$ $ $ $ Section 2 Recording Transactions in the General Journal Chapter 6 $ Section 2 Recording Transactions in the General Journal $ What You’ll Learn The purpose of a general journal. The parts and labeling of a general journal. How information is entered in a general journal. How to correct errors in a general journal. $ $

$ $ $ $ Why It’s Important Key Terms Chapter 6 general journal Section 2 Recording Transactions in the General Journal (cont'd.) Chapter 6 $ Why It’s Important The general journal is a permanent record of the financial transactions of a business. $ $ Key Terms general journal $

$ $ $ $ Recording a General Journal Entry Chapter 6 Section 2 Recording Transactions in the General Journal (cont'd.) Chapter 6 $ Recording a General Journal Entry The general journal is an all purpose journal in which all the transactions of a business may be recorded. $ 1 Date of the transaction 2 Name of the account debited 3 Amount of the debit $ $ 4 Name of the account credited 6 Source document reference or an explanation 5 Amount of the credit

$ $ $ $ Recording a General Journal Entry (cont'd.) Chapter 6 Section 2 Recording Transactions in the General Journal (cont'd.) Chapter 6 $ Recording a General Journal Entry (cont'd.) $ Business Transaction BUSINESS TRANSACTION ANALYSIS $ ANALYSIS Identify 1. Identify the accounts affected. Classify 2. Classify the accounts affected. + / – 3. Determine the amount of the increase or decrease for each account affected. $

Business Transaction (cont'd.) Section 2 Recording Transactions in the General Journal (cont'd.) Chapter 6 $ Recording a General Journal Entry (cont'd.) $ Business Transaction (cont'd.) BUSINESS TRANSACTION ANALYSIS (cont'd.) $ DEBIT-CREDIT RULE 4. Which account is debited? For what amount? 5. Which account is credited? For what amount? $

Business Transaction (cont'd.) Section 2 Recording Transactions in the General Journal (cont'd.) Chapter 6 $ Recording a General Journal Entry (cont'd.) $ Business Transaction (cont'd.) BUSINESS TRANSACTION ANALYSIS (cont'd.) $ T ACCOUNTS 6. What is the complete entry in T-account form? $

Business Transaction (cont'd.) Section 2 Recording Transactions in the General Journal (cont'd.) Chapter 6 $ Recording a General Journal Entry (cont'd.) $ Business Transaction (cont'd.) BUSINESS TRANSACTION ANALYSIS (cont'd.) $ JOURNAL ENTRY 7. What is the complete entry in general journal form? $

$ $ $ $ Chapter 6 On October 1, Maria Sanchez Business Transaction 1 Section 2 Recording Transactions in the General Journal (cont'd.) Chapter 6 $ 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. $

Business Transaction 1 (cont'd.) Section 2 Recording Transactions in the General Journal (cont'd.) Chapter 6 $ Recording a General Journal Entry (cont'd.) Business Transaction 1 (cont'd.) $ 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. $

Business Transaction 1 (cont'd.) Section 2 Recording Transactions in the General Journal (cont'd.) Chapter 6 $ Recording a General Journal Entry (cont'd.) $ Business Transaction 1 (cont'd.) 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. $ Maria Sanchez, Cash in Bank Capital T ACCOUNTS 6. $ Debit + 25,000 Credit – Debit – Credit + 25,000

Business Transaction 1 (cont'd.) Section 2 Recording Transactions in the General Journal (cont'd.) Chapter 6 $ Recording a General Journal Entry (cont'd.) $ Business Transaction 1 (cont'd.) 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. $

$ $ $ $ Chapter 6 On October 9, Roadrunner Business Transaction 4 Section 2 Recording Transactions in the General Journal (cont'd.) Chapter 6 $ 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. $ $

Business Transaction 4 (cont'd.) Section 2 Recording Transactions in the General Journal (cont'd.) Chapter 6 $ Recording a General Journal Entry (cont'd.) Business Transaction 4 (cont'd.) $ 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. $

Business Transaction 4 (cont'd.) Section 2 Recording Transactions in the General Journal (cont'd.) Chapter 6 $ Recording a General Journal Entry (cont'd.) $ Business Transaction 4 (cont'd.) On October 9, Roadrunner bought a used truck on account from North Shore Auto for $12,000, Invoice 200. $ T ACCOUNTS 6. Delivery Accounts Payable— Equipment North Shore Auto Debit + 12,000 Credit – Debit – Credit + 12,000 $

Business Transaction 1 (cont'd.) Section 2 Recording Transactions in the General Journal (cont'd.) Chapter 6 $ Recording a General Journal Entry (cont'd.) $ Business Transaction 1 (cont'd.) On October 9, Roadrunner bought a used truck on account from North Shore Auto for $12,000, Invoice 200. $ JOURNAL ENTRY 7. $

$ $ $ $ Correcting Errors in General Journal Entries Chapter 6 Section 2 Recording Transactions in the General Journal (cont'd.) Chapter 6 $ 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. $ $ $

$ $ $ $ Check Your Understanding Chapter 6 Section 2 Recording Transactions in the General Journal (cont'd.) Chapter 6 $ 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? $ $