Journalizing Transactions Chapter 4 Journalizing Transactions

Vocabulary Journal – A form for recording transactions in chronological order Journalizing – recording transactions in a journal Special amount column – A journal amount column headed with an account title. General amount column – A journal amount column that is not headed with an account title.

Vocab Continued Entry – Information for each transaction recorded in a journal is called an entry. Double entry accounting – the recording of debit and credit parts of a transaction. Source Document – a business paper from which information is obtained for a journal entry.

A FIVE-COLUMN JOURNAL The word journal comes from the Latin diurnalis, meaning daily. Most business conduct transactions every day. To keep from getting overloaded, the business will make entries in their accounting journals every day. Lesson 4-1, page 66

CHECKS Concept Objective Evidence: Source documents are prepared for each transaction Lesson 4-1, page 67

Vocabulary Invoice – A form describing the goods or services sold, the quantity, and the price. Sales invoice – An invoice used as a source document for recording a sale on account

SALES INVOICES Lesson 4-1, page 67

Vocabulary Receipt – A business form giving written acknowledgement for cash received Memorandum – A form on which a brief message is written describing a transaction.

OTHER SOURCE DOCUMENTS Lesson 4-1, page 68

RECEIVED CASH FROM OWNER AS AN INVESTMENT August 1. Received cash from owner as an investment, $10,000.00. Receipt No. 1. Lesson 4-1, page 69

Received cash from owner as an investment August 1. Received cash from owner as an investment, $10,000.00. Receipt No. 1. Barbara Treviño, Capital Cash 1. Which accounts are affected? Cash & Barbara Treviño, Capital Debit Normal Balance 10,000.00 2. How is each account classified? Cash asset Barbara Treviño, Capital owner’s equity.  3. How is each classification changed? Assets increased/Owner’s equity is increased. Credit Normal Balance 10,000.00  4. How is each amount entered in the accounts? Assets increase on the debit side. Owner’s equity accounts increase on the credit side. Lesson 4-1, page 69

Received cash from owner as an investment August 1. Received cash from owner as an investment, $10,000.00. Receipt No. 1. 1 2 4 3 1. Write the date. 2. Debit Cash. 3. Credit Barbara Treviño, Capital. 4. Write the source document number. Lesson 4-1, page 69

PAID CASH FOR SUPPLIES 1 2 4 3 1. Write the date. 2. Debit Supplies. 3. Credit Cash. 4. Write the source document number. Lesson 4-1, page 70

Complete 4-1 work together and on your own

PAID CASH FOR INSURANCE August 4. Paid cash for insurance, $1,200.00. Check No. 2. 1. Which accounts are affected? Prepaid Insurance & Cash Cash Prepaid Insurance Debit Normal Balance 2. How is each account classified? Prepaid Insurance is an asset account. Cash is an asset account. 1,200.00  3. How is each classification changed? Assets are increased. Assets are decreased. Debit Normal Balance 1,200.00  4. How is each amount entered in the accounts? Assets increase on the debit side. Assets decrease on the credit side. Lesson 4-2, page 72

Paid cash for insurance (continued) August 4. Paid cash for insurance, $1,200.00. Check No. 2. 2 3 1 4 1. Write the date. 2. Debit Prepaid Insurance. 3. Credit Cash. 4. Write the source document number. Lesson 4-2, page 72

PAID CASH ON ACCOUNT   1. Which accounts are affected? August 11. Paid cash on account to Ling Music Supplies, $1,360.00, Check No. 3. 1. Which accounts are affected? Accounts Payable—Ling Music Supplies & Cash Cash Accts. Pay.—Ling Music Supplies 1,360.00 Credit Normal Balance  2. How is each account classified? Accts. Pay.—Ling Music Supplies is a liability account. Cash is an asset account. 3. How is each classification changed? Liabilities are decreased/Assets are decreased. Debit Normal Balance 1,360.00  4. How is each amount entered in the accounts? Liabilities decrease on the debit side. Assets decrease on the credit side. Lesson 4-2, page 74

PAID CASH ON ACCOUNT (continued) August 11. Paid cash on account to Ling Music Supplies, $1,360.00, Check No. 3. 2 3 1 4 1. Write the date. 2. Debit Accounts Payable—Ling Music Supplies. 3. Credit Cash. 4. Write the source document number. Lesson 4-2, page 74

Complete 4-2 work together and on your own

RECEIVED CASH FROM SALES August 12. Received cash from sales, $325.00. Tape No. 12. 1. Which accounts are affected? Cash & Sales Sales Cash Debit Normal Balance 2. How is each account classified? Cash is an asset account. Sales is an revenue account. 325.00  3. How is each classification changed? Assets are increased. Revenues are increased. Credit Normal Balance 325.00  4. How is each amount entered in the accounts? Assets increase on the debit side. Revenues increase on the credit side. Lesson 4-3, page 76

RECEIVED CASH FROM SALES (continued) 3 1 4 2 August 12. Received cash from sales, $325.00. Tape No. 12. 1. Write the date. 2. Debit Cash. 3. Credit Sales. 4. Write the source document number. Lesson 4-3, page 76

SOLD SERVICES ON ACCOUNT August 12. Sold services on account to Kids Time, $200.00. Sales Invoice No. 1. 1. Which accounts are affected? Accounts Receivable—Kids Time & Sales Sales Accounts Rec.—Kids Time Debit Normal Balance 200.00 2. How is each account classified? Accounts Receivable—Kids Time is an asset account.Sales is as revenue account.  3. How is each classification changed? Assets are increased. Revenues are increased. Credit Normal Balance 200.00  4. How is each amount entered in the accounts?Assets increase on the debit side. Revenues increase on the credit side. Lesson 4-3, page 77

SOLD SERVICES ON ACCOUNT (continued) 2 1 4 3 August 12. Sold services on account to Kids Time, $200.00. Sales Invoice No. 1. 1. Write the date. 2. Debit Cash. 3. Credit Sales. 4. Write the source document number. Lesson 4-3, page 77

PAID CASH FOR AN EXPENSE August 12. Paid cash for rent, $250.00. Check No. 4. 1. Which accounts are affected? Rent Expense & Cash Cash Rent Expense Debit Normal Balance 2. How is each account classified? Rent Expense is an expense account. Cash is an asset account. 250.00  3. How is each classification changed? Expenses are increased. Assets are decreased. Debit Normal Balance 250.00  4. How is each amount entered in the accounts? Expenses increase on the debit side. Assets decrease on the credit side. Lesson 4-3, page 78

PAID CASH FOR AN EXPENSE (continued) 2 3 1 4 August 12. Paid cash for rent, $250.00. Check No. 4. 1. Write the date. 2. Debit Rent Expense. 3. Credit Cash. 4. Write the source document number. Lesson 4-3, page 78

RECEIVED CASH ON ACCOUNT August 12. Received cash on account from Kids Time, $100.00. Receipt No. 2. Accounts Rec.—Kids Time Cash 1. Which accounts are affected? Cash & Accounts Receivable—Kids Time Debit Normal Balance 100.00 2. How is each account classified? Cash is an asset account. Accounts Rec.—Kids Time is an asset account.  3. How is each classification changed? Assets are increased. Assets are decreased. Debit Normal Balance 100.00  4. How is each amount entered in the accounts? Assets increase on the debit side. Assets decrease on the credit side. Lesson 4-3, page 79

RECEIVED CASH ON ACCOUNT (continued) 3 1 4 2 August 12. Received cash on account from Kids Time, $100.00. Receipt No. 2. 1. Write the date. 2. Debit Cash. 3. Credit Sales. 4. Write the source document number. Lesson 4-3, page 79

PAID CASH TO OWNER FOR PERSONAL USE August 12. Paid cash to owner for personal use, $100.00. Check No. 6. 1. Which accounts are affected? Barbara Treviño, Drawing & Cash Cash Barbara Treviño, Drawing Debit Normal Balance 2. How is each account classified? Barbara Treviño, Drawing is an owner’s equity account. Cash is an asset account. 100.00  3. How is each classification changed? Withdrawals are increased. Assets are decreased. Debit Normal Balance 100.00  4. How is each amount entered in the accounts? Owner’s equity accounts decrease on the debit side. Assets decrease on the credit side. Lesson 4-3, page 80

PAID CASH TO OWNER FOR PERSONAL USE 2 1 4 3 August 12. Paid cash to owner for personal use, $100.00. Check No. 6. 1. Write the date. 2. Debit Barbara Treviño, Drawing. 3. Credit Cash. 4. Write the source document number. Lesson 4-3, page 80

Complete 4-3 work together and on your own

PROVING A JOURNAL PAGE     2 General $ 7,960.00 $12,840.00 Column Debit Column Totals Credit Column Totals General $ 7,960.00 $12,840.00 Sales 2,439.00 Cash 12,319.00 5,000.00 1 Totals $20,279.00 $20,279.00 2 3 1. Add each amount column. 2. Add debit column totals, and then add the credit column totals. 3. Verify that the total debits and total credits are equal. Lesson 4-4, page 82

RULING A JOURNAL PAGE 1 5 2 3 4 1. Rule a single line. 2. Write the date. 3. Write Carried Forward. 4. Write each column total. 5. Rule double lines. Lesson 4-4, page 83

STARTING A NEW JOURNAL PAGE 1  3 4 2 1. Write the page number. 2. Write the date. 3. Write Brought Forward and place a check mark in the Post. Ref. column. 4. Record the column totals brought forward from the previous page. Lesson 4-4, page 84

PROVING A JOURNAL AT THE END OF A MONTH     Column Debit Column Totals Credit Column Totals General $ 8,979.00 $12,840.00 Sales 4,411.00 Cash 14,291.00 6,019.00 1 Totals $23,270.00 $23,270.00 2 3 1. Add each amount column. 2. Add debit column totals, and then add the credit column totals. 3. Verify that the total debits and total credits are equal. Lesson 4-4, page 84

RULING A JOURNAL AT THE END OF A MONTH 1 5 4 2 3 1. Rule a single line. 2. Write the date. 3. Write Totals. 4. Write each column total. 5. Rule double lines. Lesson 4-4, page 84

Complete 4-4 work together and on your own