The General
Journal
Introduction
The General Journal is used for any transaction which will not fit in the four
special journals:
• Cash Receipts Journal,
• Cash Payments Journal,
• Credit Purchases Journal (stock) &
• Credit Sales Journal.
Format
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Traditionally, the account(s) being debited are recorded first, followed by
the credit entry.
The account to be credited is indented slightly.
The value of the debit entry(ies) will equal the value of the credit entry(ies).
A narration (a short explanation) is used to describe the transaction. The
narration includes a reference to the relevant source document (e.g.
memo).
Date
Details
1 Apr
Debit Entry
Credit Entry
Narration
General Ledger
DR
CR
xxx
Subsidiary Ledger
DR
CR
xxx
The Use of the General Journal
As previously stated the General Journal is used when a transaction does not
occur frequently or if it does not fit into any of the four special journals. There
are FIVE main situations that will require the use of the General Journal
 Establishing a double entry system (pages 135-138)
 Contribution or withdrawal of (non-cash) assets by owner (p138 – 139).
Note: When non-cash assets are contributed, an agreed value is determined
by the owner.
 Donations of stock and business advertising (p140)
 Bad debts (pages 140-143) Note: If some cash is collected, this is recorded in
the cash receipts journal. The amount to be written off as bad is recorded in
the cash payments journal.
 Correcting recording errors. (See pages 143 – 145). Eg where the entry was
to the wrong account or wrong side of an account, or the wrong amount was
recorded.
GJ & the Ledger
Posting to the Ledger
Each entry must be posted individually to the ledger accounts.
The process is actually quite simple as the general journal entry
states what is to be debited and what is to be credited.
Subsidiary Ledgers
This involves the use of an extra two columns to record both the
general and subsidiary ledger accounts.
An amount will be posted to the Debtors Control, Creditors Control
or Stock Control account depending on the transaction. There
also needs to be an individual posting to each affected Subsidiary
Debtor or Creditor Ledger Account
SAC HINTS – OUTCOME PART B
Mark-ups
If a business uses a 100% mark-up this means the selling price is DOUBLE the
cost price – to be recorded in the Cost of Sales column in the Cash Sales
Journal (and then posted to Stock Control & Cost of Sales ledger accounts)
Posting to the Ledger
Cash at bank ledger account
DR – Cash Receipts Total
CR – Cash Payments Total
Stock Control ledger account
DR – Cash Payments “stock” column – cross reference = “cash at bank
DR – Credit Purchases “stock” – cross reference = creditors control
CR – Cost of sales column from both Cash Payments and Credit Purchases
journals – cross reference = Stock Control
Creditors/Debtors Control ledger accounts
Remember – the discount has been accounted for – post the total of the
debtors/creditors columns
Remember – when posting to the individual ledger accounts – use the amount
from the debtors/creditors column NOT the bank column.
Cash Receipts Journal
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Payments received from DEBTORS – don’t forget the DISCOUNT
Cash sales
Injection of extra CASH from owner (CAPITAL)
Loan received from bank - CASH
Cash Payments Journal
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Payments made TO creditors – don’t forget the discount
Payment of LOANS
Payment of expenses
Cash purchase of ASSETS (not stock)
Drawings of CASH by owner
Credit Purchases Journal
• Credit purchase of STOCK
Credit Sales Journal
• Credit sales of STOCK
General Journal
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Creating a Double Entry system
Credit sales of ASSETS
Donations of STOCK (advertising)
Writing off Bad Debts
Correcting errors
Withdrawal or contribution of ASSETS (not cash) by owner
Credit Purchases Journal
• Credit purchase of STOCK
Credit Sales Journal
• Credit sales of STOCK
General Journal
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•
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Creating a Double Entry system
Credit sales of ASSETS
Donations of STOCK (advertising)
Writing off Bad Debts
Correcting errors
Withdrawal or contribution of ASSETS (not cash) by owner