to open a business
checking account in the name
of Roadrunner Delivery Service, Memorandum 1.
ANALYSIS Identify 1. The accounts Cash in Bank and
Maria Sanchez, Capital are
affected.
Classify 2. Cash in Bank is an asset account.
Maria Sanchez, Capital is an
owner’s capital account.
+ / – 3. Cash in Bank is increased by
$25,000. Maria Sanchez, Capital
is increased by $25,000.
Section 2 Recording Transactions in the General
Journal (con’t.)
Recording a General Journal
Entry (con’t.)
Business Transaction 1 (con’t.)
On October 1 Maria Sanchez took $25,000 from
personal savings and deposited that amount to open a
business checking account in the name of Roadrunner
Delivery Service, Memorandum 1.
DEBIT-CREDIT RULE 4. Increases in asset accounts are
recorded as debits. Debit Cash in
Bank for $25,000.
5. Increases in owner’s capital
account are recorded as credits.
Credit Maria Sanchez, Capital for
$25,000.
Section 2 Recording Transactions in the General
Journal (con’t.)
Recording a General Journal
Entry (con’t.)
Business Transaction 1 (con’t.)
On October 1 Maria Sanchez took $25,000 from
personal savings and deposited that amount to open a
business checking account in the name of Roadrunner
Delivery Service, Memorandum 1.
T ACCOUNTS
6.
Cash in Bank
Maria Sanchez,
Capital
Debit
Credit
Debit
Credit
+
–
–
+
25,000
25,000
Section 2 Recording Transactions in the General
Journal (con’t.)
Recording a General Journal
Entry (con’t.)
Business Transaction 1 (con’t.)
On October 1 Maria Sanchez took $25,000 from
personal savings and deposited that amount to open a
business checking account in the name of Roadrunner
Delivery Service, Memorandum 1.
JOURNAL ENTRY
7.
Section 2 Recording Transactions in the General
Journal (con’t.)
Business Transaction 4
On October 9 Roadrunner
bought a used truck on
account from North Shore
Auto for $12,000, Invoice 200.
ANALYSIS Identify 1. The accounts Delivery Equipment
and Accounts Payable—North
Shore Auto are affected.
Classify 2. Delivery Equipment is an asset
account. Accounts Payable—
North Shore Auto is a liability
account.
+ / – 3. Delivery Equipment is increased
by $12,000. Accounts Payable—
North Shore Auto is increased by
$12,000.
Section 2 Recording Transactions in the General
Journal (con’t.)
Recording a General Journal
Entry (con’t.)
Business Transaction 4 (con’t.)
On October 9 Roadrunner bought a used truck on
account from North Shore Auto for $12,000, Invoice 200.
DEBIT-CREDIT RULE 4. Increases in asset accounts are
recorded as debits. Debit Delivery
Equipment for $12,000.
5. Increases in liability accounts are
recorded as credits. Credit
Accounts Payable—North Shore
Auto for $12,000.
Section 2 Recording Transactions in the General
Journal (con’t.)
Recording a General Journal
Entry (con’t.)
Business Transaction 4 (con’t.)
On October 9 Roadrunner bought a used truck on
account from North Shore Auto for $12,000, Invoice 200.
T ACCOUNTS
6.
Delivery
Equipment
Accounts Payable—
North Shore Auto
Debit
Credit
Debit
Credit
+
–
–
+
12,000
12,000
Section 2 Recording Transactions in the General
Journal (con’t.)
Recording a General Journal
Entry (con’t.)
Business Transaction 1 (con’t.)
On October 9 Roadrunner bought a used truck on
account from North Shore Auto for $12,000, Invoice 200.
JOURNAL ENTRY
7.
Section 2 Recording Transactions in the General
Journal (con’t.)
Correcting Errors in General
Journal Entries
 An error should never be erased.
 Use a pen and a ruler to draw a
horizontal line through the entire
incorrect item and write the correct
information above the crossed-out
error.
Section 2 Recording Transactions in the General
Journal (con’t.)
Check Your Understanding
1. What accounts would you use to
record the purchase of a
newspaper ad for cash?
2. What accounts would you use to
record the sale of business
services on account?