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Types of Journals

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Journals

Journal is a book where the information from source documents is first recorded. It is also known as book of original entry.
Journal is a book of prime entry in which transactions are copied in order of date. The entries as they are copied, are classified into debits and credits, so as to facilitate them being correctly posted afterwards in the ledger.

Journals can be classified as:

General Journals

Specialized Journals

  • Sales Journal
  • Returns Inwards Journal
  • Purchases Journal
  • Returns Outwards Journal

The General Journal Format

general journal


Recording into the General Journal

The following entries are recorded in the General Journal

Opening Entries

These entries usually arise when the business has just started or a new set of books has been opened. Such entry is made on the basis of accounting equation i.e. debiting all assets and crediting liabilities and capital account.

Example
Sam is opening a new set of books for the accounting year. He is carrying forward his previous year’s assets and liabilities. On 1st January 2008, he has the following:

Building

$20,000

Furniture

$10,000

Debtors

$2,000

Creditors

$2,000

Bank loan

$4,000

Cash

$500

General Journal

Date

Particulars

Dr.($)

Cr.($)

1st Jan
2008

Building
Furniture
Debtors
Cash
Creditors
Bank Loan
Capital
[Being assets, liabilities and capital recorded ]

20,000
10,000
2,000
500

 

 

2,000
4,000
26,500

Capital is not given and has to be calculated by as follows:
Assets-Liabilities
=$32,500-$6,000
=$26,500

Closing Entries

These are entries at the end of the accounting period.

Purchase and sale of fixed assets on credit.

All assets purchased or sold on credit are posted in the General Journal. Assets purchased or sold in cash are recorded in the Cash Book.
Example
On 12th May, 2008, Sam purchased a Computer on credit for $1000 from Orion computer ltd.

General Journal

Date

Particulars

Dr.($)

Cr.($)

 

Office equipment
Orion computer Ltd
[being purchase of Computer on credit]

1000

 

1000

Entries which are not recorded in any other Journal

Example

  • Goods worth $200 were distributed as free sample on 31st March 2008
  • On the same date Charity $400 in the form of goods

General Journal

Date

Particulars

Dr.($)

Cr.($)

31st March 2008

Advertisement
Charity
Purchases
[being goods distributed for advertisement and charity]

200
400

 

600


Purchases Journal

This Journal is used to record all the purchases made on credit.
Purchase of fixed assets are recorded in General Journal
Cash purchases are recorded in Cash Book.
Source document used is Invoice received from the supplier.

Format of Purchase Journal


Date

Particular

Invoice no.

Details of Invoice ($)

Total ($)

 

Name of the supplier
Less Trade discount
Purchases Account Dr.

 

 

 

Returns Outwards Journal

Also known as Purchases Returns Journal.
Goods which are purchased on credit but returned later on to the supplier are recorded in this Journal.
Source document used is Credit Note.

Format of Returns Outwards Journal

Date

Particular

Invoice no.

Details of Credit Note ($)

Total ($)

 

Name of the supplier
Less Trade discount
Returns Outwards Account Cr.

 

X
X

 

X
X

Sales Journal

Only sales of goods on credit are recorded in the Sales Journal.
Cash sales are recorded in the Cash Book.
Source document used is Sales Invoice.

Format of Sales Journal

Date

Particular

Invoice no.

Details of Credit Note ($)

Total ($)

 

Name of the customer
Less Trade discount
Sales Account Cr.

 

X
X

 

X
X

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