Unit
5
The General Journal
 Journalizing the recording process!
THE RECORDING PROCESS
JOURNAL
JOURNAL
LEDGER
1. Analyse each transaction.
2. Enter transaction in a journal.
3. Transfer journal information to ledger accounts.
THE JOURNAL


Transactions are initially recorded in chronological order in a
journal before being transferred to the accounts.
Every company has a general journal which contains
1. spaces for dates,
2. account titles and explanations,
3. references, and
4. two money columns.
WHY THE JOURNAL
The journal makes several significant contributions to the
recording process:
1. It discloses, in one place, the complete effect of a transaction.
2. It provides a chronological record of transactions.
3. It helps to prevent or locate errors because the debit and credit
amounts for each entry can be readily compared.
JOURNALIZING

Entering transaction data in the journal is known as journalizing.

Separate journal entries are made for each transaction.

A complete entry consists of
1. the date of the transaction,
2. the accounts and amounts to be debited & credited, and
3. a brief explanation of the transaction.
JOURNAL FORM
Page: _____
TECHNIQUE OF JOURNALIZING
The date of the transaction is entered in the date column.
J1
GENERAL JOURNAL
Date
2002
Sept. 1
1
Account Titles and Explanation
Cash
M. Doucet, Capital
Invested cash in business.
Equipment
Cash
Purchased equipment for cash.
Ref.
Debit
Credit
15,000
15,000
7,000
7,000
TECHNIQUE OF JOURNALIZING
The debit account title is entered at the extreme left
margin of the Account Titles and Explanation column.
The credit account title is indented on the next line.
J1
GENERAL JOURNAL
Date
2002
Sept. 1
1
Account Titles and Explanation
Cash
M. Doucet, Capital
Invested cash in business.
Equipment
Cash
Purchased equipment for cash.
Ref.
Debit
Credit
15,000
15,000
7,000
7,000
TECHNIQUE OF JOURNALIZING
The amounts for the debits are recorded in the Debit column and
the amounts for the credits are recorded in the Credit column.
J1
GENERAL JOURNAL
Date
2002
Sept. 1
1
Account Titles and Explanation
Cash
M. Doucet, Capital
Invested cash in business.
Equipment
Cash
Purchased equipment for cash.
Ref.
Debit
Credit
15,000
15,000
7,000
7,000
TECHNIQUE OF JOURNALIZING
A brief explanation of the transaction is given.
J1
GENERAL JOURNAL
Date
2002
Sept. 1
1
Account Titles and Explanation
Cash
M. Doucet, Capital
Invested cash in business.
Equipment
Cash
Purchased equipment for cash.
Ref.
Debit
Credit
15,000
15,000
7,000
7,000
TECHNIQUE OF JOURNALIZING
A space is left between journal entries. The blank
space separates individual journal entries and
makes the journal easier to read.
J1
GENERAL JOURNAL
Date
2002
Sept. 1
1
Account Titles and Explanation
Cash
M. Doucet, Capital
Invested cash in business.
Equipment
Cash
Purchased equipment for cash.
Ref.
Debit
Credit
15,000
15,000
7,000
7,000
TECHNIQUE OF JOURNALIZING
The column entitled Ref. is left blank at the time the
journal entry is made and is used later when the journal
entries are transferred to the ledger accounts.
J1
GENERAL JOURNAL
Date
2002
Sept. 1
1
Account Titles and Explanation
Cash
M. Doucet, Capital
Invested cash in business.
Equipment
Cash
Purchased equipment for cash.
Ref.
Debit
Credit
15,000
15,000
7,000
7,000
SIMPLE AND COMPOUND
JOURNAL ENTRIES
If an entry involves only two accounts, one debit and
one credit, it is considered a simple entry.
J1
GENERAL JOURNAL
Date
2002
Oct. 2
Account Titles and Explanation
Delivery Equipment
Cash
Purchased truck for cash.
Ref.
Debit
Credit
14,000
14,000
COMPOUND JOURNAL ENTRY
When three or more accounts are required in one
journal entry, the entry is referred to as a compound
entry.
J1
GENERAL JOURNAL
Date
2002
Oct. 2
1
2
3
Account Titles and Explanation
Delivery Equipment
Cash
Note Payable
Purchased truck for cash
and note payable.
Ref.
Debit
Credit
34,000
8,000
26,000
COMPOUND JOURNAL ENTRY
This is the wrong format; all debits must be listed
before the credits are listed.
J1
GENERAL JOURNAL
Date
2002
Oct. 2
Account Titles and Explanation
Cash
Delivery Equipment
Note Payable
Purchased truck for cash
and note payable.
Ref.
Debit
Credit
8,000
34,000
26,000
The Two-Column General Journal
SUMMARY OF JOURNAL RECORDING
Step 1 : Record the Date
 The year and month are shown on each journal page.
Step 2: Record the Debit
 The debit is shown first
Step 3: Record the Credit
 The credit is indented
Step 4: Record the Explanation
 The explanation includes on invoice or cheque
number
 A journal presents a chronological history of all the
company's transactions.
The Opening Entry
 Every accounting entry is recorded first in the journal.
 This is done even for the first accounting entry, the one
that sets up the financial position from a balance sheet.
 The journal entry that starts the books off, or "opens"
them, is known as the OPENING ENTRY.
RECEIVED CASH FROM
OWNER AS AN INVESTMENT
August 1. Received cash from owner as an investment, $5,000.00.
Receipt No. 1.
1
2
2
3
1. Write the date in the Date column.
2. Write the title of the account debited.
Write the debit amount.
3. Write the title of the account credited.
Write the credit amount.
3
PAID CASH FOR SUPPLIES
August 3. Paid cash for supplies, $275.00. Check No. 1.
2
1
3
1. Write the date in the Date column.
2. Write the title of the account debited.
Write the debit amount.
3. Write the title of the account credited.
Write the credit amount.
2
3
PAID CASH FOR INSURANCE
August 4. Paid cash for insurance, $1,200.00. Check No. 2.
1
2
3
1. Write the date in the Date column.
2. Write the title of the account debited.
Write the debit amount.
3. Write the title of the account credited.
Write the credit amount.
2
3
BOUGHT SUPPLIES ON ACCOUNT
August 7. Bought supplies on account from Supply Depot, $500.00.
Memorandum No. 1.
2
2
1
3
1. Write the date in the Date column.
2. Write the title of the account debited.
Write the debit amount.
3. Write the title of the account credited. Write the credit amount.
3
PAID CASH ON ACCOUNT
August 11. Paid cash on account to Supply Depot, $300.00. Check No. 3.
2
2
1
3
1. Write the date in the Date column.
2. Write the title of the account debited.
Write the debit amount.
3. Write the title of the account credited.
Write the credit amount.
3
RECEIVED CASH FROM SALES
August 12. Received cash from sales, $295.00. Tape No. 12.
2
2
1
3
1. Write the date in the Date column.
2. Write the title of the account debited.
Write the debit amount.
3. Write the title of the account credited.
Write the credit amount.
3
SOLD SERVICES ON ACCOUNT
August 12. Sold services on account to Oakdale School, $350.00. Sales
Invoice No. 1.
2
2
1
3
1. Write the date in the Date column.
2. Write the title of the account debited.
Write the debit amount.
3. Write the title of the account credited.
Write the credit amount.
3
PAID CASH FOR AN EXPENSE
August 12. Paid cash for rent, $300.00. Check No. 4.
2
2
1
3
1. Write the date in the Date column.
2. Write the title of the account debited.
Write the debit amount.
3. Write the title of the account credited.
Write the credit amount.
3
RECEIVED CASH ON ACCOUNT
August 18. Received cash on account from Oakdale School, $200.00.
Receipt No. 2.
2
2
1
3
1. Write the date in the Date column.
2. Write the title of the account debited.
Write the debit amount.
3. Write the title of the account credited. Write the credit amount.
3
PAID CASH TO OWNER
FOR PERSONAL USE
August 18. Paid cash to owner for personal use, $125.00. Check No. 6.
2
2
1
3
1. Write the date in the Date column.
2. Write the title of the account debited.
Write the debit amount.
3. Write the title of the account credited.
Write the credit amount.
3