Journals, Source Documents, &
Recording Entries in a Journal
Chapter Three
Chapter Introduction
After taking chapter
2 test, list all new
vocabulary words
for chapter 3 and
write out their
definitions.
• Journal
• Journalizing
• Special Amount
Columns
• General Amount
Columns
• Entry
• Double-entry
accounting
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Source document
Check
Invoice
Sales invoice
Receipt
Memorandum
Proving Cash
Journals and Journalizing
• Journal: form for recording
transactions in chronological
order.
• Recording transaction in a
journal is called journalizing.
– Journal is permanent record
– Fits the needs of the business
• What determines the kind of
journal used?
– Nature of business
– Number of transactions
• Journalizing is done daily!
Five-Column Journal
Five Amount Columns
– General Debit
– General Credit
– Sales Credit
– Cash Debit
– Cash Credit
Special Amount Column: a journal amount
column headed with an account title.
• Used for frequently occurring transactions
• Eliminates writing an account title in the
Account Title column and saves time
Three Special Amount Columns:
• Sales Credit
• Cash Debit
• Cash Credit
Five Column Journal
General Amount Column: a journal
amount column that is not headed with
an account title.
• General Debit
• General Credit
Facts about the Journal
• Information recorded includes debit
and credit parts of each transaction in
one location.
• Data can be verified by comparing
journal to transaction data.
• Transactions are recorded in
chronological order.
Journalizing
Entry: information for each
transaction recorded in a journal.
Double-entry accounting:
recording of debit and credit
parts of a transaction.
• Each transaction affects at least
two accounts
• A debit and a credit are
recorded
• Debits = Credits
Source Documents
Source Documents are business
papers from which information
is obtained for a journal entry.
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Each transaction is described by a
source document that proves it
occurred.
Example: Check stub for each
cash payment
Objective Evidence: applied when
a source document is prepared
for each transaction.
Five Source Documents
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Checks
Sales Invoices
Receipts
Calculator Tapes
Memorandums
Source Documents
• Checks (Source document for cash
payments)
• Sales Invoices (Source document for
recording a sale on a account)
– Invoice: form describing the goods or
services sold, the quantity, and the price.
• Receipts – written acknowledgement for cash
received (Source document for cash received
from sources other than sales)
– Example: Received Cash and an
Investment
– Calculator Tapes (Cash Sales)
• Memorandums – a form for which a brief
message is written describing a transaction.
(Used when no other source document is
prepared for a transaction or when an
additional explanation is needed.
Journal Entries
A Journal entry consists of
four parts:
• Date
• Debit
• Credit
• Source Document
Use T accounts to help you!
Journal Entry Examples
Received Cash From Owner as an
Investment, $5,000.00. Receipt No. 1
FYI – Dollar and cent signs,
decimals are not used when
writing on ruled paper
Journal Entry Example
August 3 -Paid Cash for Supplies,
$275.00. Check No. 1
Remember: Writing Cash
frequently could be time
consuming- Special amount
columns are used for these
frequently used accounts
Review
1. In what order are transactions
recorded in a journal?
2. Why are source documents
important?
3. List the four parts of a journal
entry.
Practice
• Working Together
• On Your Own
• Application Problem 3-1
Review
Look under your chairs – you
may have a slip of paper
1. Read Your Question
2. Give the Answer
3. Prize
Go Over Application
Problem 3-1
Section 3-2: Journalizing
August 4th – Paid Cash for Insurance,
$1200. Check No. 2
Bought Supplies on Account
August 7 - Bought Supplies on
Account from Supply Depot, $500.
Memorandum No. 1
Paid Cash on Account
August 11 – Paid Cash on Account
to Supply Depot, $300. Check
No. 3
Practice
Working Together
On Your Own
Journalizing Transaction that affect
OE and Receiving Cash on Account
August 12 – Received Cash from
Sales, $295. Tape No. 12
Sold Service on Account
August 12 – Sold services on account
to Oakdale School, $350. Sales
Invoice No. 1
Paid Cash for an Expense
August 12 – Paid Cash for Rent, $300.
Check No. 4
Received Cash on Account
August 12 – Received cash on
account from Oakdale School,
$200. Receipt No. 2
Paid Cash to Owner for Personal
Use
August 12 – Paid cash to owner
for personal use, $125. Check
No. 6
Practice and Reviewing
Section 3
• Working Together
• On Your Own
Section 2-3
• Audit Your Understanding p. 66
& 72
Homework
Application Problems 3-2 and 3-3
Review Quiz
1. In what order are transactions
recorded in a journal?
2. What are the four parts of a journal
entry?
3. Why are source documents
important?
4. What are the three special account
columns?
5. What columns are used to record
Received Cash from owner as
investment?
Section 3-4: Proving and Ruling a
Journal
When all but the last line on a journal page is
used, columns are proved and ruled….
• Total are carried forward to the next page
Steps in Proving a Journal:
1. Add each amount column
2. Add Debit column totals, Add Credit
Column totals
3. Verify that Total Debits=Total Credit
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Journal page is PROVED
If errors- must correct first
Steps in Ruling a Journal Page
You Must Use a STRAIGHT EDGE!
• Rule single line across all amount columns
– indicated that columns are to be totaled
• On the next line, write date
• Write Carried Forward in the Account
Title column – checkmark placed on post
ref. column
• Write in column totals
• Rule double line below totals
– Indicates amounts are totals and
debit=credits
Starting a NEW JOURNAL Page
• Write page number at top
• Write date (year, month
and day)
• Write Brought Forward –
check mark is placed in
the post ref. column
• Record column totals from
previous page
Proving and Ruling at the
End of the Month
• Rule single line to indicate
columns will be added
• Write date
• Write the word Totals in the
account title column –
check mark is NOT placed
in the post ref.
• Write each column total
• Rule double line debits=credits
Proving Cash
Determining that the amount of cash
agrees with accounting records…
1. Add Cash at beginning and Cash
Debit Column
2. Subtract Cash paid out- Cash Credit
column
3. This equal cash balance at the end
of the month
4. Compare to checkbook balance –
next unused check stub.
Practice
• Section 2-4
– Working Together
– On Your Own
– Application 4
• Work on Application
Problems 5
Review
• Quotes/ Brainteasers
• Audit Test
• Go over Homework
Standard Accounting Practice
Procedures for error corrections,
abbreviated words, signs and rulings.
• Popcorn reading
• Write on the board
• Students make a list
Practice & Application
• Crossword Puzzle
• Applications Problems 6-6
• Homework 6-7
Review
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Catch Phrase
Study Guide
Review Game
Audit Test
Chapter Three Test